Evolutionary game analysis on local governments and manufacturers' behavioral strategies: Impact of phasing out subsidies for new energy vehicles

This paper discusses how to promote stable new energy vehicle (NEV) diffusion and how to alleviate the related financial pressure faced by governments. First, indirect evolutionary game theory is applied to examine the interaction mechanism of complex behaviors between local governments and auto manufactures, with and without consideration of subsidy policy phase-outs. Second, we define the ideal event and analyze the impacts of key factors on the dynamic evolution process. On this basis, the empirical analysis method is used to verify the game models and primary conclusions. Finally, the sensitivity analysis of selected parameters is discussed in details. Results demonstrate that: (1) subsidy policy phase-outs can help to develop the NEV industry; (2) the probability of an ideal event is positively correlated with the vehicle purchase tax, additional benefits for NEV manufacturers, penalties for fossil vehicle manufacturers and the coverage ratio of public charging piles, and it is negatively correlated with the phase-out rate; (3) NEV evolutionary dynamic factors can be divided into three priority levels and optimization of the parameters design is discussed, which can provide useful decision-making tools for governments and enterprises.