A Game-Theoretic Analytical Approach for Fostering Energy-Saving Innovation in the Electric Vehicle Supply Chain

Abstract

Motivated by the industrial observation that electric vehicle (EV) manufacturers are often fully or partially outsourcing some specific components, for instance, powertrains and battery systems, and rely on their suppliers’ energy-saving innovation to improve their own EVs’ comprehensive performances, this study builds an analytical framework to investigate how different cooperation modes affect the EV supply chain’s energy-saving performance and firms’ profitability. As a main barrier preventing potential consumers from purchasing EVs, the consumer range anxiety for EVs’ performance was incorporated into the analytical model. Three primary cases and one strategic alliance case are sequentially analyzed. The results show that the supplier always self-motivates to implement energy-saving innovation to improve the performance of the core component, and the EV manufacturer is always willing to participate in its supplier’s energy-saving innovation by sharing a fraction of the investment. Moreover, a strategic alliance between the manufacturer and the supplier can effectively improve the profit of the whole supply chain. This strategic alliance can be coordinated through a generalized Nash-bargaining mechanism.