Effects of personal carbon trading scheme on consumers' new energy vehicles replacement decision: An economic trade-off analysis

Carbon emissions from private transportation and resident travel are exhibiting a fast upward trend that requires immediate action. Personal carbon trading (PCT) in private transportation sector is considered to be an effective market tool based on the "cap and trade" principle to guide residents to carry out low-carbon travel behaviour. This study proposed a replacement decision model under the PCT scheme and applied the theories of life cycle cost (LCC) to address the issue of new energy vehicles (NEVs) replacement decision. The results of the numerical analysis and mathematical model solution demonstrate that the adoption of a PCT scheme can accelerate the conversion of consumers to adopting new energy vehicles. When the carbon market price fluctuates erratically, consumers are unlikely to decide to replace their fuel vehicles. The process of consumers' decision making to switch to NEVs will accelerate through the increase in gasoline prices. Conversely, the increase in market discount rates will make the replacement decision of consumers more uncertain and discourage them from making early replacement decisions. The gradual withdrawal of financial subsidies will have a certain delaying effect on consumers' decision-making behaviours. Moreover, the results of sensitivity analysis support the robustness of our research findings. Finally, we summarize the conclusions, implications and limitations.