The impact of national environmental policy on the global success of next-generation automobiles

Abstract

In this paper, we identify the most crucial factors of the potential world market success of alternative car designs: fuel cell vehicles (FCVs), hybrid electric vehicles (HEVs), battery electric vehicles (BEVs), and conventional fuel efficient vehicles (FEVs). We assess which vehicle concept is favoured under which regulation regime. We suggest that the global success of a certain technology critically depends on the ability of a regional lead market to leverage and transfer its local success, be it through large cost reductions or the international diffusion of a pioneering environmental regulation, etc. Due to the high cost of FCVs and the lack of strict regulation supporting this radical innovation, incremental innovations, such as new versions of conventional combustion engines and hybrid cars, have the best chances of becoming globally successful.