Transition to Low-Carbon Vehicle Market: Characterization, System Dynamics Modeling, and Forecasting

Rapid growth in vehicle ownership in the developing world and the evolution of transportation technologies have spurred a number of new challenges for policymakers. To address these challenges, this study develops a system dynamics (SD) model to project the future composition of Iran’s vehicle fleet, and to forecast fuel consumption and CO₂ emissions through 2040. The model facilitates the exploration of system behaviors and the formulation of effective policies by equipping decision-makers with predictive insights. Under various scenarios, this study simulates the penetration of five distinct vehicle types, highlighting that an increase in fuel prices does not constitute a sustainable long-term intervention for reducing fuel consumption. Additionally, the model demonstrates that investments aimed at the rapid adoption of electric transportation technologies yield limited short-term reductions in CO₂ emissions from transportation. The projections indicate that the number of vehicles in Iran is expected to surpass 30 million by 2040, with plug-in and hybrid electric vehicles (EVs and PHEVs) comprising up to approximately 2.2 million units in the base scenario. It is anticipated that annual gasoline consumption and CO₂ emissions from passenger cars will escalate to 30,000 million liters and 77 million tons, respectively, over the next two decades. These findings highlight the need for a strategic approach in policy development to effectively manage the transition towards a lower-carbon vehicle fleet.