modularity in electric vehicle - faee€¢ bicycle(fixson & park, ... • mirroring is supported...

Challenges: EV

EV not only challenges electricity network But also set challenges to automobile sector

EV: challenges to automobile industry

• How car-makers manage the design and production of EV?• Less valued knowledge over Engine

• Lack of knowledge on battery, recharging system

• Recharging system within scope? Problem on range anxiety and chicken-and-egg question

• Firm boundary in the competition for EV dominant design?

Mirroring Hypothesis and Integrality in the Electric Vehicle Industry: Evidence from Tesla Motors

CHEN Yurong , CHOWDHURY Shamsud, DONADA Carole & PEREZ Yannick

Introduction: mirroring hypothesis in the context of EV

Vertical Integration and Mirroring hypothesis

Vertical Integration

Product architecture: Modularity and integrality

“Mirroring”

VI and Mirroring hypothesis in auto industry

early 20th century early 1990s Now

Increasing vertical integration

Decreasing vertical integration

Outsourcing => Modularization in automobile product (Argyres & Bigelow, 2010; MacDuffie, 2013; Sako, 2003, etc.)

Source: (Huth, Wittek, & Spengler, 2013)

Mirroring hypothesis in EV industry

EV industry:• Product architecture?

• Vertical integration level?

• Mirroring hypothesis?

early 20th century early 1990s Now

Increasing vertical integration

Decreasing vertical integration

EV

– just refit ICE with electric motor, tank with battery pack? - Modular architecture?

– buy battery pack, Rely on public recharging system? VI disintegration ?

Mirroring hypothesis in EV industry

Two approaches in the search of dominant design refitted EV

• minimizing changes in their existing production infrastructure, capabilities, and network of external partners.

• E.g. BMW Mini E and Mitsubishi i-MiEV, Tesla Roadster• “Business as usual” vertical disintegration

purpose designed EV• new vehicle design with an idiosyncratic architecture • EV = auto industry + electricity industry• E.g. Tesla Model S, BMW i3, and Nissan Leaf• Product Architecture? Vertical integration? Mirroring hypothesis?

Less manufacturing costs/ impact on electricity network->Range anxiety problem!

Mirroring hypothesis of Modularity and integrality

Modularity and integrality in product architecture design

Complex product

With modularity With integrality

Component level innovation Architecture innovation

Modularity and integrality in product architecture design• Product architecture

• A scheme by which the functional elements of the product are arranged (or assigned) in to physical building blocks and by which the blocks interact (Ulrich, 1995)

Modular product • shows “one-to-one mapping between

functional elements and components.”• includes de-coupling interfaces.

Integral product• shows “one to more” or ”more to

more mapping”• includes coupling interfaces

Funtional mapping/ function component allocation interface

Mirroring hypothesis of modularity and integrality

Transaction cost theory:

Integral product- specific asset, and

potential hold-up situation with suppliers-

high transaction cost - VI

Vertical integration

ModularityIntegrality

Vertical disintegration

Product architecture

Organizational structure

One• Bicycle(Fixson & Park,

2008)

Abundant empirical studies:

• Mirroring is supported in the 70% of thecases (Colfer and Baldwin, 2010 )

• PC (Baldwin and Clark, 2000; Langloisand Robertson, 1992)

• Early U.S. Auto (Argyres & Bigelow,2010)

Empirical case study from Tesla Motors

Case study approach

Tesla Motors

• Purpose designed EV

• Successful player in EV industry

2008-2012 2012-now Oct. 2015- now March 31, 2016

Research design

• Key Components and interfaces

Architecture of Tesla Model S

Measures- Function- component allocation ( Fixson, 2005)- Design structure matrix map (Baldwin & Clark, 2006)- Vertical integration

Other components in

Function Component allocation

Function-component allocation scheme of Model S

Coupling character of Interfaceselectrici

ty

network

size

/number

electrical

spec.

capacity/

size

electrical

spec.

energy

managem

ent

system

electric

spec.

physical

output of

plug

body

material

arrange

ment

vehicle

control

system

fast

charging

technolog

y

requirem

ent

electrical

spec.

physical

specific

of plugs

location

size /number

electrical spec.

capacity/ size

electrical spec.

energy

management

system

X X

electric spec. X

physical output of

plugX X

body material X

arrangement X

vehicle control

systemX

charging

technologyX

electrical spec.

physical specific of

plugs

location X X

Electricity network

Electric

motor

Battery

pack

Charger

Vehicle

Charging

system

Electric

motorBattery pack Charger Vehicle Charging system

design structure matrix map of Model S

- Vehicle body designModel S: 85-90kWh battery pack ~ 544 kg,Same size conventional car ~ 2,000 kg Aluminum vehicle body

2,108 kg - (85 kWh battery pack)- Shape of battery pack- Allocation of components

- Fast charging technology- Location of recharging network- Battery energy management systemIn 2012, supercharger station can only support of Model S with certain type battery pack (upgrade in hardware and software of battery pack)

Vertical integration of Tesla

Vertical integration strategy of Tesla Motors

Mirroring hypothesis in Tesla?

Basically, the case of Tesla supports mirroring hypothesis of integrality

Drives for mirroring hypothesis in Tesla

Integrality

Vertical integration

Vertical disintegration

Modularity

Differentiation strategy of TeslaCommitment for “range anxiety reduction”

External environment

• Differentiation strategy of Tesla :ambitious goal for largely reducing range anxiety• Integrality of Model S -> VI of Tesla: Transaction cost• External environment: other stakeholders in the ecosystem are unwilling to invest directly in

charging system

Power of integrality: Compete in the nascent EV market • Modular EV vs. Integral EV

• History of modularity in auto-industry

• Less components, modularization is relatively easy in electronical components -> not true for recharging system

• Architecture innovation vs. component innovation

• Emerging EV market: competing for market share, developing features that attract customers. e.g. range anxiety issues

• Integrality may be essential for compete with Tesla for relevant EV market segment to reach high vehicle performance

Conclusion

• The case of Tesla Motors, verifies the mirroring hypothesis of integrality that higher integral product architecture corresponding to higher vertical integration level of firm.

• Our work contributes to the debate over integral or modular EV architecture for current nascent EV market

• Future research: Extend the frame to other EV firms: e.g. BMW-I, Dynamic of integrality and modularity and VI/DVI in EV architecture choice: regarding product- company life cycle, generic strategy …

Thank you for your attention!