1 s2.0 S0928765514000049 Main

Resource and Energy Economics 37 (2014) 279301
Contents lists available at ScienceDirect
Resource and Energy Economics

journal homepage: www.elsevier.com/locate/ree
Preferences for alternative fuel vehicles of

company car drivers
Mark J. Koetse a,, Anco Hoen b
a
Institute for Environmental Studies (IVM), VU University Amsterdam, De Boelelaan 1087, 1081 HV
Amsterdam, The Netherlands
b
PBL Netherlands Environmental Assessment Agency, Oranjebuitensingel 6, 2511 VE The Hague, The
Netherlands
a r t i c l e
i n f o
Article history:
Received 19 April 2012
Received in revised form 8 November 2013
Accepted 28 December 2013
Available online 8 January 2014
JEL classication:
C25
C54
O33
Q54
R41
Keywords:
Car choice
Alternative fuel vehicles
Company cars
Choice experiment
Policy tax
Annual mileage
a b s t r a c t
Costs of car ownership for company cars drivers and private car
owners are very different. Car use, car choice decisions and preferences for car characteristics may therefore differ substantially
between these two markets. In this paper, we present results of
a study on the preferences of company car drivers for alternative fuel vehicles and their characteristics, based on data from
an online stated choice experiment in the Netherlands. Results
show that, assuming current car characteristics, preferences for
alternative fuel vehicles, and for electric and fuel cell cars in particular, are substantially lower than those for the conventional
technology. Limited driving ranges, long recharge/refuelling times
and limited availability of refuelling opportunities, are to a large
extent responsible for this. Preferences for alternative fuel vehicles
increase considerably with improvements on these aspects, especially for the hybrid and exifuel car. Under the current company
car tax system in the Netherlands, which favours cleaner technologies, these two car types are even preferred to the conventional
technology, assuming equal catalogue prices and personal monthly
cost contributions. Comparing results with those from a similar
choice experiment among private car owners shows that willingness to pay patterns for AFV improvements regarding driving range,
recharge and refuelling times, fuel availability and diversity in AFV
supply, are considerably different for company car drivers than for
private car owners. Company and private car drivers may therefore
react (very) differently to future improvements in AFV technology
Corresponding author. Tel.: +31 20 5983194.

E-mail addresses: mark.koetse@vu.nl (M.J. Koetse), anco.hoen@pbl.nl (A. Hoen).
0928-7655/$ see front matter 2014 Elsevier B.V. All rights reserved.
http://dx.doi.org/10.1016/j.reseneeco.2013.12.006
280
M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301
and fuel availability. We nally show that preferences of company

car drivers for fuel cell and electric cars depend to a large extent on
annual mileage. Market share simulations show that potential early
adopters of electric and fuel cell cars can be found among people
with a relatively low annual mileage.
2014 Elsevier B.V. All rights reserved.
1. Introduction
The adoption of cleaner and more energy efcient technologies is an important means to reduce
reliance of economies on fossil fuels and to reach international goals of CO2 emission reduction. In this
respect transport is a relevant sector because it is highly dependent on fossil fuels and is responsible
for a large share of total CO2 emissions. Globally, passenger and freight transport contribute to around
20% of energy use and more than 20% of energy related CO2 emissions (Fulton et al., 2009). In the
EU-27 the share of transport in total CO2 -emissions is between 25% and 30%, and rising (European
Commission, 2010). Passenger cars make up approximately 50% of road transport CO2 emissions in the
EU. Replacement of passenger cars with conventional internal combustion engines by alternative fuel
vehicles (AFVs) is therefore crucial to meet long-term climate goals and reduce economic dependence
on fossil fuels (Van Vuuren and Faber, 2009).
In the discussion on CO2 reduction and AFV adoption, company cars are of special interest. Company cars determine to a large extent the composition of the entire passenger car eet in Europe and
consequently transport-related CO2 -emissions, because they are generally used 34 years and then
sold on the private second-hand car market. In most European countries the share of company cars
in annual new car registrations is around 50% (Naess-Schmidt and Winiarczyk, 2010). Car choice and
car preferences on the private and on the company car market may vary widely for several reasons,
and may hence lead to different government policies to encourage AFV adoption in the company and
private car markets. First, the (structure of the) total cost of operation is very different between the
two groups. Company car drivers are not confronted with high up-front investment costs because the
purchase price is born by the employer. In most European countries the annual costs for company car
drivers of owning a company car are created through the tax system. Generally, the catalogue or purchase price is multiplied by a policy tax set by the central government and the result is added to taxable
income (Naess-Schmidt and Winiarczyk, 2010). It is interesting to observe that in the Netherlands and
some other countries, e.g., France and the UK, the policy tax is dependent on vehicle CO2 emissions
(ACEA, 2012), with the intention of stimulating CO2 efciency and AFV adoption. Second, company
car drivers often do not or only indirectly pay for their fuel consumption, implying that their car use is
likely less sensitive to changes in fuel prices. The impact of these differences are currently reected by
the fact that the average company car in the EU is larger and heavier than the average privately owned
car (Naess-Schmidt and Winiarczyk, 2010), and that the annual mileage of company cars is higher
than that of private cars within the same fuel type (Skinner et al., 2006). It is therefore likely that
preferences for other car characteristics, such as driving range, refuelling times and fuel availability,
are also different on the two markets.
For these reasons specic research on AFV preferences of company car drivers is necessary in order
to assess the market potential of AFVs and the effectiveness of policy measures that are aimed at
increasing AFV adoption in the company car market. To our knowledge there are no studies on AFV
preferences of company car drivers. In this paper we aim to ll this gap in the literature. Because the
sales shares of AFVs are currently very low, we have to rely on stated preference research. We conduct
an online stated choice experiment among company car drivers in the Netherlands. The Netherlands
make an interesting case study since the structure of the Dutch economy is relatively close to the EU
average (particularly EU15) in terms of car density, share of company cars, income per capita, tax rates
and company car subsidy levels (Naess-Schmidt and Winiarczyk, 2010). Similar to the EU average, the
average Dutch company car is heavier and larger than the average private car, and annual mileage
is approximately twice that of private cars (CBS, 2012). With this study we aim to (1) obtain insight
into the preferences of company car drivers for AFVs and AFV characteristics, (2) compare these to
281
preferences on the private car market, (3) uncover the background and car use characteristics that
affect these preferences, and (4) to identify potential early adopters.
The remainder of this paper is organised as follows. In Section 2, we give an overview of the relevant literature. Section 3 presents the design and presentation of the choice experiment and the data
collection process. Main estimation results and willingness-to-pay estimates are presented in Section
4. In Section 5, we compare company market estimates with estimates from a similar choice experiment in the private car market. Section 6 is devoted to identifying potential early adopters. Section 7
concludes.
2. Overview of the literature
Literature on preferences for alternative fuel vehicles of company car drivers is largely missing.
Although in some papers company car drivers might be included in the data sample, they are not
identied as such and have not been subjected to separate analyses. A notable exception is a study by
Golob et al. (1997) on AFV preferences of commercial eet operators in California. In their study car
eet operators were asked to imagine that they would have to replace their entire eet and to allocate
their budget over a set of three vehicle types, each described by various characteristics, among which
fuel type. Results show that most car eet operators strongly prefer petrol cars even when all other
car characteristics are identical, and that the electric vehicle is considered to be the least attractive
alternative. Sector variation in preferences is large, e.g., the agricultural sector has a stronger than
average aversion against electric vehicles, while the education sector is almost indifferent between
gasoline and electric cars. Driving range and off-site fuel availability are found to be important factors
in commercial eet composition choices, while CO2 emissions appear to be of minor importance.
Although the Golob et al. study gives interesting insights into potentially relevant car attributes,
it does not give information on the car characteristics that are considered to be relevant by company
car users. Although there are no studies for this particular group, we may derive relevant information
from studies on AFV preferences of private car owners. Many of these studies conclude that the limited
driving range of electric cars appears to be especially problematic (e.g., Mau et al., 2008; Train, 2008;
Hidrue et al., 2011). A meta-analysis by Dimitropoulos et al. (2013) shows that willingness-to-pay
(WTP) estimates for driving range vary widely. They also nd that marginal WTP decreases when
driving range increases, and that regional differences in WTP are large, which most likely reects
regional differences in spatial structure and car use. Recharge and refuelling times have been studied
in only a limited number of cases, with the available evidence suggesting that it is an important barrier
to consumer acceptance of electric cars (e.g., Hidrue et al., 2011). With respect to fuel availability
most studies show that limited fuel availability has a strong negative effect on consumer preferences
(Potoglou and Kanaroglou, 2007; Mau et al., 2008; Train, 2008). Studies that include emissions as a
choice attribute generally nd very large WTP estimates for emission reduction (e.g., Batley et al., 2004;
Potoglou and Kanaroglou, 2007; Hidrue et al., 2011). Since emission reduction predominantly affects
social and not individual welfare, this nding may be the result of hypothetical bias. Explicitly including
emissions as a choice attribute may therefore produce rather incredible estimates and more generally
may negatively affect results. Finally, differences in ndings with respect to fuel type constants are
large. For example, Ewing and Sarigll (1998) and Mabit and Fosgerau (2011) nd (strong) preferences
for electric vehicles over conventional cars, while Hidrue et al. (2011) and Hess et al. (2006) nd the
opposite. Although these differences in outcomes may be explained in various ways, it is important
to highlight the fact that when important fuel or car type characteristics are not included as a car
attribute, consumer perceptions on these attributes are likely picked up by the fuel-type constants.
3. Description of choice experiment
3.1. Choice attributes and attribute levels
Choice attributes were selected through an extensive literature review and consultations with
stakeholders. Important criteria were that there is a marked difference between the conventional
technology and some or all AFVs, and that that the attribute was found or is considered to be important
282
Table 1
Catalogue price mark-up levels for the ve AFV types.
Car type
Level 1
Level 2
Level 3
Hybrid
Plug-in hybrid
Fuel cell
Electric
Flexifuel
D
D
D
D
D
D
D
D
D
D
D
D
D
D
D
0
0
1000
1000 (range/140)
500
2000
2000
3000
3000 (range/140)
1200
6000
7000
10,000
10,000 (range/140)
3000
or even crucial for car choice. Ultimately nine attributes were included in our choice experiment, i.e.,
car type, catalogue price, personal monthly contribution, policy tax, driving range, recharge/refuelling
time, additional detour time, number of available models, and policy measure. Below we discuss these
attributes and the associated levels.
3.1.1. Car type
The car types included were the conventional technology, the hybrid, the plug-in hybrid, the fuel
cell, the electric and the exifuel car.
3.1.2. Catalogue price
In the company car market initial investment costs are not born by company car drivers themselves.
Catalogue price is still a relevant factor in car choice because in the Netherlands, as in most EU countries,
it is multiplied by a policy tax and the resulting amount is added to an employees taxable income
(Naess-Schmidt and Winiarczyk, 2010). For details of the Dutch tax system we refer to the policy tax
attribute description below. In order to reduce the risk of hypothetical bias in a choice experiment, it
is essential that the choices faced by respondents are as close to reality as possible. Catalogue prices
were therefore made respondent specic. Prior to the choice tasks respondents were asked what the
price range of their next car would presumably be, for which they could select from a drop-down menu
with 17 price categories (ranging from less than D 9000 to more than D 100,000). For the conventional
technology we took the bottom price of the selected category and in order to add variation to the
dataset we multiplied this gure by a random number generated from a uniform distribution between
0.9 and 1.1. The catalogue price of an AFV was equal to the price of the conventional technology plus a
design-dependent mark-up, using three different mark-up levels for each AFV. In addition, the markup of the electric vehicle was made proportional to driving range, since higher driving range requires
a larger battery pack with higher associated costs. More specically, three mark-ups were selected
for a range of 140 km because for this particular range we were able to obtain relatively reliable price
information. Mark-ups for ranges other than 140 km were assumed to be proportional to the range/140
ratio. Table 1 gives an overview of the catalogue price mark-up levels for each AFV type.
3.1.3. Policy tax
The policy tax is relevant whenever the user of a company car in the Netherlands drives more
than 500 non-business kilometres a year. The tax level depends on the CO2 efciency of the vehicle,
similar to the situation in Belgium, France and the UK (ACEA, 2012).2 Basically the system in the
Netherlands works as follows. The catalogue price is multiplied by the policy tax and the resulting
amount is added to taxable income, implying that in general an income tax of 42% has to be paid over
the resulting amount. For example, a catalogue price of D 20,000 combined with a policy tax of 20%
leads to (42% 20% D 20,000 =) D 1680 of additional annual income tax. Table 2 presents the policy
tax levels used for each of the car types. Although a policy tax of 7% did not exist at the moment of
data collection in the Netherlands, it seemed a logical level between the 14% and 0% levels.
2
Most other European countries also use CO2 -dependent taxes or levies on car ownership or car usage, but do not have a
CO2 -dependent policy tax system on ownership.
283
Table 2
Policy tax levels for each car type used in the choice experiment (policy tax for each car type at the moment of data collection
is denoted by *).
Car type
Level 1
Level 2
Level 3
Petrol/diesel
Hybrid
Plug-in hybrid
Fuel cell
Flexifuel
Electric
14%
7%
7%
0%*
0%
0%*
20%*
14%*
14%*
7%
7%
7%
25%*
20%
20%
14%
14%*
14%
3.1.4. Personal monthly contribution

