Effects of dual-credit policy and subsidy cancellation on decisions in an automotive supply chain

The green development of China's automotive supply chain is driven by policies. This study uses game theory to explore the pricing and emission reduction strategies of the automotive supply chain under dual-credit policy and subsidy policy (scenario DS), as well as dual-credit policy and subsidy cancellation (scenario DC). This study discusses the effects of dual-credit policy and subsidy cancellation on optimal decisions. The results show that increasing the intensity of dual-credit policy hinders the production and emission reduction of H-type fuel vehicles (FVs). Tougher corporate average fuel consumption (CAFC) standards do not affect L-type FVs; however, they can increase the production and emission reduction of E-type FVs. The more stringent production proportion target of new energy vehicles (NEVs) will limit the production of all types of FVs. Subsidy cancellation reduces the wholesale price of NEVs; however, its effects on the selling price and market size of NEVs are uncertain and depend on their respective thresholds. The government should formulate differentiated dual-credit policies based on different types of fuel consumption. This will ensure that FV manufacturers with different types of fuel consumption can reduce their emissions or increase the production of NEVs. Additionally, the government should ensure a smooth transition before subsidy cancellation to prevent negative effects on the NEV market.