Strategic alliance selection for retired power batteries recycling under carbon cap-and-trade and government subsidies

Abstract

The rapid growth of electric vehicles makes recycling retired power batteries critical for sustainable energy systems, resource security, and the low-carbon transition. This study establishes a game theory framework to analyze four strategic alliance modes from no alliance to three-party alliance in a closed-loop supply chain system comprising battery manufacturers, electric vehicle manufacturers, and third-party recyclers under carbon cap-and-trade and government subsidies. Using a manufacturer-led Stackelberg game model and numerical simulation, the analysis evaluates how key parameters influence system outcomes. Results indicate: (1) A 0.1 unit increase in consumer recycling price sensitivity coefficient and recycler competition coefficient, the recycling volume changes by up to 1060.9 (10%) and −1204.4 (−8.20%) units, and supply chain profits change by up to 1.769 × 10⁷ (0.392%) and −1.595 × 10⁷ (−0.353%), respectively. (2) A 1 unit increase in government subsidies can increase supply chain profits by up to 2.728 × 10⁵ (0.006%). A 1 unit increase in the carbon price results in a decrease of up to 7.872 × 10⁵ (0.018%) in profits. As subsidies decline, the non-alliance model exits faster due to thin profits and carbon pricing pressure. (3) Increasing carbon emission reduction levels (per unit) and echelon utilization rate (per 0.1 unit) increase supply chain profits by up to 5.88 × 10⁵ (0.132%) and 4.80 × 10⁷ (0.727%), respectively, with the MT + V model benefiting most from high SOH testing costs via technology sharing. (4) The optimal alliance model depends on market conditions: under high consumer price sensitivity and low recycler competition, a manufacturer-retailer alliance proves superior; otherwise, a three-party alliance becomes preferable. These findings offer actionable guidance on selecting an industry collaboration model and calibrating the policy mix to support resilient, efficient battery recycling systems.