Employers sometimes require the employee to pay a monthly contribution for use of the company
car. Typically the personal contribution is higher for more expensive and larger cars and lies somewhere between D 0 and D 400. We decided to adopt four levels for the monthly contribution, i.e., D
0, D 100, D 200 and D 400, and not to vary these levels for different car types.
3.1.5. Driving range
The driving range of hybrid, plug-in hybrid and exifuel vehicles does not differ from that of conventional cars. For these four car types the range was kept constant and was presented to the respondent as
same as current range. The range levels for electric and fuel cell vehicles were derived from a range
of studies and consultations with experts. For electric cars the current driving range varies widely
depending on the specic electric car; values range from 50 to 350 km, and values of or around 75 km
are reported most often (Agentschap NL, 2012). For the electric car we included a current driving range
of 75 km, and driving ranges of 150, 250 and 350 km as possible medium to long-run driving ranges.
Driving ranges for the fuel cell car are more difcult to obtain since only prototypes exist. Based on
expert consultation we included a current driving range of 250 km, and feasible medium to long-run
driving ranges of 350, 450 and 550 km.
3.1.6. Recharge/refuelling time
Four levels of recharge/refuelling times were applied for plug-in hybrid, electric and fuel-cell
vehicles, the value for the other car types was set constant at two minutes as a proxy for the average refuelling time of conventional cars. Table 3 contains a detailed overview of AFV-type specic
recharge/refuelling times. Recharge times for electric cars depend largely on the size of the battery
and recharging technology. For example, fast charging an electric car with a driving range of 150 km
currently takes around 30 min (e.g., Grning et al., 2011), while recharging the same car using a normal
outlet takes around 8 h. We included values ranging from 30 min to 8 h to allow for a wide range of
possible future values and for heterogeneity in recharge technology. For the plug-in hybrid we also
included a wide range, but smaller values since a plug-in hybrid car has smaller batteries. The literature
on refuelling time for the fuel cell car reports values ranging from 3 to 9 min for refuelling technologies with hydrogen stored in gas or liquid form (e.g., Thomas, 2009; Eberle et al., 2012). Refuelling
technologies with hydrogen storage in solid form, however, take more time to refuel a fuel cell car,
although the extent to which is uncertain (e.g., Von Helmolt and Eberle, 2007). Since the refuelling
technology to be used in the future is uncertain we varied refuelling times for the fuel cell car from 2
to 25 min. These values were based on both literature and consultation with experts in the eld.
Table 3
Recharge/refuelling times for plug-in hybrid, fuel cell and electric cars.
Car type
Level 1
Level 2
Level 3
Level 4
Plug-in hybrid
Fuel cell
Electric
20 min
2 min
30 min
35 min
10 min
1h
1h
15 min
2.5 h
3h
25 min
8h
284
3.1.7. Additional detour time

