Substitution effect of New-Energy Vehicle Credit Program and Corporate Average Fuel Consumption Regulation for Green-car Subsidy

Abstract

The green-car subsidy program since 2009 has been successfully used to boost the nation's new-energy vehicle industry and cut vehicle emissions in China; however, it may cause financial burden on the governments at the same time. Therefore, alternatives including a New-Energy Vehicle Credit Program and Corporate Average Fuel Consumption Regulation (dual-credit policy) have been proposed to reduce the government's expenditure caused by subsidization. To examine the effectiveness of the new regulation, new energy vehicles' development under different scenarios have been quantitatively simulated by using a developed game theory-based analysis model. The obtained results show that: (i) the dual-credit policy can effectively promote the development of new energy vehicles, with this policy (in scenario NSC and SC) the proportion of NEV in the whole auto market will be up to 3.9%; (ii) compared with green-car subsidy, the dual-credit policy can significantly increase the amount of new energy vehicles to two times as much as that of current subsidy level; and (iii) when the dual-credit policy is implemented, green-car subsidy will not further promote the development of new energy vehicles.