The Silicon Valley Electric Bus Manufacturer: a Case Study of Proterra Wooseok JUHN, Adam KRAUS and Kiyomichi ITO*

研究技術計画 Vol. 32, No. 4, 2017

特集・EV をめぐる技術転換，市場，競争のダイナミズム

The Silicon Valley electric bus manufacturer: a case study of Proterra Wooseok JUHN, Adam KRAUS and Kiyomichi ITO*

1. Introduction automobile industry? Given the high level of uncer- Roughly a century ago electric cars lost out as tainty, research based on solid observation by field the dominant design [1]. However, with the rise of survey is required. Tesla and with announcements of an electric future In this paper, we will introduce the single case of from many established vehicle manufacturers, some Proterra, an electric bus manufacturer based in the people believe the electric vehicle could be seeking United States, which is often called “the Tesla of revenge and soon usurp the internal combustion buses.” At this time, it is not possible for us to engine. On the other hand, there is also a risk that judge whether this case is an extreme case, revela- the boom of the electric vehicle may end with only tory case, or a general case. However, we believe excessive expectations. Will that this case study will contribute to future electric electric vehicles become a vehicle research. runaway success like the This paper is mainly based on the secondary smartphone or be more like materials, such as the website of Proterra, electric the 3D television? How vehicle related journals, and so on. In addition, one much potential do electric of the authors conducted an interview with an EV vehicles have? What revolu- (electric vehicle) expert who formerly worked at tion will it bring to the global Tesla1). We will not quote the results of the inter- * Wooseok JUHN Professor School of Management, Chukyo University Yagotohonmachi 101-2, Showa-ku, Nagoya, Aichi, Japan 466-8666 (Office) [email protected] ** Adam KRAUS Research Fellow Institute of Business Studies, Chukyo University Yagotohonmachi 101-2, Showa-ku, Nagoya, Aichi, Japan 466-8666 (Office) [email protected] *** Kiyomichi ITO Visiting Professor School of World Englishes, Chukyo University Yagoto honmachi 101-2, Showa-ku, Nagoya, Aichi, Japan 466-8666 (Office) [email protected]

1) The interview was conducted for 1 hour, on 17 February, 2017 in Silicon Valley. At the request of the interviewee, we cannot disclose the details of the interviewee.

— 393 — view directly, but the interview was very helpful in describing the case of Proterra.

2. Overview of Proterra Proterra, Inc. was founded in 2004 by Dale Hill in Golden, Colorado. This is interesting because it's only one year after Tesla’s start up, so it is quite a while ago. Hill stepped aside as CEO of the company in 2008 [2]. Proterra had its ﬁrst customer in 2009 when it sold three buses to Foothill Tra nsit in

Pomona, California. In 2011, Proterra opened its Source: [6] first factory in Greenville, South Carolina. Figure 1. Greenville Factory of Proterra In 2014, Ryan Popple a Senior Director of Finance at Tesla Motors was appointed the CEO of Apple, Tesla, GM, Ford, SunPower, Denso, Honey- Proterra. Shortly thereafter Proterra transitioned its well, A123 sy stems, Propel, Cessna, and Blue Bird headquarters to Burlingame, CA which is located in [13]. Silicon Valley and then in 2016 they opened their new factory in City of Industry, CA near Los Angeles. The 3. Sales and market overview headquarters in Burlingame, in addition to having As of January 2014, out of some 71,000 transit offices, has a state-of-the-art battery engineering lab buses run across the U.S., the portion of electric and battery pack production facility [3] [4]. The buses was said to be less than 1% [2]. The current City of Industry factory is designed to produce up fleet is dominated by diesel and CNG (compressed to 400 buses a year to meet demand for zero- natural gas). However, Ryan Popple, the CEO of emission vehicles from transit agencies west of the Proterra, boldly believes that by 2020, one-third of Mississippi [5]. new fleet bus purchases will be electric, by 2025, a Proterra raised $140m at the beginning of 2017 half, and by 2030, 100% [14]. Actually, as of Janu- and another $55m in June 2017. Proterra’s investors ary 2017, Proterra had 36 customers and 377 orders include Kleiner Perkins, GM Ventures, Mitsui [15]. It has close to 40 customers all located within Global Investment, and some others [7] [8]. GM the United States (See Figure 2 and Table 1). Ventures is the investment arm of General Motors. They have a lot of customers in California and Proterra has about 260 employees [9]. Much of the west coast, because California has the reputa- the manpower at Proterra is recruited from other tion for being very progressive and very environ- leading companies. First of all, the CEO at present mentally focused. But they also have a lot of cus- is from Tesla. The VP of engineering is also a for- tom ers in the south, Dallas, TX, San Antonio, TX, mer Tesla engineer. At Tesla he worked on the bat- Louisiana, South Carolina, Tennessee, and Ken- tery for Tesla Model S, Tesla Model 3, the Daimler tucky. It is really a nationwide kind of phenome- A Class, and the Daimler B class [10]. The COO non. The largest customer is King County Metro in (Chief Operating Officer) worked at Tesla and he Seattle, and this year they actually announced an worked at Honeywell, as well [11]. The CTO order for 73 vehicles [16]. There are a lot of cus- (Chief Technology Officer) was a lead engineer at tomers that are interested in electric vehicles (See Denso in Michigan [12]. The backgrounds of the Figure 3). members of executive team are such firms as Proterra has two main types of competitors; one