To test for differences in the availability of refuelling locations we adopted the approach used by
Train (2008), who included additional detour time as an attribute and used 0, 3 and 10 min as attribute
levels. We included four levels of additional detour time for fuel cell, electric and exifuel cars, i.e.,
0, 5, 15 and 30 min, the latter two levels being more in line with current circumstances. Additional
detour time is equal to 0 for the other car types. For electric vehicles additional detour times larger
than zero only appeared when recharge time was equal to 30 min (fast charging). For recharge times
larger than 30 min we assumed that recharging the vehicle occurs at home.
3.1.8. Number of available brands/models
Preferences of car buyers are very heterogeneous (e.g., Hoen and Geurs, 2011; Carlsson et al., 2007),
implying that the amount of choice offered on the car market could be relevant. In order to analyse
whether supply and choice matter we include the number of available brands/models as an attribute.
Four attribute levels (1, 10, 50 and 200) were assigned to all ve AFV car types, while the number of
brands/models for the current technology was always dened as Same as current amount. Including
this rather general attribute should give an indication of preferences for supply and choice, the reasoning being that respondents interpret intuitively that a higher number of brands and models would
increase their chances of nding their preferred brand and/or model.
3.1.9. Policy measure
We included a policy measure as an attribute in order to assess whether policy incentives may
stimulate AFV adoption. Three levels were included, i.e., current policy, free parking (e.g., Potoglou
and Kanaroglou, 2007), and access to bus lanes within the built up area.
3.2. Presentation, design and pilots
Information on the attributes and their levels was given to the respondent prior to the choice
tasks (see Appendix A). Each respondent was presented with eight choice tasks consisting of three
choice options each, and was asked to indicate his or her preferred choice. The order of the attributes
remained the same throughout all choice tasks. Prior to the eight choice tasks an example choice card
was shown. In this example we asked respondents to imagine that the moment had come when their
current car (i.e., the car in which they drive most frequently) would have to be replaced. Fig. 1 shows
Fig. 1. Choice card example (fuel type next car: petrol; catalogue price next car: D 21,000D 24,000).
285
an example of a choice card. Note that for the purpose of this paper we translated the original Dutch
wording to English. When moving the cursor over the question marks shown in the gure a pop-up
would appear containing the information on the attribute presented earlier in the survey.
We used the Sawtooth CBC software package to programme and eld the online questionnaire,
and also to generate the statistical design. The programme uses a randomised design strategy, and
produces a fractional factorial design that is as orthogonal as possible for each respondent. The most
often used design option in the program ensures that attribute levels are duplicated as little as possible within choice sets, a property called minimal overlap. Although this produces the most efcient
design in terms of main effects, a second design option allows for slightly more overlap between
attribute levels, thereby increasing efciency when attribute interaction effects are considered (see
Chrzan and Orme, 2000). Since we were assured a priori of a relatively large number of respondents,
a slight reduction in efciency on main effects was not considered to be a problem. Since interaction
effects were likely to be important, we opted for the design strategy with slight overlap between
attribute levels. Using this strategy we generated an alternative-specic statistical design, consisting
of 30 survey versions of 8 choice tasks each. Respondent were randomly assigned to one of the 30
versions. In order to test the resulting design we performed simulations using the expected number
of respondents. The D-efciency of our design was lower than but close to the D-efciency of the
complete enumeration design, main effects standard errors were all very acceptable, and increasing
the number of questionnaire versions further did not decrease the standard errors substantially.3 For
a comparison of the different Sawtooth design strategies with other well-known design strategies we
refer to Chrzan and Orme (2000).
Before elding the questionnaire a number of consultations, tests and pilots were carried out to
make sure questions were interpreted correctly and to check whether the attribute levels used would
reveal the interesting parts of the utility curves. Experts and policy makers were invited to comment
on the preliminary selection of attributes and attribute levels. This led to some changes in the questionnaire and the design of the stated choice questions. A test version was then prepared and sent to
approximately 20 experts and colleagues who commented on wording and general quality of the questionnaire. This led to additional improvements. Subsequently two consecutive pilots on small samples
of respondents were elded to nalise the testing phase; 52 respondents for pilot 1 and 51 respondents
for pilot 2. For the pilots respondents were drawn randomly from the panel of respondents that was
used for this study (see Section 3.3 for further details on this panel). The main objective of the pilots
was to test the usefulness of the attribute levels, and some additional questions were added following
the stated choice questions to determine at which level of a certain attribute respondents decided to
reject a choice option. Ranges of levels for the attributes catalogue price, monthly contribution and
policy tax were wide because we are interested in preferences under current circumstances as well as
under possible future price, cost and tax scenarios. Also their levels and those for fuel type and policy
measures were already changed due to comments in the consultation phase. Results from pilot 1 did
lead to changes in driving range of the electric and fuel cell car, and to additional detour time, because
results indicated that levels chosen were suboptimal in revealing possible non-linearities in utility.
Results from the second pilot showed more promising results, so we made no further changes to these
levels in our main study.
3.3. Data collection and data characteristics
For data collection we made use of a Dutch internet panel owned by TNS-NIPO. More specically,
respondents were selected from a separate automotive panel containing more than 40,000 households
with one or more car, approximately 4000 of which are company car drivers. The panel is established
through random sampling, implying that each member of society has an equal chance to be added to
the panel as long as he or she has conveyed the willingness to cooperate. In order to keep control over
representativeness of the panel, potential respondents are invited by TNS-NIPO to join the panel, and
one cannot join without an invitation. The automotive panel has several advantages above and beyond
Detailed simulation results for the statistical design used in this study are available upon request from the authors.
286
more general panels. Regular screenings of respondents reveal additional information on current car
type and car use and allow for a priori segmentations on fuel type, panel members are familiar with
automotive related questions improving the reliability of results, and respondents who fully complete
the questionnaire are paid for their efforts. We aimed for a net response of 450 respondents for both
petrol and diesel drivers. Too few LPG (Liqueed Petroleum Gas) drivers were present in the panel to
obtain reliable results, so we excluded them altogether.4 For both petrol and diesel the respondents
were selected using representative sampling. Since population statistics for the company car market
are unknown, TNS-NIPO does an annual screening on gender, age and residential location among 1000
of its company car respondents. The screening used for our sampling procedure took place in March
2011, and the resulting distributions were used as the standard for representative sampling on gender,
age and residential location. The nal version of the questionnaire was elded in two stages, the rst in
June/July 2011 and the second in October 2011. We added a selection question in the questionnaire in
order to disqualify those respondents that were not the main users of the company car and as such are
not likely to make the decisions on its replacement. Total response rate, including the respondents who
were disqualied, is 78%. This large response rate is probably the result of the specic panel that we
used for our data collection. We subsequently excluded respondents from our sample who indicated
that they had made random choices (around 4%).5 This resulted in 940 complete questionnaires, 458
for petrol and 482 for diesel drivers, and 7519 usable observations (1 observation was missing). Some
background characteristics for the 940 respondents are presented in Table 4. The distributions on
gender, age and residential location are similar to those obtained in the annual screening, although
males are slightly overrepresented in our sample.
4. Main effects and willingness-to-pay estimates
Although many complex choice models exist, the multinomial logit (MNL) is still the starting point
for any choice modelling analysis (Louviere et al., 2000). In this section we discuss results from a MNL
model with dummies for all attribute levels except for the nancial attributes, which are included
linearly.6 Estimation results are presented in Table 5, along with associated willingness-to-pay (WTP)
estimates, their standard errors, and marginal WTP estimates. WTP estimates are based on the estimated coefcient for Personal monthly contribution, and standard errors are obtained using the delta
method.7
Coefcients on catalogue price and on personal monthly contribution both have expected negative
signs and are highly statistically signicant. The coefcient on the policy tax is also negative and highly
statistically signicant, showing that the CO2 differentiation in the current company car taxation
system in the Netherlands affects the choices made by company car drivers. Since taxation systems in
many European countries have a very similar structure to that in the Netherlands (Naess-Schmidt and
Winiarczyk, 2010), and CO2 differentiation is already used in other countries as well (ACEA, 2012), this
nding has broad European relevance for policies aimed at stimulating AFV adoption and increasing
4
The share of LPG cars in the total company car eet in the Netherlands was around 3% in 2007 and around 2% in 2010. Shares
of LPG in company car sales in 2007 and 2010 were even lower than that (Ecorys, 2011).
5
After the choice tasks we asked respondents how they made their choices. They could choose one out of the following four
categories: (1) I based my choices on multiple attributes; (2) I based my choices on a single attribute; (3) I based my choices on
intuition; (4) I made my choices randomly. We excluded respondents who chose option 4.
6
We also estimated a nested logit model with conventional technology in a rst tree and all AFVs in a second tree. Estimates
and derived elasticities were very similar to their MNL counterparts, and the two nesting coefcients were both close to one.
Other nesting structures, e.g., with conventional technology, hybrid and exifuel in a rst nest and all other AFVs in a second
nest, gave comparable results. In conclusion, nested models do not appear to add much to our analyses.
7
We also estimated a model with a single cost coefcient based on total monthly costs, consisting of 1/12 of annual tax
costs, which is equal to catalogue price policy tax income tax percentage (equal to 42% with possibly a few exceptions),
plus the personal monthly contribution. The resulting coefcient on this cost variable is negative and statistically signicant as
expected. Using this total cost coefcient possibly provides a more sensible basis for calculating WTP estimates. However, with
a few exceptions, the resulting WTP estimates are very similar to the ones presented in Table 4. The downside of this alternative
model is that it has lower explanatory power, and that it does not explicitly show the impact of the policy tax on car choice. We
therefore decided to use the model presented in Table 4. Estimates from the alternative model and associated WTP estimates
are available upon request from the authors.
287
Table 4
Background characteristics for the 940 respondents.
Variable
Percentage share
Gender
Male
Female
87%
13%
Age category
Age 25
25 < age 35
35 < age 45
45 < age 55
55 < age 65
65 < age
0.01%
18%
36%
31%
14%
0.002%
Household size
1 person
2 persons
3 persons
4 persons
More than 4 persons
15%
25%
18%
29%
13%
Highest nished education

