Production and recycling of new energy vehicle power batteries under channel encroachment and government subsidy

Abstract

With the advancement of new energy vehicles, power battery recycling has gained prominence. We examine a power battery closed-loop supply chain, taking subsidy decisions and battery supplier channel encroachment into account. We investigate optimal prices, collected quantities and predicted revenues under various channel encroachment and subsidy decision. It analyzes the effects of channel costs and subsidy levels on predicted revenues and social welfare. We discover that when the channel encroachment is under a particular threshold, it can accomplish a “win–win.” Both the channel encroachment and subsidy strategies are conducive to promoting battery recycling, where the channel cost and the subsidy level are key factors affecting enterprise profits and social welfare. And high subsidies are always conducive to battery recycling, but this will undoubtedly bring severe fiscal stress to the government. In addition, if the government's goal is to reduce environmental impacts and subsidies, the government will adopt a subsidy strategy to reduce environmental pollution when the recycling revenue is significantly small. Otherwise, the government will not provide subsidies. Furthermore, we further examine the equilibrium decisions of enterprises and governments under risk-averse conditions to demonstrate the robustness of the results.