Optimal channel strategy for obtaining new energy vehicle credits under dual credit policy: Purchase, self-produce, or both?

It widely proves that the dual credit policy has positive influences on the penetrations of new energy vehicles (NEVs). But in reality car makers adopt which channel strategy and what conditions of acquiring NEV credits is not clear. To investigate the optimal channel strategy for firms' obtaining NEV credits, we consider a duopoly market consisting of a NEV firm, and a conventional vehicle (CV) firm capable of making both conventional vehicles and NEVs (also refer to a CV-NEV firm), and formulate game-theoretical models to analyze the optimal production decisions of two firms under three typical channel strategies, namely PN strategy (purchasing), SN strategy (self-producing) and SP strategy (hybrid). The findings show that the CV-NEV firm will select PN strategy for obtaining NEV credits when its CVs and NEVs are at a lower technical level, or consumers' environmental awareness is higher, whereas if the cost of required NEV credits per CV is high, the CV-NEV firm prefers SN strategy. Additionally, we also find that keeping a moderate NEV credit trading price is critical to drive the CV-NEV firm' improvement in CV's technical level. The CV-NEV firm with a high technical CV, has a more bargaining power to determine NEV credits trading prices than the NEV firm. Importantly, the findings also reveal the conditions under which the CV-NEV firm can get better off from the hybrid strategy than the two others.