The role of charging fee regulation in the adoption of electric vehicles

Electric vehicles (EVs) present a promising solution to address environmental challenges in the transport sector. However, the adoption of EVs heavily relies on the development of charging infrastructure. In addition to subsidies for charging infrastructure, regulations on charging service fees are a common incentive for charging station deployment. We develop a game-theoretic model to examine the impact of charging fee regulations on the deployment of charging stations, EV adoption, and the interests of EV manufacturers, third-party charging service providers, and consumers. We show that regulators may not always need to reduce charging fees with a cap. Instead, increasing the charging fee with a floor may incentivize third-party companies to deploy more charging stations, benefiting consumers. This is particularly true when consumers are sensitive to the number of charging stations, or the cost of station installation is low. Conversely, when EV manufacturers deploy charging stations, regulators should consistently set a charging fee cap to intensify competition among EV manufacturers and enhance social welfare. Furthermore, while a charging station subsidy always encourages more charging stations and higher charging fees than either a charging fee cap or floor, regulating the charging fee can lead to higher social welfare than providing a subsidy. Moreover, a charging fee regulation may need to reduce the share of direct current fast charging (DCFC) to enhance welfare. Additionally, compared with EV manufacturers, a third-party company might deploy more charging stations, but EV manufacturers always deploy a greater share of DCFC than a third-party company.