Research on the Dynamic Game in Consumer Choice Between Fuel

and Electric Vehicles

Junhao Wu

Rugao International Academy, Nantong, Jiangsu, 226500, China

Keywords: Dynamic Game, Consumer Choice, Fuel Vehicles, Electric Vehicles.

Abstract: This study uses a coordinated game model to analyze consumer behavior in the transition between fuel and

electric vehicles (EVs), emphasizing the synergistic role of government policy incentives, regional

infrastructure equity, and collective social norms in shaping market equilibrium. A comparative case study of

Norwegian EV dominance and Chinese subsidy-driven volatility shows that fragmented policies (e.g., sudden

subsidy cuts or uneven infrastructure investment) cannot break the tram sector’s dependence, while an

integrated strategy achieves a stable Nash equilibrium. Key findings highlight the environmental and

economic benefits of electric vehicles, including a 50% lifecycle reduction and long-term cost savings, but

also highlight ongoing challenges: the urban-rural tram infrastructure rate gap (12% coverage), the

unpredictability of post-subsidy market volatility (sales fell by 40% after subsidy cuts), and socio-geocultural

resistance (e.g., fossil fuel dependence in Texas). To address these issues, the study proposes a multi-

dimensional framework approach: phased subsidy cuts linked to market penetration thresholds centered on

government decision-making, decentralized solar charging networks for rural areas centered on infrastructure,

and behavior-based campaigns using social media and education based on popular social preferences.

Theoretically, this paper integrates Debreu’s dynamic equilibrium (analyzing subsidy phase-out thresholds)

with Buchanan’s coordination paradigm (for infrastructure-public preference alignment), providing a dual

lens to optimize policy timing and stakeholder incentives.

1 INTRODUCTION

The global transition to electric vehicles (EVs) is a

critical component of achieving carbon neutrality, yet

consumer adoption remains influenced by cost,

infrastructure, and cultural factors. As the world

enters a phase of rapid technological development,

the environmental hazards brought about by the

process of industrial modernization have become a

challenge for the entire globe. From the Paris

Agreement to carbon neutrality, the shift from

traditional fuels to electric and new energy sources

has made environmental protection a global priority.

Especially, Drive EV adoption is especially targeted

by Global carbon neutrality. From the consumer’s

perspective, their choices are still influenced by cost

differentials, infrastructure gaps, and cultural inertia.

For instance, Norway’s EV market share reached

about eighty percent (82%) in 2023 through tax

exemptions and charging networks, while Texas

https://orcid.org/0009-0000-3151-7166

retained 93% fossil fuel vehicles due to infrastructure

deficits and cultural resistance (IEA, 2023). These

reflect the different preferences of consumers in

various countries towards the oil and electric vehicle

market. In order to better understand the government

and society adjustments to the consumption market of

electric vehicles to study its influences on the

formation of Nash equilibrium and coordinated

games, this study examines how policy coordination

reshapes market equilibrium through a dynamic game

framework.

External psychological effect: Smith & Jones

(2021) identified a “bandwagon effect” where peer

preferences accelerate EV adoption. This

psychological effect of the trend toward popular

choices is seen as an important basis for guiding

consumers in their choices of electric vehicles.

Consumers may more readily accept car types that are

more popular with the public.

Wu, J.

Research on the Dynamic Game in Consumer Choice Between Fuel and Electric Vehicles.

DOI: 10.5220/0013814400004708

Paper published under CC license (CC BY-NC-ND 4.0)

In Proceedings of the 2nd International Conference on Innovations in Applied Mathematics, Physics, and Astronomy (IAMPA 2025), pages 83-89

ISBN: 978-989-758-774-0

The guiding nature of government policy: Wang

et al. (2022) demonstrated that subsidies exceeding

$5,000 significantly increase EV adoption by

lowering upfront costs. This example shows that the

macro-control of government policies is a decisive

factor that cannot be ignored for the competitiveness

of the electric vehicle industry in the automotive

consumer market. The low market price of electric

vehicles after subsidies is a key reason for consumer

choice.

