Modified Bass Model with External Factors for Electric Vehicle Adoption 2013-01-0505

In recent years, electrification has emerged as an important means to reduce the carbon footprint of personal transportation. A key question for both policy makers and vehicle manufacturers is how quickly electric vehicles (EV) will be adopted by consumers. EV adoption will be impacted by external factors such as the price differential between gasoline and electricity, large incremental vehicle costs, and strong government policies that are far less significant for other advanced vehicle technologies such as hybrid electric vehicles (HEV) or the Ford Eco-Boost engine technology. The ability to reflect these additional externalities in adoption models will improve the reliability of EV market penetration forecasts and the quality of policy analysis.

The Bass diffusion model is well established in studies of the adoption of new technologies, but it is not able to reflect those external factors related to EVs in its usual form. In this paper, we propose a modification of the Bass model that does reflect those factors and find that their inclusion allows the model to reflect the impact of fuel cost volatility realistically. We have validated the Bass model with real HEV sales data and demonstrate how the model can be used to compare the impact of policy options on the adoption of EVs.