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arXiv · 2207.03672

The Future of Traditional Fuel Vehicles (TFV) and New Energy Vehicles (NEV): Creative Destruction or Co-existence?

Zhaojia Huang·Liang Zhang·Tianhao Zhi
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Abstract

There is a rapid development and commercialization of new Energy Vehicles (NEV) in recent years. Although traditional fuel vehicles (TFV) still occupy a majority share of the market, it is generally believed that NEV is more efficient, more environmental friendly, and has a greater potential of a Schumpeterian "creative destruction" that may lead to a paradigm shift in auto production and consumption. However, less is discussed regarding the potential environmental impact of NEV production and future uncertainty in R&D bottleneck of NEV technology and innovation. This paper aims to propose a modelling framework based on Lux (1995) that investigates the long-term dynamics of TFV and NEV, along with their associated environmental externality. We argue that environmental and technological policies will play a critical role in determining its future development. It is of vital importance to constantly monitor the potential environmental impact of both sectors and support the R&D of critical NEV technology, as well as curbing its negative externality in a preemptive manner.

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Zhaojia Huang, Liang Zhang, Tianhao Zhi. 2022-07-08. The Future of Traditional Fuel Vehicles (TFV) and New Energy Vehicles (NEV): Creative Destruction or Co-existence?. https://arxiv.org/abs/2207.03672

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