Infrastructure Impact: Lee (2023) highlighted a

strong correlation between charging density and

urban EV penetration. The completeness of basic

equipment is an important reason affecting

consumers’ choices of related products. This

indicates that the local availability of corresponding

basic supporting facilities, such as charging stations

for electric vehicles, is an important factor for local

consumers when choosing between petrol and electric

cars. It is an explanation of the regional influence on

the hybrid vehicle market.

Existing studies often isolate policy,

infrastructure, or social factors, neglecting their

synergistic impact on consumer behavior and market

equilibrium. Most scholars’ articles mainly study the

impact factors of a specific aspect on consumers’

choice judgments in the economic market. Such

research tends to overlook the cumulative effects

between different factors, resulting in conclusions

that lack flexibility, limit usability, and fail to analyse

the economy from both macro and micro perspectives.

Fragmented interventions fail to address systemic

path dependency. In reality, very few scholars analyse

consumers’ preferences for goods in the economic

market using multi-angle, multi-faceted, and multi-

factor research methods. As a result, objective

choices cannot be well reflected in consumers due to

the lack of relevant research analysis. As explained in

1.2, the influencing factors from the three different

aspects of society, government, and infrastructure

have not been unified and integrated into research,

resulting in the current research on the market

tendencies of oil and electric vehicles being overly

singular and lacking comprehensiveness, making the

analysis of the market insufficiently objective and

complete (Wang, et al., 2022; Lee, 2023; Zhang &

Ren, 2023).

In order to ensure the comprehensive availability

of the research, during the course of this study,

coordinated games will be regarded as the main

approach to researching consumer choices regarding

electric vehicles, thereby analysing the impact of

government, society, and infrastructure on consumer

choices through game theory concepts such as Nash

equilibrium. During the research process,

government variables such as subsidies and

restrictions will interact with social preferences for a

joint study. Additionally, actual data and conclusions

from previous literature will be used to verify the

authenticity of the results. The aim is to provide the

public with a more reasonable and economically

viable choice of electric vehicles through a relatively

objective and multi-faceted research outcome. This

study aims to provide a comprehensive understanding

of consumer preferences for EVs through a multi-

faceted analysis of government policies, social factors,

and infrastructure impacts.

2 CASE DESCRIPTION

2.1 China’s Subsidy-Driven Market

Transition

China’s phased subsidy policy initially boosted EV

adoption but faced challenges when subsidies were

reduced. To promote new energy industries, the

Chinese government implemented a phased subsidy

policy, such as the ’10 cities, 1000 vehicles’ plan,

which initially boosted EV adoption in the public

sector. However, the sudden reduction in subsidies

after the industry reached initial maturity led to a 40%

decline in EV sales. Since the reduction of subsidies

for electric vehicles in 2019, the total sales of the new

energy electric vehicle market have decreased by

40% compared to the past, which highlights the need

for stable coordination of the government to be an

important part of the vigorous development of the

electric vehicle industry (Ma et al., 2017).

2.2 Policy, Infrastructure, and Social

Preferences: A Comparative

Analysis of EV Adoption in Norway

and Texas

The contrasting cases of Norway and Texas illustrate

how policy coordination, infrastructure development,

and social preferences shape EV adoption outcomes.

Norway, a Nordic country, will account for more than

80% of the electric vehicle market in 2023 with

exemption from vehicle purchase tax, full subsidy for

national tram charging fees, and high-density tram

supporting systems, and has established an

environmental protection strategy with tram

transportation as the core of transportation (IEA,

2023, Lee, 2023). Through the Norwegian

government’s set of tram policy models, it is shown

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that the coordinated investment in policy and

infrastructure has greatly accelerated the market

coverage of trams for fuel vehicles (IEA, 2023). In

contrast, The Texas state government’s lax, non-rigid

new energy vehicle promotion policy for electric car

companies and the resistance to the local deep fuel

vehicle culture has led to the fact that petroleum fuel

still accounts for the majority of transportation,

accounting for about 90% of the total number of

vehicles, as shown in Table 1 (IEA, 2023; Alkhathlan

& Javid, 2015).

