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In Transitioning Ulevs to Market by Gavin DJ Harper 2014

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The role of Business Model Innovation: in transitioning ULEVs To Market by Gavin D. J. Harper BSc. (Hons) BEng. (Hons) MSc. MSc. MSc. MIET A Thesis Submitted in Fulfilment of the Requirements for the Degree of Doctor of Philosophy of Cardiff University Logistics and Operations Management Section of Cardiff Business School, Cardiff University 2014 Contents CONTENTS II CANDIDATE’S DECLARATIONS XII LIST OF FIGURES XIII LIST OF TABLES XVIII LIST OF EQUATIONS XIX LIST OF BUSINESS MODEL CANVASES XIX LIST OF ACRONYMS & ABBREVIATIONS XX ACKNOWLEDGEMENTS XXIV ABSTRACT XXVII CHAPTER 1: 1 INTRODUCTION 1 1.1 The Drive towards Sustainable Mobility 1 1.1.1 Sustainability 2 1.1.1.1 Archetypes of Sustainability 4 1.1.1.2 What do we seek to sustain? 5 1.1.1.3 Sustainable Development 6 1.1.1.4 Strategising for Sustainable Development 8 1.1.1.5 The Environmental Footprint of Motor Vehicles 10 1.1.1.6 Resource Scarcity & Peak Oil 12 1.1.1.7 Climate Change & Automobility 13 1.1.1.8 Stern’s Framing of Climate Change 16 1.1.1.9 Accounting for Development 17 1.1.1.10 Population, Development & The International Context 19 1.1.1.11 Sustainable Mobility: A Wicked Problem? 21 1.1.1.12 A Systems View of Sustainability & Automobility 22 1.1.2 Sustainable Consumption & Production 26 1.1.2.1 Mobility: A Priority SCP Sector 26 1.1.2.2 Situating the Car In A Sustainable Transport Hierarchy 27 1.1.2.3 The Role of Vehicle Consumers 29 1.1.2.4 Are Consumers To Blame? 30 1.1.2.5 The Car Industry: Engineering for Consumption? 31 1.1.2.6 ULEVs: Consuming Less? 32 ~ ii ~ 1.1.3 Industrial Ecology 33 1.1.3.1 The Industrial Ecology of Alternative Vehicles 35 1.1.4 Sustainability: The Corporate Perspective 36 1.1.4.1 Sustainability: Diverse Business Responses 37 1.2 Defining the Ultra Low Emission Vehicle (ULEV) 38 1.2.1 ULEV Terminology 39 1.3 Research Questions 40 1.3.1 Focus of this Thesis 42 1.3.2 Limitations & Boundaries of the Study 42 1.3.3 Contributions to Knowledge 43 1.4 A Guide To The Thesis 44 1.5 Chapter Summary 46 CHAPTER 2: THEORY BASE FOR THE RESEARCH INNOVATION & TRANSITIONS: TECHNICAL & BUSINESS MODEL PERSPECTIVES 47 2.1 Introduction to the Literature Review 47 2.2 The Nature of Technological Change & Continuity 48 2.2.1 Path Dependency 49 2.2.2 Technological Lock-In 50 2.2.3 Transition Failure in the Automotive Industry 51 2.3 Technology Transitions Literature 53 2.3.1 Landscape 55 2.3.2 Regime 56 2.3.3 Niche 59 2.3.4 Strategic Niche Management 61 2.3.5 The Multi-Level Perspective 62 2.3.6 Transitions Pathways 64 2.3.7 Transition Failures 67 2.3.8 Transitions to Sustainability 68 2.3.9 The Multi-Level Perspective in the UK ULEV Transition Context 71 2.3.9 Sustainable Mobility & The Transitions Perspective 72 2.4 Innovation & Technology Management Literature 73 2.4.1 The Innovation Process 74 2.4.2 Innovation for Sustainability 76 2.4.3 Eco Innovation In Niches 77 2.4.4 Technology Adoption 78 2.4.5 The Pace of Innovation 83 2.4.6 Continuous vs. Discontinuous Change 84 2.4.7 Innovation: Insurgents vs. Incumbents 85 2.4.8 Innovation and the Business Model 88 2.5 ‘Business Model’ Literature 90 2.5.1 Defining Business Models 91 2.5.2 Differentiation from Strategy 96 ~ iii ~ 2.5.3 Business Model Components 98 2.5.4 Business Model Ontology 100 2.5.5 Commercial Support for the Business Model Ontology 101 2.5.6 The Business Model as a Planning Tool 102 2.5.7 Business Model Design 103 2.5.8 How are Business Model Decisions Made In Firms? 