Closed-loop supply chain pricing strategy for electric vehicle batteries recycling in China

The importance of reasonable pricing strategy for electric vehicle batteries under the background of government subsidies has been recognized. However, variable government subsidy policy may highly impact the pricing strategy of electric vehicle batteries recycling market in its infancy. There is an urgent need to discover the hidden electric vehicle batteries relation, give the pricing strategy, and suggest the effective policy design. The paper studies the optimal pricing strategies for electric vehicle batteries in three different Chinese recycling channels in the government subsidies situation by using Stackelberg game. And then, the model is simulated in decentralized decision-making and centralized decision-making, respectively, to explain the relationship among parameters using MATLAB. Finally, a numerical experiment derived from the market data of electric vehicles in China and existing literature is used to show the effectiveness of Stackelberg model, proving that our approach can contribute to closed-loop supply chain pricing strategy for electric vehicle batteries recycling under government subsidies. Results show that the government should increase the subsidy of electric vehicle batteries recycling and urge the electric vehicle enterprises to take responsibility of batteries recycling. The total profit of the closed-loop supply chain with centralized decision-making is higher than the decentralized decision-making, so the upstream and downstream of the supply chain should strengthen communication to achieve profit growth. It significantly provides a theoretical basis for the enterprises in the electric vehicle batteries recycling closed-loop supply chain to formulate pricing strategies under three recycling models and provides suggestion for the government in the designing power battery recycling subsidy policy.