RESEARCH ARTICLE Is the environment‐friendly factor attractive to customers when purchasing electric vehicles? Evidence from South Korea Yujin Beak | Kayoung Kim | Kyuho Maeng | Youngsang Cho Department of Industrial Engineering, College of Engineering, Yonsei University, Seoul, South Korea Correspondence Youngsang Cho, Department of Industrial Engineering, College of Engineering, Yonsei University, 50 Yonsei‐Ro, Seodaemun‐gu, Seoul, 03722, South Korea. Email: y.cho@yonsei.ac.kr Funding information National Research Foundation of Korea, Grant/Award Number: NRF‐ 2016R1A2B4009990 Abstract In a bid to reduce greenhouse gas emissions, several countries worldwide are implementing policies to promote electric vehicles (EVs). However, contrary to expec- tations, the diffusion speed of EVs has been rather slow in South Korea. This study analyzes consumer preferences for the technological and environmental attributes of EVs and derives policy and environmental implications to promote market diffusion of EVs in South Korea. We conduct a choice‐based conjoint survey of 1,008 consumers in South Korea and estimate the consumer utility function using a mixed logit model considering consumer heterogeneity. Based on the consumer utility function, we analyze consumers' willingness‐to‐pay (WTP) for EV attributes such as driving range, charging method, charging time, autonomous driving function, carbon dioxide (CO 2 ) reduction rate, and purchase price. The results indicate that the current low acceptance of EVs is due to their relatively high price and lack of a battery charging technology that satisfies consumers' expectations of the charging method and time. One interesting finding is that Korean consumers have a relatively higher WTP for the CO 2 reduction rate of EVs than consumers in other countries; however, they do not consider CO 2 reduction over other technological attributes when choosing EVs. This implies that the rate of CO 2 reduction of EVs is not an important factor for South Korean consumers when buying EVs. We also calculate the effect of CO 2 reduction with the market penetration of EVs and find that CO 2 reduction through the diffusion of EVs depends on the country's electricity generation mix. KEYWORDS conjoint analysis, consumer preference analysis, electric vehicle, greenhouse gas reduction, mixed logit model 1 | INTRODUCTION The transportation sector has recently been interested in implementing alternative fuel vehicles (AFVs) as a solution for climate change. Currently, among the various AFVs, electric vehicles (EVs) have received wider attention as advancements in battery technology are making them lighter and powering them to travel longer distances. Moreover, EVs are generally regarded as promising alternatives to internal combustion engine vehicles (ICEVs) in order to alleviate air pollution and reduce greenhouse gas (GHG) emissions (Huh, Lee, & Shin, 2015; Onat, Kucukvar, & Tatari, 2015; Wolfe & McAuliffe, 2010; World Wildlife Fund, 2014), as they are zero‐emission vehicles when considering tailpipe emissions only. Moreover, EVs present a new business opportunity for the automobile industry, providing safety and convenience to drivers as they can be easily integrated with advanced information and communication technologies (ICTs; Dameri, 2017). Technically, EVs can be more easily combined with new ICTs such as autonomous driving, path management, driving control, and Received: 14 May 2019 Revised: 20 September 2019 Accepted: 8 October 2019 DOI: 10.1002/bse.2412 Bus Strat Env. 2020;1–11. © 2020 John Wiley & Sons, Ltd and ERP Environment wileyonlinelibrary.com/journal/bse 1