In the pressure of excessive resource consumption and serious environmental pollution, governments provide various consumer subsidies to promote sales of energy-saving vehicles, including the energy-saving fuel vehicle (FV) and the pure electric vehicle (EV) in the automobile industry. Utilizing a Hotelling model, this paper explores two competing firms’ decisions on the selection of green technology innovations for vehicles, namely producing either the energy-saving FV or the pure EV, while the two vehicles are different from each other on not only the energy-saving level but also the consumer’s acceptance. We further explore the impact of the government’s consumer subsidy on the profits, environment, and consumer surplus. We find that the two competing firms’ equilibrium selections of green technology innovations for vehicles change as the variable manufacturing cost of the pure EV varies. In particular, when the variable manufacturing cost of the pure EV is moderate, the firm with a lower technology capacity for improving the energy-saving level of the FV (i.e., firm 2) will produce the pure EV while the other firm (i.e., firm 1) produces the energy-saving FV, and the converse is not true. In this case, the decreasing variable manufacturing cost of the pure EV will benefit firm 2 and make firm 1 lose in a competing context. In particular, both firms would charge lower retail prices as the variable manufacturing cost of the EV decreases. In addition, we find that although the consumer subsidy could reduce the purchasing cost for the consumer and promote both firms to produce higher energy-saving level vehicles, a firm can still reduce its retail price under certain conditions because of the competition between the two firms. Finally, we prove that the consumer subsidy can be always beneficial to the environment, while it may hurt the consumer surplus and the firms’ profits under certain conditions. The results provide suggestions for governments to adopt an appropriate consumer subsidy program from perspectives of the consumer, environment, and economy.

In the pressure of excessive resource consumption and serious environmental pollution, government in China proposed a dual-credit policy to promote the production of green vehicles, such as energy-saving fuel vehicle (FV) and electric vehicle (EV). This study explores the firm’s selection of green technology innovations (GTIs) under dual-credit policy, including the energy-saving technology for FV and the technology for producing EV. We found that the firm’s technology capacity of improving the energy-saving level of FV plays an important role in affecting the firm’s selections of GTIs. Specifically, when the technology capacity is moderate, the firm chooses both types of GTIs to produce both EV and energy-saving FV, otherwise he will choose one type only. Moreover, no matter which GTI is selected by the firm, its pricing and environmental efforts decisions keep the same. With the dual-credit policy, we found that it could encourage the production of the EV under certain conditions. Besides this, increasing the green credit of EV can align the economic and environmental interests while increasing standard energy consumption has conflicts in both interests. In particular, when the firm offers FV only or both EV and FV, increasing the price of credit has conflicting interests in economy and environment. However, when the firm offers EV only, increasing the price of credit could improve the firm’s profit without hurting the environment.