Developing pricing strategy to optimise total profits in an electric vehicle battery closed loop supply chain

Abstract

This paper studies a three-period electric vehicle battery recycle and reuse closed-loop supply chain consisting of a battery manufacturer and a remanufacturer. Differing from other products and existing research, used electric vehicle batteries can be instantly reused for other purposes before recycling, such as energy storage. In order to optimise total profits in the whole supply chain in different batteries period of use, this paper develops the optimal pricing strategy between manufacturer and remanufacturer, discusses the relationships between return yield, sorting rate, recycling rate in order to optimise total profit in different period. The result suggests that, comparing with new battery manufacturing, battery recycling and reusing would contribute to reduce raw material consumption hence reduce environmental impact, but may not gain financial benefits. It also notes that although the close-loop supply chain is nonlinearly complicated, some relationships between parameters can be treated as linear or quadratic. The results of this research will help practitioners to better understand the entire closed-loop supply chain in order to enhance its collaboration.