R&D investment in new energy vehicles with purchase subsidy based on technology adoption life cycle and customers’ choice behaviour

Abstract

Improving the efficiency of subsidy policy to better promote R&D investment in new energy vehicles (NEVs) is of great strategic importance for reducing greenhouse gas emissions and achieving sustainable development. Using the technology adoption life cycle theory, this paper proposes a tri‐level programming model among a government, a NEVs manufacturer and customers to investigate the NEVs manufacturer's R&D investment strategies, the government's purchase subsidy policies, and customers' purchasing decisions. Through theoretical and numerical analysis, it is found that when the manufacturer is to maximize the sales, it commits R&D investment which maximizes sales of NEVs, or its entire R&D investment capital. When the manufacturer is to maximize its profit, it commits R&D investment which maximizes its profit, or makes the sales constraint satisfied. Purchase subsidy can raise the sales of NEVs, but cannot increase manufacturer's R&D investment, or even have a crowding‐out effect on its R&D investment. These findings will help government improve the efficiency of purchase subsidy to better support the development of the NEVs industry.