104 2.5.9 New Business Models 105 2.5.10 Business Models for Sustainability 109 2.5.11 Business Models & The Automotive Industry 111 2.5.12 Risk & Innovation in Vehicle Innovation 114 2.5.13 Criticisms of the ‘’Business Model’ Concept 115 2.6 Research Gaps Identified 117 2.7 Uniting the Theory Base for the Thesis 119 2.8 Chapter Summary 123 CHAPTER 3: PRACTICAL BASIS FOR THE RESEARCH: BUSINESS MODELS & INNOVATION IN THE CAR INDUSTRY 124 3.1 The Mainstream Car Industry 125 3.2 Genesis of the Automotive Industry Business Model 126 3.2.1 Ford – Efficient Production with the Moving Assembly Line 127 3.2.2 General Motors - Encouraging Consumption 129 3.2.3 Budd – Pressed Steel Bodywork for Speed & Efficiency 131 3.3 Modern, Toyota Production System (TPS) 134 3.3.1 The Toyota Way 135 3.3.2 The Toyota Production System 135 3.4 Recent Evolution of the Automotive Industry Business Model 138 3.4.1 Key Partners 139 3.4.2 Key Activities 140 3.4.3 Key Resources 141 3.4.4 Value Proposition 142 3.4.5 Customer Relationships & Customer Channels 143 3.4.6 Customer Segments 145 3.4.7 Cost Structure 146 3.4.8 Revenue Streams 146 3.5 Business Models for Smaller Firms 147 3.5.1 Contract manufacturers 148 3.5.2 Low volume specialist assemblers 151 3.5.3 Kit car suppliers 153 3.5.4 Design houses 156 3.6 Radical Mobility Business Models 157 3.6.1 Tesla 158 3.6.2 Tesco Cars 161 3.6.3 Local Motors 162 ~ iv ~ 3.6.4 Ridek Concept 163 3.6.5 MDI Air Car 164 3.6.6 Tata Nano 166 3.6.7 En-V GM / Segway Personal Urban Mobility & Accessibility –AUTOnomy project 167 3.6.8 Envisioning Mobility as a Function Oriented Business-Model (Product Service System) 168 3.6.8.1 [Project] Better Place 170 3.6.8.2 Mu by Peugeot 173 3.6.8.3 Zipcar 174 3.6.8.4 BMWi 175 3.7 Chapter Summary 178 CHAPTER 4: RESEARCH METHODOLOGY 179 4.1 Introduction 179 4.2 Extent of the Research 180 4.3 Epistemology 181 4.4 Ontology 182 4.4.1 Business Model Ontology 182 4.4.2 Transitions Ontology 184 4.5 Literature Analysis Methodology 185 4.6 The Case Study Method 186 4.6.1 Structuring the Case Study Design 187 4.6.2 Constructing the Sub-Case Studies 190 4.7 Data Gathering Methodology 192 4.7.1 Research Ethics 192 4.7.2 Engaged Scholarship 192 4.7.2.1 Criticisms of Engaged Scholarship 195 4.7.3 Population Definition 196 4.7.3.1 Criteria for Selection 196 4.7.3.2 Degree of UK-based activity 196 4.7.3.3 Size of Firm 197 4.7.4 Sampling Frame 199 4.7.5 Issues of Access 199 4.7.6 Interview Technique 200 4.8 Analysing Interview Data 204 4.8.1 Coding System 204 4.9 Limitations of the method 207 4.10 Chapter Summary 208 CHAPTER 5: THE UK MARKET FOR ULEVS : A STEP ANALYSIS 210 5.1 A Socio-Cultural Perspective on UK Motoring 211 ~ v ~ 5.1.1 The Habits of UK Travellers 212 5.1.1.1 Time Spent