Discrete Choice Analysis:H2 FCV Demand Potential

Cory Welch

H2 Scenario Analysis WorkshopWashington, D.C. , January 31, 2007

2

Overview

• Motivation for work

• Methodology

• Relative Attribute Strengths

• Insights and Recommendations

• Responses to Key Questions

3

Acknowledgments

Special thanks toAndy Goett (1), Bob Baumgartner (1), Eric Rambo (1), Sergei Rodkin (2) for close collaboration

and to

(1) PA Consulting, (2) Knowledge Networks

for insightful feedback

Klaus Bonhoff -- DaimlerChryslerSig Gronich -- DOEFred Joseck -- DOE

Craig Stephan -- FordBritta Gross -- GM

Moshe Ben-Akiva -- MITJeroen Struben -- MIT

Kenneth Train -- NERAMaggie Mann -- NREL

Keith Wipke -- NRELTonya Huyett -- NREL

Trish Bross -- NRELDon Jones -- RCF

4

Motivation

• Quantify sensitivity of H2 FCV market potential to station convenience

• Move beyond “% stations” or “distance to nearest station” metrics

• Input quantified parameters into HyDIVE™(other models?) for data driven analysis– quantify “chicken-and-egg” barrier– develop robust, high leverage policies/strategies

5

Methodology

• Discrete Choice Analysis– consumers “choose” among vehicles w/diff. attributes– through repeated choices, sensitivities are determined

• Responses being obtained from 500 households– Knowledge Networks’ Knowledge PanelSM

– 10 choice tasks per respondent, 2 decisions per task– 500 x 10 x 2 = 10,000 choice observations

• NREL used BIOGEME* for parameter estimation, model development (logit, nested logit, etc.)

* Bierlaire, M. (2003). BIOGEME: A free package for the estimation of discrete choice models , Proceedings of the 3rd Swiss Transportation Research Conference, Ascona, Switzerland.

6

Target Region: Southern California

∝

∝

7

Local Trips (w/in 20 mi. of

home)

Driving Radius (e.g., 150 miles)

Medium Distance

Trips (20-150 mi. from home)

Long Distance Trips (>150 mi.

from home)

Home

Local Trips (w/in 20 mi. of

home)

Driving Radius (e.g., 150 miles)

Medium Distance

Trips (20-150 mi. from home)

Long Distance Trips (>150 mi.

from home)

Home

Spatial Characterization

8

Example: “Choice Task”

9

Why are results “preliminary”

• Data recently received (Jan. 25)

• Subset of total dataset (451/500)

• Doesn’t yet consider consumer heterogeneity– via segmentation and/or “random” coefficients

• Interactions/non-linearity not fully explored

• Demographic balance to be quantified

However, results are considered to be directionally accurate, and all estimated coefficients are statistically significant.

Tornado Chart: H2 FCV Market Share Potential

0.8 1 1.2 1.4 1.6 1.8 2

Extra Time to Local Stations

d. Dist. Trips: No Adv Planning

Driving Radius

Price Difference

Fuel Cost Difference

Possible Long Distance Trips

0 min3 min10 min

Reference Case 2

0 % 50 % 90 % 100 %

Reference Case 2

100 mi 150 mi 200 mi

Reference Case 2

-15 %0 %15 %

Reference Case 2

-50 %0 %50 %

Reference Case 2

0 % 50 % 90 % 100 %

Reference Case 2

Market Share Potential -- Relative to Reference

DescriptionNonLinMod14-450Responses.matee next slide.

0.8 1 1.2 1.4 1.6 1.8 2

Extra Time to Local Stations

d. Dist. Trips: No Adv Planning

Driving Radius

Price Difference

Fuel Cost Difference

Possible Long Distance Trips

0 min3 min10 min

Reference Case 2

0 % 50 % 90 % 100 %

Reference Case 2

100 mi 150 mi 200 mi

Reference Case 2

-15 %0 %15 %

Reference Case 2

-50 %0 %50 %

Reference Case 2

0 % 50 % 90 % 100 %

Reference Case 2

Market Share Potential -- Relative to Reference

DescriptionNonLinMod14-450Responses.matee next slide.

Med. Distance Trips: No Advance Planning

*see previous slide

700/

350

bar?

Sta

tion

loca

tion,

tim

ing

stra

tegy

Veh

icle

vs.

fuel

, st

atio

n in

cent

ives

How NOT to read this chart: widest is “most important”

?

11

HyDIVE Example – “Static”

L.A. L.A.

Gas stationH2 station B: 400 StationsA: 40 Stations

12

HyDIVE Example – “Static”

Greater demand(1) potential due to improved station coverage/convenience

L.A. L.A.