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Sources: Created by authors with reference to materials of the website of Proterra Figure 2. Customer Map of Proterra

Table 1. Sales Performance of Proterra

Year Volume Customers 2009 3 Foothill Transit in Pomona, CA 2010 2011 10 San Antonio VIA 3, Tallahassee, StarMetro 3, Seneca, CATBUS 4 2012 9 Stockton, RTD 2, Worcester, WRTA 3, Tallahassee, StarMetro 2, Seneca, CATBUS 2 2013 32 Worcester, WRTA 3, Nashville, MTA 7, Pomona, Foothill Transit 12, Louisville, TARC 10 2014 11 Pomona, Foothill Transit 2, Reno, RTC 4, Nashville, MTA 2, Seattle, KCM 2, Seneca, CATBUS 1 Stockton, RTD 13, Worcester, WRTA 1, Pomona, Foothill 13, Reno, RTC 4, Louisville, TARC 6, Nashville, 2015 62 MTA 2, Tallahassee, StarMetro 1, Seattle, KCM 1, Duluth, DTA 7, Lexington, LexTran 5, Dallas, DART 7, Missoula, ASUM 2

Source: Created by authors with reference to materials of the website of Proterra

Source: [17] Figure 3. Electric bus operators in the United States being Chinese companies, and the other being the facturer, Hunan Midea Coach [18]. They have now incumbent fossil fuel bus companies in the North begun to manufacture a new electric bus called the America. The representative Chinese competitor is K9 in the U.S. BYD purchased a factory in BYD. In 2009, BYD purchased a diesel bus manu- California that previously manuf actured RVs to

— 395 — produce the K9 [19]. Their buses are made of steel ence in the entry into electric vehicles by existing and reflect a design philosophy of a converted fossil fuel car makers. With buses, the manufactur- vehicle versus ground up design. They use a battery ing techniques are less sophisticated and the volume chemistry called LFP, Lithium Iron Phosphate [19]. is relatively low compared to passenger cars. This LFP is very safe and has a long lifetime, but it has may mean companies like Proterra will have an a low energy density and thus it has a significant easier time penetrating into the bus space than a tradeoff of increasing the weight of the vehicle or company like Tesla would have entering the pas- having comparatively low range to other chemis- senger vehicle space. tries. It has a maximum battery capacity of 324 In addition, Proterra is now cost competitive kWh and a range of 161 miles. with traditional diesel buses when considering the The representative North American Competitor operational life of the vehicle. While the average fossil fuel company is New Flyer. They are a Proterra bus sells for $700,000 which is at least Canadian company and based in Winnipeg, Canada. $200,000 more than for a diesel or a natural gas They are the North American bus manufacturer model, the total cost of operation is significantly market leader [20]. Of the entire install base of less. The total cost of operation according to Pro- buses in the USA and Canada, about 50% are New terra for a diesel bus is estimated at $64,000. In Flyer buses [21]. New Flyer has come out with a co mparison, a competing Proterra model has a run- product that is also a conversion. So they have ning cost of $27,000 a year [5]. taken their vehicle, which is called the Xcelsior, and they have made an electric vehicle version of 4. Strategy of Proterra it. It is a steel bus that uses batteries from a com- Looking at the homepage of Proterra, you can pany named Xalt [22]. Those are put in a vehicle and see where Proterra places emphasis on strategy they combine it with a drive unit from Siemens [23]. especially in terms of technology. They are intro- It has a maximum battery capacity of 600 kWh and ducing their technology in four categories; batteries, range of 200 miles. chargers, drivetrains, and bus body. It is clarifying In comparison to the BYD K9 and the New Flyer that they are developing advanced, modular battery Xcelsior, the Proterra Catalyst has a maximum bat- storage and t ying it to a proven electric drivetrain tery of 660 kWh with a range to 350 miles [24]. and state-of-the-art energy delivery system, which New Flyer may have somewhat of an incumbent means they are focusing on the research and devel- dilemma. As the current market leader in the USA opment of electric powertrain. The website of and Canada, it may not be as motivated to canni- FRESHPatents shows the list of patent application balize the sales of its fossil fuel buses. Of course, related to Proterra (See Table 2). As you can see New Flyer experience in bus manufacturing, and it in the table, almost all the patents are concentrated could be helpful for them. The problem is which of on the battery system, charging system, and the building a bus and building a battery is more diffi- connection of the battery and drivetrain (motor plus cult. If building a bus is not as hard as building a inverter). These indicate that Proterra recognize the battery, it will be very hard for New Flyer to suc- original technology of electric powertrain developed ceed. In the case of passenger cars, it is said that in-house as an important source of their competi- they are more difficult to manufacture than com- tive advantage. mercial vehicles. The difference in difficulty Let’s further examine the process of development between the manufacturing of passenger cars and of each technology beginning with the battery tech- commercial vehicles seems to make a big differ- nology. Generally speaking, the battery pack of elec-

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Table 2. List of patent application related to Proterra Inc.

