Factors Influencing Consumer Likelihood of Purchasing a Flexible-Fuel or Hybrid Automobile

Abstract

Developing fuels and vehicles that reduce our reliance on fossil fuels has become a priority due to the threat of global climate change and desire for reduced dependence on oil imports. Flexible-fuel vehicles that can run on ethanol/gasoline blends of up to 85% ethanol and hybrid electric vehicles present two such opportunities. While production of both flexible-fuel and hybrid vehicles is increasing, there is still a great deal of uncertainty about how consumers will respond to these products. To address this uncertainty, data was collected through an online survey of automobile owners that asked respondents how likely they were to choose either a flexible-fuel or hybrid vehicle as their next vehicle. A bivariate probit model was used to jointly analyze responses to these two questions. The results show that, while there was some overlap in the factors correlated with perceived likelihood of choosing one of these two types of automobiles, there were also clear differences. These results should benefit policymakers, marketers and academics seeking a better understanding of the respective markets for these vehicles.flexible-fuel vehicles, ethanol, E85, hybrid electric vehicles, Demand and Price Analysis, Environmental Economics and Policy, Resource /Energy Economics and Policy,