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.
