Assessing Consumer Preferences for Clean-Fuel Vehicles:

A Discrete Choice Experiment

Gordon Ewing and Emine Sarigöllü

The authors assess preferences for clean-fuel vehicles (CFVs) versus the conventional vehi-
cle using a discrete choice experiment. The results show that though consumers value envi-
ronmental impact, vehicle performance characteristics are critical to choice. The authors
find that regulation is not sufficient to create a market for CFVs, and they identify three
market segments to which CFVs should be distinctly positioned and targeted.

oncern about transportation’s adverse impact on the use” (p. 5), including the mandatory purchase of alternative-

C environment has led the United States, the European

Commission, and Canada to pass regulations limit-
ing greenhouse gas emissions by transportation. For exam-
ple, the European Commission requires benzene levels to be
cut by 70% and carbon monoxide to be reduced by one-third
by 2005. The United States’s new federal emission stan-
dards, to be phased in between 2004 and 2009, require pas-
senger cars, sport-utility vehicles, and light-duty trucks to be
75%–95% cleaner than they are today. The California Air
Resources Board has already established that 10% of new
vehicles sold in California in 2003 must have zero emissions
(i.e., they must be electric). In response, major automakers
in the United States, Japan, and Europe have been investing
approximately $10 billion annually to develop cleaner vehi-
cles and particularly the electric vehicle (EV). Says GM’s
former chairman, Robert C. Stempel, “Our guys can build
anything but somebody’s got to want to buy it” (Woodruff,
Peterson, and Miller 1991, p. 59). Marketers and regulators
have also voiced concern about consumer acceptance/
demand for the EV.
Realizing that larger volumes of EVs will result in sub-
stantial air quality benefits, governments have stepped in to
facilitate the development of the EV market. Price subsidies
and purchase mandates for public fleets are already in place.
For example, the U.S. president has recommended tax cred-
its for EV buyers to begin in the early 2000s. In Canada, the
Federal Smog Management Plan mandates the government
to “pursue opportunities for agreements that would over-
come market barriers for alternative transportation fuels and
advanced technology vehicles” (Government of Canada
1997, p. 5). In addition, “Natural Resources Canada will
develop a ‘green fleet’ of vehicles for federal government
GORDON EWING is Associate Professor of Geography, Department
of Geography, McGill University. EMINE SARIGÖLLÜ is Associate
Professor of Marketing and Director, Centre for Knowledge and
Research in Marketing (KARMA), Faculty of Management,
McGill University. The authors thank Imran Currim, Alex
Whitmore, and Albert Lukban for their helpful comments and sug-
gestions. This research was supported by a grant from
Environment Canada’s University-Based Research Program on
Economic Instruments for Environmental Sustainability.
fuel vehicles. Furthermore, The Montreal 2000 Electric
Vehicles Project, partnered by the governments of Canada
and Quebec and Hydro-Quebec, provides purchase assis-
tance for EVs and ensures the development of recharging
infrastructures. Similarly, to encourage the leasing of EVs by
public fleets, the California Air Resources Board, the South
Coast Air Quality Management District, and the Department
of General Services have launched the ev Loan Program.
Regulations encouraging or mandating fleet operators to buy
EVs could be a major driving force, at least in the initial
stages of the EV market growth, during which development
and commercialization of the EV is subject to a learning
curve. Ultimately, however, it is consumer demand that will
determine the long-term viability of the EV.
Governments are also considering/implementing industry
subsidies or partnerships to improve the performance char-
acteristics of clean-fuel vehicles (CFVs), such as the
California Fuel Cell Partnership, a collaboration among
automakers, fuel providers, a fuel cell developer, and gov-
ernment agencies. Such initiatives would expedite the
development of a viable competitor to the conventional
vehicle and provide an attractive alternative to consumers.
Measures directly targeting the consumer, such as price
subsidy, gasoline taxes, subsidy on electricity, and allocation
of express lanes for EVs, are also being debated. Currently,
however, it is not known whether governments could play a
vital role in swaying consumer preferences with these mea-
sures. Knowledge on whether government regulation would
influence consumer preferences is critical for the marketing
of CFVs and thus is of great interest to marketers, regulators,
and automakers. The current research explores this issue.
We investigate consumer preferences for CFVs, includ-
ing both low-emission vehicles (LEVs) and zero-emission
vehicles (ZEVs)—that is, the EV—through a discrete
choice experiment. We explore what level of preference
consumers display for CFVs, how their preferences respond
to improved performance, and whether governments could
influence preferences through regulation. Specifically, we
consider policies of setting different prices for alternative
fuels (such as taxing gasoline and subsidizing cleaner fuels
and electricity), subsidizing the price of CFVs, exempting
cleaner cars from any road pricing charges, and allocating
express lanes to CFVs. Although extensive research has

