Abstract: With the rapid development of the electric vehicle (EV) industry, competition among original equipment manufacturers (OEMs) is intensifying. As a core component of EVs, the quality of batteries affects the demand for electric vehicles. To ensure the supply of high-quality batteries, many OEMs collaborate with battery suppliers on R&D. However, whether cooperation between vehicle manufacturers and suppliers can effectively improve battery quality and thereby increase profits for both parties remain need to explore. In a supply chain consisting of a single battery supplier and two competing original equipment manufacturers, considering customers’ sensitivity toward battery quality, this paper first investigates the optimal decisions of supply chain members when the supplier independently develops batteries. Next, we consider the optimal decisions of the three parties when manufacturer 1 collaborates with the supplier on battery R&D, while manufacturer 2 does not participate in the cooperation. Finally, we introduce the technology spillover effect when manufacturer 1 collaborates with the supplier and explore the impact of the technology spillover effect on the decisions of supply chain members. The game sequence in the model is as follows: In the first stage, the battery supplier decides the quality levels of batteries 1 and 2 to maximize its own profit; in the second stage, vehicle manufacturers 1 and 2 decide the EV prices to maximizing their own profits. We obtain the optimal battery quality and electric vehicle prices under the three models using the backward induction method. Further, we analyze the impact of parameters such as customer sensitivity to battery quality, price competition, and technology spillover effect on optimal decisions, and compare the changes in optimal decisions and profits of supply chain members under the three scenarios. Finally, through parameter simulation, we conduct numerical experiments. The main finding are: (1) Cooperation on R&D does not necessarily improve the quality of battery 1--if the battery wholesale prices negotiated by the manufacturer and supplier are too low, the supplier may choose not to cooperate or to cooperate passively. (2) The technology spillover effect does not necessarily improve battery 2’s quality, which depends on the value of parameters such as the battery wholesale price, customers sensitivity toward battery quality, and the level of price competition, et al. (3) For the manufacturer engaged in cooperation on R&D, the more investment in cooperation, the greater the possibility of benefiting from the cooperation, and as the technology spillover effect increases, the manufacturer needs to invest more money to ensure profit from the cooperation. (4) Cooperation on R&D does not necessarily simultaneously increase the profits of the supplier and the two manufacturers, but there is a zone in which the supplier and the two manufacturers can benefit from the technology spillover.

Key words: Battey range, Vertical cooperative R&D, Technology spillover effect, Battery supplier, Competitive EV manufacturer