Association for Public Policy Analysis & Management

Electric vehicle (EV) sales have increased significantly in the past decade. This growth has been spurred by a combination of factors including falling cost of batteries, availability of new vehicle models, support from different government policies, public acceptance, and improved infrastructure. Going forward, this growth is expected to continue and the share of EVs is estimated to rise substantially. The 2018 Annual Energy Outlook projects that the share of EVs in total new vehicle sales to rise from the current level of less than 1% to nearly 12% by 2050. This will have implications not just on the transportation and power sectors, but also on the overall economy.

Research Questions

This paper attempts to answer two research questions:

• What are the estimated economic impacts of increasing electric vehicles?
• How do these projected impacts compare with the losses in the traditional automotive vehicles sector?

Related Work

Extant literature examines the technical considerations associated with increasing uptake of EVs, impact on the power sector, and the possibility of implementing different modes of vehicle grid integration. More recent work looks at the impact of hybrid and EV adoption on the environment. The analysis of the macroeconomic impacts of a growing EV sector on employment, and output, is, however, limited. We propose to address this gap in our paper.

Methodology

This paper will employ a combination of modeling based on the National Energy Modeling System (NEMS) and the IMPLAN input-output data set. For sensitivity analysis, the modeling results will be combined with the different estimates of projected costs of EVs. This variation will hinge on the projected costs of batteries and repairs and maintenance expenses of Electric Vehicles.

The first step is to create a bill of goods of an EV. This will be used identify and examine the main industries that contribute to the production and operation of these vehicles. This bill of goods is then used together with the input-output model data to examine the employment impacts across 536 sectors of the economy. Using an input-output based approach allows us to estimate the different types of employment effects.The first order effects are direct employment gains made in the automotive sector, the second order or the indirect effects accrue to the secondary industries that support the production of EVs. And finally, the induced effects represent the overall gains to the economy with the rising consumption of those who gain from employment through the direct and indirect effects.

Initial Findings

Preliminary assessments of the composition of EV components suggests that while the automobile sector will continue to gain most of employment benefits, there is likely to be a shift in the way gains from other related industries are distributed across the economy. For instance, we expect the spending on repairs and maintenance to reduce whereas the spending on computer systems and software technology to increase. Furthermore, as these vehicles rely on electricity as a source of fuel, the supply chain of automotive fuel is expected to witness changes over time as well.