Date Name of the Patent 28 10/05/17 Vehicle accessibility system 27 08/03/17 Charging systems for electric vehicles 26 07/06/17 Electric vehicle charging to reduce utility cost 25 06/29/17 Charge head landing switch 24 06/29/17 Method of docking an electric vehicle for charging 23 06/29/17 Battery system of an electric vehicle 22 06/15/17 Braking system of a heavy-duty vehicle 21 01/05/17 Battery system cooling 20 12/15/16 Charg ing systems for electric vehicles 19 11/03/16 Systems and methods for mounting objects to a structure 18 10/27/16 Systems and methods for charging an electric vehicle at a charging station 17 10/27/16 Electric vehicles and charging stations 16 09/29/16 System and method to assist in vehicle positioning 15 09/29/16 Electric vehicle charging interface 14 09/29/16 System and method to assist in vehicle positioning 13 09/22/16 Systems and methods for enabling fast charging of an electric vehicle at a charging station 12 06/30/16 Scalable energy storage system 11 05/05/16 Low-floor electric vehicle 10 12/24/15 Charging of a fleet of electric vehicles 9 11/05/15 Side-facing vehicle charging system 8 03/12/15 Methods and systems for electric vehicle charging 7 08/28/14 Electric vehicle battery assembly 6 08/07/14 Systems and methods for battery life maximization under fixed-route applications 5 09/19/13 Vehicle battery systems and methods 4 09/05/13 Systems and methods for equivalent rapid charging with different energy storage configurations 3 08/29/13 Fast charge stations for electric vehicles in areas with limited power availabilty 2 08/01/13 Methods and systems for charging vehicles 1 05/03/12 Systems and methods for battery management

Source: [25] tric vehicles are composed of battery modules and into the pack is very diﬃcult and important. A bat- battery modules are composed of battery cells. The tery cell is an energy storage device and there could battery cells are said to be a commodity and Proterra be a thermal runaway event. So it has to be cooled procure them from many battery companies, such properly and the cells should be connected from an as LG and Toshiba [4] [26]. What Proterra does in- electrical and a thermal point of view. And the way house is designing and assembling the modules and of doing this is unique by company. packs. It is generally said that the technology to The development of battery systems at Proterra build the cells into the module and then the modules has been done in t wo diﬀerent directions [27]. The

— 397 — first direction was a shorter range, fast charging ver- a complete replacement of diesel, CNG, and hybrid sion which uses an overhead fast charging system on vehicles without compromise. Finally, Proterra’s route. Proterra’s fast charging version of the Catalyst Catalyst E2 Max bus established a new world record has between 79 and 105 kWh and a range of between in the range of heavy duty electric buses, 1,101.2 49 and 62 miles. With the use of a 500 kW fast charger miles on a single charge in the test drive [4]. One the vehicles can travel more than 700 miles during a reason for this effort of Proterra might be to respond 24 hour period [27]. The overhead fast-charger makes to the demand of the existin g customers. The long use of assisted automatic docking using wireless range Catalyst E2 series is capable of serving the communications to control the speed and stop loca- full daily mileage needs of nearly every U.S. mass tion of the bus and connects the charger with no transit route on a single charge [30]. The other rea- input required from the driver [28] (Figure 6). son seems to be more important and related to the The second direction was to enlarge the capacity future strategy of Proterra. At this time, Proterra’s core of the battery itself and extend the range. Proterra product is a 100% electric transit bus. For this prod- released the Catalyst XR (220–330 kWh, 136–193 uct category, the overhead fast charging system on miles of range) in 2015, and the Catalyst E2 route is sufficient to satisfy the transit bus custom- (440–660 kWh, 251–350 miles of range) in 2016 ers. However, if they want to expand their business (See Figure 7). Proterra has finally accomplished to other various types of large heavy duty electric

Source: [29] Figure 6. Overhead fast charging system of Proterra

Source: [15] Figure 7. The change of battery capacity of Proterra

— 398 — 研究技術計画 Vol. 32, No. 4, 2017 vehicles, such as “school buses, motor coaches, Besides the battery and drivetrain, they seem garbage trucks, delivery vans, even railroad-yard to also find their competitive advantage in their switching engines” [31] [32], extending the range is unique bus body. While many other electric bus inevitable. In the process of increasing the capac- manufacturers use steel as a body material, Proterra ity of the battery, Proterra expanded the domain of uses the composite of carbon fiber and fiberglass. R&D to the battery cell. They have co-developed The composite struc ture provides a weight savings a lithium-ion battery cell with Korea’s LG Chem of approximately 40% over conventional metallic which is optimized for heavy-duty vehicles [4] [31]. space frames [35]. This lighter body is also a deci- The development of the drivetrain at Proterra sive factor that aided Proterra in making a world also seems to be related to the future strategy men- record in range. tioned above. In October 2017, they unveiled new The final point we have to mention in terms of dual motor all-electric drivetrain, which deliver 510 Proterra’s strategy, is their strategy of selection and horsepower, accelerating Catalyst bus from 0–20 concentration. As mentioned above, in developing mph in 4.5 seconds. On the same day, Proterra their battery system, they were concentrating in announced that they were selected to make the developing and assembling the battery modules and electric powertrains fo r Van Hool’s first all-electric packs including the control system. They didn’t put coach [33]. This could be the first step for Proterra their limited resources to developing and manufac- to be not only electric bus maker but also supplier turing battery cells. And then they have just recently of electric powertrains. begun the co-development of heavy duty specific Can Proterra be an expert of heavy duty electric battery cells with LG Chem. Proterra also designed powertrains for multiple application? There could and developed a drivetrain system but worked with be a possibility that Proterra and Tesla becomes a supplier to support the development and manu- competitors in this space [31]. However, designing facturing of the system [36]. Regarding the bus an electric vehicle powertrain for light duty like body, they design the body, however, they chose to a Tesla Model S is very different than Proterra’s have the manufacturing done by the supplier, TPI powertrains. At first, the curb weight is different; of Composites, Inc. [35]. course a heavy duty vehicle is heavier than a light In addition, on the website of Proterra and the duty vehicle. So the required horsepower is differ- list of patents related to Proterra (Table 2), we ent, which is determined by the power of motor and could not find anything about the general bus com- capacity of the battery [34]; whereas Tesla’s biggest ponents, such as the wheels, the doors, and the battery pack is 100 kWh, Proterra’s battery pack is seats, which are not dedicated to electric buses. We over 400 kWh. Secondly, as we can see from the can assume from this they don’t recognize those website of each company, the focused speed range components as important in their competitiveness for the acceleration is different; for Tesla 0–60 mph and they procure those from their suppliers. and for Proterra 0–20 mph. For heavy duty vehicles, According to the regulation called Buy America, it doesn’t need to go 0–60 mph in 3 seconds. The Proterra sources more than 75 percent of the mate- efficient acceleration is determined by the control rials that make up their vehicles in the United of the system voltage from battery to motor via States [37]. Considering the fact that the major sup- inverter, and also the control of the torque and rota- pliers of battery cells were foreign companies, tion speed of motor [34]. As a result, designing the many of those procured domestically could be the electric powertrain, especially the control circuit, is general bus components mentioned above. We can totally different between heavy duty and light duty. say Proterra concentrates in electric vehicle related

