To cooperate or not? The cooperation conditions of different new energy vehicle manufacturers on power battery under government subsid

To stimulate the new energy vehicle (NEV) market, China has raised the bar for NEV subsidies so that only NEVs with high endurance are eligible for subsidies. As a result, the NEV manufacturers may cooperate on power batteries, which makes their relationship shift from competition to downstream competition and upstream cooperation, i.e. co-opetition. Based on this, this paper investigates the cooperation conditions between the leading NEV manufacturer and the emerging NEV manufacturer on power batteries under the revised subsidy policy. By establishing a Cournot model, we first analyze the optimal decisions of the two manufacturers under government subsidy policy in competition and co-opetition scenarios, respectively. By comparing the profits of NEV manufacturers in these two scenarios, we derive the conditions under which they can cooperate on power batteries. The results show that whether the NEV manufacturers can cooperate depends on the power battery cost of the emerging NEV manufacturer.