Cooperative R&D contracts for power batteries under R&D outcome uncertainty and subsidies

This paper examines a supply chain comprising a single new energy vehicle manufacturer (NEVM) and a single power battery supplier (PBS), considering government subsidies and R&D outcome uncertainty. An exponential function is employed to characterize R&D outcome uncertainty. The impacts of R&D subsidies and R&D capability on R&D investment, supply chain members, and their expected profits are examined. A comparative analysis of cost-sharing (CS) and revenue-sharing (RS) contracts is conducted. The findings reveal that: (1) R&D investment exhibits an inverted U-shaped relationship with R&D capability and a positive relationship with R&D subsidies. (2) Under an RS contract, the expected profits of the supply chain and its members increase with higher R&D subsidies and enhanced R&D capability. Under a CS contract, the expected profits of the PBS and the supply chain increase with higher R&D subsidies and enhanced R&D capability; however, the NEVM’s expected profit exhibits a U-shaped relationship with R&D subsidies and R&D capability. (3) Compared with centralized decision-making, neither contract achieves the centralized benchmark for the supply chain’s expected profit. However, compared with decentralized decision-making, the CS contract increases the PBS’s R&D investment and expected profit; the RS contract increases the PBS’s R&D investment and expected profit as well as the supply chain’s expected profit. Both contracts can only improve the NEVM’s expected profit under certain conditions. These findings provide valuable theoretical insights and practical implications for decision-making by NEVMs, PBSs, and government agencies.