Coordinating Installation of Electric Vehicle Charging Stations between Governments and Automakers

Production and Operations Management

37 Pages Posted: 15 Apr 2020 Last revised: 24 Aug 2021

See all articles by Jiayi Joey Yu

Jiayi Joey Yu

Fudan University - School of Management

Christopher S. Tang

University of California, Los Angeles (UCLA) - Decisions, Operations, and Technology Management (DOTM) Area

Musen Kingsley Li

Shanghai University - School of Management

Zuo-Jun Max Shen

University of California, Berkeley - Department of Industrial Engineering & Operations Research (IEOR)

Date Written: March 24, 2020

Abstract

Accessibility of Electric Vehicle (EV) charging stations is an important factor for adoption of EV, which is an effective green technology for reducing carbon emissions. Recognizing this, many governments are contemplating ideas for achieving EV adoption targets, such as constructing extra EV charging stations directly or offering subsidies to entice automakers to construct more EV charging stations. To achieve these targets, governments need to coordinate with automakers to ensure that the total number of charging stations is planned optimally. We study this coordination problem by considering the interactions among the government, automakers, and consumers, our equilibrium analysis yields three major results. First, both the government and the automaker should build extra EV charging stations when their construction costs are independent. Simultaneously, the government should offer a per-station subsidy to the automaker only when the adoption target and the construction cost are both high. However, when the construction costs are dependent, the government should delegate the construction to the automaker by offering a per-station subsidy. Second, when the government considers consumer purchase subsidy as an extra lever, we find that the purchase subsidy for consumers is more cost-effective than offering a per-station subsidy to the automaker. Third, the structure of the optimal government policy remains the same regardless of whether the government's goal is to improve EV adoption or consumer welfare. Our results can serve as guidelines for governments when contemplating coordination with automakers for the construction of EV charging stations to improve EV adoption as well as consumer welfare further.

Keywords: Electric Vehicles, Charging Stations, Subsidies, Incentives

Suggested Citation

Yu, Jiayi and Tang, Christopher S. and Li, Musen and Shen, Zuo-Jun Max, Coordinating Installation of Electric Vehicle Charging Stations between Governments and Automakers (March 24, 2020). Production and Operations Management, Available at SSRN: https://ssrn.com/abstract=3561317 or http://dx.doi.org/10.2139/ssrn.3561317

Jiayi Yu

Fudan University - School of Management ( email )

670 Guoshun Road
Shanghai, Shanghai 200433
China

Christopher S. Tang

University of California, Los Angeles (UCLA) - Decisions, Operations, and Technology Management (DOTM) Area ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

HOME PAGE: http://www.anderson.ucla.edu/x980.xml

Musen Li (Contact Author)

Shanghai University - School of Management ( email )

102/204,1390 Shangda Rd
Shanghai, 200444
China

Zuo-Jun Max Shen

University of California, Berkeley - Department of Industrial Engineering & Operations Research (IEOR) ( email )

IEOR Department
4135 Etcheverry Hall
Berkeley, CA 94720
United States

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