Vol. 19 (1)
106 Journal of Public Policy & Marketing Spring 2000, 106–118
 Journal of Public Policy & Marketing
been reported on both the supply side (manufacturing LEVs
and ZEVs) and the environment side, research on consumer
preferences for CFVs has been sparse (for exceptions, see
Beggs and Cardell 1980; Beggs, Cardell, and Hausman
1981; Bunch et al. 1993; Calfee 1985; Segal 1995; Urban,
Weinberg, and Hauser 1996). This research focuses on indi-
vidual consumer (or household) preferences for CFVs, not
on fleet buyers’ preferences.
We surveyed a random sample of 1500 commuters who
drive to work regularly. This study extends previous research
on consumer preferences for CFVs in four ways. First, the
choice experiment included factors that reflect potential gov-
ernment subsidies/levies to encourage the choice of CFVs.
Second, in assessing preferences for vehicles, in addition to the
typical vehicle-specific predictors (e.g., price, acceleration),
we also considered information on attitudes toward the envi-
ronment and technology. We show that such attitude informa-
tion contributes to a more accurate assessment of preferences.
Third, we customized the attribute values in each respondent’s
choice sets to maximize the relevance of the choice task for
respondents. Fourth, the sample was drawn in Montreal,
Canada, a mid-sized, low-smog city, where a large-scale
investigation of preferences for CFVs had not been undertaken
before. Much past research on CFVs has been conducted in
high fossil-fuel pollution areas in the United States, such as
southern California (e.g., Bunch et al. 1993; Segal 1995;
Urban, Weinberg, and Hauser 1996). It is not obvious whether
findings in previous studies could be generalized to other con-
texts, such as differing levels of pollution and receptiveness to
government intervention. It is conceivable that Canadians
would respond more positively to regulation and incentives for
CFVs, because in Canada the government plays a larger role,
obedience to law and authority is a deeply entrenched tradition
(Lipset 1993), and the society is more collectivist (thus less
individualistic) than that of the United States (Lipset 1990).
Methodology
Because CFVs were not commercially available for the par-
ticipants of the survey, it was not possible to observe their pur-
chase behavior or measure their preferences through revealed
preference approaches. Therefore, we adopted a stated prefer-
ence approach. Using a choice experiment, we asked respon-
dent preferences for hypothetical vehicles that were described
in terms of their attributes. Discrete choice experiment is the
standard approach in recent research that deals with choice
among hypothetical products (e.g., Bunch et al. 1993;
Hensher, Barnard, and Truong 1988; Louviere 1988).
Discrete Choice Experiment
At the outset, through a literature review (e.g., Bunch et al.
1993; Calfee 1985; Urban, Weinberg, and Hauser 1996), we
identified the most relevant attributes for three vehicle types
included in the choice experiment. The attributes include (1)
purchase price, (2) repair and maintenance cost, (3) cruising
range (i.e., the maximum distance traveled on a full tank or
charge), (4) refueling time (i.e., the time it takes to fill a fuel
tank or charge batteries), (5) acceleration, and (6) polluting
emissions. In addition, we included two commuting attri-
butes associated with each vehicle type, namely, commuting
time and cost. It is conceivable that CFVs will experience
107
shorter commuting times because of express lane privileges.
Commuting costs could also vary between vehicle types
because of differences in fuel efficiency, fuel price (taxing
gasoline, subsidizing cleaner fuels and electricity), and
exemption from any road pricing charges. These two attri-
butes were specifically included to assess the impact of reg-
ulatory policies on consumer preferences.
Subsequently, we pretested the attributes and their levels in
focus groups. Four sessions were conducted with drivers who
commute regularly (at least three days a week). Focus groups
were helpful in assessing respondent reaction to the range of
attribute levels considered in choice scenarios. For example,
small changes in fuel cost (e.g., 15%) appeared unlikely to
bring about a response (i.e., switch from a conventional vehi-
cle to the EV). Therefore, in the subsequent mail survey, we
varied fuel cost by as much as three times its present cost.
Most important, we realized that focus group participants did
not respond well to the typical values that were used for attrib-
utes, such as purchase price, commuting time, and cost. To
ensure the relevance of the choice experiment, we customized
the choice scenarios for each respondent. Finally, the partici-
pants had difficulty in quantifying commuting costs as cents
per mile as in Bunch and colleagues’ (1993) work; therefore,
we expressed commuting costs as dollar cost per week and
customized them for each respondent in the mail survey.
Attribute Levels
Table 1 summarizes the attribute-level specification for the
choice experiment. For each vehicle, four of the eight
attribute values were customized to be proportional varia-
tions of a respondent’s current situation. These were price,
annual expenditure on repairs and maintenance, commuting
time, and cost. Customization required an initial contact with
respondents to obtain the essential information. The contact
was made by a reputable research company, Centre de
Recherche sure l’Opinion Publique, which completed 1500
random telephone interviews with commuter households in
geographically representative suburban areas of Montreal.
For the conventional vehicle (vehicle like present one),
for the sake of realism we set all the variables at a fixed
value except for the commuting fuel cost, which was varied
to reflect potential carbon taxes that may be levied by the
government. Some of the values for the conventional vehi-
cle were unique to each respondent (purchase price, mainte-
nance cost, and commuting time), whereas others were fixed
for all respondents. For the sake of realism, we fixed two
other attributes, namely, a zero emission level for the EV
and a cruising range for the alternative-fuel vehicle that was
the same as that of the conventional vehicle. The remaining
15 attributes varied with three possible values for each vehi-
cle, as is shown in Table 1. In determining the attribute val-
ues, expert opinion was consulted to ensure realistic levels.
For commuting time, we considered three possibilities: (1)
The commuting time is the same for all three vehicles, (2)
the EV and alternative-fuel vehicle have access to express
lanes, or (3) only the EV has express lane privileges.
Using respondent-specific information from the tele-
phone survey and a conjoint design, we customized choice
scenarios for each respondent. With 15 three-level factors,
an 81-card fractional factorial design allowed estimation of
all the main effects plus seven interaction effects. To pre-
108 Clean-Fuel Vehicles

vent fatigue, each respondent was presented with only 9
choice sets, instead of the full 81. Respondents were pro-
vided with descriptions of three vehicles: (1) a conventional
gasoline vehicle (vehicle like present one), (2) an alterna-
tive-fuel vehicle, and (3) an EV. Alternative fuel was
defined as natural gas, propane, ethanol, or methanol, or an
alternative-fuel vehicle could be a more fuel-efficient gaso-
line vehicle of equivalent performance and emissions. In
addition to the eight attributes, respondents were told to
assume that the vehicles are identical in all other aspects,
including size, styling, comfort, and durability. Respondents
were then told to imagine they had to choose one of the three
vehicles to replace the vehicle they drove to work, and they
were then asked to pick one. Each respondent was asked to
repeat this exercise in nine separate choice scenarios. We
present a sample choice set in Figure 1.

Table 1. Discrete Choice Experiment Attribute Levels

More Fuel-Efficient
Vehicle Like Gasoline or Alternative-
Attributes Present One Fuel Vehicle EV
Purchase price Price respondent would pay for next car same as first column same as first column
10% less 10% less
10% more 10% more

Annual repair and Average annual maintenance same as first column same as first column
maintenance cost expenditure 25% less 25% less
25% more 25% more

Acceleration Like present one same as first column same as first column
25% poorer 25% poorer
25% better 25% better

Cruising range 300 miles 300 miles 100, 200, or 300 miles

Refueling rate 5 minutes 5 minutes 15 minutes

10 minutes 30 minutes
15 minutes 5 hours (at home or work)

Polluting emissions as 85% 0% 0%

percentage of present 35%
vehicle 65%

Commuting time Current trip time to work same as first column same as second column
(one way) 25% less or if second = first,
50% less same as first column
25% less
50% less

Commuting fuel and Commuting fuel cost ¥ fuel cost same as first fuel cost same as first
parking cost (weekly) {1 or 2 or 3} + parking column + parking cost column + parking cost
cost 25% less + parking cost 50% less + parking cost
50% less + parking cost 75% less + parking cost

Figure 1. Sample Vehicle Choice Set

More Fuel-Efficient
Vehicle Like Gasoline or Alternative-
Features Present One Fuel Vehicle EV

