IDEAS home Printed from https://ideas.repec.org/a/bla/popmgt/v31y2022i12p4333-4350.html
   My bibliography  Save this article

Promoting electric vehicles: Reducing charging inconvenience and price via station and consumer subsidies

Author

Listed:
  • Lingling Shi
  • Suresh P. Sethi
  • Metin Çakanyıldırım

Abstract

Environmental and energy independence concerns lead to government subsidies for electric vehicles (EVs). Operational decisions for a government are (i) to incentivize EV ownership by a direct consumer subsidy, a station subsidy that reduces charging inconvenience, or by both subsidies; and (ii) to minimize subsidy expenditure or to maximize EV adoption level. We model the interactions between the government and the charging supplier as a Stackelberg game and study the optimal structure of subsidies by incorporating charging inconvenience. We prove that this inconvenience is decreasing convex in the number of stations. In the expenditure minimization case, the optimal policy depends on the government adoption target and the charging station construction cost. If the adoption target is below a threshold that depends on the construction cost, the government provides pure consumer subsidy or no subsidy; otherwise, a combination of consumer and station subsidies is optimal. As the construction cost increases, the charger builds fewer stations, regardless of the subsidy type. We establish that expenditure minimization and adoption maximization yield the same subsidy policy if the charging inconvenience is linear. In a real‐life case, we find numerically that a station subsidy alone is optimal if the construction cost is not low but the adoption target is low. Besides, a long driving range reduces the need for subsidies significantly if the construction cost is high, whereas a long charging time necessitates high expenditure allocated mostly to a station subsidy.

Suggested Citation

  • Lingling Shi & Suresh P. Sethi & Metin Çakanyıldırım, 2022. "Promoting electric vehicles: Reducing charging inconvenience and price via station and consumer subsidies," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4333-4350, December.
  • Handle: RePEc:bla:popmgt:v:31:y:2022:i:12:p:4333-4350
    DOI: 10.1111/poms.13871
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/poms.13871
    Download Restriction: no