B: 400 StationsA: 40 Stations

(1) All else equal (e.g., net vehicle price, availability, etc.)

Vehicle Demand(1)

13

HyDIVE Example – “Static”

Vehicles/Station(1) (B) Vehicles/Station (A)<< ?

However,

(1) An indicator of station profitability

L.A. L.A.

B: 400 StationsA: 40 Stations

Vehicles per Station(1)

14

What is your most important consideration when choosing where to refuel your vehicle?

0%

10%

20%

30%

40%

50%

60%

70%

Low-pricedfuel

Convenientlocation

Access to apreferred

brand of fuel

Avoiding awaiting line to

refuel

Availability ofadditionalservices

Station Selection Considerations

Helps explain relative strengths of “time to

station” and “fuel cost”

15

Convenient Time to Station

What is the longest time you would drive to a refueling station and still consider it to be “convenient” ?

0%

10%

20%

30%

40%

50%<2 2-5

5-10

10-1

515

-20

20-2

525

-30

>30

Drive Time (minutes)

0%

20%

40%

60%

80%

100%

Cum

ulat

ive

(%)

Average = 6.4 minutes

What is the longest time you would drive to a refueling station and still consider it to be “convenient” ?

0%

10%

20%

30%

40%

50%<2 2-5

5-10

10-1

515

-20

20-2

525

-30

>30

Drive Time (minutes)

0%

20%

40%

60%

80%

100%

Cum

ulat

ive

(%)

Average = 6.4 minutes

Helps explain low sensitivity of “time to

station” below 10 min.

16

“Comfort Level” – No Stations NearbyWould you be comfortable estimating whether you had

enough fuel in your tank to travel to a destination with no refueling stations nearby?

0%

10%

20%

30%

40%

50%

DefinitelyNot

ProbablyNot

ProbablyYes

DefinitelyYes

Would you be comfortable estimating whether you had enough fuel in your tank to travel to a destination with no

refueling stations nearby?

0%

10%

20%

30%

40%

50%

DefinitelyNot

ProbablyNot

ProbablyYes

DefinitelyYes

Helps explain why some are

sensitive to “medium distance

trip” coverage

17

Insights and Recommendations

• Diminishing returns of local coverage once local time to station is within 5-10 minutes

• Adding more stations induces demand, but depending on the starting point,– can reduce overall station utilization/profitability.– In such a case, adding more stations is not high leverage.

• Vehicle demand would need to increase via other means (e.g., price incentives, vehicle availability, fuel cost reductions, etc.)

• The spatial, temporal behavior of this highly complex, non-linear system needs rigorous modeling/analysis considering uncertainty in various inputs to develop robust policies and strategies that are likely to be effective.

18

Additional Slides

19

“Market Share Potential” Calculation

• Can be thought of as an equilibrium, upper bound market share, assuming:– H2 FCV “option” universally available (all makes/models)– All consumers “aware” of H2 FCV technology option– All consumers are “aware” of actual levels of station coverage

(i.e., no difference b/w reality and perception)

• The dynamics of growth in “availability” and “awareness” would lower actual forecast market share relative to the “potential”– To be incorporated in future analyses (beyond Apr 07)

20

Refueling LocationWhere do you most frequently refuel your vehicle?

0%

10%

20%

30%

40%

50%

60%

70%

Nearest home It dependsmainly on

where I amwhen my tank

is low

B/w work &home (e.g.,

along freewayor other road

to work)

Nearest work Other

Where do you most frequently refuel your vehicle?

0%

10%

20%

30%

40%

50%

60%

70%

Nearest home It dependsmainly on

where I amwhen my tank

is low

B/w work &home (e.g.,

along freewayor other road

to work)

Nearest work Other

21

Importance of Vehicle BenefitsWhich of these vehicle benefits is most important

to you?

0%

10%

20%

30%

40%

50%

Virtuallyeliminate oilimports for

vehicle

Reducegreenhouse

gas emissions

Eliminatesmog-causing

emissions

None areespeciallyimportant

Which of these vehicle benefits is most important to you?

0%

10%

20%

30%

40%

50%

Virtuallyeliminate oilimports for

vehicle

Reducegreenhouse

gas emissions

Eliminatesmog-causing

emissions

None areespeciallyimportant

22

Global WarmingHow concerned are you about global warming?

0%

10%

20%

30%

40%

VeryUnconcerned

VeryConcerned

How concerned are you about global warming?

0%

10%

20%

30%

40%

VeryUnconcerned

VeryConcerned

23

Pollution/SmogHow concerned are you about local air pollution or

smog?

0%

10%

20%

30%

40%

VeryUnconcerned

VeryConcerned

How concerned are you about local air pollution or smog?

0%

10%

20%

30%

40%

VeryUnconcerned

VeryConcerned