The Green Paradox in NEV Manufacturing: Regulatory Impacts on Innovation from a Stakeholder Perspective

Abstract

This paper explores the paradoxical impact of environmental regulations on green innovation in the manufacturing of new energy vehicles (NEVs) from a stakeholder perspective. We address the dual challenge of accelerating green innovation across various diffusion stages and refining environmental regulations for effective stakeholder engagement, including the central government, upstream suppliers, and internal operations teams. First, we utilize Stackelberg game theory to analyze the strategic interaction and behavioral rationale between local governments and NEV manufacturers at different stages of innovation diffusion, represented by specific parameter sets. Second, we examine the roles of four key stakeholders, exploring their unique impact mechanisms and potential to influence the game’s Nash equilibrium. Finally, the game models’ validity and primary conclusions are corroborated with real-world case studies, prominently including the ongoing shift of Chinese automakers towards NEVs. Results demonstrate that: (1) environmental regulations should be calibrated according to the diffusion stages of green innovation, and (2) misaligned stakeholder interests can lead to environmental regulations that inadvertently hinder, rather than promote, NEV manufacturers’ green innovation efforts.