Primary school
Secondary school (level 1; lowest)
Secondary school (level 2)
Secondary school (level 3)
Secondary school (level 4; highest)
Bachelor
Master/PhD
Dont know/no response
0.005%
6%
5%
25%
11%
36%
16%
0.001%
Degree of urbanization
Non urbanised (less than 500 inhabitants/km2 )
Little urbanised (5001000 inhabitants/km2 )
Moderately urbanised (10001500 inhabitants/km2 )
Urbanised (15002500 inhabitants/km2 )
Very urbanised (2500 or more inhabitants/km2 )
13%
18%
27%
27%
15%
CO2 efciency. Later on in this section we assess to what extent the policy tax may be an effective tool
to stimulate AFV adoption in the company car market.
Dummy variables in our model were chosen such that AFV constants represent AFVs with lowest range, highest recharge/refuelling times and detour times, and lowest number of brands/models,
thereby representing as much as possible the current situation. Constant for all AFVs are negative, i.e.,
the conventional technology is the most preferred car given current AFV characteristics and current
refuelling infrastructure. Negative preferences are largest for the electric car, which is plausible given
its driving range limitations and long recharge time. The fuel cell car is the 2nd least preferred car type
followed by the plug-in hybrid, the exifuel and the hybrid car.
On average respondents are willing to pay substantial amounts of money for increases in driving
range, both for the electric and the fuel cell car. It is also interesting to note that marginal WTP per
driving range kilometre for the electric car is practically constant, which is in contrast to ndings for
private car owners (Dimitropoulos et al., 2013). Marginal WTP per driving range kilometre for the fuel
cell car appears to be slightly decreasing. WTP estimates for reductions in recharge/refuelling times
and for additional detour time are also large, and strong non-linear effects can be observed. Marginal
WTP values are especially large below approximately 30 min.8
8
The pattern for the plug-in hybrid car is somewhat erratic, but note that the rst two dummy coefcients are statistically
insignicant at the usual critical signicance levels. Although marginal WTP increases when refuelling times decrease, this does
not hold for a further reduction in refuelling time of the fuel cell car from 10 to 2 min.
288
Table 5
MNL estimation results and associated WTP and marginal WTP values (in Euro per month).
Attributes
Coefcient
Standard
error
WTP
Standard
error
Marginal
WTP
Car type constants

Hybrid car
Electric car
Plug-in hybrid car
Flexifuel car
Fuel cell car
0.682**
4.224**
1.619**
1.160**
2.750**
0.079
0.158
0.109
0.085
0.123
D
D
D
D
D
D
D
D
D
D
Driving range electric car

75 km 150 km
75 km 250 km
75 km 350 km
0.244
0.620**
0.933**
0.130
0.125
0.121
D 93
D 237**
D 357**
D 49.6
D 48.1
D 47.5
D 1.24
D 1.44**
D 1.20**
per km
per km
per km
Driving range fuel cell car

250 km 350 km
250 km 450 km
250 km 550 km
0.293**
0.575**
0.812**
0.089
0.083
0.088
D 112**
D 220**
D 311**
D 34.3
D 33.0
D 35.8
D 1.12**
D 1.08**
D 0.91**
per km
per km
per km
Recharge time electric car

8 h 2.5 h
8h1h
8 h 30 min
0.401**
0.504**
0.595**
0.123
0.123
0.127
D 154**
D 193**
D 228**
D 47.3
D 47.0
D 49.1
D 0.47**
D 0.44
D 1.16
per min
per min
per min
Recharge time plug-in hybrid car

3h1h
3 h 35 min
3 h 20 min
0.172
0.145
0.415**
0.126
0.129
0.126
D 66
D 55
D 159**
D 48.5
D 49.3
D 48.7
D 0.55
D 0.41
D 6.88*
per min
per min
per min
Refuelling time fuel cell car

25 min 15 min
25 min 10 min
25 min 2 min
0.152
0.415**
0.405**
0.087
0.085
0.087
D 58
D 159**
D 155**
D 33.3
D 33.2
D 34.0
D 5.82
D 6.72**
D 0.50
per min
per min
per min
Additional detour time

30 min 15 min
30 min 5 min
30 min No detour time
0.268**
0.422**
0.572**
0.066
0.067
0.066
D 103**
D 161**
D 219**
D 25.5
D 26.2
D 26.5
D 6.83**
D 5.90*
D 11.4*
per min
per min
per min
Number of available brands/models

1 10
1 50
1 200
0.186**
0.239**
0.321**
0.048
0.047
0.047
D 71**
D 91**
D 123**
D 18.3
D 18.4
D 18.6
D 7.92**
D 0.50
D 0.21
per model
per model
per model
Policy measures
Free parking
Access to bus lanes
0.104*
0.016
0.043
0.044
D 40*
D 6
D 16.6
D 17.0
Financial attributes
Policy tax (in %)
Personal monthly contribution (in D )
Catalogue price (in 1000 D )
NOBS
Log-L
Pseudo R2 (adjusted)
0.039**
0.003**
0.033**
7519
6259
0.241
0.003
0.000
0.004
261**
1616**
619**
444**
1052**
31.5
81.8
47.8
36.3
62.2
**, * = statistically signicant at 1% and 5%, respectively.
The willingness to pay for model availability suggest that increasing the supply and diversity of
AFVs may have a considerable effect on AFV adoption. Marginal WTP for model availability does
decrease rapidly, implying that some choice is highly preferred to no or very limited choice, but that
the additional value of a large amount of choice is limited. With respect to government incentives,
free parking has a positive effect on preferences, although the effect is small. The effect of allowing
access to bus lanes within the built-up area is close to zero. Of course, when people do not live in areas
289
Table 6
WTP estimates (in Euro per month) for the current situation and with maximal AFV improvements, and with and without
current policy tax incentives (standard errors in brackets).a
No tax incentives
Hybrid
Electric
Plug-in hybrid
Flexifuel
Fuel cell
Current tax incentives
AFV
current
AFV
improved
AFV
current
AFV
improved
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
D
(D
261**
31.5)
1616**
81.8)
619**
47.8)
444**
36.3)
1052**
62.2)
138**
30.7)
943**
66.4)
338**
40.4)
102**
31.8)
464**
42.9)
97**
29.3)
1243**
71.8)
455**
44.2)
280**
31.1)
525**
46.4)
26
29.8)
571**
58.1)
174**
38.8)
61*
28.8)
91*
40.0)

