Policy incentives and market mechanisms dual-driven framework for new energy vehicles promotion

Abstract

Incentive policies represented by financial subsidies and dual-credit policies play an essential role in the market cultivation of the new energy vehicle. However, the current promotion is transitioning from a policy-guided stage to a stage driven by both policy and market forces, whose effectiveness has received limited attention. This paper constructs a tripartite evolutionary game model involving the government, automobile manufacturers, and consumers, combining the Hotelling model and evolutionary game theory. We explores the interactive processes and dynamic evolutionary paths of decision-making among the stakeholders in vehicle promotion. The study reveals that: a) Market-driven mechanisms, such as the demonstration effect of new energy ride-hailing, increase the vehicles’ price and market share, with the dual-driven mechanism further enhancing the promotional effect; b) The system exhibits four stable equilibrium strategies, and the target equilibrium will be achieved when the government gains significant social reputation from the environmental benefits; c) The initial selection probabilities of stakeholders significantly impact the equilibrium, while optimizing key elements (e.g., strengthening the influence of tradable driving credits) would partially mitigate the influence of initial probabilities, nudging the evolution towards the target stable strategy. This paper offers theoretical explanations and managerial insights for government decision-making within the dual-driven framework.