Purchase price $20,000 $20,000 $22,000

Annual repair and maintenance cost $180 $180 $180
Acceleration Like present one Like present one 25% poorer than present one
Cruising range 300 miles 300 miles 200 miles
Refueling rate 5 minutes 10 minutes 5 hours (at home or work)
Polluting emission as percentage of present vehicle 85% 0% 0%
Commuting time (one way) 20 minutes 15 minutes 15 minutes
Commuting fuel and parking cost (weekly) $20 $15 $10
 Journal of Public Policy & Marketing 109

Attitude Measurement (1990).1 These items specifically measure attitudes toward

In addition to the vehicle choice experiment, the question-
naire contained items to assess attitudes toward the environ-
ment and technology. We believe that consumers who are
concerned about the environment and are not intimidated by
technology should display a higher preference for CFVs
than consumers who are not concerned and are intimidated.
Our belief is consistent with the long and compelling evi-
dence in the literature that relates attitudes to preference and
behavior (e.g., Ajzen and Fishbein 1977; Borgida and
Campbell 1982; Snyder and Kendzierski 1982). We show
subsequently that information about attitudes indeed permits
a better assessment of preferences. Thus, we confirm find-
ings of prior research and extend them to a new context—
vehicle choice.
We assessed attitudes toward the environment using sev-
eral items adapted from a study by the Roper Organization
air pollution, but not other environmental issues (water pol-
lution, sustainable production, and so forth), which are
beyond the scope of this study. Items measuring attitudes
toward technology were adapted from a CROP study
(Barbeau 1994). The items are listed in Table 2.2
Respondents were asked to indicate their degree of agree-
1Items included both general and specific attitude questions in accord
with Ajzen and Fishbein (1977), who recommend that more immediate
(specific) determinants of behavior, such as attitude toward the behavior, be
considered in predictive models of behavior.
2The attitude items adapted for this study may not be all-encompassing.
Nonetheless, they have been validated over time. Furthermore, our findings
from these items are consistent with those of previous research (e.g., Aaker
and Bagozzi 1982; Balderjahn 1988; Schwepker and Cornwell 1991).
Because development of attitude scales for environment and technology is
beyond the scope of this study, we make do with the items adapted from the
extant literature.

Table 2. Results of Factor Analysis on Attitude Items*

Factor 1
General Factor 2 Factor 3 Factor 4
Environmental Environmental Locus of Technology
Attitudes Toward Environment and Technology Attitude Activism Control Attitude
The whole pollution issue has never upset me too much since I feel it is
somewhat overrated. 76 –17 2 –8
I rarely ever worry about the effects of pollution on myself and family. 70 –21 –3 –6
I am really not willing to go out of my way to do much to help the
environment. 63 –18 1 –17
To preserve people’s jobs in this country, we must accept higher
degrees of pollution in the future. 54 2 17 –3
It is acceptable for an industrial society like ours to produce a certain
degree of pollution. 49 –10 15 24
I’d be willing to write to my MP or MNA about ecological problems. –10 78 1 1
I would be willing to go door to door to discuss and distribute literature
on the environment. –2 77 –8 –2
I would be willing to take the bus, train, or metro to work in order to
reduce the air pollution. –15 47 2 15
I am willing to spend a bit more to buy a product that is more
ecologically friendly. –12 45 3 17
The world will be dead in 40 years if we don’t remake the environment. –13 40 21 –26
I would probably never join a group, club, or organization that is
concerned solely with ecological issues. 44 –50 4 11
There is never enough time in a day to get everything done. –10 –17 68 31
Things have become so complicated in the world today that I really
do not understand just what is going on. 22 13 68 –21
Whatever we do, the world’s destiny is predetermined and history
takes its course. 27 7 61 –10
I am excited by the possibilities offered by new technologies. –8 23 –3 80
New technologies cause more problems than they solve. 15 –3 51 –55
Eigenvalue 2.39 2.26 1.67 1.33
Percentage of variance 15 14 10 8

