Asymmetric preference and loss aversion for electric vehicles: The reference-dependent choice model capturing different preference directions

Abstract

Greenhouse emissions from internal combustion engines have become a serious social issue. As of 2019, most vehicles in the South Korean car market have internal combustion engines. Although the South Korean government is adopting and implementing various policies to facilitate the penetration of battery electric vehicles (EVs) in the car market, its efforts have been in vain. Several studies on EV diffusion strategies have analyzed consumer preference for EVs using discrete choice experiments with virtual alternatives. However, they do not consider that consumers choose a new product based on the properties of products they already own; this aspect has a significant effect on consumer preferences and has several implications. Therefore, this study uses a discrete choice model with a reference point to investigate asymmetric consumer preferences for the major attributes of EVs and analyzes the related loss aversion parameters. The results are then used to conduct a sensitivity analysis for fuel efficiency and infrastructure attribute to explore which factor is more influential to consumers' EVs choice probability.