Dual-credit Policy Research Articles

Dual-Credit Policy of New Energy Automobiles in China: Corporate Innovation Capability

This study investigates the impact of China’s Dual-Credit Policy on innovation capability in the new energy vehicle (NEV) industry using a difference-in-differences approach with dynamic panel data from 2013 to 2022. We employ multiple innovation measures, including patent counts, valid invention patents, and patent grant rates. Our findings reveal that the policy has a positive and significant effect on NEV innovation, partially mediated by R&D investment. Using GMM estimation to address endogeneity, we find the policy effect varies across subgroups based on location, ESG rating, and ownership type. Dynamic effect analysis shows the policy’s impact intensifies over time. Threshold effect analysis identifies a critical policy intensity level beyond which innovation effects are amplified. Our results have implications for policymakers in designing effective innovation incentives and for firms in strategically responding to regulatory changes in the NEV sector.

How to Promote Traditional Automobile Companies’ Intelligent-Connected Transformation under the New Dual-Credit Policy? A Tripartite Evolutionary Game Analysis Combined with Funding Time Delay

How to Promote Traditional Automobile Companies’ Intelligent-Connected Transformation under the New Dual-Credit Policy? A Tripartite Evolutionary Game Analysis Combined with Funding Time Delay

Does “Dual Credit Policy” Really Matter in Corporate Competitiveness?

Does “Dual Credit Policy” Really Matter in Corporate Competitiveness?

Optimal Production Strategies with Credit Sharing for Automakers under the Dual-Credit Policy

This paper investigates strategic production selections in scenarios of credit sharing between cooperative fuel vehicle (FV) automakers and new energy vehicle (NEV) automakers under the dual-credit policy. Three coopetition production strategies are formulated: the simultaneous production strategy, the FV priority production strategy, and the NEV priority production strategy. On the basis of these three production strategies, this study examines the optimal strategy for both parties in scenarios of no credit sharing, credit sharing dominated by the FV automaker, and credit sharing dominated by the NEV automaker. The simultaneous production strategy is the most conducive to both parties’ coexistence in the vehicle market, and the FV or NEV priority production strategy can be adopted to realize the Pareto optimization of their total profit in certain applicable intervals. Credit sharing will greatly change both parties’ applicable intervals and optimal strategy selections, and credit sharing dominated by FV automakers has been proven to effectively improve their social welfare with a low credit price. Interestingly, a high credit price is sometimes more important for the development of NEVs than the NEV cruising range and substitutability under the dual-credit policy. This study also demonstrates the impact of the credit coefficient, credit equilibrium, and NEV substitutability on both parties’ production decisions and credit sharing. Our study has important managerial implications and can be utilized as strategic guidance for FV/NEV automakers to pursue coopetition under the dual-credit policy.

Structure adjustment strategies and carbon emission performance of automobile supply chain facing the dual credit policy

Structure adjustment strategies and carbon emission performance of automobile supply chain facing the dual credit policy

Correction: Market-incentive environmental regulation and performance of new energy vehicle enterprises: evidence from the dual credit policy in China

Correction: Market-incentive environmental regulation and performance of new energy vehicle enterprises: evidence from the dual credit policy in China

Impact of dual-credit policy on diffusion of technology R & D among automakers: Based on an evolutionary game model with technology-spillover in complex network

Dual-credit policy promotes new-energy vehicle (NEV) automakers to invest in technology R & D by granting NEV with better technological performance to higher NEV-credit. Based on the complex network evolutionary game theory, this paper constructs a technology R & D diffusion model of automakers considering the technology spillover effects, and explores the dynamic impact of adjusting different dual-credit policy parameters on technology R & D diffusion among automakers. Our results show that: (1) increasing the annual increment of NEV-credit requirement ratio can encourage more NEV automakers to invest in technology R & D, but also lead to significant increase in NEV-credit price. (2) Reducing the CAFE target coefficient can simultaneously promote the diffusion of NEV technology R & D and GV green-technology R & D, but excessive reduction can hinder GV automakers from entering NEV market. (3) Lowering the upper limit of credit per unit NEV suppresses the diffusion of NEV technology R & D. (4) Reducing technology-spillover is conducive to the incentive of dual-credit policy on the diffusion of technology R & D.

