Abstract Policies play a pivotal role in fostering the growth of new energy vehicles. This paper delves into the benefits and risks associated with the development of new energy vehicles under varying policy landscapes. Firstly, the intricate relationship between the competition and growth of new energy vehicles and internal combustion engine vehicles is captured through the application of the extended Lotka-Volterra model. Secondly, a simulation flow diagram is constructed, taking into account the actual mediums of policy impact and drawing insights from diverse research methodologies. This flow diagram enables a comprehensive evaluation of environmental benefits, health risks, and traffic pressure. Finally, a critical evaluation of the actual impact of policies on new energy vehicles is conducted, along with an exploration of the root causes of potential policy paradoxes. The findings reveal that a standalone infrastructure support policy, research and development support policy, or carbon tax policy can, in certain periods, lead to an increase in carbon emissions and traffic pressure. Although the driving restriction policy does not exert negative impacts on the environment, health, and traffic at the national level, it can result in a surge in the total vehicle population. Therefore, it is imperative to adopt a combination of policies to mitigate the potential risks associated with any single policy.