— 399 — technology, and not in traditional fossil fuel vehicle the product as quickly as possible to market to technology which already exists and has little value form a first mover a dvantage and then through as an intellectual property. iterative improvements, stay ahead of the competition. Until 2014, Facebook had the motto, “move 5. Meaning of the location of Silicon Valley fast and break things,” and Uber’s Otto had the Many people may question the thought process unofficial motto, “Safety third,” implying that speed behind moving Proterra from the comparatively low of releases were far more important than something cost area of Greenville, SC to the high rent district like safety which is usually considered the most of Burlingame, CA. However, the decision to move important thing [42] [43]. Tesla has received some the headquarters to Burlingame, CA begins to make blowback from the press f or releasing their Autopi- more sense when one considers the culture and lot software to the general public while it is still in expertise of Silicon Valley and how Tesla has had beta. They do this to gather massive amount of real a profound effect on the whole bay area. Tesla now world driving miles as well as keeping ahead of the has over 30,000 employees with 25,000 of those competition feature-wise. Tesla has even released based in the United States [38]. That has created a versions of the software with some of the basic large pool of expertise in electric vehicles centered active safety features disabled, and only enabling around Fremont, CA. that Proterra can benefit them once they have been proven to have a certain from. level of reliab ility in a shadow mode that runs on Electric cars have an immense amount of soft- all their Autopilot enabled vehicles. Proterra has ware in order to control the subsystems of the proven itself to be a company that excels at iterat- vehicles. Tesla considers its cars to be sophisticated ing and improving on its product lineup, including computers on wheels [39]. The number of Tesla their vehicles that have already been delivered to employees looking for their next opportunity after customers. In 2016 Proterra offered to upgrade all their stock grants have vested (there is a 4-year of its Catalayst XR customers’ batteries to a new vesting period for new hires), in addition to the larger battery pack with 28% more energy capacity swarms of talented software programmers and engi- at no expense to the customers [44]. Comparing neers in the Bay area, creates an opportunity for Proterra to these other companies is not to imply talent acquisition for Proterra [40]. Proterra is not that Proterra does not take safety seriously, but the particularly unique in this thought process and point is that the general culture of Silicon Valley is many other EV start-ups such as Faraday Future that you need to innovate and constantly iterate or and autonomous driving departments of legacy risk death. Proterra has regularly iterated on their motor vehicle manufacturers such as General buses by adding more range, adding high speed Motors have opened offices in the Bay Area in charging ability, and developing a dual motor ver- order to be able to draw from what is considered sion. Proterra also announced in May of this year the strongest talent pool in the world and leverage that they are working on autonomous vehicle capa- Silicon Valley’s external economies of scale. bilities. Many Silicon Valley start-ups pride themselves Another common practice in Silicon Valley is on quickly innovating and iterating on ideas [41]. creating an intellectual property moat of patents in Google became famous for publicly releasing soft- order to be defensive and not allow others to patent ware in beta and then leaving it in perpetual beta things before you and then sue you for using the for years after initial launch. Tesla has followed in invention. Many Silicon Valley companies in the Google’s footsteps. The general idea is to release past have opened up patents, made software open-

