Competition between battery switching and charging in electric vehicle: considering anticipated regret

Abstract

Consumers may anticipate regret when making purchasing decisions on a battery-charging vehicle (CV) or a battery-switching vehicle (SV). They anticipate a revolutionary regret when purchasing SVs with an extra switching function but a higher price, and a conservative regret at a lower price but only a charging function. This study investigates whether and how anticipated regret affects competing manufacturers’ price and quality. We find that SV demand is always higher than CV demand, and anticipated regret always promotes electric vehicle (EV) adoption. Interestingly, the revolutionary regret discourages the development of the extra battery-switching function and weakens the consumer’s preference for SVs. Then, the presence of only revolutionary regret causes a lose–lose situation where SV manufacturers reduce the quality level of the additional battery-switching attribute and thus intensify price competition for both manufacturers. SV sales cannibalize CV demand when consumers anticipate revolutionary regret. Moreover, the presence of only conservative regret has no impact on SV manufacturers, but affects CV manufacturers. When EV charging is convenient for consumers, CV manufacturers benefit from conservative regret; otherwise, CV manufacturers quit the market. Finally, when two kinds of regret coexist, the profits of both manufacturers are lower than when there is no regret and only conservative regret, but they are higher than when there exists only revolutionary regret. The results not only contribute to guiding the manufacturer to invoke or mitigate consumers’ anticipated regret, but also provide advice to show or hide this regret for consumers.