Willingness to Pay and Attitudinal Preferences of Indian Consumers for Electric Vehicles

TL;DR

This study analyzes Indian consumers' preferences and willingness to pay for electric vehicles, considering attitudinal factors and reference dependence, to inform policy and marketing strategies for EV adoption in India.

Contribution

It introduces a hybrid choice model incorporating reference dependence to estimate more realistic willingness-to-pay figures for Indian EV buyers.

Findings

Consumers are willing to pay USD 10-34 more to reduce fast charging time by 1 minute.

Willingness to pay USD 7-40 for an additional kilometre of driving range.

Consumers are willing to pay USD 104-692 to save USD 1 per 100 km in operating costs.

Abstract

Consumer preference elicitation is critical to devise effective policies for the diffusion of electric vehicles (EVs) in India. This study contributes to the EV demand literature in the Indian context by (a) analysing the EV attributes and attitudinal factors of Indian car buyers that determine consumers' preferences for EVs, (b) estimating Indian consumers' willingness to pay (WTP) to buy EVs with improved attributes, and c) quantifying how the reference dependence affects the WTP estimates. We adopt a hybrid choice modelling approach for the above analysis. The results indicate that accounting for reference dependence provides more realistic WTP estimates than the standard utility estimation approach. Our results suggest that Indian consumers are willing to pay an additional USD 10-34 in the purchase price to reduce the fast charging time by 1 minute, USD 7-40 to add a kilometre to the driving range of EVs at 200 kilometres, and USD 104-692 to save USD 1 per 100 kilometres in operating cost. These estimates and the effect of attitudes on the likelihood to adopt EVs provide insights about EV design, marketing strategies, and pro-EV policies (e.g., specialised lanes and reserved parking for EVs) to expedite the adoption of EVs in India.