Free Riding of Vehicle Companies under Dual-Credit Policy: An Agent-Based System Dynamics Model

The dual-credit policy promotes green transition in automobile companies. This paper investigates the dual-credit policy framework in the Chinese automotive industry, with a focus on the phenomenon of free riding. This occurs when traditional vehicle manufacturers within an alliance benefit from the excess credits generated by a transitioning vehicle company without fully committing to their own green transitioning. The focus of this study lies on an alliance constituted by a transitioning vehicle company in partnership with two traditional vehicle manufacturers, all interconnected via equity ties. Utilizing an agent-based system dynamics model, this study explores the strategic behaviors emerging from such credit collaborations and their consequent effects on operational efficiency and financial performance. The findings reveal that 1. free riding negatively impacts the transitioning company’s revenue but benefits the alliance by easing transition pressures and boosting collective performance; 2. stricter policies increase intra-alliance credit transfers and performance, while lower credit prices reduce transfer value and harm the transitioning company’s earnings. This study implies that transitioning vehicle companies with equity-linked partners can benefit from a nuanced understanding of how policy mechanisms interact with alliance dynamics under free riding. By adjusting credit transfer strategies in line with market conditions and policy trends, they can better navigate the dual-credit policy landscape, balancing individual profitability with the needs of the broader alliance and long-term sustainability goals.

Low carbon strategy and coordination for a two-echelon automotive supply chain considering dual credit policy

The dual-credit policy currently plays a crucial role in the automobile industry and significantly contributes to low-carbon operations in the automotive supply chain. This paper employs the game-theoretic approach to build a supply chain comprising a supplier (leader) and an automaker (follower), considers the impact of dual-credit policy, and incorporates vertical spillovers into the supply chain abatement. Both parties lower carbon emissions through vertical spillovers while maximizing profits, thereby studying the low-carbon strategy of the automobile supply chain. Our findings reveal that (1) increased vertical spillover rate reduces the prices of fuel vehicles (FVs) and new energy vehicles (NEVs), raises the low-carbon levels and profits of automakers and suppliers. (2) An increase in the NEV credit ratio under the centralized system raises both price and demand for NEVs, while the low-carbon levels of automotive enterprises are reduced. (3) The carbon emissions of each vehicle under the centralized system will be lower than those of the decentralized system, and the order of total carbon emission levels under both systems is closely related to the credit trading price and credits per NEV. Moreover, we explore the automotive supply chain coordination and find that the Nash bargaining model fully coordinates the supply chain, while the cost-sharing and revenue-sharing contracts do not. Also, numerical analysis shows that the optimal system profit under revenue-sharing is greater than cost-sharing.

Does the dual-credit policy promote the technological development of new energy vehicles? An industry chain reconstruction perspective

With the deep application of automation and digitalization technologies, the global automobile value chains are undergoing a new round of large-scale restructuring, and the traditional supply chain structure taken vehicle manufacturers as the core has been broken. The dual-credit policy (DCP), taking over the subsidies for new energy vehicles (NEVs), plays a vital role in reconstructing, transforming, and upgrading the automobile industry. The target group of DCP is passenger vehicle manufacturers, but it is unclear how its implementation will affect the NEV industry chain. To address this issue, this study examined the impact of the DCP on the innovation performance of automobile manufacturing enterprises using a DID (difference-in-difference) model based on the data of 693 listed advanced manufacturing enterprises in China A-shares from 2014 to 2021. The empirical results show that the DCP has significantly promoted the innovation performance of automobile manufacturing enterprises. In terms of supply chain role heterogeneity, the impact of the DCP on the innovation performance of parts manufacturers is more significant. Regarding enterprise ownership heterogeneity, the DCP has a greater impact on the innovation performance of SOEs(state-owned enterprises). In addition, regarding regional heterogeneity, enterprises in eastern and middle regions are significantly affected by the DCP to improve innovation performance.

Market-incentive environmental regulation and performance of new energy vehicle enterprises: evidence from the dual credit policy in China

Market-incentive environmental regulation and performance of new energy vehicle enterprises: evidence from the dual credit policy in China

New energy vehicles' technology innovation coordination strategy based on alliance negotiation under dual credit policy.

The development of new energy vehicles (NEVs) is one of the effective ways to alleviate carbon emissions, environmental pollution, and energy scarcity in the transportation sector. The Chinese government has innovatively proposed the "dual credit policy," but it is still a hot topic whether it can promote the NEVs' technological innovation. In this study, we construct game models and obtain the technological innovation strategies for NEVs under the dual credit policy, considering that the NEV supply chain contains one manufacturer and N suppliers. Further, we construct bargaining game models and study how to encourage manufacturers and suppliers to enhance technological innovation, realize supply chain coordination, and give the alliance strategy to maximize suppliers' profit. We found that the dual credit policy can effectively stimulate technological innovation, and the higher the credit price or technological innovation credit factor, the higher the technical level of NEVs. The findings could guide the government to adjust and revise the policy. Second, we found that the bargaining games could coordinate the NEV supply chain so that decentralized enterprises can achieve optimal technological innovation under centralized decision-making. Third, we found that suppliers can improve their profits by choosing a suitable alliance strategy under the manufacturer's different negotiating power.

