Beyond the 1:1 assumption: Quantifying the realistic displacement of electric vehicles for life cycle assessment

The environmental performance of vehicle electrification depends critically on the extent to which electric vehicles (EV) actually replace conventional vehicles (CV). Comparative life cycle assessment (LCA) studies typically rely on an idealized 1:1 displacement assumption, which lacks empirical validation and risks miscalculating environmental benefits. To quantify the realistic displacement effect, this study employs a quasi-experimental approach to estimate the displacement ratio induced by China’s “Dual-credit” policy. Using a firm-level panel dataset of 96 automakers from 2016 to 2023, we implement a continuous Difference-in-Differences model for EV and CV sales, jointly estimating them via Seemingly Unrelated Regressions to obtain the displacement ratio. The policy is found to have a significant asymmetric impact, promoting EV sales while suppressing CV sales. The benchmark results indicate a statistically significant displacement ratio of 88%, suggesting that each policy-induced EV sale displaces only 0.88 CVs. This deviation from unity implies a net market expansion rather than perfect substitution. This finding provides an empirically grounded correction parameter for LCA, suggesting that current evaluations relying on the default assumption may overestimate sustainability gains. Leveraging China’s experience, this research challenges the universal 1:1 assumption and demonstrates the necessity of integrating realistic market dynamics into engineering environmental evaluations.