Forum for Science, Industry and Business

Sponsored by:     3M 
Search our Site:


Alternative fuel vehicles will be tough sell --But policy incentives will widen use

Imagine a vehicle that runs on hydrogen or biofuels and offers the same features, performance and price as today's gasoline vehicle. Will it capture half the market? Not likely, concludes a new MIT analysis of the challenges behind introducing alternative-fuel vehicles to the marketplace. Not even if it's three times more fuel-efficient.

Among the barriers: Until many alternative fuel (AF) vehicles are on the road, people won't consider buying one-so there won't be many on the road. Catch-22.

The researchers' conclusions are not all gloomy, though. If policy incentives are kept in place long enough, adoption will reach a level at which the market will begin to grow on its own. But "long enough"

may be a surprisingly long time.

Given today's environmental pressures and energy security concerns, we need to move away from fossil-fuel-powered vehicles. But repeated attempts to introduce other technologies during the past century have nearly all failed. Dethroning the gasoline-consuming internal combustion engine (ICE) has proved difficult.

"The challenge is not just introducing an AF vehicle," said postdoctoral associate Jeroen Struben of the Sloan School of Management, who has been examining the mechanisms behind such market transitions. "Consumer acceptance, the fueling infrastructure and manufacturing capability all have to evolve at the same time."

Thus, consumer exposure to AF vehicles is just one feedback loop that can slow adoption. Similarly, fuel suppliers won't build AF stations until they're certain of future demand; but until the fuel is widely available, consumers won't buy the vehicles. And manufacturers won't be able to make AF vehicles cheaper and better until their production volume is high; but high-volume production won't happen until such improvements are in place to attract buyers.

And then of course there's the status quo to be overcome-the well-established and highly attractive gasoline-ICE vehicle and the fueling infrastructure, energy supply chain and other industries that support it.

Understanding market behavior

To analyze the behavior of this system over time, Struben and Professor John D. Sterman of the Sloan School have developed a system dynamics model that simulates how markets for AF vehicles may (or may not) grow. The model can track the fate of various vehicle platforms, including conventional and advanced ICE, hybrids and plug-in hybrids, hydrogen fuel cells and biofuels. Decisions made by consumers, fuel suppliers and auto manufacturers change the market, consumer opinion, vehicle attributes and other factors, which then feed back to alter the decisions people make tomorrow.

Finally, the model accounts for the peculiarities of human behavior.
"Our model doesn't assume that everybody is a perfectly rational economic agent," said Sterman. "Instead, we try to model how people actually make decisions such as which cars to buy and when and where to drive them. Emotion and social status matter, along with the economics." Thus, people's buying decisions may not reflect the actual features of an AF vehicle but rather what they have heard or read about it. And real drivers who are worried about locating fuel for their AF vehicles may fill their tanks early-a behavior that reduces the vehicles' effective range and may cause unanticipated side effects such as crowding at filling stations.

Analyses to date show that a key factor slowing AF-vehicle adoption is the long lifetime of today's vehicles. People buy cars infrequently, so it will be a long time before a given consumer is exposed to enough AF vehicles to feel comfortable buying one. Even an AF vehicle that's as attractive (objectively) as a gasoline-ICE vehicle won't catch on without strong and lasting promotion campaigns.

Concern about finding fuel also slows adoption. In a simulation representing California, entrepreneurs opened AF stations in urban areas but not in less-populated rural areas where demand is initially lower. Urban AF drivers must then avoid the rural areas, reducing the appeal of AF vehicles and slowing their sales everywhere.

Another counterintuitive result: Tripling the fuel efficiency of the AF vehicle should attract more buyers. But since drivers then need much less fuel, energy suppliers build fewer AF stations, lowering the appeal of these efficient cars. The net result? Sales may actually decline.

Self-sustaining markets

Despite such findings, Sterman sees reason for optimism: There are tipping points. With policy incentives that push the new technology forward and sufficient coordination across decision-makers, eventually enough AF vehicles will be on the road that all the decision-makers will buy in and the AF market can become self-sustaining.