    File URL: https://libkey.io/10.1111/poms.13871?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Jonathan Chemama & Maxime C. Cohen & Ruben Lobel & Georgia Perakis, 2019. "Consumer Subsidies with a Strategic Supplier: Commitment vs. Flexibility," Management Science, INFORMS, vol. 65(2), pages 681-713, February.
    2. Egbue, Ona & Long, Suzanna, 2012. "Barriers to widespread adoption of electric vehicles: An analysis of consumer attitudes and perceptions," Energy Policy, Elsevier, vol. 48(C), pages 717-729.
    3. Ho-Yin Mak & Ying Rong & Zuo-Jun Max Shen, 2013. "Infrastructure Planning for Electric Vehicles with Battery Swapping," Management Science, INFORMS, vol. 59(7), pages 1557-1575, July.
    4. Neaimeh, Myriam & Salisbury, Shawn D. & Hill, Graeme A. & Blythe, Philip T. & Scoffield, Don R. & Francfort, James E., 2017. "Analysing the usage and evidencing the importance of fast chargers for the adoption of battery electric vehicles," Energy Policy, Elsevier, vol. 108(C), pages 474-486.
    5. Langbroek, Joram H.M. & Franklin, Joel P. & Susilo, Yusak O., 2016. "The effect of policy incentives on electric vehicle adoption," Energy Policy, Elsevier, vol. 94(C), pages 94-103.
    6. Geoffrey G. Parker & Burcu Tan & Osman Kazan, 2019. "Electric Power Industry: Operational and Public Policy Challenges and Opportunities," Production and Operations Management, Production and Operations Management Society, vol. 28(11), pages 2738-2777, November.
    7. Fan, Yingling & Guthrie, Andrew & Levinson, David, 2016. "Waiting time perceptions at transit stops and stations: Effects of basic amenities, gender, and security," Transportation Research Part A: Policy and Practice, Elsevier, vol. 88(C), pages 251-264.
    8. Jiayi Joey Yu & Christopher S. Tang & Zuo-Jun Max Shen, 2018. "Improving Consumer Welfare and Manufacturer Profit via Government Subsidy Programs: Subsidizing Consumers or Manufacturers?," Manufacturing & Service Operations Management, INFORMS, vol. 20(4), pages 752-766, October.
    9. Nitin R. Joglekar & Jane Davies & Edward G. Anderson, 2016. "The Role of Industry Studies and Public Policies in Production and Operations Management," Production and Operations Management, Production and Operations Management Society, vol. 25(12), pages 1977-2001, December.
    10. Omar Besbes & Assaf Zeevi, 2015. "On the (Surprising) Sufficiency of Linear Models for Dynamic Pricing with Demand Learning," Management Science, INFORMS, vol. 61(4), pages 723-739, April.
    11. Erin Baker & Senay Solak, 2014. "Management of Energy Technology for Sustainability: How to Fund Energy Technology Research and Development," Production and Operations Management, Production and Operations Management Society, vol. 23(3), pages 348-365, March.
    12. Maxime C. Cohen & Ruben Lobel & Georgia Perakis, 2016. "The Impact of Demand Uncertainty on Consumer Subsidies for Green Technology Adoption," Management Science, INFORMS, vol. 62(5), pages 1235-1258, May.
    13. Micha T. Kahlen & Wolfgang Ketter & Jan van Dalen, 2018. "Electric Vehicle Virtual Power Plant Dilemma: Grid Balancing Versus Customer Mobility," Production and Operations Management, Production and Operations Management Society, vol. 27(11), pages 2054-2070, November.
    14. Jiayi Joey Yu & Christopher S. Tang & Musen Kingsley Li & Zuo‐Jun Max Shen, 2022. "Coordinating Installation of Electric Vehicle Charging Stations between Governments and Automakers," Production and Operations Management, Production and Operations Management Society, vol. 31(2), pages 681-696, February.
    15. Hossein Abouee‐Mehrizi & Opher Baron & Oded Berman & David Chen, 2021. "Adoption of Electric Vehicles in Car Sharing Market," Production and Operations Management, Production and Operations Management Society, vol. 30(1), pages 190-209, January.
    16. Schroeder, Andreas & Traber, Thure, 2012. "The economics of fast charging infrastructure for electric vehicles," Energy Policy, Elsevier, vol. 43(C), pages 136-144.
    17. Konstantina Valogianni & Wolfgang Ketter & John Collins & Dmitry Zhdanov, 2020. "Sustainable Electric Vehicle Charging using Adaptive Pricing," Production and Operations Management, Production and Operations Management Society, vol. 29(6), pages 1550-1572, June.
    18. Michael K. Lim & Ho-Yin Mak & Ying Rong, 2015. "Toward Mass Adoption of Electric Vehicles: Impact of the Range and Resale Anxieties," Manufacturing & Service Operations Management, INFORMS, vol. 17(1), pages 101-119, February.
    19. Buket Avci & Karan Girotra & Serguei Netessine, 2015. "Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact," Management Science, INFORMS, vol. 61(4), pages 772-794, April.
    20. Gemma Berenguer & Pinar Keskinocak & J. George Shanthikumar & Jayashankar M. Swaminathan & Luk Van Wassenhove & Gemma Berenguer & Qi Feng & Jeyaveerasingam George Shanthikumar & Lei Xu, 2017. "The Effects of Subsidies on Increasing Consumption through For-Profit and Not-For-Profit Newsvendors," Production and Operations Management, Production and Operations Management Society, vol. 26(6), pages 1191-1206, June.
    21. Sierzchula, William & Bakker, Sjoerd & Maat, Kees & van Wee, Bert, 2014. "The influence of financial incentives and other socio-economic factors on electric vehicle adoption," Energy Policy, Elsevier, vol. 68(C), pages 183-194.
    22. Silvia, Chris & Krause, Rachel M., 2016. "Assessing the impact of policy interventions on the adoption of plug-in electric vehicles: An agent-based model," Energy Policy, Elsevier, vol. 96(C), pages 105-118.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tang, Juan & Ji, Guan-Qun & Liu, Zhi & Sheu, Jiuh-Biing, 2024. "Electric vehicle battery-charging service and operations managing under different charging station construction modes," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 181(C).
    2. Subodha Kumar & Christopher S. Tang, 2022. "Expanding the boundaries of the discipline: The 30th‐anniversary issue of Production and Operations Management," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4257-4261, December.