Table 1: Tram differentiation in Norway and Texas

Dimension Norway Texas, USA

Policy

coordination

Tax reductions,

infrastructure

investment, and

social

mobilisation are

proceeding on

three parallel

tracks.

Federal

subsidies are

isolated, and

local policies

are lacking.

Infrastructure

coverage

The density of

charging stations

is eight times that

of Texas.

Less than 5% of

charging piles

in rural areas

Social

preference

With a high degree

of environmental

recognition, EVs

have become

status symbols.

There is strong

cultural

resistance, and

fuel vehicles

are bound to the

values of

“freedom”.

Market

Results

EVs accounted for

82% of the total in

2023

Fuel vehicles

accounted for

93%.

Revelation: The Norwegian case indicates the

“triple synergy” of policy, infrastructure, and culture

is the core mechanism for breaking path dependence.

Conversely, the disjointed policies and lagging

infrastructure in Texas have led the market to be

locked into an inefficient equilibrium. The

contrasting cases of Norway and Texas highlight the

importance of coordinated policy, infrastructure, and

social engagement in driving EV adoption.

3 ANALYSIS ON THE PROBLEM

3.1 Positive Impacts

3.1.1 Significant Environmental Benefits of

Electric Vehicles

EVs provide significant environmental benefits

through reduced emissions and improved air quality.

EVs offer multi-faceted environmental benefits,

including reduced CO2 emissions, improved air

quality, and ecosystem optimization.

Life cycle emission reduction of lithium battery

raw materials: While the production of lithium-ion

batteries, the main fuel for electric vehicles, produces

5-10 tonnes of CO2, tram factories that are driven by

green energy production (such as Tesla’s Berlin

Gigafactory) can reduce carbon pollution emissions

by 40% by optimizing battery production (IPCC,

2022). In China, grid decarbonization policies (36%

of non-fossil energy by 2023) have resulted in a 60%

reduction in polluting gas emissions per kilometer

from electric vehicles compared to fuel-powered

vehicles (Yuan et al., 2015).

Local Pollution Control for Electric Vehicles:

According to the study, PM2.5 concentrations in

Beijing decreased from 80.6 μg/m³ (2015) to 38

μg/m³ (2023), with a 12% reduction in the proportion

related to transportation gas emissions (Zhang & Ren,

2023).

Ecological synergy of new energy use: With an

annual capacity of 150 kWh/m², the solar-integrated

charging station in Oslo balances basic energy

production with the protection of the ecological

environment of the land (IEA, 2023).

3.1.2 High Economic Efficiency Brought by

the Tram Industry

The advantages of the low cost of long-term tram

production and the spillover effect of tram industrial

production of electric vehicles have demonstrated

economic viability through consumer purchases,

savings, and macroeconomic transformation of the

automotive industry.

Consumer Cost Analysis: China’s EV ownership

costs (purchase + electricity + maintenance) total

18,000 over 10 years, 2218,000 over 10 years,

2223,000) (Ma et al., 2017).

Industrial Upgrading: Battery energy density

doubled from 150 Wh/kg (2015) to 300 Wh/kg (2023),

driving advancements in energy storage and drones

(Yang, 2024).

Employment and Trade: China’s electric vehicle

industry employs 1.5 million workers, and 60% of

that human resources are used in battery

manufacturing (Zhang & Ren, 2023). In 2023,

China’s total overseas exports of electric vehicles will

reach 1.2 million units, and China has reduced its

dependence on oil imports through the development

of new energy fuels and the export of electric vehicles

(Yang, 2024).

Research on the Dynamic Game in Consumer Choice Between Fuel and Electric Vehicles

3.2 Existing Challenges

The challenges in EV adoption stem from

infrastructure inequities, policy fluctuations, and

socio-cultural resistance.

3.2.1 Inequities in Infrastructure: Spatial

Distance Differences and Behavioral

Habit Disorders

Infrastructure inequities between urban and rural

areas deepen regional disparities in EV adoption.

