Panle Barwick, University of Wisconsin Madison

Electric vehicle (EV) battery costs have dropped by more than 90\% over the past decade. This study assesses the extent to which this sharp decline in battery costs is attributable to learning-by-doing in battery production, and quantifies the impact of two types of government policies (consumer subsidies and local content requirements) on learning and industry dynamics. Utilizing rich data on product attributes and battery suppliers for every EV model sold in 13 top EV countries, we estimate a structural model of the global EV industry to recover battery costs for each EV model by accounting for consumer choices, EV makers' pricing decisions, and bilateral bargaining between EV makers and battery suppliers over battery prices. Learning-by-doing, estimated at a rate of 14\%, greatly magnified the impact of consumer subsidies on EV adoption and led to positive complementarity among subsidies in different countries. European subsidies and US subsidies benefited other regions more than Chinese subsidies, partly because of larger import shares and a greater extent of sourcing from foreign battery suppliers. China's whitelist policy, which required automakers to use domestically produced batteries to receive EV subsidies, generates significant business stealing while inhibiting the positive global spillovers from consumer subsidies.