a
WTP estimates are excluding differences in catalogue price, personal monthly contribution and policy incentives other than
tax incentives. For the electric car we assume a reduction in recharge time from 8 to 1 h.
where buses have separate bus lanes and where parking is already free, these government incentives
will have no effect. It may therefore be more interesting to assess the effects of these incentives within
cities, where trafc congestion is large and parking close to home is generally expensive.
In order to assess the overall impact of potential improvements in AFV characteristics and
recharge/refuelling infrastructure we present in Table 6 WTP estimates for AFVs in the current situation and in the situation where maximal improvements are made in terms of driving range,
recharge/refuelling time, additional detour time, and number of available models. We also include
WTP estimates for situations with and without current tax incentives in the Netherlands.9 The table
shows that compensations required for AFVs decrease when technological and infrastructure improvements are made, but that for all AFVs these compensations remain negative and statistically signicant,
indicating that there are intrinsic negative utilities for AFVs compared to the conventional technology.
Current tax incentives in the Netherlands have a strong effect on preferences of company car drivers.
Assuming that the number of available models for the hybrid and exifuel car increases, and that
fuel availability for the exifuel car is improved such that people would not have to make detours
for refuelling their car, these two car types would on average even be preferred to the conventional
technology under current policy taxes, although the positive WTP for the hybrid car is statistically
insignicant (and assuming equal catalogue price and personal monthly contribution, see also note to
Table 6). Market potential for these car types may therefore be substantial in the short to medium run.
Under current taxes and assuming maximum improvements, the compensation required for the fuel
cell car is also relatively small, although still negative and statistically signicant. The technological
and infrastructure improvements needed for the fuel cell car are, however, far more substantial than
for the hybrid and exifuel car. Market potential of fuel cell cars is therefore likely small in the short
and medium run.
For robustness purposes we compare WTP estimates from linear MNL and mixed logit (ML) models. For the ML model we estimate parameter distributions on all attributes except the monetary ones
(policy tax, catalogue price and personal monthly contribution). For the simulations we use a maximum of 150 iterations and 2000 Halton draws from a triangular distribution for continuous attributes,
and from a uniform distribution for dummy coded attributes (i.e., the ve AFV constants and the two
9
Policy taxes in the Netherlands at the time the questionnaire was elded favoured AFVs. Specically, the tax level for the
conventional technology was 25%, the tax level for hybrid, exifuel and plug-in hybrid vehicles was equal to 14%, and the tax
level for the electric and fuel cell vehicles was equal to 0%.
290
Table 7
WTP estimates (in Euro per month) from linear MNL and ML models.
Attributes
WTP: MNL
WTP: ML means
WTP: ML standard
deviations
Hybrid
Electric
Plug-in hybrid
Flexifuel
Fuel cell
Driving range electric (per km)
Driving range fuel cell (per km)
Recharge time electric (per min)
Recharge time plug-in (per min)
Refuelling time fuel cell (per min)
Additional detour time (per min)
Number of available models (per model)
Free parking
Access to bus lanes
D
D
D
D
D
D
D
D
D
D
D
D
D
D
D 200**
D 1328**
D 432**
D 186**
D 890**
D 1.26**
D 1.08**
D 0.73*
D 1.02**
D 7.98**
D 6.70**
D 0.39**
D 34.8*
D 3.31
D
D
D
D
D
D
D
D
D
D
D
D
D
D
215**
1228**
453**
195**
890**
1.26**
1.08**
0.45**
0.79**
7.61**
6.70**
0.42**
39.4*
5.22
3.15
942**
367**
400**
471**
0.81
0.60
1.97**
4.97**
26.3**
13.9**
1.72**
177**
22.9
policy measures).10 WTP estimates for the ML model are calculated using the means of the distribution
only, but we also present WTP equivalents of the estimated standard deviations in order to get some
insight into preference heterogeneity. Results are presented in Table 7.
Mean WTP estimates for the two models are very similar, although ML estimates for
recharge/refuelling time are somewhat higher than their MNL counterparts. The MNL results discussed in Tables 4 and 5 are therefore largely robust to the model chosen. From the WTP equivalents
of the ML standard deviations (not to be confused with standard errors) it is also clear that preference heterogeneity for most attributes is large and statistically signicant. Exceptions are the standard
deviations of the hybrid car constant, of electric and fuel cell car driving range, and of the access to bus
lanes policy measure, which are insignicant. For these attributes preference heterogeneity appears
to be low.
5. Comparison with private car market estimates
To our knowledge this is the rst study that explicitly addresses AFV preferences of company car
drivers, which makes it difcult to compare our WTP estimates to estimates from the literature. We
therefore use results of a similar choice experiment among private car owners in the Netherlands in
order to compare our company car results with those for the private car market. The cost structure
of owning a private car is very different from that of owning a company car. Specically, catalogue
prices on the company car market are converted into annual costs through the policy tax, which
does not exist on the private market. On the private car market purchase prices represent high but
one-time upfront costs, resulting in car choice decisions that are clearly differently from those on
the company car market. Furthermore, monthly costs in the private car choice experiment consist of
car type specic maintenance and fuel costs, whereas on the company car market they consist of a
generic (i.e., not car type specic) personal monthly contribution to the employer. Other attributes and
attribute levels in the private car choice experiment were identical to the ones used in the company
car choice experiment.11 For details on the private car choice experiment and its results we refer to
Hoen and Koetse (2014).
10
The uniform distribution is the standard distribution to draw from for binary variables (Hensher et al., 2005, p. 612). We
also estimated a ML model drawing from a normal distribution for the continuous attributes, and the results are very similar.
Full mixed logit results are available upon request from the authors.
11
In the private car experiment an additional policy measure was included, i.e., the abolishment of annual road tax exemptions
for AFVs. These annual road tax exemptions do not exist on the company car market.
291
Fig. 2. Monetary compensations required for AFVs, and 95% condence intervals, for company and private car drivers.
On the data obtained from the private car choice experiment we estimate a MNL model using
a model specication that is almost identical to the company car model specication; differences
between the models are the policy tax variable in the company car model and an additional policy
measure in the private car model. In the private car experiment we distinguished between car owners
who report that their next car will be a new car and those who report their next car will be a secondhand car. In the choice experiment this affected the purchase price, the AFV purchase price mark-up,
and monthly maintenance costs. For our purposes in this paper we exclude the choice data for secondhand cars because company cars are (almost) always new cars and we want to make the samples as
comparable as possible. Identical to the company car analysis we exclude respondents who indicated
to have chosen randomly. This results in 5806 observations for our private car analysis. The adjusted
R2 of the private car model is equal to 0.266, which is comparable to that of the company car model.12
Since catalogue/purchase prices represent two very different entities on the private and the company
car market, the monthly cost attribute is arguably most suitable for comparing WTP estimates between
the two experiments. Still, comparing the WTP gures in terms of their absolute magnitudes should be
done with caution, for two reasons. First, monthly cost in the private car analysis is car-type specic,
whereas the personal monthly contribution in the company car experiment is not. This implies that
variation in the attribute levels for each car type in the two experiments is different. Second, the
manner in which the monthly costs are paid for is different for private car and company car drivers;
private car owners pay for their maintenance and fuel costs out of pocket, while the personal monthly
contribution for company car drivers is included in their monthly net salary.
We compare WTP estimates for the company car sample with those for the private car sample, and
test whether the differences between estimates are statistically signicant using the test developed
by Poe et al. (2005). Compensations required for AFVs (WTP equivalents of AFV specic constants)
for company and private car drivers, along with 95% condence intervals, are presented in Fig. 2. The
patterns for company and private car drivers are fairly similar, with largest compensations required
for electric cars and fuel cell cars, followed by plug-in hybrid and exifuel cars, and the smallest
compensation required for hybrid cars. Note that compensations for electric and fuel cell cars are
quite similar, but that compensations for plug-in hybrid, exifuel and hybrid cars are much smaller
for company car drivers than for private car owners (around 30% smaller for plug-in hybrid and exifuel
cars and around 40% smaller for hybrid cars). Poe test show that the differences in compensations for
the electric and fuel cell car are statistically insignicant at the usual critical levels, but that differences
for the hybrid, plug-in hybrid and exifuel are statistically signicant at 5%.
A possible explanation for this nding, especially in the case of hybrid cars but possibly extending
to exifuel and plug-in hybrid cars as well, is that due to the favourable conditions for hybrid cars on
the company car market, hybrid car sales gures have been relatively high on the company car market
12
Other differences between the private car estimates reported in this paper and those presented in Hoen and Koetse (2014)
are that the latter reports estimates from a mixed logit model that is linear in its attributes and contains WTP estimates based
on the purchase price.
292
Fig. 3. WTP for driving range of electric and fuel cell cars for company and private car drivers (closed marker = statistically
signicant at 5%; open marker = statistically insignicant at 5%).
compared to the private car market. Arguably this has increased familiarity with the technology and
reduced uncertainty about the performance of the technology on the company car market more than
one the private market. However, since hybrid car drivers were not included in either of the two
experiments, actual experience in using the technology cannot explain this result. Our ndings may
therefore reect indirect effects of higher sales gures on the company car market than on the private
car market. Still, they suggest that intrinsic negative preferences for a new technology decrease when
a technology is actually sold on the market and familiarity with the technology has increased.
Willingness to pay estimates for increases in driving range of electric and fuel cell cars for company
and private car drivers are presented in Fig. 3. The gure shows that the WTP curve for company car
drivers is as good as linear, both for electric and fuel cell cars. Private car patterns are more erratic. The
fuel cell car WTP curve for private car drivers appears to display decreasing marginal WTP for increasing
driving ranges, with the exception that an increase from 250 to 350 km is negative and statistically
insignicant, and therefore appears to have no extra added value. The WTP for driving range of the
electric car displays an even stronger decreasing marginal WTP when driving range increases. The
linear WTP curve for driving range for company car drivers therefore appears to be in contrast with
decreasing marginal WTP found in our private car study, and in most other private car AFV studies
(Dimitropoulos et al., 2013). In terms of absolute magnitude the evidence is somewhat mixed. WTP
for increases in driving range of the electric car is higher for private than for company car drivers,
and Poe tests show that all differences are statistically signicant at least at 10%. Company car drivers
appear to have higher WTP for driving range increases of the fuel cell car, although Poe tests show
that only the difference in WTP for 350 km is statistically signicant (at 5%). Still, our results suggest
that company car drivers marginal WTP for driving range is higher (lower) than that of private car
owners when driving ranges are high (low).
