Diffusion of new energy vehicles under incentive policies of China: Moderating role of market characteristic

Abstract

Policies have been the main motivator to stimulate the diffusion of new energy vehicles, which are vital to greenhouse gas control and air pollutant governance. However, the policy mechanisms are complicated and sometimes fall into inefficiency. Thus, a two-stage Stackelberg game model is developed in this study to investigate the impacts of four main policies, namely, subsidy, dual credit policy, restrictions on fuel vehicles, and charging pile construction, on new energy vehicle diffusion. Furthermore, the moderating role of market types is incorporated in analyzing policy effectiveness. Thus, policy performances can be evaluated under different markets. Results show that subsidy, dual credit policy, and charging pile construction have a positive effect on new energy vehicle diffusion. And controlling the trading price of new energy credit within a certain range proposed in this study is vital in maximizing policy effectiveness. However, the effect of restrictions on fuel vehicles shows an inverted U-shaped relationship, indicating that imposing excessive restrictions on fuel vehicles is unwise. Moreover, simultaneously implementing the four incentive policies is unnecessary. Replacing subsidy with dual credit policy is advisable, and the government should devote more resources to construct charging piles instead of implementing restrictions on fuel vehicles. Furthermore, the average price sensitivity of the consumption market has a negative moderating effect on policy effectiveness. The government must strengthen the policies under markets with high average price sensitivity. By applying Stackelberg game and computation experiment, this paper theoretically contributes to understanding the impact of multiple policies on the diffusion of new energy vehicles, and gaining insight into the performance of various policies under different consumption markets.