— 400 — 研究技術計画 Vol. 32, No. 4, 2017 source, or done large scale IP co-licensing agree- tery being the most expensive component. They can ments with competitors. In June 2014, Tesla opened also motivate people to upgrade their vehicles by up the patents for their chargers as well as all of regularly updating the range of the vehicles. Pro- their other EV related patented technology and has terra also consistently increases their battery pack offered them to be used by its competitors. They density and now offers a range of sizes from 79 did this to try and advance the EV industry as a kWh all the way up to 66 0 kWh. whole [45]. Proterra followed suit in June 2016, Tesla became the electric car manufacturing when Proterra als o released the patents for its over- leader with the release of the Tesla Model S. It head charging system. They also did this so that features a number of key features that have sepa- other companies could benefit from the technology rated it from the rest of the relatively small market when developing their own EV applications [29]. and Proterra has tried to follow this model closely. There is a general belief from both Tesla and Pro- Firstly, Tesla purchases many commodity sized terra that the EV industry needs to move forward as lithium ion batteries and assembles them into large quickly as possible to help save the environment, dense flat battery packs which are controlled by but there is also the mentality that a rising tide lifts complicated custom software. Tesla uses Panasonic all boats. By making EV vehicles of all types produced cells, but Tesla has worked with Pana- become more mainstream it helps companies like sonic to create exclusive battery chemistries. Fol- Tesla and Proterra more easily convince people that lowing in Tesla’s footsteps, Proterra announced in buying EV’s is the right thing to do. September of this year that they had co-developed Proterra likes to differentiate itself from its more a custom battery chemistry with LG to be used in traditional competitors based on some of the funda- their vehicles [46]. mental differences in the way they operate and iter- Secondly, Tesla used a lightweight car body ate on technology. Both Tesla and Proterra design made of aluminum to increase range. Proterra has their products from the ground up versus modifying also opted to use lightweight materials for the bus existing fossil fuel vehicles. Like Tesla Motors, body, but instead of aluminum, they use tough Proterra specializing in the development of high- composite materials. Presumably the cost of the technology in order to minimize the cost of buses light weight body is still less expensive than the while providing maximum range and speed of increase in kWh necessary to overcome the differ- recharging. Tesla holds the world record for dis- ence in weight between steel and composite. tance traveled by an electric car on a single charge Thirdly, Tesla uses a dual-motor drivetrain on with a distance of 670 miles. As mentioned earlier, many of its vehicles to enhance driving perfor- Proterra recently broke t he world record for the mance, handling and range. Acceleration has always longest distance traveled by an electric vehicle been a key marketing point of Tesla and they now when one of its buses drove 1,102.2 miles before it claim the a 0–60 mph of 2.5 seconds. Tesla also ran out of juice. Tesla has gained fame for its rela- has the highest range in its class. Proterra recently tively massive 100 kWh battery pack, which it has announced a new dual-motor drivetrain called the iterated on over time. They have offered battery DuoPower. This drivetrain gives the Catalyst bus sizes ranging from 40 kWh all the way up to 100 the fastest 0–20 mph acceleration of any bus and an kWh. Initially the largest battery pack size offered industry-leading 26.1 MPGe. The DuoPower drive- by Tesla was a 85 kWh unit and then later a 90 trai n can propel the Proterra Catalyst up a 26 per- kWh unit. By offering a variety of sizes, Tesla can cent grade, more than twice the performance of a target different markets due to the price of the bat- comparable diesel.

— 401 — Lastly, the cars were designed to recharge very done, it would not be surprising for Proterra to also rapidly on their Supercharger proprietary network. attempt to enter new markets such as the utility-scale Tesla vehicles currently have the ability to charge battery backup market as there is a lot of overlap in at up to 120 kW, with rumors of faster charging the technological expertise required with what they rates coming in the future. As mentioned above, as do now. In Proterra’s Series E funding round, they a way to reduce the amount of battery required on- took an investment from BMW i Ventures. BMW board their buses, Proterra has also developed a has experience using EV batteries in grid storage high speed charging standard with the patent stating after they have finished being used in vehicles. Pro- it can handle a load of up to 1.4 MW. Both compa- terra, with their massive battery packs, could easily nies have realized that in order to minimize the do the same. If not with new batteries, it is still weight of batteries and give people more of the feel quite possible Proterra could repurpose their old bus of a traditional fossil fuel powered vehicle, they battery packs to be stationary storage once they had need to bring down charge times to more manage- degraded to a certain amount of capacity. Tesla has able times that fit into the specific use cases of the previously discussed a similar model of using their vehicles. vehicles old cells for storage, but so far has opted Looking at the Tesla business model overall, to use only new cells for stationary storage [47]. Tesla has tried to stay away from just being an As can be seen above, Proterra’s culture and integrator and has tried to vertically integrate business models have been heavily influenced by deeply and innovate on multiple aspects of the both their location in Silicon Valley and more spe- vehicle [41]. Proterra also tries to not just be an cifically their employees’ former ties to Tesla. With integrator, but design much of the bus themselves. access to top talent from Tesla and the rest of Sili- They are not large enough to devote as many con Valley, it has infused Proterra with an innovat- resources to manufacturing as Tesla, but Proterra ing spirit that believes that technology can help controls most aspects of the bus design. make the better place and in order to succeed one In addition, Tesla has a history of supplying must constantly iterate and improve the product. drivet rains to larger legacy car manufacturers such With Tesla currently standing as the only currently as Mercedes and Toyota as a way of supplementing successful electric vehicle company, it only makes their sales. Those manufacturers would take existing sense to try and follow their model as closely as car models such as the Toyota Rav 4 or Mercedes possible. From technological, cultural, and business B class and integrate the Tesla drivetrain into them. model perspectives, there is far more similar Proterra just announced in October 2017 that they between the two companies than differ ent and that have partnered with Van Hool, a traditionally diesel is why many people refer to Proterra as the Tesla of bus manufacturer to supply them with their new buses. powertrain technology to be used in Van Hool’s popular diesel CX45 coaches that will be modified 6. Proterra’s ability to attract talent from with Proterra components [33]. Silicon Valley and the EV space Tesla used the Roadster as a proof of concept Despite the relatively fierce competition for hir- vehicle that they would then use to expand into ing talent in the bay area, there are a few key rea- other product categories. Tesla considers themselves sons Proterra has been able to attract top talent experts in electric powertrains and now they are from Tesla and other Silicon Valley tech and soft- just expanding the number of products that use their ware companies. Silicon Valley has a reputation for powertrains including semi-trucks. Just as Tesla has creating companies that want to make the world a

