Optimal vertical collaboration and pricing strategies electric vehicle supply chain in the presence of brand competition and government subsidies

In recent years, the rapid development of electric vehicle (EV) manufacturers has been fueled by government subsidies aimed at reducing harmful gas emissions from traditional fuel sources. However, Manufacturers often face limitations in battery production capacity. So, they produce EVs in two ways. Firstly, EV manufacturers procure batteries from specialized suppliers and produce EVs independently. Secondly, manufacturers engage in vertical cooperation, collaborating with battery suppliers to jointly produce EVs. This paper examines the advantages and disadvantages of these two strategies and considers factors such as production efficiency, cost-effectiveness, and supply chain dynamics. By analyzing the outcomes of these approaches, this research aims to shed light on effective strategies for overcoming manufacturing limitations in the EV industry and fostering sustainable growth. However, as the number of EVs and subsidies has increased, governments have faced financial pressures, leading to a reduction in subsidization. This paper examines the consequences of subsidy reductions on selling prices, market demand, and the advantages within the EV supply chain. The study involves multiple stakeholders, including battery suppliers, manufacturers of ordinary brand EVs (Manufacturer A), manufacturers of well-known brand EVs (Producer B), and government subsidies. Additionally, three strategies are investigated the Non-cooperative strategy ("N" Strategy), the cooperative strategy between Manufacturer A and battery suppliers ("S-A" Strategy), and the cooperative strategy between Producer B and battery suppliers ("S-B" Strategy). This research aims to provide insights into the impact of reduced subsidies on EV market dynamics and effectivity approaches to the electric vehicle supply chain.