Does environmental concern promote EV sales? Duopoly pricing analysis considering consumer heterogeneity

TLDR: In this article, a duopoly pricing model was proposed to capture consumer heterogeneity in two dimensions to study consumers' vehicle adoption choices and EV pricing, and the results showed that environmental concerns may not always stimulate EV sales.

Abstract: The moderating role of consumers’ environmental concern in electric vehicles (EVs) adoption intentions is well established, but the variation between intentions and behaviors leads to the necessity to consider corporate behavior and further evaluate its primary role. This paper constructs a duopoly pricing model and captures consumer heterogeneity in two dimensions to study consumers’ vehicle adoption choices and EV pricing. Counter-intuitively, the results show that environmental concerns may not always stimulate EV sales. Green consumers with environmental concerns enhance EV’s unit profitability, which may induce manufacturers to abandon conventional consumers. Thus, governments should control the phase-out rate of subsidies in markets with more green consumers to mitigate shifts in pricing strategies. Furthermore, by demonstrating the relationship between EV policies, this paper highlights the importance of policy coordination and provides specific strategies. Our findings have broad implications for understanding EV marketing under conditions of customer heterogeneity and cost-effective policy coordination strategies.