Optimal number of charging station and pricing strategy for the electric vehicle with component commonality considering consumer range anxiety

Abstract

The battery driving mileage on a single charge and convenience of the charging stations affect Electric Vehicle’s (EV) demand. This paper studies the optimal number of charging stations and EV’s price strategy considering different component commonality configurations. Assume the EV manufacturer provides two types of EV and the two EVs have the same battery configuration (battery as a common part) or the same naked vehicle–EV without batteries (naked vehicle as a common part). And the common part could be configured with low or high quality. We discuss four scenarios with different common parts and different quality levels. For each scenario, we present the optimal number of the charging stations and EV prices. Then we compare the optimal solutions and manufacturer’s profits in above four scenarios with numerical simulation and give some managerial insights. Our analysis reveals that (1) consumers’ range anxiety towards battery will affect manufacturer’s product configuration strategy, EVs’ prices and demands. (2) large consumers’ sensitivity towards charging station will corresponding to more charging station, high EV prices and demands. If consumers are very concerned about the charging convenience, high-end electric vehicles need to be launched first, then as customers’ anxiety about charging decreases, the low quality EV could be developed and diffused. (3) the unit product cost reduction caused by the commonality may increase or decrease the EVs’ prices, which depends on the relationship between the demand increment incurred by one more charging station and the cost coefficient of building the charging station. (4) The low quality naked vehicle as common component will increase both the number of the charging stations and the demand and the manufacturer is more likely to obtain high profits. (5) the cost saving coefficient of battery common parts has greater influence on the selection of commonality. When consumers’ range anxiety towards battery is very high, manufacturers should choose low-quality naked vehicles or high-quality battery as common components.