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A fundemantal and unanswered question for the widely shared goal ofelectrifying passenger vehicles is how the price of electricity, which can varygreatly across countries and regions, affects buying behavior. I make use of anatural experiment in Norway in the period 2021-2022 when large pricedifferences between north and south emerged to estimate the effect ofelectricity prices on the decision to purchase a pure battery-electric vehicle.Simple difference estimates along the border of the price zones as well as adifference-in-difference regression model suggest a significant buteconomically modest effect of a 2-4\% reduction in the probability ofpurchasing an electric vehicle in the high price zone. A counterfactualsimulation suggests that there would have been about 3000 to 6000 fewerelectric vehicles sold in the high-price south compared to a scenario where thesouth had equally low prices as in the north.

With great power (prices) comes great tail pipe emissions? \\ A natural experiment of electricity prices and electric car adoption