*Values are multiplied by 100 and rounded off to the nearest integer. Values greater than 40 appear in bold.
110
ment with each statement using a scale from 1 (strongly dis-
agree) to 5 (strongly agree).
Survey Implementation
We obtained 881 usable responses from a mail survey of
1500 commuters. The response rate, 59%, is satisfactory
given the length of the survey (16 pages), the complexity of
the choice task, and the mere fact that the survey was admin-
istered by mail, for which the average return rate is approx-
imately 20%. Several factors may have contributed to the
response rate. Customization of the choice sets made the
choice task relevant and may have encouraged response.
The initial telephone contact may have raised respondents’
commitment for completing the subsequent mail survey. In
addition, incentives (lottery prizes worth a total of $2,000)
promised to respondents may have been effective.
Although we are content that many people care enough
about the topic to complete a long and complex mail survey,
we are cognizant of the potential self-selection bias. We con-
sidered investigating respondents’ representativeness of their
intended population in demographic terms. Unfortunately, this
was not feasible, because we do not have demographic infor-
mation specific to our population—adults from automobile-
owning households who live in Montreal suburbs and com-
mute regularly in their private vehicles. Instead, we took
demographic data on the Montreal population as a reference
with which to compare our respondents. We found that the sur-
vey respondents are wealthier and younger than the Montreal
population. Whereas 41% of Montrealers have an annual
household income of $30,000 or less, only 13% of the respon-
dents do. Only 5% of our sample, but 16% of Montrealers, are
55 years of age and older (Statistics Canada 1994). It is not
surprising that our specific population is wealthier and younger
than the population of Montreal, given that suburban popula-
tions tend to be younger and wealthier than the central city
populations on average. It is also likely, however, that within
our specific population, wealthier and younger people exhib-
ited a higher response rate. Given the lack of true population
data, it is not possible to measure the level of self-selection
bias. We discuss the impact of self-selection bias subsequently.
The Model
Consumer vehicle choice is represented in terms of the follow-
ing multinomial logit model, in which vehicle-specific attrib-
utes and attitude segment information were used as predictors:
Ê K J ˆ
(1) U il = expÁ a1 +
Á Â b k X k1 + Â c jl Z ji ˜ ,
˜
Ë k = 1 j = 1 ¯
where
Uil = vehicle 1’s utility as seen by respondent i,
al = vehicle-specific constant for vehicle 1,
Xkl = quantity of attribute k in vehicle 1,
bk = generic effect of attribute k in vehicle utility,
Zji = quantity of characteristic j possessed by respondent i, and
cjl = effect of respondent characteristic j on the utility of vehi-
cle 1 compared with the base vehicle.
A potential limitation of multinomial choice models is the
implicit assumption of the independence of irrelevant alter-
Clean-Fuel Vehicles
natives, which implies a nonhierarchical choice. A hierar-
chical choice would be, for example, if a consumer made a
prior decision whether to buy a conventional or nonconven-
tional vehicle and, only if the latter is chosen, made a sec-
ond decision between the EV and an alternative-fuel one.
This was tested for by using a procedure described by
Greene (1992), and no evidence of hierarchical choice was
found.
Findings
We first present findings from segmentation of respondents
based on attitudes toward the environment and technology.
Then we report discrete choice experiment findings regard-
ing vehicle choice. Specifically, we delineate the impact of
both vehicle performance characteristics and government
regulation on vehicle choice.
Findings on Attitude Segmentation
Respondents were heterogeneous in their attitudes; there-
fore, we used a cluster analysis to classify those with similar
attitudes into the same segments. Because of multicollinear-
ity among attitudinal items, we factor analyzed them before
cluster analysis, using a principal component analysis. We
provide the rotated factor solution in Table 2.3 Four factors
with eigenvalues greater than 1.0 emerged. The factor solu-
tion was appropriate from an interpretative point of view
and was also confirmed with a scree test. The factors were
labeled “general environmental attitude,” “environmental
activism,” “locus of control,” and “technology attitude.”
The items loading highly on each factor were then
summed to create four scales.4 Subsequently, the scales
were entered into a k-means cluster procedure to segment
respondents on the basis of their attitudes. We explored two,
three-, four-, and five-cluster solutions. A three-cluster solu-
tion provided the best results statistically. The clusters were
validated by split-sample approaches and found stable.
Furthermore, the resultant segments were readily interpreted
and managerially relevant: They were significantly different
from one another in their characteristics and were easily
identifiable and sufficiently large.
Cluster 1, labeled “actively concerned,” consists of 353
people (40% of the sample) who are highly concerned about
the environment and are activists. They believe they are in
control and display positive attitudes toward technology.
Cluster 2, labeled “passively concerned,” has 330 members
who are highly concerned about the environment but are not
willing to do anything about it. They, too, believe they are
in control and have positive attitudes toward technology, but
their attitudes are less strong than those of the actively con-
cerned group. Cluster 3, labeled “unconcerned,” is the
smallest group, with 198 members (22% of the sample).
They believe the pollution issue is overrated, and they are
not concerned about its effects. Therefore, they do not con-
sider taking action in any way. The unconcerned believe
new technologies cause more problems than they solve.
They do not perceive themselves to be in control.
3Quartimax rotation was performed in accord with Stewart’s (1981, p.
59) and Sharma’s (1996, p. 120) work.
4Internal reliability tests indicated adequate scale consistency (alpha
ranging from .68 to .76).
 Journal of Public Policy & Marketing
The three clusters differ significantly in their mean ratings
of individual attitude items as well as various other charac-
teristics. Actively concerned respondents are the youngest
segment (p = .06). Whereas only 34% of the actively con-
cerned group is 40 years of age and older, the proportion is
46% for the other segments. Unconcerned respondents have
the lowest annual income (p = .06). Seventeen percent of the
unconcerned group, but approximately 11% of the concerned
group, makes less than $30,000 in annual income. However,
the three segments do not differ significantly in terms of sex.
Most passively concerned and unconcerned respondents
make the vehicle purchase decision alone, but actively con-
cerned ones are more likely to decide jointly with their
spouse or companion (p = .08). The unconcerned respon-
dents are most inclined to purchase a vehicle in the next five
years. One in four unconcerned respondents said that there is
more than a 50/50 chance that they will buy a vehicle.
The high proportion of actively concerned respondents in
our sample most likely overrepresents their population pro-
portion, whereas unconcerned respondents seem to be
underrepresented. As mentioned previously, although ques-
tionnaires were mailed to a randomly selected sample, peo-
ple who are activists may have had a higher motivation to
return the surveys than the unconcerned people. Indeed, the
survey respondents, in comparison with the Montreal popu-
lation, are disproportionately wealthier and younger—char-
acteristics of the concerned segments. Furthermore,
although the survey was confidential, some respondents
may have picked politically correct responses. Potential bias
due to self-selection and political correctness would not per-
mit us to make generalizations regarding the relative size of
each segment in the population. However, our inferences
regarding the general characteristics of the respective seg-
ments are valid.
Findings on Vehicle Choice
Findings are presented for two model specifications. The
base model contains only vehicle-specific and generic
terms.5 The full model builds on the first one with additional
explanatory variables consisting of respondent attitude
information. Comparison of the estimation results from the
two models permits assessment of the incremental benefit to
predictive effectiveness of adding respondent attitude infor-
mation as an explanatory variable.
Estimation results for the base model are shown in Table
3. The model is highly statistically significant. All the indi-
vidual coefficients are significant and of the expected sign
and direction, with the exception of refueling rate. This is
because in the choice experiment, refueling levels were
associated with each type of vehicle for the sake of realism.
Recharging times more than 15 minutes were uniquely asso-
ciated with the EV, and refueling times less than 15 minutes
were never associated with the EV. Only a 15-minute refu-
eling time was associated with more than one vehicle type.
Because refueling times between 5 and 30 minutes were not
5The generic terms—acceleration, range, refueling rate, and emission
level—were treated as categorical, and a separate effect was estimated for
each level. For each attribute, without loss of generality, one level was
defined as the standard, and coefficients were estimated for the other lev-
els. The standard levels are acceleration same as present vehicle, 300-mile
range, and 0% emissions.
111
significant, we redefined this variable as having two cate-
gories, (1) 30 minutes and less and (2) five hours, and rees-
timated this reduced model. There is no significant differ-
ence in how well the two models fit the data. Therefore, the
reduced model is used in further analysis.
In the analyses, without loss of generality, the conven-
tional vehicle is treated as the base vehicle. Therefore, vehi-
cle-specific coefficients are estimated only for alternative-
fuel vehicles and EVs. These coefficients capture all
intrinsic vehicle-specific effects on choice, as distinct from
the effects of generic attributes estimated by bk. Both vehi-
cle-specific coefficients were found to be significant (see
Table 3). This may indicate that other critical fuel-related
variables (e.g., quiet engine, smooth acceleration) were
omitted in the experimental design. Our finding differs from
that of Bunch and colleagues (1993), who did not find sig-
nificant vehicle-specific effects. This discrepancy in the
findings cannot be attributed to differences in vehicle types
or model specifications, because both studies employed
similar vehicle types, explanatory variables, and models.
Instead, the discrepancy may be ascribed to several reasons,
including differences in the two populations’ level of
knowledge or perception regarding these vehicles. Because
affirmative media coverage of the EV and LEV has been
increasing over time, our respondents may have had higher
exposure to supportive information about these vehicles
than Bunch and colleagues’ respondents. It is also conceiv-
able that our population has a more positive disposition
toward the EV and LEV than Bunch and colleagues’ popu-
lation. This may be due to several factors. First, public elec-
tric utilities, lauded in Canada for their exceptionally reli-
able service at reasonable prices, are actively involved in the
development and promotion of the EV. Second, the govern-
ments at all levels, federal and provincial, are promoting the
development of the EV market. Consequently, Canadians,
who are amenable to government intervention, may have
developed more positive dispositions toward the EV. It
should be noted that in the province of Quebec, receptive-
ness to government intervention is particularly strong.
Using a multinomial logit model in which the dependent
variable is the natural logarithm of the odds of choosing one
alternative over a base alternative, the exponential of the
coefficient estimates for each vehicle can be used to deter-
mine the odds of each type of vehicle being chosen. These
are shown in Table 3, with xk replaced by Dxk. They show
by how much the odds of choosing an alternative would be
multiplied for an increment of Dxk in its value of xk.
The odds ratio for the alternative fuel vehicle is 2.99 and
for the EV is 2.48, as opposed to the gasoline vehicle, which
is set at 1. These values are utility measures for these vehi-
cles holding everything else constant. Therefore, the likeli-
hood of selecting an alternative-fuel vehicle can be esti-
mated as its utility relative to the sum of utilities of all three
vehicles, which in this case is 2.99/(2.99 + 2.48 + 1) = .46.
Of the three types of vehicles, the alternative-fuel vehicle is
the most likely to be chosen, followed by the EV (p = .38).
The gasoline car is the least preferred option (p = .15).
These findings indicate that far from displaying any resis-
tance to trying these new types of vehicles, Montrealers
demonstrate a strong preference for them, assuming the
vehicles can deliver the same performance at the same price.
112 Clean-Fuel Vehicles