    3. Jiashun Li & Aixing Li, 2024. "Optimizing Electric Vehicle Integration with Vehicle-to-Grid Technology: The Influence of Price Difference and Battery Costs on Adoption, Profits, and Green Energy Utilization," Sustainability, MDPI, vol. 16(3), pages 1-19, January.
    4. Yilin Bi & Jiangwei Liu & Zhuang Liu & Suhao Wei, 2024. "Impact of New Energy Vehicle Charging Point Subsidy Policy on Subway Demand: Evidence from Beijing’s Real Estate Market," Sustainability, MDPI, vol. 16(9), pages 1-18, May.
    5. Feng, Jian & Yao, Yifan & Liu, Zhenfeng & Liu, Zhenling, 2024. "Electric vehicle charging stations' installing strategies: Considering government subsidies," Applied Energy, Elsevier, vol. 370(C).
    6. Chen, Feng & Xu, Su Xiu & Ning, Yu & Ji, Xiang & Ren, Yaping, 2024. "Compatible electric vehicle charging service: Blessing or curse?," Journal of Retailing and Consumer Services, Elsevier, vol. 79(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Brozynski, Max T. & Leibowicz, Benjamin D., 2022. "A multi-level optimization model of infrastructure-dependent technology adoption: Overcoming the chicken-and-egg problem," European Journal of Operational Research, Elsevier, vol. 300(2), pages 755-770.
    2. Li, Kunpeng & Wang, Lan, 2023. "Optimal electric vehicle subsidy and pricing decisions with consideration of EV anxiety and EV preference in green and non-green consumers," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 170(C).
    3. Neaimeh, Myriam & Salisbury, Shawn D. & Hill, Graeme A. & Blythe, Philip T. & Scoffield, Don R. & Francfort, James E., 2017. "Analysing the usage and evidencing the importance of fast chargers for the adoption of battery electric vehicles," Energy Policy, Elsevier, vol. 108(C), pages 474-486.
    4. Konstantina Valogianni & Wolfgang Ketter & John Collins & Dmitry Zhdanov, 2020. "Sustainable Electric Vehicle Charging using Adaptive Pricing," Production and Operations Management, Production and Operations Management Society, vol. 29(6), pages 1550-1572, June.
    5. Nur Sunar & Jayashankar M. Swaminathan, 2022. "Socially relevant and inclusive operations management," Production and Operations Management, Production and Operations Management Society, vol. 31(12), pages 4379-4392, December.
    6. Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mandal, Prasenjit, 2021. "Promoting electric vehicle adoption: Who should invest in charging infrastructure?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    7. Qiu, Y.Q. & Zhou, P. & Sun, H.C., 2019. "Assessing the effectiveness of city-level electric vehicle policies in China," Energy Policy, Elsevier, vol. 130(C), pages 22-31.
    8. Makena Coffman & Paul Bernstein & Sherilyn Wee, 2017. "Electric vehicles revisited: a review of factors that affect adoption," Transport Reviews, Taylor & Francis Journals, vol. 37(1), pages 79-93, January.
    9. Srivastava, Abhishek & Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mateen, Arqum & Narayanamurthy, Gopalakrishnan, 2022. "Design and selection of government policies for electric vehicles adoption: A global perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    10. Yoo, Seung Ho & Choi, Thomas Y. & Sheu, Jiuh-Biing, 2021. "Electric vehicles and product–service platforms: Now and in future," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 149(C).
    11. Feng, Jian & Yao, Yifan & Liu, Zhenfeng & Liu, Zhenling, 2024. "Electric vehicle charging stations' installing strategies: Considering government subsidies," Applied Energy, Elsevier, vol. 370(C).
    12. Gu, Huaying & Liu, Zhixue & Qing, Qiankai, 2017. "Optimal electric vehicle production strategy under subsidy and battery recycling," Energy Policy, Elsevier, vol. 109(C), pages 579-589.
    13. Li Liu & Zhe Wang & Jiangtao Xu & Zaisheng Zhang, 2023. "Green baton: how government interventions advance green technological innovation," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(10), pages 11121-11152, October.
    14. Jiayi Joey Yu & Christopher S. Tang & Musen Kingsley Li & Zuo‐Jun Max Shen, 2022. "Coordinating Installation of Electric Vehicle Charging Stations between Governments and Automakers," Production and Operations Management, Production and Operations Management Society, vol. 31(2), pages 681-696, February.
    15. Guangrui Ma & Michael K. Lim & Ho-Yin Mak & Zhixi Wan, 2019. "Promoting Clean Technology Adoption: To Subsidize Products or Service Infrastructure?Abstract: We study the dynamic adoption process of clean-technology products (e.g., electric vehicles and solar pho," Service Science, INFORMS, vol. 11(2), pages 75-95, June.
    16. Wolbertus, Rick & van den Hoed, Robert & Kroesen, Maarten & Chorus, Caspar, 2021. "Charging infrastructure roll-out strategies for large scale introduction of electric vehicles in urban areas: An agent-based simulation study," Transportation Research Part A: Policy and Practice, Elsevier, vol. 148(C), pages 262-285.
    17. Iogansen, Xiatian & Wang, Kailai & Bunch, David & Matson, Grant & Circella, Giovanni, 2023. "Deciphering the factors associated with adoption of alternative fuel vehicles in California: An investigation of latent attitudes, socio-demographics, and neighborhood effects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 168(C).
    18. Brito, Thiago Luis Felipe & Islam, Towhidul & Stettler, Marc & Mouette, Dominique & Meade, Nigel & Moutinho dos Santos, Edmilson, 2019. "Transitions between technological generations of alternative fuel vehicles in Brazil," Energy Policy, Elsevier, vol. 134(C).
    19. Stergios Statharas & Yannis Moysoglou & Pelopidas Siskos & Pantelis Capros, 2021. "Simulating the Evolution of Business Models for Electricity Recharging Infrastructure Development by 2030: A Case Study for Greece," Energies, MDPI, vol. 14(9), pages 1-24, April.
    20. Saiful Hasan & Terje Andreas Mathisen, 2020. "Policy measures for electric vehicle adoption. A review of evidence from Norway and China," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(1), pages 25-46.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:popmgt:v:31:y:2022:i:12:p:4333-4350. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1937-5956 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.