The researchers are not ready to make policy recommendations, but their analyses provide initial insights. They clearly illustrate the effectiveness of carbon emission taxes, but they also produce some more-unexpected findings. For example, given the importance of vehicle lifetime, providing incentives to scrap current vehicles may be more effective than direct efforts to get more AF vehicles on the road. Likewise, providing subsidies for building AF stations will help, but giving bonuses for building and especially keeping them in remote areas may be critical.

Most important, for markets to reach the tipping point, policy incentives may have to be kept in place for many decades, even through periods of declining fuel prices. Withdrawing the policies too soon will result in yet another failed attempt to shift the market away from gasoline-powered ICE vehicles.

This research was supported by the Project on Innovation in Markets and Organizations at the MIT Sloan School of Management, the National Renewable Energy Laboratory and Shell Hydrogen.

Written by Nancy Stauffer, MIT Energy Initiative

Elizabeth A. Thomson | MIT News Office
Further information:

More articles from Ecology, The Environment and Conservation:

nachricht Invasive Insects Cost the World Billions Per Year
04.10.2016 | University of Adelaide

nachricht Malaysia's unique freshwater mussels in danger
27.09.2016 | The University of Nottingham Malaysia Campus

All articles from Ecology, The Environment and Conservation >>>

The most recent press releases about innovation >>>

Die letzten 5 Focus-News des innovations-reports im Überblick:

Im Focus: New 3-D wiring technique brings scalable quantum computers closer to reality

Researchers from the Institute for Quantum Computing (IQC) at the University of Waterloo led the development of a new extensible wiring technique capable of controlling superconducting quantum bits, representing a significant step towards to the realization of a scalable quantum computer.

"The quantum socket is a wiring method that uses three-dimensional wires based on spring-loaded pins to address individual qubits," said Jeremy Béjanin, a PhD...

Im Focus: Scientists develop a semiconductor nanocomposite material that moves in response to light

In a paper in Scientific Reports, a research team at Worcester Polytechnic Institute describes a novel light-activated phenomenon that could become the basis for applications as diverse as microscopic robotic grippers and more efficient solar cells.

A research team at Worcester Polytechnic Institute (WPI) has developed a revolutionary, light-activated semiconductor nanocomposite material that can be used...

Im Focus: Diamonds aren't forever: Sandia, Harvard team create first quantum computer bridge

By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.

"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer...

Im Focus: New Products - Highlights of COMPAMED 2016

COMPAMED has become the leading international marketplace for suppliers of medical manufacturing. The trade fair, which takes place every November and is co-located to MEDICA in Dusseldorf, has been steadily growing over the past years and shows that medical technology remains a rapidly growing market.

In 2016, the joint pavilion by the IVAM Microtechnology Network, the Product Market “High-tech for Medical Devices”, will be located in Hall 8a again and will...

Im Focus: Ultra-thin ferroelectric material for next-generation electronics

'Ferroelectric' materials can switch between different states of electrical polarization in response to an external electric field. This flexibility means they show promise for many applications, for example in electronic devices and computer memory. Current ferroelectric materials are highly valued for their thermal and chemical stability and rapid electro-mechanical responses, but creating a material that is scalable down to the tiny sizes needed for technologies like silicon-based semiconductors (Si-based CMOS) has proven challenging.

Now, Hiroshi Funakubo and co-workers at the Tokyo Institute of Technology, in collaboration with researchers across Japan, have conducted experiments to...

All Focus news of the innovation-report >>>



Event News

#IC2S2: When Social Science meets Computer Science - GESIS will host the IC2S2 conference 2017

14.10.2016 | Event News

Agricultural Trade Developments and Potentials in Central Asia and the South Caucasus

14.10.2016 | Event News

World Health Summit – Day Three: A Call to Action

12.10.2016 | Event News

Latest News

Resolving the mystery of preeclampsia

21.10.2016 | Health and Medicine

Stanford researchers create new special-purpose computer that may someday save us billions

21.10.2016 | Information Technology

From ancient fossils to future cars

21.10.2016 | Materials Sciences

More VideoLinks >>>