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06017911

06017911

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Published by: Archana Diwakar Ranjish on Nov 19, 2011
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Electric Vehicles: Struggles in Creating a Market
Abraham Sin Oih Yu, Lydia Lopes Correia Silva, Cristina L. Chu,Paulo Tromboni S. Nascimento, Alceu S. Camargo Jr. 
University of São Paulo, Business Administration Dept., São Paulo, Brazil
 Abstract 
--Toyota is the pioneer in the hybrid electric vehicle,and today almost all major car assemblers produce hybrid cars.Now, several auto manufacturers are preparing for thecommercial launches of battery powered electric vehicles in2011. Another battle for dominance in electric car market hasstarted. However, the development of technologies for electriccars has a very long history and presently there is a hugediversity of technological solutions in development. In order tounderstand the evolution of electric vehicles, we carried out tworelated case studies. In the first case study, we analyze theexperience of General Motors in the last 40 years in developingelectric vehicles. Our focuses are on the objectives of eachdevelopment, technologies employed and external factors thatstimulated each effort. The results show that in the first 20 yearsthe main objective is to explore different technologies. Theintention to launch a commercial electric vehicle only appears inthe last 20 years. In the second case study, we analyzepropulsion technologies and product architectures electricvehicles announced, in the last few years, by established automanufacturers and new entrants. The results show thatinnovations in product architecture can provide a niche marketfor electric vehicles.
I. INTRODUCTIONEven recognizing the importance of mobility as a keyvector for the growth of a globalized economy and for thedevelopment of socio-cultural well-being, the concern withthe environment and with sustainability of the energy sector now puts the spotlight on transportation as a central focus of attention worldwide [29]. To meet these challenges, theautomotive industry has invested considerable resources inresearch and development in a broad portfolio of newtechnologies related to vehicle propulsion, ranging fromimprovements in conventional internal combustion engines[41], operating with fossil fuels or renewables (biofuels) toelectric propulsion systems, hybrid, fuel cells, or combinations of those.Increasingly present in the auto show and receiving greatattention from the media and public around the world, propulsion systems based partly or wholly in electric power train has been outstanding in recent years as an attractivesolution to environmental and energy security issues relatedto sustainable transportation of the future. Major automakershave already introduced electric cars such as Chevrolet Volt by General Motors (GM) and Leaf (Renault/Nissan), and theyare gearing-up their manufacturing plants for mass- production of these EVs (Electric Vehicles). Although thesecars are commonly known as EVs, there is no dominantdesign yet, as defined by Utterback [39], in EV. GM’s Volt isa so called extended-range hybrid electric vehicle. It is powered by an internal combustion engine (ICE), batteriesand grid electricity. This technology is also known as a plug-in hybrid. Renault/Nissan’s Leaf is powered only by batteries: a battery electric vehicle (BEV). There are manyother varieties of EV, including not only differences in propulsion systems but also in vehicle architecture, beingintroduced into the world market in the last few years.It seems that these different electric vehicle technologiesand architectures are ready for the coming battles that willdetermine, in the first place, which variety (or varieties) will be dominant in the EV market(s); and in the second place,whether the EV will displace ICE vehicles. It is interesting toremember that this is not the first time that the EV is battlingICE cars. Around the beginning of the 20
th
century, the EVwas competing against ICE and other propulsion systemssuch as steam engine. Actually, in 1900 the total number of EV produced was higher than that of vehicles equipped withICE in the USA [16]. This is what we call the first wave of EV. The result of this first battle is well known: the victory of ICE. Now, one hundred years later, we are witnessing another wave of enthusiasm for EV.This paper is focused on this current wave of EVs. We useSuarez’s framework for technological battle [34] toinvestigate the technical trajectories traveled by one companyand to analyze technological strategies adopted by participating firms.For Suarez [34], a battle for technological dominance ischaracterized by a sequence of five phases and respectivemilestones: Phase I is characterized by the research anddevelopment (R&D) build-up in a technological field. Themilestone that defines the beginning of this phase is when a pioneering firm starts its efforts in R&D applied to the production of a new commercial product (T
0
). Phase II isdescribed by the search for the technical feasibility of a new product. The emergence of the first prototype in thetechnological field is the milestone that indicates its beginning (T
P
). Phase III is characterized by the effort increating the market for the technological field. The milestonethat signals its initiation is the launch of the first commercial product (T
L
), which introduces the technology developed tothe market. Phase IV is the decisive battle and its onset ismarked by the presence of a clear early front-runner (milestone T
F
). There is no guarantee that a front-runner willwin the battle. When a dominant design emerges (T
D
), thetechnological battle enters in Phase V: Post-dominance.Competition in this phase is often an intense “within-standard” rivalry based on licensed dominant technology.This paper uses two analyses to better contextualize thisenthusiasm for electric cars that can help better understand
978-1-890843-23-6/11/$26.00 ©2011 IEEE
 
