Toward supply side incentive: The impact of government schemes on a vehicle manufacturer's adoption of electric vehicles
Zhongwei Chen, Zhi‐Ping Fan, Xuan Zhao
Abstract
Abstract Besides the consumer subsidy scheme, governments have recently implemented a hybrid scheme with an additional dual‐credit scheme on the supply side. It is important to understand the impact of this new practice on a vehicle manufacturer (VM) that provides gasoline vehicles (GVs) and/or electric vehicles (EVs), and the consumer and social welfare. Implementing the dual‐credit scheme leads to higher prices of GVs and EVs, but the effective price of EVs is actually lower. As the cost difference decreases and consumers’ low‐carbon awareness (LCA) increases, the VM prefers the product choice strategy including EVs under the pure subsidy scheme. Surprisingly, the hybrid scheme makes selling EVs feasible even though the cost difference is high and LCA is low. Although the additional dual‐credit scheme can improve the adoption of EVs, its parameter values should be carefully designed because otherwise it will damage the VM's profit and the consumer and social welfare.