on Journeys in the UK 212 5.1.1.2 The Length of Journey’s in the UK 212 5.1.1.3 The Purpose of Journeys in the UK 213 5.1.1.4 Modal Split of UK Journeys 214 5.1.1.5 London: A Special Case? 215 5.1.2 UK Driver Demographics 216 5.1.3 The UK Media, Society & ULEVs 217 5.1.4 Attitudes to Environmental Problems 218 5.1.5 Cultural Dimensions to the UK Carscape 219 5.1.6 Attitudes Towards Electric Vehicles 220 5.1.7 Consumer Concerns about Electric Vehicles 221 5.1.8 Public Education for ULEVs 222 5.1.9 The Social Impacts of the UK Automotive Industry 222 5.2 Technology & Change in UK Motoring 223 5.2.1 The UK Vehicle Stock 224 5.2.2 Emissions from UK Transport 225 5.2.3 The Environmental Performance of the UK Motor Industry 227 5.2.4 Industry Vehicle Technology Roadmaps 230 5.2.5 Appraising ULEV Vehicle Technologies 231 5.2.6 Charging / Refuelling Infrastructure 233 5.2.7 Potential Technological Fixes To Social Challenges 236 5.2.7.1 Battery Leasing 236 5.2.7.2 Battery Swap Infrastructure 237 5.2.7.3 Fast Charging 237 5.2.7.4 Inductive Power Transfer 238 5.2.7.5 ‘Apps’ for Vehicle Charging 238 5.3 An Economic Perspective on the UK Motor Industry 239 5.3.1 UK Vehicle Production 241 5.3.2 Automotive Sector Employment Trends 243 5.3.3 Investment in Knowledge, Research & Development 245 5.3.4 The UK in the International Marketplace 246 5.3.5 Registration of Alternative Fuelled Vehicles 247 5.3.6 ULEV Sales in International Contexts 248 5.3.7 Plug-In Car Grant Uptake 249 5.3.8 ULEV Market Growth Projections 250 5.4 The UK Political Context for ULEVs 252 5.4.1 UK Government Sustainable Development Policy 253 5.4.2 UK Transport Policy 254 5.4.3 UK Regional Governance 255 5.4.4 UK & the European Union 256 5.4.5 European Policy 257 5.4.6 Vehicle Emissions Standards 258 5.4.6.1 Future Emissions Standards 260 5.4.6.2 Climate Change Legislation 260 5.4.6.3 Air Quality Legislation 261 5.4.6.4 London Low Emission Zone 261 5.5 Chapter Summary 262 ~ vi ~ CHAPTER 6: CASE STUDY 1- TNC/MNC VEHICLE MANUFACTURERS 263 6.1 Embedded Case Study: Aston Martin 264 6.1.1 Cygnet 267 6.1.2 DB9 Hybrid 269 6.1.3 Hybrid Hydrogen Rapide S 270 6.2 Embedded Case Study: BMW (MINI, Rolls Royce) 271 6.2.1 MINI 271 6.2.2 Rolls Royce 274 6.2.3 Other BMW owned brands 278 6.3 Embedded Case Study: Honda 279 6.3.1 Honda Fit 281 6.3.2 Honda FCX Clarity 282 6.3.2 Innovative Key Partnerships 283 6.4 Embedded Case Study: Jaguar Land Rover 284 6.4.1 Evoque_E 287 6.4.2 Bladon Jets 288 6.5 Embedded Case Study: Nissan 289 6.5.1 Renault-Nissan Alliance 289 6.5.2 Nissan Leaf 290 6.5.3 Nissan Leaf in Other Markets 292 6.6 Embedded Case Study: Toyota 293 6.6.1 Toyota Hybrid Vehicles 294 6.6.2 Toyota Electric Vehicles 295 6.6.3 Toyota Hydrogen Vehicles 295 6.6.4 Acquisition of Shareholding in Tesla 296 6.7 Embedded Case Study: Vauxhall 297 6.7.1 Vauxhall Ampera 298 6.7.2 Vauxhall Adam 300 6.7.3 Vauxhall Commercial Vehicles 302 6.8 Chapter Summary 303 CHAPTER 7: CASE STUDY II- SME VEHICLE MANUFACTURERS 304 7.1 Embedded Case Study: Allied Electric Vehicles 305 7.2 Embedded Case Study: Axon Automotive 307 7.3 Embedded Case Study: Bee Automobiles Ltd.
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