Designing government subsidy schemes to promote the electric vehicle industry: A system dynamics model perspective

YA Li (First Author), CC Liang (Participant Author), F Ye (Participant Author), XD Zhao (Participant Author)

Research output: Contribution to journalJournal

9 Citations (Web of Science)


To ensure green and sustainable development, how to design effective subsidy schemes to promote the electric vehicle (EV) industry has become a critical problem faced by governments. In this paper, using a system dynamics (SD) model that incorporates the dynamic interactions between government, manufacturers, and consumers, we investigate the effects of different subsidy schemes (an acquisition subsidy vs a Research and Development (R&D) subsidy, as well as dynamic vs static subsidies) on the EV industry and environmental protection. Using empirical evidence from China, we verify the proposed model and predict that both an acquisition subsidy and an R&D subsidy can boost EV demand and reduce CO2 emissions. The acquisition subsidy helps to stimulate the sales of EVs more quickly and to a greater extent in the short term, but at great expense; for a given level of government expenditure, the R&D subsidy is more effective in promoting EV penetration and mitigating CO2 emissions. Moreover, the dynamic R&D subsidy scheme outperforms the static one in terms of subsidy efficiency. The study has implications for policy makers designing a subsidy scheme to promote the development of the EV industry.
Original languageEnglish
Article number103558
Number of pages18
JournalTransportation Research, Part A: Policy and Practice
Publication statusPublished - Jan 2023

Corresponding author email

Project sponsor

Joint Funds of NSFC and Guangdong Province, China
Social Science Foundation of Guangdong, China
Guangdong Basic and Applied Basic Research Foundation, China
National Natural Science Foundation of China (NSFC)

Project No.



  • CO2 emission reduction
  • Electric vehicle
  • Government subsidy scheme
  • Subsidy efficiency
  • System dynamics model

Indexed by

  • ABDC-A*
  • SSCI
  • SCIE
  • Scopus


Dive into the research topics of 'Designing government subsidy schemes to promote the electric vehicle industry: A system dynamics model perspective'. Together they form a unique fingerprint.

Cite this