From Fluid to Transitional Phase of EV Innovation: Reorienting Electric Mobility Research focus on Industrialization Issues

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Abstract:

In their seminal work on technology innovation, Abernathy and Utterback, (1978) give a model of innovation dynamics in three different phases. The first “fluid” phase is almost a large exploration phase in term of innovative offer definition, use cases and markets. In the second “transitional” phase, the market starts growing efforts to catch significant market share of this new attracting market drive an intense effort on innovative product-process design and industrialization to master the scale up of production and the cost competition for large markets (Utterback, J. M. – Mastering the Dynamics of Innovation, Harvard Business School 1994).
The aim of this communication is double. First, to demonstrate that electric mobility dynamic enters now this transitional phase after more than a century long fluid phase of emergence and unmet expectations. Secondly, to draw the consequences on strategy and management research refocusing from macro or micro approaches on electric mobility usage, value and markets to deeper analysis of EV product process and value chain issues.
The ongoing EV market scale up: transition phase, at last.
EV has been a century-long emerging technology (Beaume Midler, International Journal of Automotive Technology and Management, 2009). The 2010 has seen major changes both from the offer side and the demand determinants.
On the offer side, all the OEM had for decades EV prototypes and concept cars. But the 2010 decade introduced significant breakthrough at different levels:
- In term of battery technology, the lithium-ion expanded the vehicle autonomy to more competitive level compare to ICE;
- In term of product design, from electrification of ICE vehicles in the 1990s to more specifically designed cars to fit the electric power opportunities and constraints (see Tesla models, Renault Zoe and Nissan Leaf for example)
- In term of production and commercialization scale, car manufacturers such as Nissan, Renault, Tesla or Geely invested substantial scale production units for EV…
- In term of electric mobility system, such as charging infrastructures, services to easier usage of EV, specific urban rules that favor EV …
- In term of regulations that heavily incent OEM and customer to produce and buy EV.
A systemic change is in progress that clearly raises the competitive value of EV against ICE and so sustains the scale up of EV market, yesterday below 1% of the global sales, and forecasted between 10% and 15% of the worldwide market by 2025.
The automotive industry will thus be facing a sharp increase of production in EVs; we can also expect a long coexistence with ICE vehicles raising multiple and complex issues of manufacturing performance in case of mixed production of vehicles and powertrains. Such scale up will raise hard industrial questions both for incumbent that have to deeply transform their industrial footprint, as for the new comers as Tesla, which is confronted to the transition of niche market to mass production system.
Refocusing research on EV mass industrialization issues
Looking at the vast management and economic literature on EV, it clearly focusses generally on the question of the value of electric mobility at different level: macro vision of environmental criteria, global automotive strategies or value for customer.
The existence of a new mobility paradigm taking into consideration social, societal and technological changes as well as strong political pressure to achieve smart and sustainable mobility is now fairly well described and considered as a strong hypothesis for the future of mobility in many academics papers.
On a more economic and strategic level, new mobility business models have been drawn up by many authors introducing new service-oriented usages such as, for instance, car-sharing, car-pooling, multimodal transportation, robotaxi. Due to the conjunction of these new needs and the irruption of digitalization in all industries, these new business models enlarge the number of stakeholders versus existing transportation schemes; they also raise the issue of which type of industry (ICT, automotive, platform and/or transportation operators, power supply and management …) will take the lead and dominate the market of mobility services.
In most of the studies addressing this new mobility landscape, the connected autonomous BEV is preferred to the equivalent ICE vehicle for urban mobility services. On the other hand, we can identify an emergent trend for multi-purpose EV according to most of the autonomy announcements from OEMs for future products and amazing forecast of battery cost reduction made by OEMs or consulting experts. And low cost EV is still an unknown field to shape!
On the contrary, literature on industrial questions addressed by the market scale-up seems today rather short. Product-process optimization, make or buy issues related to architectural characteristics of the product, flexible or dedicated product lines… are old issues that had to be rethought in the context of EV scale up. More globally, the “business as usual” industrial system of carmakers will be strongly disrupted by the introduction of new technologies necessary to achieve mass reduction of vehicles (both ICE and EVs) along with emission reduction and by a redesigned value chain for e-traction. Batteries, e-powertrain and associated management systems are the key enablers of EV’s performance, but they are not yet fully integrated in the core business of incumbent carmakers. The production of batteries components is largely dominated by the electrochemical industry, e-motors, inverters are produced by many companies all over the world. Nevertheless, none of them are ready to catch up with the demanding technical and economical requirements of the automotive industry. A few papers already address all these potential disruptions in the value chain and identify the different visible strategies of incumbents and newcomers. Lastly, some papers address circular economy and recycling issues which are mainly related to batteries second use opportunities and performant recycling process.
To fill this identified gap, our research, which is developed within the research program of Sustainable Mobility Institute (Renault Group, ParisTech), can be briefly described as follows. After setting the reference framework of the manufacturing process of an ICE vehicle (including powertrain and chassis) as well as the impacts (on the process) related to the introduction of an EV, we aim to identify different scenarios of technological transition for VE manufacturing processes; these scenarios will be derived from empirical studies, addressing the full scope of the value chain, of already launched EV and forthcoming projects. We’ll use them to compare their intrinsic respective performances and question the existence of significant patterns of corporate strategies for EV industrialization.
Furthermore, we would like to identify upcoming potential disruptions in product, manufacturing technologies and value chains which could impact industrialization scenarios. Therefore, we plan to conduct a systemic analysis of EV business models, EV concepts and automotive design knowledge relying on C-K methodology to identify what are the upcoming key disruptions and their impacts on EV industrialization scenarios.