The social-economic-environmental impacts of recycling retired EV batteries under reward-penalty mechanism

Abstract

With the increasing popularity of Electric Vehicles (EVs), a large number of EV batteries are intensively reaching their end-of-life, which has posed substantial challenges in ecological protection and sustainable development. However, the traditional subsidy mechanism is not effective in the current recycling market. Moreover, it is not conducive for guiding the EV industry to reduce dependence on the governmental financial support. As the reward-penalty mechanism has been successfully applied in similar fields, such as the recycling of waste portable batteries, it is expected to become a feasible alternative policy to promote the recycling of retired EV batteries. Therefore, this study aims to investigate the social-economic-environmental impacts of recycling retired EV batteries under reward-penalty mechanisms by developing a Stackelberg game theoretical model. Three scenarios are proposed and compared: S1 no policy intervention, S2 subsidy mechanism, and S3 reward-penalty mechanism. The obtained results show that:(i) Compared with the subsidy mechanism, the reward-penalty mechanism presents greater effects on recycling rate and the social welfare; (2) Under the subsidy mechanism, consumer surplus and the profit of EV manufacturer are two main driving factors of the social welfare. Under the reward-penalty mechanism, the reduced environmental burden tends to be another key contribution; (3) A relatively low minimum recycling rate favors the environmental benefit, consumer surplus and profit of EV manufacturer, while a relatively high minimum recycling rate is beneficial to reduce both the policy implementation cost and environmental burden caused by untreated EV batteries.