Optimizing and Diversifying the Electric Range of Plug-in Hybrid Electric Vehicles for U.S. Drivers

To provide useful information for automakers to design successful plug-in hybrid electric vehicle (PHEV) products and for energy and environmental analysts to understand the social impact of PHEVs, this paper addresses the question of how many of the U. S. consumers, if buying a PHEV, would prefer what electric ranges. The Market-oriented Optimal Range for PHEV (MOR-PHEV) model is developed to optimize the PHEV electric range for each of 36,664 sampled individuals representing U. S. new vehicle drivers. The optimization objective is the minimization of the sum of costs on battery, gasoline, electricity and refueling hassle. Assuming no battery subsidy, the empirical results suggest that: 1) the optimal PHEV electric range approximates two thirds of one's typical daily driving distance in the near term, defined as $450/kWh battery delivered price and $4/gallon gasoline price. 2) PHEVs are not ready to directly compete with HEVs at today's situation, defined by the $600/kWh battery delivered price and the $3-$ 4/gallon gasoline price, but can do so in the near term. 3) PHEV 10s will be favored by the market over longer-range PHEVs in the near term, but longer-range PHEVs can dominate the PHEV market if gasoline prices reach as high as $5-$6 per gallon and/or battery delivered prices reach as low as $150-$ 300/kWh. 4) PHEVs can become much more attractive against HEVs in the near term if the electric range can be extended by only 10% with multiple charges per day, possible with improved charging infrastructure or adapted charging behavior. 5) the impact of a $100/kWh decrease in battery delivered prices on the competiveness of PHEVs against HEVs can be offset by about $1.25/gallon decrease in gasoline prices, or about phi 7/k Wh increase in electricity prices. This also means that the impact of a $1/gallon decrease in gasoline prices can be offset by about phi 5/k Wh decrease in electricity prices.