Electric vehicles are always almost here: Why current business model innovation does not kill the permanently emerging technology syndrome

Transcription

1 Electric vehicles are always almost here: Why current business model innovation does not kill the permanently emerging technology syndrome This paper is currently under review at Energy Policy.

2 FRANZISKA GÜNZEL-JENSEN 2

3 MORTEN RASK The Tuborg Research Centre for Globalisation and Firms 3

4 We need YOUR help! 4

5 100-plus years history 5

6 Permanently emerging technology syndrome The development of the EV technology has been discontinuous, characterized by great efforts in the beginning, followed by repeated stops and starts Perfect example of the permanently emerging technology syndrome A technology is in an emergent stage until a dominant design has been created; firms will introduce alternative designs in order to secure their own competitive position in the market (Lee, O Neal, Pruett & Thomas, 1995; Koski & Kretschmher, 2007). PETS Dominant design PETS 6

7 Why are we facing a PETS? Technology lock-in (Cowan & Hultén, 1996) economic path dependence whereby the market selects technological standards and because of network effects the market gets locked-in (gasoline) Resistance to change notwithstanding imperatives for radical action or the multitude of attempts via socio-technical experimentation to nurture strategic niches (Wells & Nieuwenhuis, 2012) Market regimes- market power Importance of dominant design to understand innovation trajectories (Utterback 1994) Deep renewal of path depended tracks including customer practices and values, ecosystem perimeters, regulations etc. 7

8 Different behaviors of start-ups and incumbents Start-ups Empirical literature has generally found that discontinuous innovations are developed and commercialized by new entrants (e.g. Andersen & Tushman, 1990; Christensen & Bower, 1996; Henderson & Clark, 1990) because of their smaller size, shorter pathdepend histories, and more limited commitments to value networks and current technological paradigms (Macher & Richmann, 2004; Walsh et al., 2002). Incumbents Incumbents fail to embrace new technology due to embeddeness of incumbents within an established industry network, forces of inertia within incumbent firms, resource dependencies etc. (e.g. Christensen, 1997; Rosenbloom & Christensen, 1998; Trippas & Gavetti, 2000; Tushman & Andersen, 1986). 8

9 How to overcome PETS? Disruptive innovation and bm literature put a premium on business model innovation as a cornerstone to end PETS (Christensen, 1997; Chesborough & Rosenbloom, 2002) The journal Energy Policy has published several papers that argue that business model innovation might be the main driver to finally bring EVs to the market (e.g. Christensen et al. 2012) Overcome technological short-comings (e.g, battery problem) Solve chicken-and-egg problem (infrastructure vs. car) Introduce new dominate design 9

10 Our focus RQ 1: How do incumbents and new entrants innovate their business model? RQ 2: Does business model innovation facilitate the creation of a new dominant design? Definition bm innovation: Introduction of a business model that is new to the product-market space. 10

11 MULTIPLE CASE STUDY 11

12 Empirical setting Empirical context needed where different actors are active in forming the dominant design of the market (2009) Danish market Committed to low carbon agenda Registration fee: EVs are exempt from registration fee until 2015 (closing price gap) Oversupply of wind energy unused resources (7%) No local car industry Various national and international start-ups and incumbents choose DK 12

13 Data collection and analysis Using a maximum variation strategy four cases were selected 2 infrastructure providers and 2 car producers 2 start-ups and 2 incumbents 2 local and 2 international actors Data collection from 2009 onwards Primary data: interviews with CEOs, founders and country representatives Secondary data: annual reports, newspaper articles, white papers, presentations etc. Pattern matching and cross-case analysis 13

14 Always almost here RESULTS Note: This is not meant as a judgment of the presented businesses or their market timing. 14

15 Four cases Renault is a traditional car manufacturer (1899) that has started investing heavily into EVs in 2008 Vision: 10% of cars in Renault should be EVs in 2020 (= EVs per year) Entered DK in Renault has a market share around 5,5% today in DK (average Europe 11%) Produces EVs as traditional cars Spun out 2009 (former ChoosEV) It is the leading Danish electric mobility operator. CLEVER is owned by five large utility companies in Denmark In June 2012, CLEVER opened first public accessible nationwide charging network ECOmove founded in 2009 (first licensed car manufactured in DK) Developed the QBEAK III Their innovative business approach and technology were internationally recognized EV infrastructure start-up from 2007, fastest VC funding in the history Entered Denmark in 2009 Since 2012 nation-wide infrastructure; 500 clients (Renault) Existed DK May by filing for bankruptcy 15

16 Business model changes (in comparison to the dominant design of the industry) Renault has presented in 2012 a full-range of EVs by using existing platforms, wellknown materials, old channels and customer relationship management, targeting the same customers. Clever provides charging solutions for households, companies and municipalities at home as well as through a nationwide network of public charging stations in Denmark for all models of electric cars. Flexible production customizable EV platform Make-to-order for niche market Direct sells; Personal relationships to customers Enabled weak battery technological by work-a-round through business model creation Battery not owned by car holder (dropping the price) this only can work if there partners (car manufacturer) agree on this very new system 16

17 Business model innovation analysis AIM: Selling more normal cars Extended value proposition that supports their current business model with new product line Business model archetype unchanged AIM: Getting access to households for future - from intelligent charging to intelligent house Offers new value to existing customers by offering intelligence of the grid Activities support current dominant design in the industry AIM: develop a real electric car Targets a niche market with a novel value proposition New value proposition calls for new business model archetype AIM: EV experience = car experience Targets common mass market with old value proposition Applies new archetype (subscription - from telecommunication industry) 17

18 Business model innovation in the EV industry 18

19 Current business model innovation does not translate disruptiveness of the technology into a disruptive value proposition DISCUSSION AND CONCLUSION 19

20 Key insights Incumbents investments at this stage appear to be driven by other than EVrelevant prospects Their behavior might prolong PETS Advantages of EV technology are not exploited Value for the customer is not added green factor is questionable Good example: TESLA faster, more silent and greener sports car If advantages of the EV technology are not translated into a novel value proposition EVs will be an added product line as electric bikes From a customer point of view current incentives as tax credits have only a limited effect Should add to existing value proposition 20

21 CONCLUSION Until now business model discussions in the EV industry have mainly taken an industry perspective and therefore focused on business model archetype The value proposition, which is at the heart of the business model, has been neglected in previous analysis (legitimization of EVs on societal level) 21

22 Now it s your turn Support existing BM archetype?? Create new BM archetype?? Support existing value proposition Create new value proposition! 22

23 THANK YOU FOR TODAY! 23