Optimal production decision of new energy vehicle and traditional fuel vehicle

With the reduction of government subsidies for new energy vehicle, it has become an important decision problem for traditional vehicle enterprises with new energy vehicle production qualification to decide how much proportion of new energy vehicles should be produced. By maximizing the utility of the vehicle enterprise, this study analyses the influence of enterprise’s production decision and consumer’s preference payment premium for the performance of new energy vehicle on optimal mixed production and pricing decision after the subsidies withdraw from the new energy vehicle market. The Results show that: (1) consumer’s payment premium increases the proportion of new energy vehicles produced by automobile enterprise. The enterprise only produces traditional fuel vehicles instead of new energy vehicles, when the premium is less than a certain level; and when the payment premium is higher than a certain threshold, the enterprise merely produces new energy vehicles instead of traditional ones. (2) As the rise of consumer’s payment premium, the amount of people who consume vehicles show a downward trend, and finally only 1/2 of consumers will remain to purchase automobiles. (3) There shows a U-shaped relationship between the optimal profit of vehicle enterprise and consumer payment premium that the profit of vehicle enterprise will decline first and then rise with the increase of consumer payment premium.