Recycling models and subsidy policies in the electric vehicle power battery recycling industry

With the rapid development of electric vehicles, power battery recycling and utilization have attracted increasing attention. This study employs game theory to investigate power battery recycling subsidy strategies under two distinct recycling models (i.e., retailer-only recycling and joint recycling by the retailer and the third-party recycler), as well as the impact of recycling models on the subsidy strategies. The results reveal that when the required recycling subsidy level is high, the government chooses not to subsidize; when the required recycling subsidy level is low, the government provides subsidies, but subsidy strategies vary significantly under different recycling models. Specifically, when the manufacturer recovers power batteries only through the retailer recycling channel, subsidizing any supply chain member can maximize social welfare. By contrast, when the manufacturer adds a third-party recycling channel, the government should provide subsidies to the manufacturer or consumers to maximize social welfare. Furthermore, the retailer prefers government subsidies for itself in the retailer–third-party joint recycling model, but not in the retailer-only recycling model. In addition, this study examines the impacts of key parameters on the firms' profits and social welfare, and shows that as the government subsidy increases, the profits of supply chain firms rise, while social welfare first increases and then decreases. These findings can support decision-making by firms and help governments formulate relevant policies for closed-loop supply chains.