Reducing Greenhouse Emissions from Light-Duty Vehicles: Supply-Chain and Cost-Effectiveness Analyses Suggest a Near-Term Role for Hybrids

Policy makers generally favor all-electric vehicles over hybrid-electric vehicles because of greater unit effectiveness in reducing carbon emissions. Since both systems use lithium-ion batteries, global demand for batteries is projected to grow 10-fold by 2030. If any step in the global battery supply-chain experiences bottlenecks, shortages can occur. We use a novel cost-effectiveness metric, carbon reduction per unit of battery capacity consumed, to rank emissions reductions accomplished by, alternatively, eight plug-in hybrid-electric vehicles, 75 hybrid-electric vehicles, and 230 mild hybrid-electric vehicles, which have the same total battery capacity as one all-electric vehicle. Our main finding, although counterintuitive, is that, with limited battery supplies, larger reductions in carbon emissions can be accomplished by hybrids than by all-electric vehicles. Insofar as carbon emission reduction is the policy goal, policies need to be reconsidered to ensure that they are not tilted too far in favor of all-electric vehicles relative to hybrids.