The dual-credit policy effectively replaces subsidy from the perspective of R&D intensity

The dual-credit policy and government subsidy are the two fundamental policies affecting the electric vehicle industry in China. We focus on exploring how these two policies have different impacts on R&D intensity of upstream raw material companies, midstream power battery manufacturers, and downstream vehicle manufacturers. Based on the panel data of listed companies, the empirical results show that the dual-credit policy directly improves the R&D intensity of downstream vehicle manufacturers. Moreover, the positive effect spills over to upstream raw material enterprises. However, this effect does not seem sustainable. Government subsidy improves R&D intensity of battery manufacturers and vehicle manufacturers, but it has no significant effect on upstream raw material enterprises. In addition to directly improving R&D intensity of vehicle manufacturers, the dual-credit policy also negatively moderates the effect of government subsidy on R&D intensity for downstream vehicle enterprises, so the dual-credit reduces the dependence of vehicle manufacturers on government subsidy and mitigates the negative impact of subsidy decline on vehicle manufacturers. To address the issue of the unsustainable positive effects, the government should establish more ambitious dual-credit policy targets and tighten the implementation of dual-credit policy in order to rectify the oversupply issue in the new energy vehicle credit market.