Auto finance in the electric vehicle transition

Abstract

finance and economics discussion series federal reserve board, washington, d.c. issn 1936-2854 (print) issn 2767-3898 (online) auto finance in the electric vehicle transition elizabeth klee, adair morse, chaehee shin 2024-065 please cite this paper as: klee, elizabeth, adair morse, and chaehee shin (2024). “auto finance in the electric vehicle transition,” finance and economics discussion series 2024-065. washington: board of governors of the federal reserve system, doi.org/10.17016/feds.2024.065. note: staff working papers in the finance and economics discussion series (feds) are preliminary materials circulated to stimulate discussion and critical comment. the analysis and conclusions set forth are those of the authors and do not indicate concurrence by other members of the research staff or the board of governors. references in publications to the finance and economics discussion series (other than acknowledgement) should be cleared with the author(s) to protect the tentative character of these papers. auto finance in the electric vehicle transition elizabeth klee, adair morse, chaehee shin∗ july 13, 2024 abstract financing cost differentials tilt the calculus for households toward electric vehicles (evs). using 85 million observations on u.s. auto loans, we study households’ credit risk by engine type, seek to uncover the sources and ask if credit risk differentials are being priced. we find that ev borrowers default 29% less relative to internal combustion engine vehicle …

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