  The diffusion of electric vehicles (EVs) is studied in a two-sided market
framework consisting of EVs on the one side and EV charging stations (EVCSs) on
the other. A sequential game is introduced as a model for the interactions
between an EVCS investor and EV consumers. A consumer chooses to purchase an EV
or a conventional gasoline alternative based on the upfront costs of purchase,
the future operating costs and the availability of charging stations. The
investor, on the other hand, maximizes his profit by deciding whether to build
charging facilities at a set of potential EVCS sites or to defer his
investments. The solution of the sequential game characterizes the EV-EVCS
market equilibrium. The market solution is compared with that of a social
planner who invests in EVCSs with the goal of maximizing the social welfare. It
is shown that the market solution underinvests EVCSs, leading to slower EV
diffusion. The effects of subsidies for EV purchase and EVCSs are also
considered.