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Table 3. Employe es average ratings for their overall satisfaction with their employer

Employee Ratings of their Total Number of Employee Company Employers on Glassdoor.com Reviews

Google 4.4 / 5 6,252 Proterra 4.2 / 5 34 Apple 4.0 / 5 10,695 Ford 3.9 / 5 2,282 GM 3.8 / 5 2,633 Tesla 3.4 1,003 New Flyer 3 33 BYD 2.5 43

Source: Created by authors with reference to materials of the website of Glassdoor.com better place. Proterra is able to attract key hires skewed from the relatively low number of reviews, through its mission driven program to move the bus it’s clear that Proterra’s as an employer is viewed industry to an emissions free future. Many software more favorably than other companies that potential developers like the idea of working on software hires would consider working for. that will be used in real world products and not just Pr oterra has not yet gone public but has been figuring out how to get people to click on more able to attract large investments from top venture advertisements or buy more virtual goods. Also, it’s capital firms and strategic partners in its multiple location makes it convenient for people to jump to investment rounds. This gives employees the after doing a stint at Tesla which has a reputation opportunity to get into the company before a poten- for burning out its employees with long hours and tial IPO or acquisition by a larger company where only average compensation for the industry. Many there is the opportunity to generate a large return. people view working at Tesla like being in the Spe- Tesla has already grown to such a large size that cial Forces of the military and then after a tour of some employees may be looking for a job with duty they become highly marketable to other busi- stock grants with a greater upside potential. Tesla nesses where they can demand high compensation employees may use the Tesla name to gain skills and a more relaxed atmosphere [48]. Tesla’s reputa- and enhance their resume, but then strategically tion as a difficult place to work is exemplified by plan for their next career move. Tesla’s rating from employees on Glassdoor.com. It Tesla took a pragmatic approach with their busi- received an average rating of 3.4 out of 5. Above is ness model in the assumption that they needed to a table comparing Tesla to Proterra and other com- make attractive looking cars because that is the way panies of interest for comparison. people, particularly in the United States, primarily Google, which is famous as being a fantastic travel and they did not believe that many people place to work, has a 4.4 rating. Proterra comes in would be willing to change their lifestyles drasti- second, placing even ahead of Apple in total cally to help the environment. Proterra on the other employee satisfaction with their employer. Also pay hand has taken a more idealistic approach with the attention to how BYD and New Flyer, Proterra’s belief that public transportation is inherently supe- two top competitors, are so poorly rated by rior to passenger vehicles in order to combat issues employees. Assuming Proterra’s data isn’t too like climate change. It is possible that while both of

— 403 — these companies would be attractive to people con- tlenecks of high price and cumbersome charging. cerned about the environment, they may have a However, unlike the IT industry, the field of EV tendency to attract people that have different belief technology has not seen accelerating rate technol- systems or personality types. ogy developments for a century. Quantity and time Lastly, many people find the concept of working may not be able to solve bottlenecks. Deep under- for a fast moving startup to be exciting. Many of standing of technologies must be required to study the hires of Proterra would likely have no interest the feasibility of this scenario. in working for the EV division of an established However, as the case of Proterra shows, the fossil fuel bus c ompany or for the likes of a com- nature of the commercial EV market is distinct pany like General Motors. The combination of enough from the passenger EV market that they location, industry, culture, work environment and may not follow the same trends. Proterra already close ties to former Tesla employees, has created a claims that the total cost of ownership for their competitive advantage for Proterra in their ability buses is lower than diesel competitors. They have to attract some of the top talent in the EV industry. also made great strides in extending range and developing simple to use yet powerful charging 7. Possibility of EV in the future - Several solutions. On the other hand, commercial vehicles scenarios differ in some important respects from passenger How huge will the EV’s potential be? How vehicles. Buses need relatively few charging sta- intense of a change will the EV bring to the auto- tions since their routes ar e predetermined. In addi- motive industry? To answer these questions, there tion, if needed, they can quickly charge while they are many issues remaining to be clarified. In order pick up passengers. Transit operators also have to explore this complicated jungle, the sum of fact more concern for total cost of operation than aver- based studies like this case study on the one hand, age owners of passenger vehicles do and will be and a bird’s-eye view comprehension on the other, less sensitive to upfront costs. will be needed. Thus, in this section, to help build Along with the weaknesses, the EV has three a bird’s-eye view of the EV world, we would like significant advantages, i.e. environmental perfor- to organize possible scenarios where EVs becomes mance, low maintenance requirements, and quiet the dominant design of automobiles. but powerful acceleration. The possibility of EVs The EV still is an incomplete product. While becoming popular in niches where customers make studying possible scenarios, weaknesses of the EV, much of these advantages cannot be ignored. i.e. high price and cumbersome battery charging In the second scenario the EV becomes dominant must be recognized. Even the most popular EV in in a niche where customers require excellent envi- Japan, the Nissan LEAF, is receiving subsidies ronmental performance but do not need quick worth 400 thousand yen to enable the competitive charging as they use vehicles mostly for short dis- pricing. The time required to charge a LEAF 40 tance drives. Nishimoto [50], who is an official of kwh model is around 40 minutes as opposed to 3 to MLIT (Ministry of L and, Infrastructure and Trans- 5 minutes in case of a gasoline vehicle [49]. As port) of Japan, advocates the development of an shown in some charging stations in California, ultra lightweight vehicle designed for “public ser- Tesla drivers can feel helpless when they are at the vice and delivery businesses,” “sightseeing” and end of a long queue in a crowded charging station. “commuters.” As the high price bottleneck remains In the simplest scenario, EVs become dominant in this scenario, developing ideas to lower the cost by technological innovations which eliminate bot- such as sharing a vehicle among customers whose

