A game-theoretic model to compare charging infrastructure subsidy and electric vehicle subsidy policies

We develop a game-theoretic model to compare two electric vehicle (EV) policies, i.e., an electric vehicle subsidy (EVS) and a charging infrastructure subsidy (CIS), under different market structures. We find that when a monopoly EV manufacturer builds and operates its own charging stations or two competing EV manufacturers jointly build and operate charging infrastructure, EVS always leads to higher levels of charging infrastructure and social welfare. If the charging infrastructure contractor is a third-party company in a monopoly or duopoly EV market, or one of the EV manufacturers in a duopoly EV market, CIS may result in higher social welfare under two conditions: a high benefit-cost ratio for charging infrastructure deployment and a low charging fee under which the charging infrastructure contractor has a weak incentive to build the charging infrastructure. We then examine how EV competition affects the effectiveness of the policies. We show that when a third-party company builds the charging infrastructure, compared with a monopoly EV market, in a duopoly EV market, it is more likely that CIS leads to higher social welfare than EVS. Finally, through simulations, we show that in the US and Germany, EVS appears to be a more effective EV incentive, while in China, CIS can be more socially beneficial. In addition, the current subsidy levels in the above markets should still be increased to achieve higher social welfare.