Dynamics production strategies of duopoly heterogeneous automakers in the context of energy transition: A bounded rationality perspective

China's dual-credit policy is reshaping competition between new energy vehicle (NEV) and fuel vehicle (FV) manufacturers, raising a practical question: how can firms adjust production and fuel-saving choices without destabilizing the market? We develop a long-term repeated game model with boundedly rational firms to study joint adjustments in NEV output, FV output, and FV fuel-saving effort under dual-credit compliance. Calibrated with Chinese market parameters, the model shows that the speed of firms' adjustments is pivotal: gradual updates keep quantities and profits stable, whereas aggressive updates generate dynamically unstable cycles that amplify credit price shocks. The results indicate that faster fuel-saving adjustments tend to reduce an FV maker's own profits while benefiting its NEV rival; reducing the FV fuel-saving cost coefficient increases FV output and profits while lowering total emissions. Policy implications are twofold. First, regulators can enhance market stability, thereby facilitating NEV adoption, by progressively tightening target stringency, imposing caps on credit-price volatility, and promoting disclosure to reduce informational noise. Second, firms should implement stepwise adjustment rules rather than one-shot changes when responding to credit targets. Together, these practices support a more orderly transition toward low-carbon mobility.