WTP for recharge/refuelling time for company and private car drivers are plotted in Fig. 4. Although
the patterns are very similar, willingness to pay for reductions in recharge/refuelling times of the
electric and plug-in hybrid car are higher for private car owners than for company car drivers. This is
somewhat surprising since the value of time should, on average, be higher for company car drivers. Poe
tests reveal that for these two car types none of the differences between company and private car WTP
estimates are statistically signicant. WTP for refuelling time reductions of the fuel cell car are higher
for company than for private car drivers, and according to Poe tests these differences are statistically
signicant at 5%. The results therefore suggest that compared to private car owners company car
drivers are mainly willing to pay for recharge/refuelling time reductions when refuelling times are
already relatively low (at least on the scale presented in Fig. 4).
Company car drivers and private car owners appear to have a very similar WTP for a maximum
reduction in additional detour time, but the patterns leading up to that value are somewhat different
for company and private cars (see Fig. 5). Private car drivers put the highest marginal value on detour
time reductions when detour times are high, and display strong decreasing marginal WTP when detour
times get smaller. In contrast, company car drivers have lower marginal WTP than private car drivers
293
Fig. 4. WTP for reductions in recharge/refuelling time of electric, plug-in hybrid and fuel cell cars for company and private car
drivers (closed marker = statistically signicant at 5%; open marker = statistically insignicant at 5%).
Fig. 5. WTP for reductions in additional detour time to reach a refuelling station for electric, exifuel and fuel cell cars for
company and private car drivers (closed marker = statistically signicant at 5%; open marker = statistically insignicant at 5%).
when detour times are high, but a higher marginal WTP for detour time reductions when detour
times are low. Poe tests conrm these results: the difference in WTP for a reduction in detour time to
15 min is statistically signicant at 5%, the difference in WTP for a reduction in detour time to 5 min
is statistically signicant at 10%, and the difference in WTP for a reduction in detour time to 0 min
is insignicant. Different stages of development of recharge/refuelling infrastructure may therefore
have different consequences for AFV adoption in the private and company car market.
With respect to choice and diversity of supply, as measured by the number of brands/models on
the market, company car drivers clearly have a higher willingness to pay than private car drivers (see
Fig. 6), although Poe tests show only the difference in WTP for 200 models is statistically signicant at
10%.13 Both company and private car drivers have strong decreasing marginal WTP when the number
of brands/models increases. This implies that supply effects may be expected in the short to medium
run when more and more models are provided on the market, that this effect is stronger on the
company car market than on the private market ceteris paribus, and that these supply effects become
much smaller when the market starts to mature.
Finally, WTP estimates for access to bus lanes in the built-up area are positive but statistically
insignicant in both models, suggesting that this particular policy measure, on average, will not contribute much to AFV adoption. The WTP estimate for free parking is higher for private car owners than
for company car drivers. It is difcult to assess whether these differences reects actual differences
in preferences or differences in sampling. For example, respondents living in urbanised areas appear
to have a higher WTP for free parking (see also next section), so differences in WTP between the two
13
Results from all Poe et al. (2005) tests discussed in this paper are available upon request from the authors.
294
Fig. 6. WTP for an increase in number of AFV brands/models for company and private car drivers (closed marker = statistically
signicant at 5%; open marker = statistically insignicant at 5%).
samples may simply reect differences in the share of respondents that currently pays for parking
their car close to home.
In conclusion, our ndings show that willingness to pay estimates for AFV improvements, and the
patterns therein, are considerably different on the two markets. This implies that company and private
car drivers may react (very) differently to future technological AFV improvements and increasing fuel
availability. Specically, private car owners appear to have higher WTP than company car drivers
for technological improvements and increased fuel availability in the short run where driving range,
refuelling times and fuel availability are far more favourable for the current technology. Our ndings
therefore suggest that improvements in AFV technology and fuel availability in the short run may
have more effect on sales in the private car market than in the company car market, ceteris paribus.
However, if in the medium to longer run substantial technological and infrastructure improvements
have been made, marginal WTP for additional improvements will be higher for company car drivers
than for private car owners. Relative sales increases may therefore be larger for the company car
market than for the private market in the medium to longer run.
Ultimately, however, comparing the market potential of AFVs on the private and the company
car market is difcult because of the many uncertainties involved. For example, large uncertainties
exist with respect to the technological improvements that are possible in the future, but also future
sales prices and fuel costs are highly uncertain. In order to account for these uncertainties AFV market
shares for the two markets would have to be computed for many possible scenarios, likely resulting in
widely varying insights under different future scenarios. Even more worrying in this respect is the possibility of changing preferences over time. Especially intrinsic negative AFV preferences may decrease
rapidly over time due to increased experience and familiarity with AFV technologies and reductions
in uncertainty with respect to technology performance. These changes may be very different for the
private car market than for the company car market. In due time more data on AFV sales and individual (revealed) preferences will become available, allowing for a comparison with and a calibration of
our stated preference insights. These issues are beyond the scope of this paper and we leave them for
further research.
6. Potential early adopters
The mixed logit results presented in Section 4 show that preference heterogeneity on many of the
attributes is large and statistically signicant at the usual critical signicance levels, but they do not
reveal the underlying sources of heterogeneity. Estimating a latent class model would shed light on
the preferences of company car drivers in different segments of the company car market. However, our
main purpose is to assess the characteristics of people that can be identied as potential early adopters.
Estimating a latent class model does not achieve this purpose. We therefore estimate a MNL model
with interactions between car attributes and respondent background and car use characteristics. Initial
model estimations show that many characteristics matter to a certain extent. For example, when the
295
company car is the second car in the household, which does not occur very often (approximately
5% in our sample), preferences for the electric car are far less negative and WTP for increases in
driving range is close to zero. When checking statistics for this group we observe that it consists
of people with a relatively limited annual mileage, who live at relatively short distances from their
work, and of which more than 15% does not or very rarely commute to work by car. Under these
circumstances, low driving range apparently is not much of a limitation. Free parking was shown
previously to have a limited effect on preferences, but turns out to have a large effect on choices made
by people who live in very urbanised areas and have to pay to park their car close to home. In our nal
model specication, however, we decided to focus on the factor that turns out to be very powerful in
explaining heterogeneity for electric and fuel cell car preferences, i.e., the annual number of kilometres
driven, hereafter referred to as annual mileage. In our survey, respondents were asked to indicate their
annual mileage by selecting one of six categories. We created dummies for each of these six categories,
which were subsequently interacted with the electric and fuel cell constants, electric and fuel cell car
driving range, and with the monthly cost attribute (other mileage interactions turned out to not to
matter). Estimation results are presented in Table 8.
The results clearly show that annual mileage has substantial effects on preferences of company
car drivers: it decreases preferences for the electric and fuel cell car and increases preferences for
driving range.14 This nding is explained by the fact that people who drive more run into problems
of limited driving range more often. Because kilometres driven during a single day will more often
exceed maximum driving range for people with a high annual mileage, recharging would have to take
place not only at the end of the day but also somewhere in-between trips. Limited fuel availability and
long recharge/refuelling times are therefore likely limiting factors as well. Another interesting result
is that annual mileage increases sensitivity to personal monthly contribution.
These ndings are essential for identifying potential early adopters of electric and fuel cell cars.
However, future developments on driving range are uncertain, and will to a large extent depend on
battery costs developments. Also future company cost structures for the conventional technology and
alternative fuel vehicles are highly uncertain, since they depend on developments of relative catalogue
and fuel prices. It is therefore difcult to make a priori inferences about which annual mileage group
is more likely to adopt an electric or fuel cell car in the future. We therefore have to rely on market
share simulations to shed more light on this issue.
We simulate market shares for each of the six distinguished car types and for six annual mileage
categories, using the standard MNL model and the parameters presented in Table 8.15 We use attribute
values that resemble the current situation as closely as possible, but within the ranges of the attribute
levels used in our choice experiment. Specically, the catalogue price of the conventional technology
we arbitrarily set at D 20,000, and we assume the maximum price mark-up of D 10,000 for electric
and fuel cell cars, and a mark-up of D 5000 for hybrid, plug-in hybrid and exifuel cars. The personal
monthly contribution for all cars except the electric and fuel cell car is arbitrarily set at D 200. Policy
taxes are set at their current policy levels, i.e., the maximum of 25% for the conventional technology,
14% for hybrid, plug-in hybrid and exifuel cars which are more CO2 efcient than the conventional
technology, and 0% for electric and fuel cell cars as these are zero-emission vehicles. Driving ranges
of the conventional technology and the hybrid, plug-in hybrid and exifuel car were not varied in the
design and are subsumed in the car type constants. Recharge/refuelling times for the electric, plug-in
hybrid and fuel cell car are kept constant at their approximate current values of 8 h, 3 h and 5 min,
respectively. Additional detour time for the fuel cell and exifuel car is set at the maximum value of
30 min, and an 8 h recharge time for the electric car implies recharging at home, so detour time is
set at zero. The number of models for all AFVs is set equal to one, and we assume that no additional
14
In the private car choice experiment we also nd substantial effects of annual mileage on the electric and fuel cell car
constant and on the preferences for driving range of the electric car, but no effects on preferences for driving range of the fuel
cell car and monthly costs (see Hoen and Koetse, 2014).
15
Parameters are constant for each of the six annual mileage groups for the conventional technology and the hybrid, plug-in
hybrid and exifuel car, and for the electric and fuel cell car they differ between annual mileage groups with respect to the
car type constants, driving range and personal monthly contribution. Full market share simulations are available upon request
from the authors.
296
Table 8
MNL estimation results for a model specication with annual mileage (AM) interaction effects.
Hybrid
Electric (AM < 7500 km)
Electric (7500 km < AM < 15,000 km)
Electric (15,000 km < AM < 25,000 km)
Electric (25,000 km < AM < 35,000 km)
Electric (35,000 km < AM < 45,000 km)
Electric (AM > 45,000 km)
Plug-in hybrid
Flexifuel
Fuel cell (AM < 7500 km)
Fuel cell (7500 km < AM < 15,000 km)
Fuel cell (15,000 km < AM < 25,000 km)
Fuel cell (25,000 km < AM < 35,000 km)
Fuel cell (35,000 km < AM < 45,000 km)
