Improving Bass model based on product value for forecasting new energy passenger vehicle sales

The purpose of this study is to propose an improved Bass model based on product value (IBMPV) for forecasting new energy passenger vehicle sales. This study develops a product value function of new energy passenger vehicles based on the theory of value engineering and improves the Bass model by incorporating the product value. Quarterly data on sales and product attributes of new energy passenger vehicles in China from 2014 to 2023 are used to verify IBMPV, and the prediction performance of IBMPV is compared with the Bass model. The results show that IBMPV outperforms the Bass model in terms of the goodness of fit and prediction accuracy. The market potential of new energy passenger vehicles grows exponentially with the enhancement of product value, and diffusion rate is determined by external and internal influences as well as product value. Internal influences play a significantly larger role compared to external influences in new energy passenger vehicle diffusion. Moreover, the enhancement of product value stimulates an increase in external influence coefficient, but decreases the internal influence coefficient. Our study quantitatively estimates how product value impacts new energy vehicle diffusion, providing a practical framework to better forecast new energy vehicle sales.