Over 2 million hybrid-electric vehicles (HEVs) have been sold in the United States since their introduction over a decade ago. However, diffusion is not uniform: sales are clustered in particular regions such as the West Coast, around Washington DC and north into New York and New England. In this research I am exploring the extent to which these adoption patterns are explained by two alternative theories: 1) market heterogeneity, due to factors such as regional variation in government incentives, gasoline prices and consumer demographics; and 2) social contagion, as information about the innovation spreads through consumers’ social networks; in particular, the extent to which social contagion is primarily local, or whether links between geographically distant nodes play an important role in adoption.