Fuel cell (AM > 45,000 km)
Driving range electric (AM < 7500 km)
Driving range electric (7500 km < AM < 15,000 km)
Driving range electric (15,000 km < AM < 25,000 km)
Driving range electric (AM > 45,000 km)
Driving range fuel cell (AM < 7500 km)
Driving range fuel cell (7500 km < AM < 15,000 km)
Driving range fuel cell (15,000 km < AM < 25,000 km)
Driving range fuel cell (AM > 45,000 km)
Recharge time electric
Recharge time plug-in
Refuelling time fuel cell
Number of available models
Free parking (reference category)
Access to bus lanes
Personal monthly contribution (in D ) (AM < 7500 km)
Personal monthly contribution (in D ) (7500 km < AM < 15,000 km)
Personal monthly contribution (in D ) (15,000 km < AM < 25,000 km)
Personal monthly contribution (in D ) (AM > 45,000 km)
Catalogue price (in 1000 D )
Policy tax (in %)
NOBS
Log-L
Pseudo R2 (adjusted)
Coefcient
Standard error
0.5608**
1.8563**
2.7098**
2.9697**
3.2725**
3.3092**
3.4841**
1.1787**
0.5082**
1.2862
1.9364**
2.1582**
2.2543**
2.2864**
2.7172**
0.0013
0.0022
0.0034**
0.0035**
0.0037**
0.0033**
0.0009
0.0019
0.0029**
0.0027**
0.0027**
0.0035**
0.0012**
0.0020**
0.0199**
0.0174**
0.0011**
0.1019*
0.0150
0.0013
0.0017**
0.0026**
0.0026**
0.0027**
0.0028**
0.0338**
0.0388**
7519
6250
0.243
0.0735
0.5158
0.3472
0.2368
0.2193
0.2230
0.2249
0.0835
0.0733
0.7466
0.4608
0.2786
0.2535
0.2612
0.2494
0.0023
0.0014
0.0009
0.0008
0.0008
0.0008
0.0017
0.0011
0.0006
0.0005
0.0006
0.0005
0.0002
0.0007
0.0036
0.0020
0.0002
0.0426
0.0441
0.0007
0.0004
0.0002
0.0002
0.0002
0.0002
0.0044
0.0026
policy measures are in place for any of the AFVs. Attribute values described above are kept constant
in our simulations, but we systematically vary the personal monthly contributions and the driving
ranges of the electric and fuel cell car. The personal monthly contribution for the electric and fuel
cell car is varied between D 0 and D 400 with increments of D 100, electric car driving range takes
on values of 75, 150, 250 and 350, and fuel cell car driving range takes on values of 250, 350, 450
and 550.16 Attribute values used for the simulations are summarised in Table 9. Using ve personal
16
The personal monthly contribution for the electric and fuel cell car were equal within a single simulation, so combinations
of, for example, D 100 for the electric car and D 300 for the fuel cell car were not tested. Driving ranges of the electric and fuel
cell car were also combined according to magnitude, i.e., 75/250, 150/350, 250/450 and 350/550.
297
Table 9
Attribute values used for market share simulations (in bold the attribute levels that are varied systematically).
Catalogue price
Personal monthly contribution
Policy tax
Driving range
Recharge/refuelling time
Number of available models
Policy measure
Conventional Hybrid
technology
Plug-in
hybrid
Flexifuel
Electric
Fuel cell
D 20,000
D 200
25%
D 25,000
D 200
14%
3h
1
Current
policy
D 25,000
D 200
14%
30 min
1
Current
policy
D 35,000
D 0 - D 400
0%
75350 km
8h
0 min
1
Current
policy
D 35,000
D 0 - D 400
0%
250550 km
5 min
30 min
1
Current
policy
D 25,000
D 200
14%
1
Current
policy
monthly contribution scenarios and four driving range scenarios we end up with 20 sets of market
share simulations.
Since we are primarily interested in the electric and fuel cell car we do not discuss market shares
of the other four cars. Also discussing market share simulation results for six annual mileage groups
would complicate the presentation of results without having much added value, so we only present
and discuss results for the highest (>45,000 km) and lowest (<7500 km) annual mileage categories
for the electric and fuel cell car. In Fig. 7, we present simulated market shares of the electric car for
the two mileage categories for each of the 20 scenarios. Note that the absolute market share values
depend considerably on the values presented in Table 9, which are uncertain to a large extent, and on
the estimated fuel type constants, which have not been calibrated with real world data. Market shares
should therefore not be interpreted as actual predictions, especially when considering the short and
medium run, but the patterns that emerge are interesting. Most relevant for our purposes is that market
shares for people with a relatively low annual mileage are larger in magnitude than market shares for
people with a relatively high annual mileage. These differences increase when the personal monthly
contribution of electric and fuel cell cars increase compared to the personal monthly contribution of
other cars, because people who drive more are more sensitive to the personal monthly contribution.
The differences decrease when driving range increases, because people who drive more have a higher
WTP for driving range. In the end, people with a relatively low annual mileage are more likely to
adopt than people with a relatively high annual mileage in all cases, i.e., regardless of driving range
and personal monthly contribution.
Results for the fuel cell car are presented in Fig. 8. Market shares are higher than for the electric
car, which is mainly due to the longer driving range and shorter refuelling time of the fuel cell car. The
patterns found are otherwise comparable to those found for the electric car, with some interesting
exceptions. In those situations with relatively low personal monthly contribution and large driving
Fig. 7. Market shares of electric cars (on the y-axis) for people with annual mileage < 7500 km (grey cylinder) and annual
mileage > 45,000 km (black cylinder), for four driving range scenarios (on the x-axis) and ve personal monthly contribution
scenarios (on the z-axis).
298
Fig. 8. Market shares of fuel cell cars (on the y-axis) for people with annual mileage < 7500 km (grey cylinder) and annual
mileage > 45,000 km (black cylinder), for four driving range scenarios (on the x-axis) and ve personal monthly contribution
scenarios (on the z-axis).
ranges, people with a high annual mileage are more likely to adopt a fuel cell car than people with a
low annual mileage.
In conclusion, we nd that in the short and medium run company car drivers with a relatively low
annual mileage have a higher probability of adopting electric and fuel cell cars than those with a relatively high annual mileage. However, this does not necessarily imply that policies that try to stimulate
electric or fuel cell car adoption should target people with a low annual mileage. Especially in the company car market the share of drivers with a low annual mileage is limited. In terms of absolute numbers
there clearly is a trade-off between a higher probability of adoption within low mileage groups, and
higher market shares of higher mileage groups. Unfortunately, although the average annual mileage
of company car drivers is known for the Netherlands, the distribution of company car drivers over
different annual mileage groups is not, implying that the net effect is difcult to assess.
7. Conclusions
In this paper, we present results of a choice experiment on preferences of Dutch company car drivers
for AFVs and AFV characteristics. Assuming current AFV characteristics, results show that on average
the conventional technology is preferred to AFVs, especially in case of electric and fuel cell cars. Limited
driving ranges, long recharge/refuelling times, and limited availability of refuelling opportunities,
are to a large extent responsible for this. Average preferences for AFVs increase considerably when
maximal improvements on these aspects are made, in the range of 4080% depending on the AFV
type. The current tax regime, which favours cleaner technologies, also increases AFV preferences to a
large extent, in the range of 2560% depending on the AFV type. Assuming equal prices and personal
monthly contribution, our ndings suggest that under the current tax regime company car drivers
would, on average, even prefer the hybrid and exifuel car over the conventional technology, given
a modest increase in model availability for both car types and a substantial improvement in terms of
fuel availability for the exifuel car. Average preferences for fuel cell vehicles are also relatively close
to those of the conventional technology, but in this case substantial improvements are also needed
with respect to driving range and refuelling time. Negative preferences for the electric and plug-in
hybrid car remain large, even under the current tax regime that offers considerable tax advantages for
these two car types.
In any case, the CO2 differentiation in the policy tax system in the Netherlands appears to be an
effective tool to stimulate AFV adoption. This not only holds for the company car market but for the
private car market as well, since most company cars are sold after 3 or 4 years at the second hand
private market. Moreover, since company car taxation systems in many European countries are very
similar to the Dutch system, this nding has relevance for policies aimed at stimulating AFV adoption
and increase CO2 efciency at a European scale.
When comparing our company car estimates with those from a similar choice experiment among
private car drivers, we nd that willingness to pay patterns for AFV improvements are considerably
299
different on these two markets. More specically, our ndings show that in the short run technological
improvements and increased fuel availability have more substantial effects on sales gures in the
private market, ceteris paribus. When initial and potentially large improvements have taken place,
WTP for additional technological and fuel availability improvements is higher for company car drivers.
This suggests that initial improvements in AFV technology and infrastructure may affect AFV sales
especially on the private market, while additional improvements that are expected in the medium to
long run may have more substantial effects on sales in the company car market.
Preferences for the electric and fuel cell car depend to a large extent on the number of miles driven
annually (annual mileage). Specically, annual mileage decreases preferences for the electric and fuel
cell car, increases driving range preferences, and increases cost sensitivity. Since future developments
on these issues are highly uncertain, we perform market share simulations to identify potential early
adopters. Results show that differences in predicted market shares between annual mileage categories are large in most cases, that they increase when the personal monthly contribution of electric
and fuel cell cars increase relative to the personal monthly contribution of other cars, and that they
decrease when driving range increases. Ultimately, electric car market shares are higher for people
with a relatively low annual mileage, regardless of driving range and differences in personal monthly
contribution. Findings for the fuel cell car are similar, although when driving range is large and personal monthly contribution for the fuel car are relatively low, market shares are higher for people
with a high annual mileage. Potential early adopters can therefore be found among people with a relatively low annual mileage, especially in the short and medium run in which driving ranges are likely
to remain limited. In terms of absolute gures, however, adoption potential in low annual mileage
groups is likely limited because of their limited market shares.
Acknowledgements
We gratefully acknowledge comments by Rogier Kuin of BOVAG on a rst draft of the choice experiment and assistance by Kelvin van der Doe of TNS-NIPO in the data collection process. We thank
Gregory Poe, Richard Horan and two anonymous reviewers whose comments and suggestions have
led to substantial improvements in the paper.
Appendix A. Descriptive texts on attributes as presented to respondents
A.1. Car type
Full electric: a car that is set in motion by an electric motor. Batteries provide the electric motor with
energy, and must be recharged when they are empty. Electricity obtained from a socket is suitable for
recharging the car.
Fuel-cell: also called hydrogen car. A car that requires to be fuelled with hydrogen. In the car the
hydrogen is converted into electricity with fuel cells, and an electric motor sets the car in motion.
Plug-in hybrid: a car with both a petrol or diesel engine and batteries. The batteries can be charged
with a plug and the car drive several tens of kilometres solely on electricity. When the batteries are
empty the car will switch to using petrol/diesel. It is thus also possible to drive solely on petrol/diesel.
Flexifuel: a car that, besides petrol or diesel, can drive completely on biofuels (fuels manufactured
from biological materials). These fuels may be biodiesel, bioethanol (comparable to petrol) or biogas
(comparable to natural gas).
Hybrid: a car with batteries but without a plug. The engine in the car charges the batteries during
driving, and braking energy is also used for charging the batteries. A hybrid can drive several kilometres
solely on electricity.
A.2. Policy tax
The tax addition for the private use of your company car. A higher policy tax results in higher
additions to your monthly salary over which you pay income tax.
300
A.3. Personal monthly contribution