— 404 — 研究技術計画 Vol. 32, No. 4, 2017 driving time differs and studying the validity con- dominant. Further study on technology is necessary as tinuing to subsidize these vehicles will be required. the feasibility of this scenario differs depending on the The third, another niche scenario, is the business level of autonomous driving and the level of combus- model which provides success to Tesla. The affluent tion engine based autonomous driving technology class customers attach lower weight to the vehicle likely to be realized in the near future. price. Thus, the limited cruising range issue can be What will the future of the EV will be? A com- solved by simply adding expensive batteries. Those bination of some of the above mentioned six sce- customers can also afford to purchase multiple narios a lso can take place. The automotive industry vehicles. If the EV is offered as their second vehi- may also pursue a 7th scenario which this thesis cle for town use, long charging time will not failed to predict. Whichever the course may be, as become an issue. Tesla thrives by targeting the the EV is the subject of one of the greatest interests affluent class and offering vehicles accentuating EV in the field of business studies, we would like to advantages, i.e. environmental performance and keep enhancing our study on EV utilizing these six quiet but powerful acceleration. This approach scenarios as our guidepost. seems worth considering for Japanese makers who tend toward environment al performance and rea- Conclusion sonable pricing. Proterra seems to think of themselves as an During 1970’s, low emission vehicles, though “ELECTRIC bus maker” rather than “electric BUS they are still incomplete products, made dominant maker.” They focus on the research and develop- by government’s political and economic policy con- ment of EV related technologies and as a result on sideration. The fourth scenario is the case where the the value of intellectual property. It is very similar same will happen to the still incomplete EV. To to Tesla in those respects. These features of Proterra study the feasibility of this scenario, discussion on come from the location, Silicon Valley, which has outstanding issues such as “global standard” and been a cradle of innovation in the world. Through “integral and modular design” has to be fostered. the case study of Proterra, we found some topics to However, as the number of influential elements is be researched in the future. One is the difference so high, a wider scope of study such as an interdis- between passenger vehicle manufacturers like Tesla ciplinary approach with international politics and and commercial vehicle manufacturers like Proterra. expansion of analysis subjects to the lower tier sup- The second is the difference between an EV-born pliers also should be added. maker and a converted maker from the traditional The fifth scenario involves a different technology fossil fuel vehicle space. The future of EVs still such as hydrogen fuel cells leapfrogging EVs in remains uncertain and only with additional research popularity. Toyota has invest ed a lot of money into can we grasp what its potential holds. fuel cells, but so far has had little luck in generat- ing demand with the public. With far less infra- Acknowledgment structure than with either gasoline or electric charg- Funding from the Institute of Business Studies of ing stations and relatively high cost there would Chukyo University is gratefully acknowledged. have to be drastic market changes for this outcome to occur. References The driving force of the sixth and final scenario is ［1］ W. J. Abernathy et.al. Industrial Renaissance, Basic autonomous car technology. The high-profile driverless Books: New York (1983). car technology can help the compatible EV become ［2］ A. Ohnsman, (2016, November 30). Proterra’s Ryan

