Focused on alternative energy vehicles, this paper measures the space and frontier of the new and old tech-economic paradigm in the three dimensions of product performance, selling price and subsequent spending. Under the assumption of heterogeneity, a model of consumer choice and firm investment decision is constructed to simulate the evolution of automobile industry by Matlab 7.0. The effects of government consumer subsidies and productive subsidies are investigated respectively. The results show that the conventional vehicles will dominate the market with the advantages of product performance and selling price, although the subsequent spending of alternative energy vehicles is comparatively less. The consumer subsidies can stimulate the purchase of alternative energy vehicles, and from the demand side force the firms producing alternative energy vehicles to improve the product performance and increase the production cost through R＆D activities, so as to increase the firms’ competitiveness. The productive subsidies from the supply side help the firms producing alternative energy vehicles enter into the market, but do not change the conditions of low market share and profitability. Further, the subsidies do not take effects in the support of emerging industries, but disturb market order to some extent.