Migrating from Oil- to Electricity-Powered Vehicles: Modeling Germany's Transition to the EV until 2040 in System Dynamics

Bachelor Thesis from the year 2009 in the subject Business economics - Economic Policy, grade: 1.0, Otto Beisheim School of Management Vallendar (Kuehne Foundation Chair in Logistics Management), language: English, abstract: Replacing traditional internal combustion engine cars by electric vehicles (EVs) offers significant advantages, such as lower CO2 emissions, lower noise pollution and lower oil consumption. Nonetheless, a potential migration of Germany's personal transportation ector towards the EV faces significant challenges like a low initial driving range and high production costs of the EV, as well as high investment costs into a supporting infrastructure. It is argued that some of these challenges form 'chicken-and-egg'-problems that are particularly difficult to overcome. We analyze these challenges using a comprehensive System Dynamics model calibrated to Germany for the period from 2010 to 2040 with endogenous infrastructure entry and exit, detailed reigonal driving behavior, technological improvement and economies of scale. We conclude that the EV will eventually overcome these initial hurdles after 2002, even though market penetration will remain limited for a long time. The impact of different recharging technologies and a potential up-front deployment of recharging infrastructure are investigated. Furthermore, we evaluate the efficiency and effectiveness of policy measures in support of the EV and aggregate potential annual CO2 emission reductions due to the introduction of the EV for different scenarios. The thesis includes: - Concrete, numeric market potential forecasts for Germany under different scenarios and assumptions (including a rapid 'Better Place'-style deployment of infrastructure) - Overview over current EV technology - A description of a sophisticated System Dynamics model, including algorithms to simulate driving behavior on a regional level (>450 regions for Germany) - Sensitivity analysis for different technology development patterns and various subsidies (including city tolls for non-zero emission vehicles or infrastructure subsidies) Model, as well as data is available from the authors upon request.