Optimal strategies of energy suppliers and manufacturers of electric and gasoline vehicles

Several governments aim to increase the deployment of electric vehicles (EVs) through policies such as taxation on gasoline vehicles (GVs) and subsidy on EVs. In this research, we study the impact of such a government policy on energy suppliers and manufacturers of EVs and GVs. We develop two generalized two-stage sequential games. In the first model we consider a single energy supplier who moves first and decides the optimal number of gas stations, EV charging stations, per kilometre price of gasoline and per kilometre price of charging of EVs. The manufacturers of EV and GV simultaneously move next and decide their respective price. In the second model, we consider two different energy suppliers, one for gas stations and other for charging stations. Our results indicate that the realized demand for EVs always exceeds that of GVs in the two models and that all stakeholders in the two models benefit significantly. Model 1 performs better than Model 2 in terms of efficient utilization of charging stations. The unit price of gasoline and electricity per kilometre is more in Model 2 compared to Model 1, therefore Model 1 performs better in terms of customer perspective. Energy suppliers make more profit in Model 2 compared to Model 1.