Study On Indirect Network Effects On The Electric Vehicle Diffusion And Subsidy Policy

Developing electric vehicles(EV)is an effective way to solve the energy and safety problems in China.China’s EV market is developing rapidly under the strong support of the government.But from 2013,the Chinese government began to implement the gradually declining subsidy policy for EVs,and completely abolish the subsidy policy by 2021.The adjustment of subsidy policy has affected the development of EV market to some extent.In addition,charging pile is an indispensable infrastructure for the development of EVs.Because of the indirect network effects between EV and charging infrastructure,the construction and development of charging pile plays an important role in the EV diffusion.However,at present its construction quantity is far from meeting the diffusion needs of EVs,which is one of the important factors hindering the development of EVs.How to continue to develop healthily and rapidly in the EV industry is an important problem to be solved urgently under the current situation of declining subsidy policy and lacking of charging infrastructures.Considering the indirect network effects between the EV market and the charging infrastructure market,this paper constructs a three-stage Stackelberg game model based on the government,the charging pile investor and the EV consumers to study the impact of the game behavior among the EV consumers,the charging pile investors and the government on the EV market share,the quantity of charging piles construction and the subsidy policy in EV industry.Then,the paper using the relevant data of EV industry in Shenzhen to make sensitivity analysis and scenario analysis.It is found that neglecting the indirect network effect can easily lead to the failure of EV market diffusion,which greatly increases the financial burden of EV diffusion.Considering the indirect network effect,the subsidy expenditure can be saved by about 40%.Under the government’s subsidy policy of gradual decline,it is suggested that the purchase subsidy of EVs be inclined to the subsidy of charging infrastructure.Under other conditions unchanged,with the reduction of government subsidies,the market share of EVs is also shrinking.From the perspective of welfare maximization,the subsidy strategy derived from this model is superior to other possible subsidy strategies.Then,sensitivity analysis is used to discuss the influence of energy price fluctuation on the diffusion of EVs.The results show that consumers are more sensitive to gasoline price fluctuations than charging prices.And it is more effective to subsidize the purchase of EVs at high gasoline prices.