Developing Pricing Strategy of the Closed-Loop Supply Chain for Electric Vehicle Batteries With the Government Reward and Punishment Mechanism

Abstract

Electric vehicles will become one of the major means of transportation, which will be accompanied by a challenge, that is, the collecting of used electric vehicle battery. This paper studied the pricing strategy of the closed-loop supply chain for electric vehicle battery with the government’s reward and punishment mechanism. A closed-loop supply chain with online to offline collecting channels consisting of electric vehicle battery manufacturer, electric vehicle manufacturer and online electric vehicle battery recycler has been developed. Furthermore, the government has ensured that the closed-loop supply chain can reach a certain collected capacity through designing a reward and punishment mechanism concerning the targeted collecting capacity on the basis of taking into account the influence of echelon utilizing and collecting costs on the closed-loop supply chain. Based on the pricing model for the closed-loop supply chain of online to offline collecting channels developed in this paper, it has discussed the optimal pricing strategy of collecting for the dual collecting channels that are competitive between electric vehicle manufacturer and online electric vehicle battery recycler have been discussed with the government’s reward and punishment mechanism and without the government’s reward and punishment mechanism as well as analyzed the influence of the degree of government reward and punishment, echelon utilization and collecting costs of electric vehicle battery on the collecting price, the collecting capacity, and the profit obtained by participants in the closed-loop supply chain. Discussion in this paper indicated that the collecting capacity, the collecting price and the recycler's profits in the closed-loop supply chain of EV battery could be improved with the government reward and punishment mechanism. Last but not least, the correctness of the model proposed was verified by numerical examples.

Keywords: Electric vehicle battery; Government reward and punishment mechanism; Pricing decision; Echelon utilization