Sustaining the advancement of new energy vehicles in the post-subsidy era: Carbon quota mechanisms and subsidy mechanisms for recycling of used batteries

Abstract

The termination of purchase subsidies and the maladaptation of the dual credit policy (DCP) are likely to slow the development of new energy vehicles (NEVs) in China. To explore new drivers that could meet the government's 2035 NEV market penetration targets, this study devises carbon quota mechanisms and used battery recycling subsidy mechanisms, embedding these in a system dynamics model that encompasses societal landscape, industrial policies, and subsystems of NEVs and traditional fuel vehicles. Through simulation, we find that: (1) Carbon trading policy (CTP) is more advantageous than DCP, and involving consumers as primary participants in carbon trading during vehicle use enhances NEV adoption and reduces carbon emissions in production and consumption; (2) Subsidies for ladder utilization of used batteries are more effective than those for their decomposition and regeneration; (3) CTP and used battery recycling subsidies show strong synergistic effects with noticeable differences and complementarity in their static and dynamic impacts. Our study addresses a possible research gap by comparing carbon quota mechanisms and suggests new policies for battery retirement issues.