Optimal models for sustainable supply chain finance: evidence from electric vehicle industry

Abstract

ABSTRACT Prior research studies sustainable supply chain (SC) management for the electric vehicle (EV) industry in which SC members have sufficient funds. However, many EV firms always face the problems of financial constraints, which lead to the importance and urgency for the research of sustainable SC finance. To address this new problem, we consider the members of the electric vehicle supply chain (EVSC) can be risk averse because of the financial risks from uncertain demands. The EV retailer has limited liability and can obtain loans through a bank or an EV manufacturer. We first address a base model in which the EV manufacturer invests in the green research and development (R&D) effort and investigate operational decisions and sustainable SC finance strategies for the EVSC and members. Using the real data from a top-four EV manufacturer in the world, we do a case study to verify the outcomes of the base model and find that the EVSC and members can derive higher profits with MF strategy for the most cases. Furthermore, we extend the base model to consider government subsidies and the EV retailer's service levels, and find that government subsidies and the EV retailer's service are beneficial to the EVSC.