Effects of Dual Credit Policy and Consumer Preferences on Production Decisions in Automobile Supply Chain

Abstract

New energy vehicles have a significant advantage in energy saving and environmental pollution reduction in the transportation industry; however, they are still at a disadvantage in the market competition. The Chinese government has introduced lots of policy measures to promote the mass adoption of new energy vehicles (NEVs), specifically the dual credit policy. Moreover, consumer’s preferences are vital factors in their purchase decision making. This study focuses on the production decisions of automobile manufacturers under the decentralized and centralized supply chain, considering the factors of both consumer preferences and dual credit policy. First, under the centralized decision mode, higher demand drives the manufacturer to expand production; however, retailers’ profits are harmed. With the increase in consumers’ environmental preference and cognition of endurance ability, market pricing and demand increase under the decentralized decision mode. The cross effects of preferences bring more profits for manufacturers and retailers. Second, the difference in prices and profits widens, under the two decision modes, as increases in consumer preferences’ value. When consumers have higher environmental preferences, manufacturers and retailers should increase the new energy vehicle pricing. Otherwise, they should decrease pricing to increase the market penetration ratio. In addition, the impacts of one preference on the profit difference are related to the other preference.

Automaker’s credits strategy considering fuel consumption and endurance capacity constraints under dual-credit policy in China

“…The research shows that the Dual-credit policy can effectively encourage the supply chain of new energy vehicles to increase investment in research and development, improve the technical level of new energy vehicles, and increase the profit of the supply chain (Ma M. et al, 2021). Peng et al (2021) study the production decisions of automakers under decentralized and centralized supply chains considering consumer preference and two-credit strategy, and the study shows that when consumers have higher environmental preferences, manufacturers and retailers should increase the prices of new energy vehicles (Peng et al, 2021). discuss the level of fuel economy improvement and production of conventional internal combustion engine locomotives (ICEV) and new energy vehicles, research and development (R&D) cost-sharing contracts, and ICEV revenue-sharing contracts aimed at harmonizing the traditional automotive supply chain, and the results show that in some cases, cost-sharing contracts of the supply chain may be better than revenuesharing contracts (Ma H. et al, 2021).…”

Exploring the Development of Automobile Service System in the New Energy Era

“…Consumers are highly sensitive to price. The price of new energy cars is still relatively high compared to traditional cars, so manufacturers need to control costs and improve production efficiency in order to lower the selling price and attract more consumers [13].…”

Research on the development strategy selection of the new energy vehicle industry from the perspective of green credit—Based on the foursquare evolutionary game analysis

“…As influencing factors, government subsidies are crucial to developing new energy vehicles [8][9][10][11]. In addition, the dual credit policy [12][13][14], industrial progress and external factors [15], production costs [16], technical maturity, and R&D funds [17] will have a significant impact on the development of the new energy vehicle industry. Therefore, it is necessary to conduct in-depth research on issues related to the further development of the new energy vehicle industry.…”