Grid Reliability and Technology Substitution in Electric Vehicle Markets

• In Event: Lightning Session: Housing, Community Development, and Urban Policy

Abstract

Electric utilities implement Public Safety Power Shutoffs (PSPS) during periods of elevated wildfire risk. These intentional blackouts, which can last from hours to weeks, may reshape how affected customers perceive the reliability of their electric grid. Building on survey-based evidence linking range anxiety and PSPS exposure to reduced EV purchase intent, we provide the first causal estimates of how PSPS events affect EV sales. Using quasi-random variation in PSPS exposure across California zip codes, we compare battery electric vehicle (BEV) and plug-in hybrid electric vehicle (PHEV) sales before and after PSPS events using a stacked difference-in-differences design. To address systematic differences between treated and untreated areas in demographics, built environment, and infrastructure quality, we restrict our control group to zip codes that have not yet experienced a PSPS event at the time of treatment. We find that PSPS events reduce BEV sales by 7.6% while increasing PHEV sales by 8.0%, consistent with a substitution mechanism driven by range anxiety: when grid reliability is uncertain, consumers favor vehicles that retain a gasoline backup. This substitution partially offsets the social costs of PSPS-induced barriers to EV adoption. Our findings have direct implications for utility regulators and clean transportation policy, as wildfire-driven grid interventions may slow the EV transition in high-risk regions.
We further examine heterogeneous treatment effects along two dimensions particularly relevant to energy equity and climate policy. First, we test whether the substitution effect varies by neighborhood income level. Lower-income zip codes may face greater constraints in switching to PHEVs, as the upfront cost premium over BEVs represents a larger financial burden, potentially leaving these communities with neither reliable grid access nor affordable clean vehicle options. Preliminary results suggest that the BEV suppression effect is concentrated in higher-income areas where households have the financial flexibility to substitute toward PHEVs, while lower-income zip codes exhibit weaker substitution responses, suggesting that PSPS events may simply deter EV adoption altogether in these communities without a compensating shift toward PHEVs. Second, we explore whether political affiliation moderates the response to PSPS exposure. Prior work has documented that EV adoption decisions are shaped in part by partisan identity, with Democratic-leaning households more likely to purchase BEVs. If PSPS events undermine confidence in grid reliability, the dampening effect on BEV sales may be more pronounced in politically conservative areas where baseline EV adoption intent is lower and skepticism toward grid-dependent vehicles is higher. Conversely, in strongly Democratic zip codes, the commitment to electrification may be more resilient to short-term reliability shocks. Taken together, these heterogeneity analyses suggest that the equity implications of PSPS policy extend beyond the immediate disruption of power access. By reshaping the clean vehicle market in ways that interact with income and political context, PSPS events risk widening existing disparities in the clean energy transition and warrant targeted policy responses from utility regulators and state transportation agencies.

Authors

• John Kim, University of North Carolina, Charlotte
  Presenting Author

• Min-kyeong Cha, Georgia Institute of Technology
  Non-Presenting Co-Author

• Daniel Matisoff, Georgia Institute of Technology
  Non-Presenting Co-Author