Power battery modular innovation investment strategies with government subsidy policies

Abstract

This paper investigates the closed-loop supply chain decisions of battery manufacturers considering innovation investments and different subsidy methods provided by the government. The analysis encompasses four scenarios: whether battery manufacturers engage in innovation investments and whether the government opts for technology R&D subsidies or production subsidies. The study finds that innovation investments by battery manufacturers can enhance the modularization level of batteries. The reward or penalty measures for recycling quality imposed on automobile manufacturers elevate the quality of battery recycling, and also increase the wholesale price of batteries and the retail price of automobiles. After implementing R&D and production subsidies, both the modularization level of batteries and the profits of supply chain members exceed those without subsidies, though these subsidies do not affect the quality of battery recycling. R&D subsidies more effectively promote innovation capacity and product quality among battery manufacturers, whereas production subsidies more significantly boost the profits of both battery manufacturers and automobile manufacturers. Therefore, subsidy measures should be tailored according to different stages of the power battery industry's development. Regardless of whether battery manufacturers invest in innovation or whether the government provides subsidies, collaboration between battery manufacturers and automobile manufacturers is essential to coordinate the closed-loop supply chain. The research findings offer valuable guidance for formulating subsidy policies in the new energy vehicle industry across different periods, and also provide theoretical insights for decision-making behaviors among related enterprises.