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Incentive policy formulation for China's electric vehicle market: Navigating pathways to sustainable mobility with a green premium analytical model

Author

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  • Fan, Hang
  • Li, Zhi
  • Duan, Yunjie
  • Wang, Boyu

Abstract

Accurate electric vehicle (EV) sales forecasting is essential for effective policy-making and sustainable industry growth. Existing approaches frequently overlook the green premium - the cost differential between conventional and zero-emission technologies - in EV adoption analyses. Thus, the objective of this research was to model the green premium in the green transition process of battery electric vehicle (BEV) and to guide the formulation of incentive policies to promote industry development. We use an improved Bass diffusion model and genetic algorithms to predict the market penetration rate of BEVs under different green premium scenarios, and we provide policy recommendations based on data from China's electric vehicle market. Our findings show that the market penetration rate of BEVs is highly sensitive to the green premium. Incentive policy subsidies and technological innovation are the main factors affecting the green premium of BEVs. Dual-credit policies and license plate restrictions increase the market penetration rate of BEVs by reducing their production and usage costs. Technological innovations, such as advancements in battery technology and improvements in intelligence levels, fundamentally reduce production costs and increase product premiums, which are key to the market entry and sustainable development of BEVs.

Suggested Citation

  • Fan, Hang & Li, Zhi & Duan, Yunjie & Wang, Boyu, 2025. "Incentive policy formulation for China's electric vehicle market: Navigating pathways to sustainable mobility with a green premium analytical model," Energy Policy, Elsevier, vol. 202(C).
    • Handle: RePEc:eee:enepol:v:202:y:2025:i:c:s030142152500117x
    DOI: 10.1016/j.enpol.2025.114610
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