Large disparities in social, urban, and rural

infrastructure exacerbate regional inequality in EV

use. For example, Norway’s high-density charging

network (8 stations per 100 km) contrasts sharply

with Texas’s sparse coverage (less than 5% in rural

areas), reflecting the impact of coordinated policy and

investment on EV adoption (IEA, 2023; Alkhathlan

& Javid, 2015). Charging Density: The same urban

tram chargers contain only one in ten (12%) in rural

areas (Lee, 2023). In China, this gap in coverage of

urban and rural tram infrastructure coincides with the

2.5:1 urban-rural income gap, so the regional

differences in tram infrastructure construction deepen

the commodity stratification of consumer groups.

Behavioral Inertia: Research shows that the

adoption rate of electric vehicles in Texas, USA, is

very low (7%), and this phenomenon of indifference

towards electric cars actually stems from the cultural

resistance to them in Texas, where fuel cars

symbolize “freedom” in the local culture (Alkhathlan

& Javid, 2015)

3.2.2 Government Policy Fluctuations:

Volatile Consumer Market

Environment and Uncertainty About

Popular Goods

Abrupt changes or enacted changes in government

policies can undermine consumers’ propensity to buy

and businesses’ earnings expectations.

Subsidy Rollback Effects: The Chinese

government’s 2022 reduction in subsidies for

domestic EVs led to a 40% decline in consumer

demand, highlighting the direct impact of policy

changes on purchasing decisions. This volatility

underscores the EV market’s dependence on

government support (Zhang & Ren, 2023).

Regulatory Fragmentation: Local governments in

Texas lack a standardized set of industrial fees for the

NEV industry, resulting in duplicate investment in

their domestic tram companies (IEA, 2023).

3.2.3 Socio-Cultural Lock-In: Identity

Politics and Path Dependency

Cultural narratives and institutional inertia hinder

transitions.

Symbolic Resistance (Subsidy repatriation effect):

In Texas, about seven in ten consumers (68%)

associate gasoline vehicles with their regional

identity (Texas residency) and resist the adoption of

electric vehicles with a regional fuel culture

(Alkhathlan & Javid, 2015)

Corporate Reluctance: Legacy automakers delay

EV R&D due to sunk costs in combustion engine

supply chains (Yang, 2024).

3.3 Extended Analysis: Dynamic Game

Perspective

3.3.1 Coordination Failure in Multi-

Stakeholder Systems

The absence of coordination among policymakers,

firms, and consumers leads to a suboptimal market

equilibrium.

Case: China’s Subsidy Rollback: The abrupt shift

in policy shifts has disrupted commodity supply

chains, just as battery makers faced a huge $2 billion

in stranded assets in response to a policy change in

2019 (Zhang & Ren, 2023).

Theoretical Framework: Using Debreu’s dynamic

equilibrium model, EV market stability requires

Ui(EV)=αPj(EV)+β(Si−Ci)Ui(EV)=αPj(EV)+β(Si−

Ci), where PjPj (peer adoption) and SiSi (policy

benefits) must align (Liu, 2006).

3.3.2 Technical-Level Upper Limit Lock-In

and Innovation-Level Breakthrough

Dilemma

Due to the information network, externalities of high-

paying technology positioning, and new energy

electric vehicles, the traditional technology of

automobile manufacturing occupies a dominant

position in the whole production.

Battery Standardization: Competing standards

(e.g., Tesla NACS vs. CCS) fragment the EV

charging network, increasing the long-term cost of

energy consumption by 15% for EV users (Lee, 2023).

Innovation Trade-offs: Hybrid electric vehicles

(HEVs), a power-driven vehicle type that optimizes

auxiliary fuel energy with electric energy, offer a

transitional advantage for electric substitution of

automotive fuels, but the existence of these hybrid

electric vehicles will extend the actual time to reach

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the full electrification of automotive goods. In the

United States, government commodity subsidies for

HEVs crowd out production investment in EV

development (IEA, 2023).

