Network effects and compatibility in the Swedish electric vehicle market

Abstract: The Swedish market for electric vehicles displays network effects due to the interdependence between electric vehicle sales and charging station deployment. This study looks at network effects under incompatible charging standards and demonstrates the potential effects of increasing the level of compatibility. Using panel-data on the vehicle sales and charging station availability in 21 counties from 2011 to 2017, I find that there exists positive and significant network effects on both markets of approximately equal magnitudes, implying a mix of policy instruments is necessary to increase electric vehicle adoption rates. Using a stylized model, I find that steady-state equilibrium car sales and charging station stock could increase by approximately 1.25 % and 6.66 % respectively.