Optimal strategies in electric vehicle battery closed-loop supply chain considering government subsidies and echelon utilization

Abstract

This study examines an electric vehicle battery closed-loop supply chain including a battery manufacturer and a retailer, with a focus on echelon utilization and remanufacturing of waste electric vehicle battery. Optimal pricing strategies and technological effort decision of the supply chain members are derived based on a Stackelberg game model. Three government subsidy policies are considered to promote recycling and reuse of waste electric vehicle batteries, namely, no subsidies, production research and development (R&D) subsidies and recycling subsidies, respectively. Results show that both echelon utilization and recycling subsidies can notably contribute to recycling rate of waste electric vehicle batteries. While echelon utilization boosts the profit of retailer and the whole supply chain, it may have a negative impact on manufacturer's inclination to remanufacturing and its profit. Subsidies for production research and development are preferred by the supply chain and its members from the profit-oriented perspective. Further analyses are conducted under hybrid strategies: hybrid government subsidy policy and hybrid recycling mode. Results show that hybrid strategies could significantly increase the demand and recycling volume, thus positively affecting the profitability of the entire closed-loop supply chain. Our study comprehensively considers the game relationships among manufacture and retailer, enhancing the efficiency of recycling and profitability while also providing a theoretical basis for the government to formulate reasonable subsidy policies.