Single rollover or dual rollover: How a monopoly NEV manufacturer responds to NEV credit policy

•The NEV manufacturer’s optimal rollover strategy (Single Rollover (SR) VS. Dual Rollover (DR)) in a two-period market is investigated.•The interactions between government’s NEV credit policy, the NEV manufacturer, and strategic consumer are analyzed.•The NEV manufacturer tends to adopt skimming pricing scheme in DR strategy while a penetration pricing one in SR strategy.•The choice between SR and DR strategy mainly depends on the calculation criteria for NEV credits set by the government, the upgrade speed of product and the improved environmental performance level of vehicles.•A higher calculation criteria for NEV credits do not always result in a higher social welfare. The NEV credit policy plays a crucial role in advancing the new energy vehicle (NEV) industry and environmental conservation. This study investigates the monopoly NEV manufacturer’s optimal rollover strategy (Single Rollover (SR) vs. Dual Rollover (DR)) and pricing scheme (skimming vs. penetration) under the government’s stricter calculation criteria for NEV credit policy, considering a two-period market with strategic consumers. We find that the NEV manufacturer typically adopts a skimming pricing scheme in DR strategy, while a penetration pricing scheme in SR strategy. The choice between SR and DR strategy hinges on the government’s calculation criteria for NEV credits, product upgrade speed, and vehicle environmental performance improvement. When the calculation criterion for NEV credits is moderate, or when it is low, coupled with fast product upgrade speed and marginal improved environmental performance of the new vehicle, SR strategy is beneficial to the NEV manufacturer to avoid the cannibalization between new and old vehicles. In contrast, the NEV manufacturer can benefit from DR strategy through price discrimination between new and old vehicles to attract consumers from different market segments. However, stricter calculation criteria for NEV credits do not always result in higher social welfare.