Automotive industry development versus environment and policy:An integration of system dynamics and life cycle assessment

Bowen Cai and Yingqi Liu

International Review of Economics & Finance, 2025, vol. 103, issue C

Abstract: This study integrates system dynamics (SD) and life cycle assessment (LCA) to investigate the dynamic mechanisms and impact pathways shaping the development of China's automotive industry. Through an extensive review of relevant literature, a comprehensive analysis of key factors influencing the industry's growth was conducted, leading to the formulation of causal loop diagrams and stock-flow models. The dynamic equations and parameterization were established accordingly. Life Cycle Assessment (LCA) methodology was integrated into the model to evaluate the environmental impact of electric vehicles (EVs) across their full lifecycle, from production and use to end-of-life disposal. This allowed for a more holistic assessment of pollutant emissions and resource consumption, providing a clearer understanding of how different factors influence the sustainability of EV adoption. Upon validating the model, system simulations were performed to analyze the development trajectory and critical factors driving the adoption of new energy electric vehicles (EVs). Based on the simulation results, this study offers policy recommendations aimed at promoting the sustainable growth of China's automotive sector. These recommendations focus on areas such as government subsidies, technological breakthroughs, the construction of charging and battery-swapping infrastructure, consumer market development, and environmental regulation based on LCA findings. The inclusion of LCA ensures that these policies not only support industry growth but also mitigate environmental impacts, providing practical and strategic insights for ensuring the long-term viability and sustainability of China's automotive industry.

Keywords: System dynamics; China's automotive industry; Impact pathways (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025005453

DOI: 10.1016/j.iref.2025.104382

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