Government Subsidy Strategies for the New Energy Vehicle Power Battery Recycling Industry

Abstract

The rapid development of the new energy vehicle industry is an essential part of reducing CO2 emissions in the transportation sector and achieving carbon peaking and carbon neutrality goals. This vigorous development of the new energy vehicle industry has generated many end-of-life power batteries that cannot be recycled and reused, which has brought serious consequences for the environment. In order to solve the negative externality problem brought by EoL power batteries, how the government intervenes in the development of the market and guides multiple parties to cooperate in recycling EoL power batteries is a question worthy of deep consideration. In this paper, we consider that the government acts before recycling companies and consumers, and recycling companies and consumers act again according to the policy. First, we examine an evolutionary game model of recycling companies and consumers in the absence of the government and explore their choice strategies in various scenarios. Second, we examine how government subsidies to recycling companies and consumers may change the trend toward positive recycling in different circumstances. This paper compares the effects of government policies on subsidies to recycling companies, subsidies to consumers, and subsidies to recycling companies and consumers. Finally, the paper proposes policy suggestions from the perspectives of the government, recycling companies, and consumers. The conclusion suggests that the market does not guarantee a high return for both parties without government subsidies. It is difficult for recyclers and consumers to cooperate proactively in recycling end-of-life power batteries. Thus, it is found that government subsidies to recycling companies and consumers can maximize social welfare at the lowest government cost. Even though government subsidies are currently targeted at recycling companies, they should gradually be extended to consumers as the industry develops.