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Government Subsidies and Manufacturer Investment Decisions in the Electric Vehicle Industry: An Evolutionary Game Analysis

In: Proceedings of the 2025 5th International Conference on Informatization Economic Development and Management (IEDM 2025)

Author

Listed:
  • Liu Cao

    (Nanjing University of Aeronautics and Astronautics, College of Economics and Management)

  • Qingmei Tan

    (Nanjing University of Aeronautics and Astronautics, College of Economics and Management)

Abstract

This study analyzes the interaction between government subsidy policies and electric vehicle (EV) manufacturers’ investment decisions using an evolutionary game theory model. The government can choose to provide subsidies or not, while EV manufacturers decide whether to invest in production based on the subsidies offered. The model shows that government subsidies can encourage investment by manufacturers, but the optimal subsidy level depends on the strategic behaviors of both parties. Numerical simulations reveal that balanced subsidy policies, considering both production costs and social benefits, lead to a stable equilibrium. This research provides insights into the design of effective subsidy policies to promote the growth of the EV industry.

Suggested Citation

  • Liu Cao & Qingmei Tan, 2025. "Government Subsidies and Manufacturer Investment Decisions in the Electric Vehicle Industry: An Evolutionary Game Analysis," Advances in Economics, Business and Management Research, in: Meilin Zhang & Au Yong Hui Nee & Khurram Shehzad & Sameer Kumar & Ehsan Javanmardi (ed.), Proceedings of the 2025 5th International Conference on Informatization Economic Development and Management (IEDM 2025), pages 88-94, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-724-3_9
    DOI: 10.2991/978-94-6463-724-3_9
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