Table 3. Parameter Estimates of the Multinomial Logit Vehicle Choice Base Model

Base Model Reduced Model

Variable Coefficient t-Value Coefficient t-Value Odds Ratio Dx *

Alternative-fuel constant 1.1234 15.84 1.0950 17.95 2.99

(.00) (.00)

Electric constant .94390 9.35 .90905 12.86 2.48

(.00) (.00)

Price ($) –.0002 –15.31 –.0002 –15.30 .8 1000

(.00) (.00)

Maintenance cost ($/year) –.00104 – 9.85 –.00105 –9.89 .9 100

(.00) (.00)

Acceleration
25% worse** –.55107 –11.76 –.55150 –11.77 .58
(.00) (.00)
25% better** .13702 3.03 .13805 3.06 1.15
(.00) (.00)

Range
100 miles –.82007 –12.06 –.82154 –12.08 .44
(.00) (.00)
200 miles –.36373 –5.59 –.36262 –5.58 .7
(.00) (.00)

Refuel rate
10 minutes –.06877 –1.08 — — —
(.287)
15 minutes –.01845 –.29 — — —
(.775)
30 minutes –.03206 –.58 — — —
(.569)
300 minutes –.38865 –4.67 –.39642 –6.73 .67
(.00) (.00)

Emission rate
35%*** –.23726 –3.78 –.23720 –3.77 .79
(.00) (.00)
65%*** –.41245 –6.54 –.41211 –6.53 .66
(.00) (.00)

Commuting time –.00826 –3.33 –.0081 –3.29 .92 10

(minutes/one way) (.00) (.00)

Commuting cost –.01492 –12.55 –.01491 –12.56 .86 10

($/week) (.00) (.00)

Log-likelihood initial (0) –7311.265 –7311.265

Log-likelihood model –6354.732 –6355.504
Chi-square 1913.065 1911.522
(.00) (.00)

*Equals one unless otherwise indicated.

**Relative to the respondent’s present vehicle.
***Relative to a ZEV.
Notes: The t-statistics may be biased, because no correction was made for repeated measurements.
 Journal of Public Policy & Marketing 113

The odds ratios for 100- and 200-mile cruising ranges

Figure 2. Part-Worth Graphs for Vehicle Performance
reveal how sensitive respondents are to this factor. The default Attributes
range was 300 miles, a typical highway range of conventional
vehicles. A range of only 100 miles cuts the odds of choosing
such a vehicle by more than half (odds ratio = .44). This makes
ACCELERATION
range the primary impediment to the widespread adoption of

Part-Worth Estimate
EVs as multipurpose transportation. Even a range of 200 miles .2

significantly reduces demand (odds ratio = .70). Respondents 0

are also sensitive to losses in acceleration. A vehicle with –.2

acceleration 25% worse than conventional has almost half the –.4
–.6
odds of being purchased. Another major obstacle to adoption
–.8
of battery-powered EVs is a five-hour recharge time (odds 25% Same 25%
ratio = .67). This finding is consistent with that of Urban, Poorer as Better
Present
Weinberg, and Hauser (1996, p. 57), who concluded that
Level
“Based on simulations and information on technology, infra-
structure, and competition, management decided that a new
battery technology was one key to profitability.”
The effect of emission rates on choice is higher than might CRUISING RANGE

be expected. The base level was a vehicle with no polluting .2

Part-Worth Estimate
emissions, the EV. The effect of 85% emission rate is not 0
estimated, because that level is uniquely associated with the –.2
conventional vehicle. Therefore, its effect on choice is –.4
embedded implicitly in its vehicle-specific constant. We –.6
find that other things being equal, clean vehicles would cap- –.8
ture a major share of the market. Specifically, the odds of –1
100 miles 200 miles 300 miles
consumers choosing a vehicle with an emission level 35% of
their current vehicle are .79 that of choosing the EV, and for Level

a vehicle with a 65% emission rate, the odds ratio falls to .66.
Consumer response to each level of performance attribute,
taken one at a time, is presented in Figure 2. Specifically, the
POLLUTING EMISSION RATE
part-worth estimates for levels of acceleration, cruising range,
Part-Worth Estimate

