Incentivizing the adoption of electric vehicles in city logistics: Pricing, driving range, and usage decisions under time window policies

Yongling GAO, Mingming LENG*, Yaping ZHANG, Li Ping LIANG

*Corresponding author for this work

Research output: Journal PublicationsJournal Article (refereed)peer-review

Abstract

In the presence of time window policies for electric vehicles (EVs) and internal combustion engine vehicles (ICVs), a logistics service provider (LSP) may renew her fleet by partially replacing existing ICVs with either only EVs (strategy E) or a mix of EVs and new ICVs (strategy H). In this paper, we investigate the LSP's choice between strategies E and H and the impacts of these time window policies on the LSP's EV usage rate and the social welfare. We analyze a two-echelon supply chain involving an EV manufacturer and an LSP or two competing LSPs and perform game analyses. The EV manufacturer determines the driving range and sale price of EVs and the LSP makes her EV usage rate and service pricing decisions. We find that strategy H is not always more profitable than strategy E, which depends on the unit operating cost for new ICVs and the portion of demand fulfilled by new vehicles. If they are sufficiently high or both of them are sufficiently low, then the LSP should opt for strategy E. A wider time window for EVs can encourage the monopolistic LSP's EV usage rate, whereas a narrower time window for ICVs can encourage (discourage) this LSP's EV usage rate if the demand potential for her service is sufficiently large (small). In addition, the per mile environmental impact of using EVs also influences the impacts of time window factors for EVs and ICVs on the social welfare.
Original languageEnglish
Article number108406
JournalInternational Journal of Production Economics
Volume245
Early online date4 Jan 2022
DOIs
Publication statusPublished - Mar 2022

Bibliographical note

Funding Information:
The first author ( Yongling Gao ) was supported by the National Social Science Fund of China ( 18BGL217 ), National Natural Science Foundation of China ( 71774182 ; 71872200 ), and Humanities and Social Science Research Project of Ministry of Education of China ( 17YJC630027 ). Yongling Gao is grateful to Professor Tarik Driouchi for his encouragements and helpful suggestions. The second author ( Mingming Leng ) was supported by the General Research Fund (GRF) of the Hong Kong Research Grants Council under Research Project No. LU13500020 .

Publisher Copyright:
© 2022 Elsevier B.V.

Keywords

  • Driving range
  • Electric vehicles
  • Logistics service providers
  • Supply chain management
  • Time windows

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