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Diffusion of a new technology and its required infrastructure is a complex process involving various adaptive decision makers interacting with each other, and this is extremely true in diffusion of alternative fuel vehicles. The purpose of this paper is to explore the dynamics of alternative fuel vehicles/infrastructure diffusion through a case study about the diffusion of NGVs (natural gas vehicles) in Shanghai, China.

This paper first provides a case study of the adoption of NGVs in Shanghai; then the major infrastructure and economic indicators, obstacles in the market penetration process are analyzed. Finally, an agent‐based model is established to simulate the diffusion of NGVs in Shanghai.

The findings show that several factors limited the adoption of NGV in Shanghai. The initial distribution of refueling stations can be critical to determining whether the technology/infrastructure system survives to become mature and successful. Therefore, the strong support offered to consumers and equipment suppliers from government is important for the market penetration. These findings are also applicable to other alternative fuel vehicles such as hydrogen.

Little real‐world observations have been carried out on the dynamics of alternative fuel vehicles/infrastructure. The paper can enrich people's understanding about the dynamics of diffusion of alternative fuel vehicles/infrastructure and gives policy implications for initializing and keeping a successful demonstration project.