The amount you pay to your employer for using your company car. This amount is subtracted from
your monthly gross income, so a part of this contribution can be retrieved through income tax.
A.4. Driving range
The maximum number of kilometres you can drive on a full tank, or on fully charged batteries in
case of an electric car.
A.5. Recharge/refuelling time
The time it takes to fully recharge the car (electric and plug-in hybrid) or to ll your tank. Note that
the time shown for the plug-in hybrid car applies only to recharging the batteries.
A.6. Additional detour time
In the case that not every fuelling station offers the required fuel, you may need to make a detour
to be able to recharge of refuel. When fuel availability decreases, additional detour time increases.
A.7. Number of available brands/models
The larger the number of brands/models, the more alternatives there are for this car type. This
includes different brands and models, but also different versions regarding engine size, acceleration
and size of the car.
A.8. Policy measure
Policies with which the government aims to inuence the sales of this car type. We distinguish
(1) current policy, (2) free parking, which applies to both parking permits and parking zones, and (3)
permission to drive on bus and taxi lanes within the built-up area. The policy only applies to the car
type for which it is shown. When for example the electric car choice option has Free parking, this
policy measure only applies to electric cars and not to the other AFVs. When Current policy is shown,
all government policies are those that hold in the current situation.
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Contents lists available at ScienceDirect

Resource and Energy Economics

Preferences for alternative fuel vehicles of

Corresponding author. Tel.: +31 20 5983194.

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and fuel availability. We nally show that preferences of company

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

3.1.4. Personal monthly contribution

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

3.1.7. Additional detour time

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

Highest nished education

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

Car type constants

Driving range electric car

Driving range fuel cell car

Recharge time electric car

Recharge time plug-in hybrid car

Refuelling time fuel cell car

Additional detour time

Number of available brands/models

**, * = statistically signicant at 1% and 5%, respectively.

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

Current tax incentives

**, * = statistically signicant at 1% and 5%, respectively.

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

**, * = statistically signicant at 1% and 5%, respectively.

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

**, * = statistically signicant at 1% and 5%, respectively.

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

A.3. Personal monthly contribution

M.J. Koetse, A. Hoen / Resource and Energy Economics 37 (2014) 279301

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