Navigating the electric vehicle revolution: Optimal subsidy allocation for electric vehicles and charging infrastructure

The transition to battery electric vehicles is critical for reducing global carbon emissions, yet high costs and inadequate charging infrastructure continue to limit market penetration. This study designs a cost-benefit mechanism that integrates an Agent-Based Model with evolutionary simulations in small-world networks to assess the effectiveness of government subsidies in promoting battery electric vehicles adoption and charging-station expansion across different policy scenarios. The study evaluates both short- and long-term effectiveness indicators, highlighting trade-offs between market acceleration and cost-benefit efficiency. Surprisingly, the findings reveal that an unlimited short-term budget yields the highest cost-effectiveness. The key results demonstrate that consumer subsidies, especially when concentrated in early stages, significantly enhance battery electric vehicles market share. In contrast, subsidies for charging stations have a more modest effect, a reduction in station subsidies leading to only a 0.87 % drop in battery electric vehicles adoption while reducing consumer subsidies results in an 8.8 % decline. Allocating additional resources to consumer subsidies requires diverting 12.56 %–16.23 % of the budget from charging stations, while reducing station subsidies frees up 15.83 %–16.17 % of the budget for consumer incentives. This study equips policymakers with essential insights to optimize subsidy strategies for maximization of both environmental and economic outcomes.