Simulating the market penetration of cars with alternative fuelpowertrain technologies in Italy

• Discrete choice model and a Monte Carlo simulation model are used to estimate the market penetration of cars with alternative fuelpowertrain technologies in Italy.
• The subsidies enacted by the Italian government in favour of the low CO2 emitting cars appear to favour mostly the diesel cars.
• A three-fold increase in the BEVs range does not change their market share significantly (about 2%).

This paper evaluates the market penetration of cars with alternative fuelpowertrain technologies in Italy under various scenarios. Seven cars on sale in 2013 are considered: the Ford Fiesta (diesel), the VW Polo (gasoline), the Fiat Punto Evo (bi-fuel – CNG), the Natural Power Alfa Romeo Mito (bi-fuel – LPG), the Toyota Yaris (hybrid – gasoline), the Peugeot iOn (BEV – owned battery), the Renault Zoe (BEV – leased battery). A Mixed Error Component Logit model is estimated based on data collected via a stated preference choice survey administered in 2013 in various Italian cities. The model's parameters are then used to build a Monte Carlo simulation model which allows evaluating, under different scenarios, the market penetration of the seven cars. The main findings are that (a) the subsidies enacted by the Italian government in favour of the low CO2 emitting cars appear to favour mostly the Ford Fiesta (diesel); (b) a three-fold increase in the BEVs range would not change their market share significantly (about 2%); and (c) only a combination of changes such as the introduction of a subsidy equal to €5000, the decrease of the purchase price for BEVs by €5000, the increase in the battery range, and the increase in the conventional fuel price would significantly increase the BEVs' market share, raising it to about 15%.