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Dynamic subsidies for synergistic development of charging infrastructure and electric vehicle adoption

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  • Luo, Qi
  • Yin, Yunlei
  • Chen, Pengyu
  • Zhan, Zhenfei
  • Saigal, Romesh

Abstract

The governmental subsidy is an important instrument for catalyzing the adoption of electric vehicles (EVs). A sustainable subsidy policy must balance between promoting EVs and expanding the charging infrastructure. This paper proposes a dynamic game approach for computing the optimal subsidies, taking into consideration the cross-side network effect between EV adoption and charging infrastructure expansion. The government's objective is to expedite the adoption of EV technology, maintain sustainable EV-to-CS ratios, and maximize cumulative social benefit in the face of uncertainty. The case study of China's EV industry indicates that the existing EV subsidy program, known as the Dual-Credit Policy (DCP), will not be sufficient to support EV growth by 2035 due to inadequate infrastructure investment. In contrast, the optimal subsidies will achieve the target EV market penetration rate and ensure the accessibility to charging infrastructure by 2035. This non-myopic strategy can prioritize the infrastructure expansion, eliminate policy enforcement's monitoring costs, prevent compensation evasion, and help achieve long-term targets by making proactive regulatory policies.

Suggested Citation

  • Luo, Qi & Yin, Yunlei & Chen, Pengyu & Zhan, Zhenfei & Saigal, Romesh, 2022. "Dynamic subsidies for synergistic development of charging infrastructure and electric vehicle adoption," Transport Policy, Elsevier, vol. 129(C), pages 117-136.
    • Handle: RePEc:eee:trapol:v:129:y:2022:i:c:p:117-136
    DOI: 10.1016/j.tranpol.2022.09.028
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