Government subsidy strategies for power batteries of new energy vehicles: the perspectives of R&D and recycling

Shizhen Bai, Hao He () and Ye Li ()
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Shizhen Bai: Harbin University of Commerce
Hao He: Harbin University of Commerce
Ye Li: Shanghai Maritime University

Palgrave Communications, 2025, vol. 12, issue 1, 1-9

Abstract: Abstract Amid global efforts to achieve carbon neutrality and promote circular economy, the new energy vehicle (NEV) supply chain has emerged as a critical focus of industrial policy optimization. This study develops a Stackelberg game model where battery manufacturers act as leaders and NEV manufacturers as followers to investigate optimal decision-making strategies in the supply chain. We examine four distinct scenarios: no government subsidy (n-strategy), government subsidy for battery manufacturers (b-strategy), government subsidy for vehicle manufacturers (m-strategy), and dual subsidy (bm-strategy). Our analysis reveals several key findings: (1) any form of government subsidy enhances both power battery research and development (R&D) levels and waste recovery rates compared to the non-subsidy scenario; (2) from the perspective of consumer surplus and social welfare, the optimal subsidy strategy follows the hierarchy: bm ≻ m ≻ b ≻ n; (3) higher subsidy levels do not necessarily translate into increased government revenue. Under both high and low regulatory cost scenarios, the dual subsidy (bm) and vehicle manufacturer subsidy (m) strategies generate optimal government net income when subsidy values are appropriately calibrated. These findings provide valuable insights for policymakers in designing effective subsidy mechanisms for the NEV industry, ultimately contributing to the optimization of economic and environmental benefits in this rapidly evolving sector.

Date: 2025
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DOI: 10.1057/s41599-025-05103-4

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