Power supply disruptions deter electric vehicle adoption in cities in China

Low-carbon electrification is crucial for deep decarbonization, as emphasized by the IPCC. However, the increasing reliance on electricity for transportation and buildings, alongside challenges to grid stability from renewable energy intermittency and increased demand, creates a complex energy system. This study focuses on the impact of power outages on electric vehicle (EV) adoption in China from November 2019 to September 2021, providing empirical evidence on a previously under-researched aspect of electrification. The study's significance lies in its potential to inform policy decisions regarding grid infrastructure investment and the costs of power disruptions. While previous research examined factors such as range anxiety, charging station availability, and environmental awareness in influencing EV adoption, there's a lack of empirical data on the direct impact of power supply disruptions. This study aims to fill this gap using high-resolution data to assess the negative influence of power outages on EV adoption in China during a period marked by several large-scale power outage events.

Existing literature primarily focuses on the factors influencing EV adoption, such as range anxiety, charging station availability, environmental awareness, and income. Some studies indirectly suggest a steady electricity supply is critical, but empirical evidence on the direct impact of power outages is lacking. A recent survey in California indicated a correlation between power outages and reduced consumer intent to purchase EVs, but this study uses actual purchase data for a more robust analysis. Studies on rural electrification in developing countries have shown that power outages reduce the benefits of electrification. This study uniquely contributes by examining the impact of power outages on EV adoption in the transportation sector of a major developed nation with substantial EV adoption. It focuses on the potential difficulty consumers face in using EVs for essential needs due to frequent or extended power disruptions, adding another perspective to the existing literature.

This study compiles a nationwide, high-frequency, point-level power outage database for Chinese cities from November 2019 to September 2021, obtained by web-scraping city government websites. This dataset, combined with city-level EV sales data (proxied by new EV automobile insurance registrations) from the China Association of Automobile Manufacturers, allows for a detailed analysis of the relationship between power outages and EV adoption. Fixed-effects panel regression models are used to analyze monthly EV sales at the city level, controlling for various factors such as per capita GDP, the number of EV charging stations, and city-specific time-varying variables (e.g., policies, consumer awareness, seasonal effects). The study uses both the number of power outages and the total hours of outages as key explanatory variables, incorporating 1-month and 2-month lags to account for the time delay between outages and purchase decisions. Robustness checks include a placebo test on non-EV sales, examining the impact of including EV charging stations as a control variable, and using an instrumental variable (IV) approach with monthly extreme temperature days as an instrument for power outages to address potential endogeneity issues. Further robustness tests incorporate control variables for government-mandated power restrictions, additional socioeconomic factors and account for the impact of COVID-19 lockdowns and supply chain disruptions. The study also analyzes the heterogeneous impact of power outages on EV adoption by vehicle type (commercial vs. non-commercial), region (north vs. south), and GDP level. A survey of 890 consumers was conducted to provide additional evidence on the impact of power outages on consumer EV purchasing intentions.

The study finds a statistically significant and negative relationship between power outages and EV adoption. A one-unit increase in the number of power outages per district per month is associated with a 0.99% decrease in new EV adoptions. This impact is more pronounced for non-commercial vehicles, in northern provinces, and in cities with lower GDP. Power outages do not have a statistically significant impact on the adoption of for-hire vehicles, likely due to policy mandates and different procurement practices for fleet vehicles. The placebo test demonstrates that power outages do not negatively affect non-EV vehicle sales, indicating the observed impact on EVs is not due to general economic factors. The analysis of the monetized carbon reduction benefit reveals that a doubling of power outages nationwide could result in a decline of over $31.3 million per year in carbon reduction benefits, with a discounted total loss of $254 million over a decade. Considering additional health benefits from reduced air pollution, the total potential loss could be far greater. The IV approach confirms the causal relationship between power outages and reduced EV sales. The survey results further support the conclusion that increasing power outages negatively influence the willingness to purchase EVs. The study uses various functional forms and model specifications to determine the best fit of the data and to increase the robustness of the results.

The findings highlight the significant economic and environmental consequences of power outages on EV adoption and carbon emissions reductions. The negative impact of unreliable electricity supply on EV uptake underscores the need for robust power grid infrastructure to support electrification efforts. The results suggest that investments in grid resilience are crucial not only for economic reasons but also for achieving climate change mitigation goals. The substantial financial losses associated with delayed EV adoption due to power outages clearly demonstrate the importance of addressing power grid stability to avoid hindering the transition to clean transportation. The significant difference in impact observed across various vehicle types, regions, and GDP levels suggests the need for targeted policies to mitigate the negative effect of power outages on EV adoption, considering regional disparities and consumer sensitivities.

This study provides crucial empirical evidence demonstrating the negative impact of power outages on EV adoption in China. The findings highlight the need for investments in grid infrastructure to ensure reliable electricity supply and accelerate the transition to electric vehicles. Future research could explore the effectiveness of specific policies designed to enhance grid resilience and address the heterogeneous impact of power outages across different demographics and regions. Furthermore, investigating the role of V2X technology and demand-side management strategies in mitigating the impact of power outages on EV adoption would be valuable.

The study relies on city-level EV sales data proxied by new EV insurance registrations, which may not perfectly capture actual sales. The analysis focuses on China, limiting the generalizability of the findings to other countries with different electricity grid characteristics and consumer behaviors. While the study addresses potential endogeneity issues, other unobserved factors may influence both power outages and EV adoption. The monetization of carbon reduction benefits relies on existing estimates, and the actual cost could vary based on future developments in carbon pricing and grid decarbonization. The study's time horizon is limited by the data availability, restricting the long term analysis of the effects of the power outages.