 the risks involved in entering the current wave. The firstanalysis concerns Suarez’s Phases I and II: we will examinethe attempts, and their motivations, by a major automaker,GM, in developing electric cars over these last 50 years. Thislong period of retrospection allows an understanding of theinteractions of a complex set of factors that culminate withthe latest commercial releases of this company. The secondanalysis focuses on Suarez’s Phase III. We investigate a largesample of EVs announced or launched commercially in the past 15 years. This analysis enables an exploration of theevolution of architectures of EV and its technologies. Thisexploration can help decision-makers, both for business andgovernments, to understand the potential impacts of theseinnovations for the survival of enterprises and themodifications required in the infrastructure of local transport.The analysis of this sample of EVs shows that there is noclear front-runner yet in the EV battle ground; therefore wedo not analyze Phases IV and V in this paper.The next section provides a brief context for the currentwave of EV by discussing electromobility. Section III presents and analyzes the trajectories traveled by GM indeveloping EV in the last 50 years. Section IV analyzes theEVs launched commercially in the last 15 years. Discussionsand conclusions are in Section V.II. ELECTROMOBILITY - INNOVATION IN THEAUTOMOTIVE INDUSTRY BY INTRODUCINGELECTRIC ENGINESThe current electric vehicles - undergoing tests, alreadylaunched or announced - may be classified into four categories according to the International Energy Agency [23],namely: Hybrids or Hybrid Electric Vehicle (HEV) useenergy from an electric motor to supplement the propulsionof a conventional internal combustion engine (ICE), using petrol or biofuel. They travel initial short distances onelectricity alone, and when the battery that stores electricenergy is exhausted or when the vehicle reaches a certainspeed, the internal combustion engine starts operating,driving the wheels and also recharging the battery pack. The plug-in hybrids or Plug-in Hybrid Electric Vehicle (PHEV)also combine the internal combustion engine and electricmotor, this being, however, rechargeable in the chargingstations. In pure electric vehicles or Battery Electric Vehicle(BEV) the battery must be recharged from the chargingstations (primary energy source), since an electric vehicle hasno capacity on board to recharge the set of battery cells. Stillundergoing research and testing, is the technology of FuelCell Electric Vehicle (FCEV), in which the fuel cell convertsan energy carrier (e.g., hydrogen) into electricity. Hydrogencan be fueled directly in the vehicle or can be produced on board of the vehicle when other fuels, like gasoline, ethanolor methanol, are used as fuel.In the late nineteenth century, there was an era of intense brewing of competing technologies for automotive propulsion. At that time coexisted and competed, steamengine external combustion, internal combustion engineoperating on fossil fuels with biofuels, and electric motor. Nevertheless, during this period, the greater share of marketsales was of the electric motor car, invented in 1834 [8]. Inthe last decade of the nineteenth century there were dozens of manufacturers of electric vehicles in Europe and the UnitedStates [28]. And even if it was characterized more by thesimpler handling than the competing alternatives, in additionto being silent and not having exhaust gas pollutants, theelectric motorization soon gave way to internal combustionengines, partly due to limitations associated with low rangeautonomy batteries, their high recharging time, as well astheir limited lifespan. And electric cars virtually disappearedfrom the scene from as early as 1930 [8]. At the beginning of the twentieth century (period 1900-1920) the disseminationof gasoline-powered internal combustion engines was rapid, probably not for technical reasons, but mainly due tofavorable factors in the socio-economic and organizationalcontexts - the externalities to technology [40]. The oilindustry has contributed enormously by installing anextensive network of fuel distribution; by having the intenseoil drilling activity hold down the price of oil, besides thenotable booming of roads, especially in the United States[35].The modern history of electric vehicles can be consideredto have initiated in the 70s, when oil prices soared with thegoal of reducing the consumption of fuels derived from thissource of energy. To that were added the environmentalists’arguments in favor of the electric vehicle option. Theresumption of marketing of electric vehicles took place in themid-1990s, in the United States through GM, which launchedthe EV1 model in 1996, the first mass-produced electric car.The automaker was followed by Ford (Think and Rangemodels), Honda (EV Plus), Toyota (RAV4) and Nissan (AltraEV). All these models were sold only through leases, costing between 250 dollars and 600 dollars monthly [27]. Despitethe success among users, in 1999 GM interrupted the production of the EV1 (just over 1,000 units were produced)on the grounds of impossibility of obtaining profitability [36].In recent years, even having better performance, thetechnological gaps that contributed to the limited use of electric propulsion in twentieth century transport are still present. Despite the challenges, the concept of electromobility began to spread and has been receiving greatattention from the media and public policies around theworld. Currently, most major automakers are engaged in thedevelopment and commercial launch of pure and hybridelectric models on the world market. Competition in themarket for electric cars has gained speed and more participants. While enthusiastic multinational executivesannounced development programs of the second generationof electric models for 2015-2020 and electromobility emergesas the most promising alternative technology to dominate personal transportation in the future, the market generallyhesitates before the innovation. Consumers see the alternativehybrid merely as vehicles that have been replacing their 
 
