The Electric Vehicle Transition and the Economics of Banning Gasoline Vehicles

Electric vehicles have a unique potential to transform personal transportation. We analyze this transition with dynamic model capturing falling costs of electric vehicles, decreasing pollution from electricity, and increasing vehicle substitutability. Our calibration the US market shows gasoline is not optimal at current substitutability: production ban would large deadweight loss. At higher substitutability, can reduce loss mix adoption timing inefficiencies. A cumulative quota has smaller loss, an purchase subsidy more robust regulator misperceptions about (JEL H23, L51, L62, L94, Q53)