and polluting emission rates are depicted. Respondents are .2

particularly sensitive to losses in acceleration and cruising 0

range. Although “25% better” and “25% poorer” represent the –.2

same change in acceleration from “same as present,” the slope –.4

from “25% poorer” to “same as present” is steeper than the
slope from “same as present” to “25% better,” which indicates
a greater impact in utility. In contrast, there appears to be no
indication that an increase of 100 miles in cruising range
would affect the utility differently when a change from 100 to
200 miles as opposed to a change from 200 miles to 300 miles
is considered. The same is true for polluting emissions.
Our findings regarding the effects of vehicle performance
characteristics on choice confirm and extend those of previous
literature (Bunch et al. 1993; Urban, Weinberg, and Hauser
1996). We conclude that drivers are sensitive to vehicle per-
formance characteristics, particularly to losses relative to what
they are accustomed to. On a more positive note, drivers, even
if they are not faced with high air pollution as in California’s
south coast air basin, respond positively to CFVs. They display
strong preference for the EV and alternative-fuel vehicle, other
things being equal. However, environmental impact is unlikely
to make up for losses in vehicle performance characteristics.
The Effects of Economic Instruments on Vehicle
Choice
The odds ratios associated with vehicle price, commuting
cost, and time indicate how demand for CFVs could be
influenced if policy measures were introduced to change the
values of these attributes. An example of such measures is
the French government’s subsidy of the price premium on
–.6
–.8
0% 35% 65%
Less than Less than
Present Present
Level
EVs produced by Peugeot-Citroen and Renault. Without a
subsidy, the odds ratio of .8 for a $1,000 difference in vehi-
cle price means that for Montrealers, the odds of choosing
the more expensive vehicle are 80% of those of choosing the
cheaper competitor, other things being equal.
Commuting costs can be modified by taxing gasoline,
subsidizing cleaner fuels and electricity, or exempting
cleaner cars from any road pricing charges. The odds ratio
of .86 for $10 a week higher commuting cost for one type of
vehicle means that its odds of being chosen are 14% less.
Commuting time can be influenced by a policy that reserves
lanes on expressways for EVs, for example. An associated
relative increase of ten minutes in the one-way commuting
time of other vehicles would reduce the odds of being cho-
sen by 8%. The odds ratios in Table 3 indicate that a 20-
minute travel time difference has approximately the same
effect as a $10 per week cost difference. A policy that both
reduces the relative travel time of EVs by 10 minutes per
114 Clean-Fuel Vehicles
trip and increases the relative commuting cost of conven-
tional vehicles by $10 a week would reduce the latter’s odds
of being chosen by more than 20%.
The impact of economic instruments on vehicle choice is
much smaller than that of vehicle performance characteris-
tics. Nonetheless, price subsidy is likely to be an effective
incentive. Gasoline taxes and faster lane privileges do not
seem to sway driver preferences. Montrealers’ lack of
response to economic measures may be explained by their
short commuting time (median = 20 minutes). In the Market
Simulations section, we investigate Montrealers’ insensitiv-
ity to economic measures further.
The Effects of Attitude Variables on Choice
Preferences for different conventional vehicle types are known
to vary among market segments (Sukhdila, Chakraborty, and
Steger 1995). Therefore, it is reasonable to expect differences
in how various segments of consumers respond to alternative
types of innovative vehicles. We tested for the significance of
attitude cluster information on vehicle choice by adding inter-
action terms between respondent attitude clusters and vehicle-
specific constants in the reduced model. Specifically, we intro-
duced four interaction terms: ACTVALT (actively concerned
and alternative-fuel vehicle), ACTVELEC (actively con-
cerned and EV), CONCALT (passively concerned and alter-
native-fuel vehicle), and CONCELEC (passively concerned
and EV). The third attitude cluster, namely, the unconcerned
group, was taken as the base group.
Including the attitude clusters as predictors significantly
improved the model’s fit (see the likelihood ratio statistics for
the full model in Table 4 versus the reduced model in Table
3). All the interaction terms are significant. Relative to the
unconcerned respondents, actively concerned ones are 3.6
times more likely to choose the EV and 2.7 times more likely
to choose the alternative-fuel vehicle. Passively concerned
respondents also displayed higher odds of selecting the inno-
vative vehicles than the unconcerned respondents, but to a
lesser extent than the actively concerned ones. So far, we have
established that these three segments differ in their prefer-
ences for vehicles, attitudes toward the environment, and
demographic characteristics. Furthermore, they are suffi-
ciently large and easily identifiable. Therefore, these seg-
ments are managerially relevant, and the CFVs, particularly
the EV, should be positioned and targeted differently for each.
The actively concerned group is the most befitting target
for alternative-fuel vehicles and particularly the EV. The EV
should be positioned as an innovative vehicle and not
directly compared with the gasoline-powered car. The
young and wealthy actively concerned group may be
attracted by advertisements that characterize the EV as
young, clean, and futuristic. The advertisements should
explicitly target both spouses, because many actively con-
cerned people make joint purchase decisions.
Passively concerned consumers, who do not act on their
worries about the environment, are unlikely to buy the EV
on its environmental merits unless it can deliver perfor-
mance typical of the gasoline-powered vehicle and match its
price. Positioning the EV as similar to gasoline vehicles,
rather than differentiating it as a brand-new product cate-
gory, would be more appropriate for this segment. The
advertisements should focus on the EV’s “soft” merits, such
as the joy of driving while listening to music that sounds
magnificent as never before, thanks to the EV’s extremely
quiet engine and smooth ride. For the passively concerned
consumers, automakers may also design educational cam-
paigns that provide factual information and statistics on how
each driver can make a difference and help the environment
in significant ways.
Although the unconcerned respondents have the highest
likelihood of buying a vehicle in the next five years, they are
unlikely to consider the EV unless it is financially more
attractive than the conventional vehicles. The unconcerned
group is most likely to respond to cash incentives (such as
rebates) and gasoline taxes. However, given that fuel cost is
approximately 12% of the cost of owning a gasoline vehicle,
the tax must be substantial. Campaigns and advertisements
that focus on the cost advantages of driving the EVs—in both
the short and long run—would be effective for this segment.
Market Simulations
So far, we have focused on how absolute changes in the val-
ues of single attributes would influence the odds of choosing
different vehicle types. If policy initiatives affect attributes,
such as commuting time and cost, attributes tend to change
proportionately rather than absolutely, because of differences
in travel distances. Also, it is desirable to estimate the joint
effect of simultaneous changes in several attributes on the
probability of each alternative being chosen. A choice simu-
lator enabled us to simulate choices and derive market shares
under varying scenarios involving changes in attribute values
for one or more vehicles. Attributes were manipulated to
reflect both future technological change and policy-induced
changes to travel times, costs, and vehicle-related costs. This
allowed for estimation of the impact of these changes on the
average choice probability of each type of vehicle.
The choice simulator is based on the sample enumeration
method (Ben-Akiva and Lerman 1985). It should be noted,
however, that because the simulator is based on the results of
a stated preference study and the choice set consists of a small
number of vehicles that does not necessarily mirror choice
sets as envisioned by real-world consumers (Bunch et al.
1993), the method is not meant to provide accurate prediction
of future market shares. Nevertheless, the method is useful for
policy analysis. The following simulation results are based on
the estimated coefficients in the full model in Table 4.
Table 5 shows the average choice probability of the three
types of vehicles under various scenarios involving changes in
vehicle technology and transportation policies. The vehicles in
the simulator are the same as in the discrete choice experiment:
Vehicle A corresponds to a vehicle like the respondent’s pre-
sent one (except its emission level is 15% less because today’s
gasoline cars are cleaner than older models); B is an alterna-
tive-fuel vehicle; and finally, C is an EV. Scenario 1 in Table
5 is the base case of which all the other scenarios are variants.
The base case assigns each vehicle realistic values for the
range, refueling/recharging time, emission rate, and travel cost.
∑Range and refueling/recharging time are 300 miles and less
than 30 minutes, respectively, for vehicles A and B versus 100
miles and five hours for vehicle C, the EV.
 Journal of Public Policy & Marketing 115

