EV Market Share and Profit Driven Competition with Service Sharing

Posted: 12 Aug 2022

See all articles by Fengfeng Xie

Fengfeng Xie

University of Nottingham, Ningbo - University of Nottingham Ningbo China

Baozhuang Niu

School of Business Administration, South China University of Technology

Biying Shou

City University of Hong Kong

Pengfei Guo

City University of Hong Kong

Date Written: August 9, 2022

Abstract

In the EV industry, it is frequently reported that market share is included by EV companies (e.g., Tesla, XPeng, and Li Auto) as an important part of their objective. This will intuitively hurt their profitability because the objective is no longer profit maximization. We are therefore interested in the EV companies' decision rationality, especially when we observe that they are selling the ``EV product + charging service", and some of them share their superior charging networks with their rivals. Our question is whether these efforts/decisions for market share are really beneficial. We interestingly find that the company making decisions under a weighted average objective of market share and profitability could indeed obtain a higher profit than that under a profit maximization objective. Sharing superior charging networks promotes competing EV companies' cooperation and diversifies their competition when the consumers can switch between EV product purchasing and charging service competition. This not only benefits the companies but also the social welfare, so an all-win situation can be achieved.

Keywords: Product and service operations; Co-opetition; Market share; Horizontal sharing; Game-theoretic model

Suggested Citation

Xie, Fengfeng and Niu, Baozhuang and Shou, Biying and Guo, Pengfei, EV Market Share and Profit Driven Competition with Service Sharing (August 9, 2022). Available at SSRN: https://ssrn.com/abstract=4185290

Fengfeng Xie (Contact Author)

University of Nottingham, Ningbo - University of Nottingham Ningbo China ( email )

199 Taikang East Road
Ningbo, 315100
China

Baozhuang Niu

School of Business Administration, South China University of Technology ( email )

Wushan
Guangzhou, AR Guangdong 510640
China

Biying Shou

City University of Hong Kong ( email )

Department of Management Sciences
Kowloon
Hong Kong

HOME PAGE: http://www.cb.cityu.edu.hk/Portfolio/Staff.cfm?EID=biyishou

Pengfei Guo

City University of Hong Kong ( email )

Hong Kong

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