Range anxiety occurs as a result of an anticipated gap between one’s mileage demand and vehicle’s range. Low fuel prices or low range can widen this gap. However, the relevance of low range is weakened in a high fuel price environment and, similarly, high mileage demand due to low fuel prices has negligible effects on range anxiety when range is high. In this paper, we formalize range anxiety and the manner in which it enters the demand for electric vehicles (EVs) through an implicit interaction between fuel prices and a vehicle’s range. Exploiting interactions between within city variation in marginal electricity prices in Texas and within manufacturer changes in EV range allows us to pin down the private cost of expected range anxiety within a structural model of vehicle choice. Results suggest that the average prospective EV driver expects to bear the equivalent of a $475-660 annual driving tax through the range anxiety mechanism. These estimated range anxiety costs have significant implications for policies aimed at increasing EV ownership, arguing another channel in which the cost of EVs exceeds that of conventional vehicles.
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