4 SUGGESTIONS

4.1 Policy Stability Through Gradual

Subsidy Reform

4.1.1 Dynamic Subsidy Adjustment:

Aligning Policy with Market

Penetration

By learning from the Chinese government’s post-

2019 subsidy cuts for electric vehicles, the electric

vehicle market has experienced a period of cooling in

both production innovation and consumer intentions.

This is in contrast to the fact that the Norwegian

government’s incremental tax exemption adjustments

for electric vehicle consumers (e.g., a 5% reduction

per year) have maintained confidence in the purchase

of electric vehicles among mass consumers (IEA,

2023).

Adjustment based on market thresholds: Subsidy

levels should be tied to EV market penetration (e.g.,

reducing subsidies by 30% when EV share exceeds

10%), preventing market oversaturation (Yang, 2024).

Differentiated regulation of regional conditions:

Priority should be given to providing subsidies for

tram consumption and production in underdeveloped

regions (e.g., rural China in remote areas), and at the

same time, incentives for production and

consumption in urban markets saturated with tram

consumption should be phased out for a certain period

of time (Yang, 2024).

4.1.2 Transitioning from Purchase Subsidies

to R&D Incentives

China’s “subsidy-for-innovation” model redirected

$2.8 billion to battery R&D from 2020–2023,

boosting energy density by 25% (Yang, 2024).

Policy Tools: Production Tax Credit for Tram

Patents: The U.S. government provides a 15%

corporate tax deduction to companies with EV-

related patents, such as Tesla’s 4680 battery

technology (Yuan et al., 2015).

Public-Private R&D Funds: Norway’s $500

million Green Innovation Fund co-financed solid-

state battery projects with private firms (IEA, 2023).

4.2 Equity in Tram Infrastructure:

Bridging Geographical Space and

Social Class Gaps

There are 0.3 chargers per square kilometer in rural

China, compared to 2.1 in urban areas (Lee, 2023).

Solutions include:

A new mode of charging for electric vehicles with

distributed solar: Villages with low rainfall have

deployed off-grid solar power stations to reduce the

dependence of electric vehicle charging on the

traditional grid (Zhang & Ren, 2023). For example,

India’s solar microgrids in rural Maharashtra reduced

EV charging costs by 60% through daytime solar

storage, offering a replicable model for low-rainfall

regions.

Cross-Subsidy Mechanisms: Allocate 30% of

urban EV tax revenue to rural infrastructure, as

practiced in Germany’s Ladeinfrastrukturprogramm

(Lee, 2023).

Competing charging standards (e.g., CCS vs.

NACS) raise user costs by 18% (Lee, 2023). Unified

Protocols: Mandate ISO 15118-20 compliance for all

new installations, enabling “plug-and-charge”

interoperability (Lee, 2023). Data Transparency

Platforms: Launch national charging maps (e.g.,

Norway’s Elbilforeningen) to optimize station

utilization (IEA, 2023).

4.3 Behavioral Interventions in

Government: Using Social

Dynamics

4.3.1 Leveraging Social Influence

Mechanisms for EV Adoption

Norway’s EV owners’ Facebook groups increased

peer influence efficacy by 40%, accelerating adoption

(Smith & Jones, 2021).

Partnerships with well-known artists: Partnering

with environmentally conscious celebrities, such as

Eileen Gu, a famous Chinese skier, to promote the

electric vehicle industry through its vast social appeal

by using electric vehicles as a status symbol (Yang,

2024).

Gamified Policy Tools: China’s ‘Green Miles’

app rewards users with tax rebates (up to 5% of

annual vehicle tax) for sharing EV charging reviews,

achieving 1.2 million user engagements in 2023

(Smith & Jones, 2021).

Research on the Dynamic Game in Consumer Choice Between Fuel and Electric Vehicles

4.3.2 Education vs. Fossil Fuel Culture:

Curriculum-Based Interventions

Texas’s fossil fuel culture stems from its historical

dominance of regional oil supply. Mitigation

Strategies:

Government integration of electric vehicle policy

into school curricula: Norway’s STEM program has

added an enrichment curriculum on EV-related

technologies to 80% of Norwegian school curricula,

shaping a positive perception of electric vehicle

technology research among young people (IEA,

2023).

