How do you use behavioural economics to increase desire for electric cars and bikes?
Governments want you to be considerate with your Energy use.
It’s easy to get someone to want a sexy Tesla. It’s sexy, for a start. (What? you need more?!@?). But with a price tag of £100k it’s a lot harder to turn desire into action. So what do you do to create actionable desire for the soon-to-be tidal wave of affordable electric cars and bikes? A little bit of structural change, and a little bit of behavioural magic, that’s what.
These are the four things that a city or large town needs to do, or be involved with, in order to prime the pump of desire:
- – Make it easy to deploy charging infrastructure and related electricity supply systems
- – Streamline permitting processes associated with charging equipment on private business premises
- – Coordinate monetary and non-monetary incentives for to the general public and organizations purchasing electric vehicles
- – Develop and publish a plan to mobilize demand for electric vehicles in city fleets
The first two are infrastructure and legislative necessities. The last two are perfect candidates for some almost-costless, and incisive, behavioural messaging.
Here’s an example of the private car buying market responding to incentives in line with our universal behavioural quirk that favours immediate gains over future gains even if future gains are larger and, as a consequence, the more rational choice:
Kelly Sims Gallagher and Erich Muehlegger, of Harvard’s Kennedy School, tried to work out the effect of public policy incentives, the market incentive of higher gas prices, and social and environmental preferences on hybrid sales. It’s quite a knot to untie. But they do.
Sales tax incentives, which are immediate and easy to obtain, have a much greater effect on the demand for hybrid vehicles than income tax incentives…
They go further by putting some useable figures next to these incentives:
…we find that the mean sales tax waiver (value $1,077) increases demand to a greater degree than the mean income tax credit (value $2,011)…Conditional on value, we find that sales tax waivers are associated (with) a seven-fold greater increase in hybrid sales than income tax credits.
Wow. A seven-fold increase in sales with immediate sales tax break. And the tax break is half the price of the delayed income tax break. Are you listening councils and governments? A cheap and effective way of creating desire for electric vehicles is right here.
It seems Israel is listening; So too is Nissan.
In Israel – one of the first countries to sign a zero-emissions agreement with the Renault-Nissan Alliance – the government cut the purchase tax for new vehicles from 80% to 10% for all-electric vehicles. Clean Auto Magazine
Proof-positive if any were needed that this ‘funny little behavioural thing’ not only works, but is being acted on.
Nissan do seem to have a comprehensive understanding of what’s needed to create the take-up of electric vehicles – including recognising that the world’s urban population exceeded its rural population for the first time in 2007, creating the perfect ‘marketplace’ for the types of short journeys that electric vehicles are so well suited to.
It’s clear that behavioural psychology can create universal behaviour – the car sales tax success is because we all favour immediate gains over future ones, irrespective of our age or socio-economic status. Only the law has such universal reach. However, is often costly to enact, appears pernicious, and has to be overt.
I think every city should have a behaviour change component as part of its change management team.
London has committed to purchase more than 1,000 electric vehicles for its fleets and 25,000 charge points by 2015 to support running of a target 100,000 electric vehicles. It has also demonstrated leadership by sharing the experiences of developing its comprehensive electric vehicle delivery plan, a first of its kind, with the C40 Electric Vehicle Network cities. It has yet to take a stance on behavioural messaging versus traditional marketing.