  propulsion systems and buyers do not yet seem familiar withthe new transport model associated with the electric motor technology.As it can be perceived from the previous explanation, theelectric motor technology represents a great opportunity toreposition a competitive and mature industry such asautomotive regarding concerns about the sustainability of thecurrent model. On the other hand, the challenges to be facedare huge, particularly by the traditional automakers and their supply chains and distributors, since electromobilityrepresents much more than a mere replacement technology of a vehicle system. The widespread introduction of electricvehicles will generate enormous impact across the industry,leading to a significant reconfiguration of the existingstructure. They are changes that involve from significantmodifications in the industrial production chain (its participants and the relationships among them), to newsystems infrastructure supply and replenishment of energy,including new business models, marketing, use andownership of vehicles and their energy systems, as well asinstitutional relations and government policies.III. GM - 50 YEARS OF EXPERIENCE WITH ELECTRICVEHICLEWe intend to understand some key phases of battle for technological dominance in electric vehicles from the perspective of one major car assembler. Since the DecisiveBattle (Phase IV) for EV may have just started with thelaunches of Volt (GM) and Leaf (Renault / Nissan) in 2010 -2011, this section is focusing only on the three first three phases: R&D Build Up, Technical Feasibility, and Creatingthe Market.GM designed and commercialized EV in the beginning of the last century. However, the ICE vehicles became thedominant design around 1920’s and the electric vehicletechnology hibernated for almost forty years. But in the 60s,the concerns with pollution and air quality in large urbanareas began [32]. This encouraged GM to re-start its R&D programs for vehicles with electric propulsion system [16].This section analyzes the experience of GM in developingEV from 1960’s onward.Why it is relevant to study technological battle from acompany’s perspective? Our results show that GM was ableto announce the first commercial launch of EV only after 13different prototypes and more than 30 years. Therefore, for acompany such as GM, the participation in a technological battle such as EV is an endurance run and a complicated oneat the best. This study contributes to the understanding of this process and which may provide support for managersinvolved in this kind of technological battles.This study is certainly not the first one trying to look at a phenomenon similar to Suarez’s technological battles. Lynnand associates [25] describe the probe and learning processemployed by companies such as GE and Corning in searchingmarkets for radical innovations. These probe and learn processes also took many years. Although our study of GM’sattempts at developing EV can also be described as a probeand learn process. Our theoretical contribution is that weuncover some key differences and are able to distinguish twotypes of probe and learn (P&L) processes: technological andmarket P&L. We also explore the relationships between thesetwo P&L processes based on the experience of GM in EVand cases from Lynn, Morone and Paulson [25].
 A.
 
Methodology
In studying the first three phases of Suarez’s technological battle we focus on the milestones within GM: the start of R&D in EV; the working prototypes; and the launching of commercial products. Since we are looking at GM’smilestones, it is irrelevant, for this section, which company isthe first one to reach these milestones. Furthermore, theidentification of the first milestone - the start of GM’s R&Din EV – depends mostly on access to GM’s internaldocuments, much more difficult to obtain; therefore welooked only for the second and third GM’s milestones in thisresearch. By working prototype, Suarez means technicallyfeasible prototype [34].The search on the experience of GM in developing EV is based on secondary information sources: technical papers,media news, government agencies, Internet sites, etc. Thesesources provide information so that we can identify EV prototypes and commercial launches by GM from 1964onward, including their specs, and sometimes informationabout their R&D process such as participants (persons andorganizational units), development objectives and results,lessons learned, relation between prototypes (such as the factthat the EV1 derived from Impact model), organizationalinfightings, etc. The year of 1964 is defined by the first GMEV prototype identified, Electrovair, in our research in thecurrent wave.
 B.
 
GM’s 50 years of history with EV 
Data on GM’s EV prototypes and commercial launches,including some technical information, are displayed on Table1. Not all GM prototypes are in this table; we include thoseEV prototypes that are new platforms: new electric power train or new chassis. Derivative prototypes, such as ElectricS-10, are excluded from this table.This Table shows that GM developed 13 different prototypes in 32 years before its first, but unsuccessful,commercial launch of electrical vehicle in 1996: the EV1.One can observe, by analyzing the timing of EVs developed by GM in these 46 years, a quite uneven distribution over time: the decade of 60’s is the most “productive” with six prototypes; and the decade of 1980’s has just one prototype:the Sunraycer. The fact that all three commercial launchesoccurred in the last two decades indicates that between the beginning of the 1960’s and the mid 1990’s GM was in PhaseI (R&D Build Up) and Phase II (Technical Feasibility) of thetechnological battle [34]. The first entry of GM into the PhaseIII (Creating the Market) occurred in the second half of 90’s,

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