The Impact of California's inefficiently high electricity prices on electric vehicle adoption in low-income communities

Abstract

The main Investor-Owned Utilities in California charge electricity prices that are way above the social marginal cost of consuming electricity. This results in economic inefficiency which previous studies prove to have negative implications for inequality and to slow down the electrification of the transportation sector. This paper seeks to build on the existing knowledge by investigating how the high electricity prices affect low and high income house-holds’ electric vehicle adoption differently in California, and it aims to quantify the extent of such difference. The results show that EV adoption among low income households would be considerably higher under efficient retail pricing, and that low income households are more negatively affected than their high income counterparts. However, the results relative to high income households specifically are inconclusive, and therefore the extent to which the two income groups are affected differently cannot be determined. Further research should tackle this issue by including additional variables such as income by year and EV quality, as well as more granular gasoline price data.