Community Tram Culture Workshop: Hold

similar electric vehicle test drive events in areas with

high environmental awareness that resist the

development of gasoline vehicles and subtly cultivate

environmental awareness of public trams, just like the

Eco Mobility Festival in Japan (Yuan et al., 2015).

4.4 Multi-Field Technology

Collaboration: Cross-Industry

Cooperation in Tram Development

Only 5% of lithium-ion batteries are recycled globally.

Extended Producer Responsibility (EPR):

According to the legal and regulatory requirements of

the European Union for battery manufacturing, car

manufacturers are required to recycle 95% of battery

materials, and the mandatory constraints of the law

are used to raise the awareness of social responsibility

of electric car producers so that battery safety is

basically guaranteed (Yang, 2024).

Blockchain traceability: The use of a distributed

ledger to track the life cycle of a battery makes the

number of ledgers public, greatly avoiding financial

fraud and reducing illegal dumping (Zhang & Ren,

2023). CATL’s blockchain platform tracks 100% of

battery raw materials, reducing illegal dumping

incidents by 75% in pilot provinces (Yang, 2024).

EVs can stabilize grids via vehicle-to-grid (V2G)

systems, yet adoption remains below 1% (Yuan et al.,

2015). Dynamic Pricing Incentives: Offer a 50%

discount on electricity for V2G participants during

peak hours (Yuan et al., 2015). Grid Upgrade

Subsidies: China’s State Grid allocated $1.2 billion to

V2G-compatible transformer upgrades in 2023 (Yang,

2024).

5 CONCLUSION

The paper’s research shows that the transition to

electric vehicles (EVs) in the transportation market is

not just a technological innovation or economic

challenge but a complex game of coordination. Nash

equilibrium in EV markets emerges only when

government policies, infrastructure equity, and social

preferences align.

Policy-infrastructure interdependence: The

success of tram penetration in Norway stems from the

Norwegian government’s policy tax exemption

subsidies and Norway’s dense infrastructure charging

network system, while the volatility of government

tram subsidies in China highlights the hidden risks of

policy intervention in the decentralized tram industry.

Dynamic influence of social and regional culture:

Regional cultural accumulation, such as the dominant

identity of fossil fuels in Texas or the green spirit of

Nordic Norway, is either an obstacle to the

development of electric cars or an accelerator of

electric variation and this dynamic cultural attribute

plays a role in reshaping consumer perceptions and

social preferences in the coordination game.

The research provides actionable strategies for

governments and industries: Dynamic Policy

Calibration: Gradual subsidy reductions paired with

R&D incentives can stabilize markets, as evidenced

by China’s battery innovation surge. Infrastructure

Justice: Solar-powered rural charging stations and

cross-regional subsidies can mitigate spatial

disparities. Behavioral Leverage: Social media

campaigns and educational programs, like Norway’s

STEM curricula, amplify peer effects and dismantle

cultural resistance.

While this study offers systemic insights, two

constraints warrant attention: Data scope: The

reliance on secondary data limits the analysis of

behavior at the micro level of coordinated games.

Future research can integrate original surveys to

capture consumers’ nuanced decisions.

Technological developments: The rapid development

of solid-state batteries and V2G systems is likely to

redefine the equilibrium in the electric vehicle market.

It is essential to keep track of these technological

innovations on a continuous basis. Forward-looking

comprehensive outlook: The transition to electric

vehicles is a typical microcosm of the broader

challenges of sustainable industrial transformation.

As the classical theory of dynamic equilibrium

postulates, stability does not come from isolated

interventions but from the continuous alignment of

rules, resources, and social values. Policymakers

must embrace this complexity if they move from

“locked-in” fossil fuel inertia to a resilient low-carbon

balance of electricity and new energy.

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Research on the Dynamic Game in Consumer Choice Between Fuel and Electric Vehicles