The impact of consumer preferences on the evolution of competition in China's automobile market under the Dual Credit Policy-A density game based perspective.

The evolution of the automobile market is a macro-expression of the behavior of automakers' production decisions. This study examines the competitive environment between new energy vehicles (NEVs) and conventional fuel vehicles (CFVs) and develops a game-theoretical model incorporating consumer utility, automaker profit, and the competitive density of NEVs and CFVs. It aims to assess how consumers' preferences for vehicle range and smart features influence automakers' strategic decisions and the broader market evolution under the Dual Credit Policy. The findings indicate: (1) A low NEV credit price facilitates NEV market size growth, but this growth rate diminishes beyond a certain price threshold; (2) The lower the consumer's range preference, the higher NEV credit price can accelerate the development of new energy vehicles to their saturation value. However, when consumers in the market prioritize smart features, increasing the NEV credit price does not significantly influence the growth of NEV market size. (3) Higher consumer preferences for both range and smart features, combined with increased NEV credit prices, can synergistically accelerate the speed of the NEV market to reach the saturation value and also raise the saturation value of the scale of NEVs. And higher consumer range preference combined with increased NEV credit prices has a more significant effect on the promotion of NEV market size than the combined effect of higher consumer smart preference and increased NEV credit prices. The actual data of China's automobile market is used in the simulation of this model. The model and its simulation results effectively explain and reveal the evolutionary impacts of consumers' range and smart feature preference on the promotion of China's NEVs under the Dual Credit Policy to provide effective technological and theoretical support for the promotion of the sustainable development of China's NEV industry.

Fast or stable: Research on dynamic behaviors of duopoly automakers under the background of energy transformation in the automobile industry

New energy vehicles (NEVs) are crucial way to solving environmental and energy dilemmas. However, the transition from traditional energy vehicles (TEVs) to NEVs is extremely intricate. If the process for TEVs switching to NEVs falls into out order, the automobile industry will be shaken. This paper takes electric vehicles (EVs), representing NEVs, and internal combustion engine vehicles (ICEVs), representing TEVs, as research objects, and constructs a dynamic Gounod duopoly model for the production decisions of two oligopolistic automakers under the dual credit policy. Combining the nonlinear dynamic theory and Cournot game, the influence of policy, market, technology, and cost on the stability of duopoly automakers’ dynamic production game equilibrium and the nonlinear evolution characteristics of Cournot-Nash equilibrium are analyzed systematically. Results show that: (1) In the transition from ICEVs to EVs, if the speed of production adjustment is too fast, the automobile system would trap into chaos and shakeouts, and the social welfare would show volatility. (2) The revised dual credit policy increases the credit ratio and decreases the credit coefficient which enhances the stability of automobile system. This revision may accelerate the transformation from ICEVs to EVs in the automobile industry. Especially, the credit coefficient plays a more significant role. (3) The consumer acceptance for vehicle prices and the range of EV are positively correlated with the production of EVs and the social welfare, and negatively correlated with the production of ICEVs. Nevertheless, the cost of the two types of vehicle had the opposite effect compared price acceptance and range of EVs.

Subsidy policy or dual-credit policy? Evolutionary game analysis of green methanol vehicles promotion

To ensure energy supply, China has developed methanol vehicles since the 1980s. Although methanol vehicles are affordable and technologically mature, their life-cycle emissions are high because China uses coal to produce methanol. China has recently proposed green methanol vehicle (GMV) fueled by methane from CO2 or biomass to reduce emissions. As an essential part of promoting alternative fuel vehicles (AFVs), a policy support scheme is necessary to increase the market share of GMV. To provide a theoretical basis for a policy support scheme before further GMV promotion, this study establishes an evolutionary game model to simulate and compare the effects of different policies on GMV deployment. The results show that by comparing the subsidy policy and the dual-credit policy, the latter is more stable and effective for GMV promotion and application; under the double-points policy, it is more favorable for GMV promotion if the government includes GMV in new energy vehicles.

How to promote the transition of fuel vehicle enterprises under dual credit policy? An improved tripartite evolutionary game analysis with time delay

Under the context of carbon peak and carbon neutrality, new energy vehicle (NEV) is considered as ultimate objective in development of automotive industry. To facilitate sustainable growth of automotive market and ensure a smooth transition for fuel vehicle (FV) enterprises, this paper constructs a tripartite evolutionary game model based on tripartite Hoteling model, which involving NEV enterprises, FV enterprises and governments. The herd effect and time-delay effect are considered to improve the tripartite evolutionary game. Results indicate that: (1) Fund feedback to NEV enterprises will counterintuitively decrease probability of active assistance from NEV enterprises. (2) Governments’ willingness for strict involvement positively correlates with supervision costs but negatively correlates with additional benefits. (3) Time delay in funds leads to weak effect of high default penalties in promoting active assistance of NEV enterprises in early stage, but opposite situation appears in later stage. (4) Higher NEV production proportion counterintuitively stimulates FV enterprises to give up transition. (5) High rewards drive diffusion of herd effect, further increasing competition among vehicle enterprises leading to FV enterprises giving up transition. (6) Herd effect and time-delay effect increase dependence of FV enterprises on funds results in higher sensitivity of credit trading price compared to credit ratio requirement.