Table 4. Parameter Estimates of the Multinomial Logit Vehicle Choice Full Model

Variable Coefficient t-value Odds Ratio Dx*

Alternative-fuel constant .5662 6.78 1.76
(.00)

Electric constant .3054 3.21 1.36

(.00)

Price ($) –.0002 –15.30 .8 1000

(.00)

Maintenance cost ($/year) –.0010 –9.83 .9 100

(.00)

Acceleration
25% worse** –.5584 –11.85 .57
(.00)
25% better** .1374 3.03 1.15
(.00)

Range
100 miles –.8301 –12.10 .44
(.00)
200 miles –.3626 –5.53 .7
(.00)

Refuel rate
300 minutes –.3947 –6.74 .67
(.00)

Emission rate
35%*** –.2381 –3.78 .79
(.00)
65%*** –.4187 –6.62 .66
(.00)

Commuting time (minutes/one way) –.0081 –3.04 .92 10

(.00)

Commuting cost ($/week) –.0149 –12.74 .86 10

(.00)

ACTVALT .9963 10.70 2.71

(.00)

ACTVELEC 1.2805 12.96 3.60

(.00)

CONCALT .5050 5.90 1.66

(.00)

CONCELEC .3757 4.01 1.46

(.00)

Log-likelihood initial (0) –7311.265

Log-likelihood model –6247.271
Chi-square (17) 2127.987
(.00)

*Equals one unless otherwise indicated.

**Relative to the respondent’s present vehicle.
***Relative to a ZEV.
Notes: The t-statistics may be biased, because no correction was made for repeated measurements.
Chi-square statistic = –2 (LMF – LMR) = 216.46; d.f. = 17 – 13 = 4; p = .0000.
116 Clean-Fuel Vehicles

Table 5. Choice Simulator: Average Choice Probabilities Under Alternative Scenarios

Vehicle A Vehicle B Vehicle C

Scenario (Conventional) (Alternative-Fuel) (EV)
1. Base case 31 51 18
2. As in 1, but B’s emission reduced to 35% 29 55 16

Scenarios 3 to 7: As in 1, but B’s and C’s vehicle prices vary

relative to 100 for A
3. B 100; C 110 33 54 12
4. B 110; C 110 38 46 16
5. B 110; C 120 40 49 11
6. B 120; C 120 46 41 13
7. B 100; C 120 35 57 8

