A charging handle recharges an electric vehicle (EV) at an EV charging station. Picture taken March 23, 2023.

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Electric vehicle uptake: Hawaii as a natural experiment


Photo Credit: REUTERS/Bing Guan


Electric vehicle (EV) adoption in the United States lags many other parts of the world. Concern about battery range is one impediment to switching over from internal combustion engine (ICE) vehicles. In this regard, the Hawaiian Islands present an intriguing natural experiment. The higher rate of EV uptake in Hawaii suggests that efforts to increase the density in charging stations in the continental US could result in a substantial increase in the use of EVs and low-emission vehicles.

The United States is the world’s second largest carbon emitter, accounting for about 16 percent of greenhouse gases globally. Nearly one-third of those emissions are due to motor vehicles. The US automotive sector matters.

But the US has been a laggard in the adoption of EVs. In 2021, EVs and hybrids accounted for only 5 percent of new vehicle purchases, compared with 17 percent in the European Union, and 16 percent China. Among commonly cited reasons for this slow adoption has been cost and a lack of charging stations in a geographically expansive country. Indeed, the bipartisan Infrastructure Investment and Jobs Act includes $7.5 billion in funding to build out the network of charging stations.

From this perspective, the experience of the state of Hawaii represents a natural experiment in evaluating the impediment to adoption of EVs that lack of charging infrastructure could pose not only on the mainland US but potentially in other expansive, low population density areas such as Australia and Africa.

The state has eight main islands, all of which are relatively small. The largest, Hawaii, commonly known as the Big Island, can be traversed by car in 1.5 hours. Long cross-country trips, and attendant fears of exhausting battery capacity, are inconceivable in this environment.

Compactness is an incentive for EV adoption in Hawaii. Relative to much of the mainland, Hawaii also benefits from warm weather, which limits battery drainage in the cold. But using the state as a natural experiment to assess how much it matters for EV uptake is confounded by state-specific incentives. The state established a goal of achieving a zero-emissions clean economy by 2045 in the context of the state’s commitment to the Paris Agreement and passed legislation in 2017 to direct planning for “the ultimate elimination of Hawaii’s dependence on imported fuels for electrical generation and ground transportation [emphasis added].” (Today Hawaii has both relatively high gasoline and electricity costs; variation in the relative price might also play into decisions to purchase electric or ICE vehicles.)

The state had previously introduced a relatively small package of incentives, establishing things like special EV parking spaces and exemption for EVs from high occupancy vehicle lane restrictions in 2012. In 2019, a more substantial package of incentives was introduced, including rebates for the installation of new or upgraded multi-user charging stations, crediting EVs in the calculation of fleet fuel standards, and grants for public sector EV procurement.

Hawaii is not the only state offering incentives, however. Under the Clean Air Act, California is permitted to seek a waiver from the Environmental Protection Agency of the preemption, which prohibits states from enacting emission standards for new motor vehicles. Other states must follow the federal guidelines unless they at least partially opt to follow California's stricter requirements. To date, 17 states and the District of Columbia have done so.

Last year, the state’s Air Resources Board promulgated a rule that would require 100 percent of new light- and medium-duty vehicles sold in the state to be zero-emission vehicles (ZEVs) by 2035. Reaction by the other 18 adoptees has been mixed with regard to this specific mandate.

Like Hawaii, California has adopted an extensive set of incentives to encourage a switchover to EVs. Other states have adopted similar incentives though the specifics are left up to their governments (i.e., while they have adopted the California emissions standard, they do not have to use the same policy tools to achieve it).

So, does compactness and freedom of battery range anxiety encourage the purchase of EVs? Panel regressions with annual fixed effects were estimated on 2016-21 state-level registration data for EVs and on the broader class of EVs inclusive of plug-ins and hybrids, controlling for state per capita income. To that specification are added three dummy variables: one adoption of the California emission standard; one for the 2019 Hawaii incentive package; and the last for Hawaii across the sample period. The results are reported in the table below.

Panel regressions: Electric and hybrid vehicle adoption, 2016-21
  (EV) (EV, Plug-in and Hybrid)
State-level personal income 0.00001** 0.00004**
  (4.67) (5.34)
California emissions program participant 0.13601** 0.90513**
  (6.4) (9.62)
Hawaii 0.46515** 1.71811**
  (12.69) (20.93)
Hawaii EV program 0.37489** 0.51556**
  (4.21) (3.68)
Constant -0.30736** -0.98751**
  (4.58) (2.67)
Adjusted R2 0.55 0.59
N 306 306
* p<0.05; ** p<0.01; t-statistic shown in parentheses.

The level of state per capita income, the more stringent California standards, and the Hawaii incentive package are all strongly associated with the shares of EVs and the broader class of low-emissions vehicles in state vehicle registrations. But the dummy variable on Hawaii is also positive and strongly correlated with both zero- and low-emission vehicle registrations.

In 2021, shares of US vehicle registrations were only about 0.5 percent for EVs and 3 percent for the broader class of low-emission vehicles inclusive of hybrids. If the Hawaii dummy is interpreted as reflecting the absence of concern about battery range in purchasing decisions, then making the rest of the US more like Hawaii would imply roughly a 50 percent increase in EV adoption and more than a doubling in the uptake of low-emission vehicles. Of course, it is impossible to say how much the density of the charging infrastructure would need to increase in the continental US to make it Hawaii-like in terms of reduced anxiety about battery range. But it does suggest that the impact of programs like the Infrastructure Investment and Jobs Act could be substantial.

It has been claimed that the net reduction in carbon emissions by EVs may be exaggerated due to the carbon intensity of battery production in the supply chain. Yet even taking this possibility into account, in light of the prominence of the US in greenhouse gas emissions, and the centrality of its motor vehicle sector, a shift toward EVs could have an appreciable impact on global emissions, as well as potentially conveying demonstration effects on other, similarly situated regions.

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