Policy Synergies and Market Dynamics in Green Vehicle Adoption: A Game-Theoretic Framework

The automotive industry's transition towards electric vehicles (EVs) is shaped by a complex interplay of government policy and market dynamics, particularly in regions implementing supportive frameworks. A key area of focus is understanding the interaction between dual-credit policies—which target manufacturers and fuel consumption reduction—and subsidies aimed at expanding charging infrastructure. This analysis employs a game-theoretic framework to model these interactions, moving beyond simple linear analysis to capture the strategic decision-making processes of various market players.

The core finding of the model indicates a significant synergistic effect: the combination of dual-credit policies and charging infrastructure subsidies can lead to a substantial increase in EV adoption, estimated at around 7%. Crucially, the subsidies are shown to enhance the price responsiveness of EV adoption to changes in the credit policy, while simultaneously mitigating the price sensitivity associated with traditional fuel vehicles. This suggests that policy instruments targeting both supply (manufacturer incentives) and demand/service (infrastructure support) operate more effectively when deployed in tandem.

Furthermore, the research highlights the role of consumer environmental preferences as a dynamic variable. As public awareness regarding environmental impact grows, these preferences exert a significant influence on corporate production decisions. Higher levels of consumer green preference are demonstrated to generate greater profitability for manufacturers, as they incentivize the development and deployment of cleaner technologies and higher service levels from charging providers. This creates a feedback loop where policy signals, consumer sentiment, and corporate strategy mutually reinforce the transition.

From a strategic standpoint, these findings suggest that policymakers should move towards integrated strategies rather than siloed interventions. The challenge lies in optimizing the timing and structure of these policies to ensure they maximize the intended environmental outcomes while minimizing unintended market distortions. For businesses operating in this sector, the implications point towards the need to build supply chain resilience around green technology and to anticipate regulatory shifts driven by evolving consumer demands. The long-term trend points toward a market where policy efficacy is determined by the degree to which demand-side signals are aligned with supply-side regulatory mechanisms.