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Faculty of Economics

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Newbery, D. M. and Strbac, G.

What is needed for battery electric vehicles to become socially cost competitive?

Economics of Transportation


Abstract: Battery electric vehicles (BEVs) could be key to decarbonizing transport, but are heavily subsidized. Most assessments of BEVs use highly taxed road fuel prices and ignore efficient pricing of electricity. We use efficient prices for transport fuels and electricity, to judge what battery costs would make BEVs cost competitive. High mileage, low discount rates and high oil prices could make BEVs cost competitive by 2020, and by 2030 fuel costs are comparable over a wider range. Its contribution lies in careful derivation of efficient fuel and electricity prices and the concept of a target battery cost.

Keywords: Electric vehicles, Social cost comparisons, Target battery cost

Author links: David Newbery  

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