Bilateral cooperation or complete autonomy? Research on the trade-in of NEV battery using a differential game with delay effect

Abstract

The trade-in initiative for spent power battery (S-PB) in the new energy vehicle (NEV) industry not only guarantees battery effective recycling but also facilitates extensive adoption of the NEV. However, the trade-in initiative rises a complex and ever changing game involving both the power battery manufacturer (PB-M) and the NEV manufacturer (NEV-M), especially in developing countries where NEV has gained widespread acceptance with thriving new business models for S-PB. This article formulates a set of dynamic differential games to examine how trade-in subsidy, repurchase and wholesale price, delay effect, technology level, market share impacts the promotion of trade-in strategy and the total profit for the NEV-M and PB-M. Three game modes are investigated including the non-cooperative mode, collaborative cooperation mode, and particularly bilateral incentive mode that is widely applied in developing countries. The research finds that: (1) The impact of the trade-in subsidy on overall profit initially increases then decreases. The NEV-M achieves optimal profitability with a smaller trade-in subsidy compared to PB-M. (2) The trade-in subsidy, NEV retail price, and S-PB repurchase price exert positive influences on market demand, whereas the PB wholesale price exhibits a negative impact. (3) The delay effect would stimulate R&D, promotion effort, technology level and market demand for the trade-in initiative, while suppressing overall profits of the NEV-m and PB-M in collaborative cooperation mode. (4) Between PB-M and NEV-M, the R&D cost sharing shrinks while the promotion cost sharing increases with the growth of the trade-in subsidy.