Scenarios 8 and 9: As in 1, but C’s cruising range increases

8. 200 miles 28 45 27
9. 300 miles 26 40 35

10. As in 1, but C’s recharge time decreases to 30 minutes 29 46 25

11. As in 10, but C’s range increases to 200 miles 26 39 35
12. As in 10, but C’s range increases to 300 miles 24 33 43

∑Vehicle A’s emission is 85% that of a respondent’s current tive to the other two vehicles. For example, a 40% price dif-
vehicle, vehicle B’s is 65%, and vehicle C is a ZEV. ference reduces the previous two shares to .09 and .14,
∑Vehicle C’s travel costs are half those of A and B.6 respectively. Therefore, EVs will need to compete in all
three factors—price, range, and recharging time—to be
Other things being equal, the alternative-fuel vehicle
competitive.
would capture half this market (Table 5). The EV, despite its
In contrast to the substantial impact of vehicle price and
limited range and slow recharging time, would capture 18%
technological improvements on choice probabilities,
of the market with its lower operating cost and zero emis-
changes in commuting cost and time induce only a small
sions. Therefore, if vehicles B and C matched A in price,
effect even with large differential proportionate changes. A
maintenance cost, and acceleration, they would capture
50% increase in vehicle A’s fuel costs reduces its choice
approximately 70% of the market between them and in the
probability by only 3%, and doubling it, by an additional
process significantly reduce total vehicle emissions.
2.6%. If road pricing were applied to both vehicles A and B
Scenario 2 in Table 5 shows that a further improvement in
such that their travel costs rose by 50%, the EV’s choice
vehicle B’s emission rate from 65% to 35% of a current vehi-
probability would rise by only 3.3%, and a doubling in their
cle raises its average choice probability only from .51 to .55.
travel costs would add a further 3.4%.
Scenarios 3 through 7 show how higher prices for the inno-
Reducing commuting time for the EV by 25%, as might be
vative vehicles B and C reduce their average choice proba-
possible through diamond lanes on expressways, would
bilities. If both were 20% more expensive than A (Scenario
increase its share by a mere 1%, and a further 1% increase
6), their combined shares would fall from .69 to .54. If only
would result from the improbable event that door-to-door com-
the EV’s price is higher by 20% (Scenario 7), vehicle B’s
muting time could be halved by this means. This reflects, in
share would be .57, and the EV’s share would drop to .08.
part, the median reported commuting time of only 20 minutes,
Technological improvements in the EV brings about sig-
so that for half the sample, a 25% reduction in commuting time
nificant increases in its share. Scenarios 8 and 9 allow the
translates into 5 minutes or less. Therefore, given the actual
EV’s cruising range to increase to 200 and then 300 miles
commuting times and costs experienced by Montrealers, road
while prices of all vehicles remain equal. The EV’s share
pricing and carbon taxes do not appear to be effective in per-
increases by 9% and a further 8% in response. Reducing the
suading motorists to purchase cleaner types of vehicles.
EV’s recharging time from five hours to 30 minutes or less
has a similar effect on its share (Scenario 10) to increasing
its range to 200 miles. Finally, a combined reduction in Discussion
recharging time and increase in range to 200 miles in Government mandates have been effective in generating
Scenario 11 and 300 in Scenario 12 increases the EV’s share investment in the manufacture of EVs. Indeed, given the
to .35 with a 200-mile range and .43 at 300 miles. However, absence of overwhelming consumer demand, development
these probabilities drop sharply as the EV’s price rises rela- of EVs could not have been accomplished without the gov-
ernment. Is government intervention also vital to the devel-
opment of the EV market? Prointerventionists concur on the
6This is based on the U.S. Department of Energy and Environmental
basis of various economic arguments, including negative
Protection Agency’s annual fuel cost estimate for Saturn Corp.’s EV1,
which is between $126 and $420 (for electricity costs at $.03–$.10), in
externality, public good, coordination problems, and
comparison with a gasoline-powered vehicle’s annual fuel cost, which economies of scale (e.g., see Ochoa and Schurmann 1997).
averages approximately $696 (Chambers 1996). But, whether governments can sway consumers to become
 Journal of Public Policy & Marketing
EV buyers—and if so, how—is yet to be determined. The
current research provides some insight into this issue.
We found that regulation alone is not sufficient to create a
market for the EV in Canada. Bearing in mind that Canadians
are generally more amenable to government intervention than
U.S. citizens, our findings about Canadians’ insensitivity to
regulation are likely to be conservative for the U.S. market.
Specifically, increasing gasoline prices, subsidizing electric-
ity, or reducing commuting time for the EV (lane privileges)
appears ineffective unless vehicle performance characteristics
(range, acceleration, and recharging rate) are improved.
Therefore, government intervention in the form of industry
subsidies (or partnerships) to better the EV’s performance is
more promising than direct consumer subsidies/levies. The
most critical technical challenge for EV manufacturers is to
develop either fuel cells that generate electricity on board
from a hydrogen source, such as methanol, or batteries that
provide high energy, power density coupled with low cost,
long life, and rapid recharge capacity. Government initiatives
to accelerate the development of fuel cell and advanced bat-
tery technologies, by forming well-funded research consor-
tiums, could enhance the EV performance factors and
strengthen consumer interest. California Fuel Cell Partnership
is a step in this direction. Furthermore, subsidies that direct
the utilities to provide free battery charging devices at the
consumers’ residences and to install charging stations at var-
ious locations in the city would help alleviate consumer fears
regarding the cost and time associated with battery charging.
Among the measures directed at the consumer, price sub-
sidy appears to be the most effective. Price subsidy could be
implemented alone or as part of a feebate program (e.g., Ford
1996). A purchase-price fee can be imposed on dirty vehi-
cles, and the revenues could be used to fund a rebate for
CFVs. Implementation of a feebate program, however, is
likely to be challenging, as shown by computer simulations
(Ford 1996). Therefore, the practical aspects of running a fee-
bate program should be examined thoroughly before execu-
tion. Tax credits for EV buyers are also likely to be effective.
Last but not least, the government can play a beneficial
role by guaranteeing the existence of a market by becoming
the industry’s first customer. As is typical of any new tech-
nology, development and commercialization of the EV is
subject to a learning curve. Therefore, initially limited pro-
duction of EVs will result in higher costs than can be antic-
ipated in the future. Regulations mandating fleet operators
to buy EVs could be a major driving force, at least in the ini-
tial stages of the EV market growth. Furthermore, mandat-
ing the fleets with set routes and times to operate EVs will
enable the automakers to work on the bugs before tackling
the tougher consumer market. Canada’s Federal Smog
Management Plan and The Montreal 2000 Electric Vehicles
Project mandate action in this direction. Similar initiatives
are being undertaken by governments in the United States
and Europe. For example, the U.S. Postal Service has
recently announced the single largest contract for EVs in
U.S. history, involving the purchase of 500 EVs by Fall
2000.
To conclude, although government mandates are useful in
creating an initial demand for the EV, ultimately it is consumer
demand that will determine its long-term viability. Regulation
cannot guarantee widespread consumer adoption of EVs as
117
multipurpose transportation vehicles; performance improve-
ments are essential. Therefore, policymakers can stimulate the
EV market by redirecting expenses to this new technology to
ensure better performance. Otherwise, government interven-
tion, if it results in a premature introduction of the EV to the
public, could result in destruction of the potential market.
Conclusions
In this research, we measured consumer preferences for
CFVs versus the conventional vehicle using a discrete choice
experiment in Montreal. We found that though consumers
had a positive disposition toward CFVs and perceive envi-
ronmental impact as important, they were unwilling to trade
off the standard vehicle performance levels of range, acceler-
ation, and refueling time. We also found that regulation alone
would not be sufficient to create a market for the EV or alter-
native-fuel vehicles. Specifically, increasing gasoline prices
or reducing commuting time (by reserving special lanes) for
these vehicles does not appear to be effective. Instead, the
vehicle performance characteristics are critical for the accep-
tance of these innovative vehicles by Montreal commuters,
and unless the range, acceleration, and recharging issues are
resolved, consumer demand is likely to remain limited.
Therefore, government intervention targeted at improving
the performance of CFVs (e.g., industry subsidies, partner-
ships) would be effective in swaying preferences. Positioning
and target marketing of the CFVs, particularly the EV, are
critical to their acceptance by consumers. Our research iden-
tified three managerially relevant market segments to which
the EV should be distinctly positioned and targeted.
This study extends previous research on consumer prefer-
ence for CFVs in four ways. We included factors reflecting
potential government subsidies/levies to encourage the
choice of CFVs, fully customized choice scenarios, incor-
porated information on consumer attitudes toward the envi-
ronment and technology, and conducted the research in a
different geographic context—Montreal.
Our method, however, is limited, because the choice set
consists of a small number of vehicles that does not neces-
sarily mirror choice sets as envisioned by real-world con-
sumers. Therefore, although the method is useful for obtain-
ing a good understanding of consumer preferences and for
policy analysis, it is not meant to provide accurate market
share predictions. If the latter is the purpose, a more appro-
priate, albeit expensive, method would be the one proposed
by Urban, Weinberg, and Hauser (1996) for premarket fore-
casting of really new products. Our research is also limited
because of attribute levels employed in the choice experi-
ment. Although we took care to ensure that the attribute lev-
els are realistic, findings may not generalize to a break-
through technology that would bring about big shifts in
attribute levels. Another limitation of our method is the nec-
essary assumption of additivity, a typical restriction in trade-
off analysis. Although the method did not allow us to model
directly potential interactions between attributes, our con-
clusions are still valid. Interaction terms are most likely to
be substantial in cases for which attributes are less tangible,
particularly when aesthetic or emotional reactions play a
large role (Hair et al. 1998, p. 409), which is not the case in
the current study. Finally, given the pertinence of educa-
tional campaigns for the passively concerned and uncon-
118 Clean-Fuel Vehicles
cerned consumers, further research should include con-
sumer education among the policy alternatives.
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