Production mode selection for automakers considering product substitution under the dual-credit policy

Purpose This paper aims to compare and analyze the effect of the dual-credit policy and product substitution rate on the automakers’ operational strategies under different production modes (e.g. centralized and independent), and further illustrate which production mode is more conducive to improving new energy vehicle (NEV) development.Design/methodology/approach The decision-making models for a centralized production mode where an integrated automaker produces both NEVs and fuel vehicles (FVs) and for independent production mode where an NEV automaker faces competition from a traditional FV automaker were formulated. The equilibrium solutions of each production mode were obtained by extreme value and game theory methods. The conclusions of the theoretical analysis were further verified with numerical analyses using IBM-MATLAB R2019a. Some management insights could be obtained by comparison analysis.Findings Under the dual-credit policy, an increase in the NEV credit trading price will always raise production quantity of NEVs, but only in an independent production mode where a higher trading price will also bring higher total profits to NEV automakers. In addition, only when the NEV credit trading price is high enough, a rising product substitution rate will be more favorable to NEV production and restrain FV production. Furthermore, an independent production mode is more favorable for the initial production of NEVs, but as each of the two vehicle types captures a certain amount of market share, a centralized production mode will be more conducive to the full replacement of FVs by NEVs.Originality/value The main contributions of this study include the formulation of decision-making models for FVs and NEVs in not only a centralized production mode but also an independent production mode. Moreover, this paper comprehensively analyzes how the dual-credit policy and product substitution relationship affect automakers’ production and pricing decisions. Then, the specific conditions under which each production mode is more conducive to NEV production and sales are summarized. The results proposed in this study provide scientific managerial insights for automakers and policy makers.

Can “dual credit” replace “subsidies” successfully? -based on analysis of vehicle supply chain decisions under the digital transformation of technology

Transportation is the second largest source of carbon emissions today, with more than 80% of the carbon emitted from automobile operations. Hence, reducing the fuel consumption per unit mileage while vigorously developing new energy vehicles has become an inevitable choice for carbon emission reduction. So, this paper applies the differential game approach to investigate the production trade-offs of fuel and new energy vehicles, fuel consumption reduction, and digital technology investment strategies in an automotive supply chain under a dynamic framework. In addition, it further analyzes whether the dual credit policy (DCP) can promote the healthy development of China's auto market after the withdrawal of the purchase subsidy policy for new energy vehicles (PSP). The results show that the implementation of DCP will reduce the sales of fuel vehicles with fuel consumption higher than the critical value (HFCV) but will not promote the willingness of manufacturers to invest in fuel consumption reduction of HFCV; the abolition of the PSP will not reduce the demand for fuel vehicles, nor will it affect the investment in fuel consumption reduction of fuel vehicles, but it will reduce the consumer demand for new energy vehicles. However, assuming that the government appropriately adjusts the intrinsic mechanism of the DCP, such as increasing the requirement for the proportion of new energy vehicles in the sales of cars by manufacturers and the value of the points per unit of new energy vehicles, it will be possible to promote the growth of new energy vehicles while discouraging the production of fuel-intensive vehicles. In addition, If the government abolishes PSP, the maximum rate of change in the profits of the manufacturer, retailer, and the entire supply chain in the parameter change intervals analyzed in our numerical example is only 1.6%, 0.04%, and 0.13%, respectively, which can be said to have minimal impact. The findings provide a theoretical basis for the government's choice of carbon regulation policy for the automotive supply chain.

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

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.

Diffusion model to analyse the performance of electric vehicle policies: An evolutionary game simulation

Previous studies on policy interventions prompting electric vehicle (EV) adoption have mainly involved fragmented analyses of multiple policies using system dynamics models and evolutionary games. This study integrates these two approaches to examine EV policies in mainland China and compares their impact on the interaction between governments, consumers, and manufacturers. The results indicate that the annual sales of EVs are most heavily impacted by license plate restrictions, followed by battery capacity. They are most sensitive to the dual-credit policy (DCP) and least affected by government research and development (R&D) subsidies; meanwhile, all four policies increase the sales of EVs. A substitution relationship exists between the dual-credit policy and the government’s R&D subsidies. A simulation analysis of the different scenarios confirmed the multiple impacts of several policy interventions on the increase in EV sales, which should be explicitly considered in EV policymaking.