Are China's subsidies for electric vehicles effective?
Zhongqi Deng, Peng Tian
Abstract
China has implemented high subsidy schemes to promote the adoption of electric vehicles. This study constructs an industrial organization model to theoretically analyze and numerically simulate the subsidy efficacy of battery electric vehicles in China. We find that subsidies for battery manufacturers and those for electric vehicle manufacturers are equivalent. Fixed subsidies are better for social welfare maximization than linear subsidies are. Simulation based on Chinese empirical data shows that China's subsidies for electric vehicles are effective but not optimal. It could be a better option overall to enable the vertical integration of the supply chain.
Topics & Concepts
SubsidyChinaMaximizationBattery (electricity)WelfareBusinessSocial WelfareElectric vehicleAutomotive engineeringEnvironmental economicsIndustrial organizationEconomicsMicroeconomicsEngineeringMarket economyPolitical sciencePhysicsPower (physics)Quantum mechanicsLawEnergy, Environment, and Transportation PoliciesElectric Vehicles and InfrastructureEnergy, Environment, Economic Growth