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NFI-Investor-Presentation-Nov-9-17-ﬁnal.pdf MILES. Retrieved November 19, 2017, from ［22］ When Energy Positively Has to Be There. (n.d.). https://www.proterra.com/press-release/proterra-catalyst- Retrieved November 16, 2017, from e2-series-sets-new-industry-precedent-with-a-nominal- https://www.xaltenergy.com/project/electric-commercial- range-of-up-to-350-miles/ transportation/ ［31］ A. Ohnsman, (2017, September 21). Proterra Counters ［23］ New Flyer Industries, Inc. (2017, October 17). New Flyer Tesla’s ‘Beast’ Of A Semi With 1,100-Mile-Range Elec- unveils next generation of electric Xcelsior CHARGE tric Bus. Retrieved November 18, 2017, from transit bus; LA Metro contracts for up to 100 units. https://www.forbes.com/sites/alanohnsman/2017/09/19/ Retrieved November 16, 2017, from proterra-counters-teslas-beast-of-a-semi-with-1100-mile- https://www.newflyer.com/2017/10/new-flyer-unveils- range-electric-bus/#34ad3e582317 next-generation-electric-xcelsior-charge-transit-bus-la- ［32］ R. Mitchell, (2017, June 27). Electric-bus startup Proterra metro-contracts-100-units/ shifts into higher gear. Retrieved November 16, 2017, ［24］ Proterra Inc. (n.d.). THE PROTERRA CATALYST® from 40-FOOT TRANSIT VEHICLE. Retrieved November https://www.seattletimes.com/business/technology/elec- 16, 2017, from https://www.proterra.com/products/40- tric-bus-startup-proterra-shifts-into-higher-gear/ foot-catalyst/ ［33］ F. Lambert, (2017, October 09). Proterra unveils new dual ［25］ Proterra Inc patents. (n.d.). Retrieved November 18, motor all-electric drivetrain for buses, partners with Van 2017, from Hool for electric coaches. Retrieved November 19, 2017, http://stks.freshpatents.com/Proterra-Inc-nm1.php from ［26］ Toshiba America, Inc. (2014, September 10). Toshiba to https://electrek.co/ 2017/10/09/proterra-dual-motor-elec- Provide Rapid Recharge SCiB ™ Batteries for Proterra tric-bus/ Zero-Emission Bus Fleet. Retrieved November 16, 2017, ［34］ Y. Hirota, S. Adachi, S. Ogasawara and Y. Deguchi Denki from Jidousha no Seigyo Sisutemu (Model-Based http://news.toshiba.com/press-release/energy-and-infra- Control Systems Design for Electric Vehicles), structure/toshiba-provide-rapid-recharge-scib-batteries- Tokyo Denki Daigaku Shuppankyoku: Tokyo (2009). proterra-zero- ［35］ TPI Composites, Inc. (2017, March 16). TPI to Manufac- ［27］ CEC awards Proterra $3M toward electric bus manufacture Composite Bus Bodies for Proterra Catalyst® Zero- tu ring plant; Foothill Transit orders 13 more buses. Emission, Battery-Electric Buses. Retrieved November (2015, April 9). Retrieved October 31, 2017, from 13, 2017, from http://www.greencarcongress.com/2015/04/cal-energy- http://www.tpicomposites.com/English/newsroom/press- awards-proterra-3m-toward-electric-bus-manufacturing- releases/press-release-details/2017/TPI-to-Manufacture- plant-foothill-transit-orders-13-more-buses.html Composite-Bus-Bodies-for-Proterra-Catalyst-Zero-Emis- ［28］ Proterra Inc. (n.d.). PROTERRA CHARGING SYS- sion-Battery-Electric-Buses/default.aspx TEMS. Retrieved November 19, 2017, from https:// ［36］ AxleTech International. (2017, October 09). Proterra www.proterra.com/technology/chargers/ develops new electric drivetrain system with support ［29］ K. Korosec, (2016, June 28). Why This Electric Bus from AxleTech. Retrieved November 16, 2017, from Startup Is Opening Up Its Patents for Free. Retrieved https://www.axletech.com/en/company/news/2017- October 31, 2017, from http://fortune.com/2016/06/28/ 10-09-proterra-develops-new-electric-drivetrain-system- proterra-open-patents/ with-support-from-axletech ［30］ Proterra Inc. (2016, September 12). PROTERRA CATA- ［37］ Proterra Inc. (n.d.). PROTERRA CATALYST® BUSES LYST® E2 SERIES SETS NEW INDUSTRY PRECE- ARE PROUDLY DESIGNED AND BUILT IN THE DENT WITH A NOMINAL RANGE OF UP TO 350 U.S.A. Retrieved November 16, 2017, from

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— 408 — Restructuring of Ecosystem and Dynamics of Innovation in EV —the trend and the role of the government in the transition period of an industrial ecosystem—

Seunghwan KU

This paper discusses the issues related to the trend the other hand, the characteristics of Japanese automobile and market development in EV. How do we understand market have the late installation of EV charging this EV boom? We will concentrate on the following infrastructure, a long-time consumption, and relatively issues: (1) Why did China’s industrial policy shift from small market, and so on. These are the reasons why Japan a gasoline vehicle to EV? (2) What factors cause that (or Japanese maker) is slower than China (or Chinese change? (3) Why did Japan lag behind China in EV? maker) in the early stage of EV diffusion. China, which has a large population and a growing In conclusion, this stage is not EV boom but the take- middle class, is likely to become a leading player in the off of EV in the innovation diffusion process. Given the future. But, the Chinese government faces many uniqueness of the Chinese market, we should observe the problems.The problems are serious air pollution problem, market with the focus on sales rather than the supply rate. import natural energy, industrial competitiveness, and Also, we should pay more attention to the role of sustainable economic growth, and so on. To solve the government as a resource allocation coordinator in the problems, The Chinese government is implementing transition period of an industrial ecosystem. industry policy focused on EV, especially battery EV. On

What is the Route and Goals of New Energy Vehicle Industry Policy in China?

Guangdi HU and Yujie JIANG

China has been the largest vehicle producer and policy mechanism changes in the form of technical consumer country in the world nowadays. In order to standards, state subsidies and infrastructure construction. face environmental crisis and keep environmental From 1991 to 2000 was the embryonic stage of sustainability, China is switching its national strategy technological research in China, focused on electric direction of new energy vehicle industry from expand vehicle and components. During 2001 to 2009, “three gasoline vehicle to develop electric and plug-in hybrid vertical and three horizontal” was the main technological electric vehicle. This paper described the present innovation strategy. Since 2009, technological develop condition of new energy vehicle industry in China and focus was back to electric vehicle and put forward discussed the significant new energy vehicle industry progress of the market.

The Silicon Valley Electric Bus Manufacturer: a case study of Proterra

Wooseok JUHN, Adam KRAUS and Kiyomichi ITO

In this paper we introduced a case of Proterra, an show the specific characteristics of commercial vehicles electric bus manufacturer in Silicon Valley, California. that could allow it to transition to EVs more rapidly Through the case study, we could clarify the different than the passenger vehicle market. We also explained behavior of Proterra which is an EV maker from the effects of Proterra being located in Silicon Valley. inception versus the behavior of fossil fuel vehicle Finally we suggested the future scenarios of the EV manufacturers that begun to offer EVs. Also we could market.

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