BMAN30010 Management, Technology & Innovation

Electric Vehicles Report

Course Coordinator: Hugh Cameron

Seminar Leader: Amir Khorasani

Joshua Hall

Student ID: 7606488

Abstract

This report examines the effect innovation in battery technology has on the electric vehicle market. Evidence suggests that there has been much development in battery technology in the past twenty years and has progressed from the low performance lead-acid type battery to the higher density and higher power lithium-ion batteries (LIBs). Sales of electric vehicles have fluctuated since the early 2000s, but have been doing so at an increasing rate with sales up 34% in 2015. The research suggests that there is a strong positive correlation between battery technology innovation and electric vehicle sales. The second part of this report is to assess how innovations in battery technology enable electric vehicles to disrupt the automotive market. It shows that electric vehicles are getting cheaper to buy and are becoming more efficient enabling them to obtain stronger competitive values. Electric vehicles are still an emerging market and have a long way to go in order to gain a substantial market share, however from my research I have found that there are various measures in place that will help to achieve this.

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Contents

1. Introduction 3

1.1. Background History 3

1.2. Research Question 3

1.3. Theory 4

2. Methodology 4

3. Findings & Discussion 4

4. Conclusion 8

4.1. Limitations & Further Research 8

5. Appendices 9

6. References 10

1. Introduction

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1.1 Background History

Electric vehicles (EVs) have been a technological phenomenon at the edge of legitimacy since the

early1800s. However, it wasn’t until the second half of the 19th century that French and English

inventors built some of the first practical electric cars (The Department of Energy, 2014). At the turn

of the 20th century the sales of EVs surged, however with the introduction of gasoline powered

vehicles lead to the near demise of the electric vehicle by 1935 (The Department of Energy, 2014). It

was not until the 1990s that things started looking up for electric vehicles; thus with the introduction

of various regulations (see appendix), the EV was revived (The Department of Energy, 2014).

One of the main issues with EVs was that they could only travel short distances. Most drivers

required a cruising range of about 125-150 miles, however most EVs only offered around 50-80 miles

(Christensen, 1997). They would take around 20 seconds to get from 0-60 when drivers required half

that time. Both of these issues were down to the lack of battery power that was encased within the

vehicle. John R. Wallace, of Ford, for example, stated that “The only solution for problems of range

and cost is improved battery technology […]” (Christensen, 1997, p. 215).

1.2 Research question:

How has innovation in battery technology affected the electric vehicle in the US market in the

last 20 years, and how is it enabling them to be a disruptive innovation in the automotive

market?

I have chosen this research question as I believe the past 20 years is the period in which the most

innovation in battery technology has occurred and it is also the period that the EV market has been

revived. I chose to enquire about the disruptive innovation as I feel it is a theory that can be applied to

the electric vehicle market.

1.3 Theory

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I will be concentrating on two major theories throughout this report, the first being disruptive

innovation. I will be considering some principles of disruptive innovation that (Christensen, 1997)

introduced and I will then consider the work of (Markides, 2006) who proposes a different view of

‘Disruptive Innovation’. I will also be briefly exploring the theory of innovation diffusion from

((Moore, 1998) & (Rogers, 2003)).

2. Methodology

I must now consider how I will gather the evidence I need in order to address the research question.

Journal articles will present me with the necessary information I need concerning battery technology.

Books like (Christensen, 1997) and (Moore, 1998) will help me understand the theory needed. State

Official websites such as that of The Department of Energy (US) will give me an insight into the

various aims, regulations involved, and an overview of the electric vehicle market.

Although primary data would have allowed me to address my specific research issue, I chose

to use secondary data as it is much more accessible and allowed me to create new insights from prior

analyses.

3. Findings and Discussion

From my research it has become clear that the most important measures of performance of an EV are

range, power, safety, convenience, cost of ownership, and reliability (Hayner, et al., 2012, p. 446).

The battery is seen as the heart of the propulsion system and plays a vital role in all of these features.

Christensen claimed that the performance of electric vehicles was improving at a faster rate,

suggesting that sustaining technological advances might have been able to carry EVs into the

mainstream markets (Christensen, 1997, p. 207).

The problem with the initially used lead-acid batteries was that they had limited energy density, which

meant that they had a relatively short battery life, and a long recharging time (The Department of

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Energy, 2011, p. 7). Looking at the diagram given in fig.1 we can see that the lithium-ion (Li-ion)

battery technology has a clear edge over other electrochemical approaches when optimised for both

energy and power density (International Energy Agency, 2009, p. 12).

Fig.1;

Source: (Hayner, et al., 2012)

(Lee, et al., 2010) showed that lithium based batteries had been introduced that provided much more

power than conventional batteries and provided much longer lifetimes; leading to faster vehicles that

can travel longer distances. The higher energy and higher currents found in these batteries are vital for

heavier hybrid vehicles (Lee, et al., 2010), which have really come to fruition since the turn of the

century (see fig.2). A popular battery for hybrid electric vehicles (HEVs) however is the Nickel-

Cadmium (NiMH) as they can be more durable and can sustain a higher number of lifetime cycles for

deep discharging up to 80% than Li-ion. However they offer a lower vehicle speed and acceleration

performance, as well as a lower electric travelling range, which are important features to the

consumer.

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If we look at the two graphs in fig.2 we can see that HEV and Plug-in Electric Vehicle (PEV) sales

have fluctuated but at an increasing rate in the past 20 years. In 2011, Barack Obama stated that he

wanted one million vehicles on the road by 2015 (The Department of Energy, 2011).

Fig.2,

Source: (U.S. Department of Energy: Energy Efficiency & Renewable Energy, 2014)

The full electric vehicle (FEV) market has not seen as much success as HEV and PEV market with

only about 280,000 sales since 2011 (Tuttle, 2015), less than a third of Obama’s target. However, total

FEV sales in the US were up 34% from 2014-2015 (Shahan, 2015). There have been advances in

performance thanks to built-in high power battery packs (Poullikkas, 2015). The most recently

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manufactured FEVs use state-of-the-art Li-ion battery backs and have a typical range of

approximately 120-390km with a top speed of 200km/h (Poullikkas, 2015).

One of the most recent innovations in battery technology is the introduction of silicon-graphene

composite electrodes for lithium-ion batteries. These are stable self-supporting composite electrodes

with an enhanced accessible interior and a high rate capacity (Zhao, et al., 2011). These batteries

could provide a 300% improvement in LIB capacity and an estimated 70% reduction in lifetime cost

for batteries (PRWeb, 2012). However this is in need of further development as its severe volume

change results in drastic capacity fading (Zhang, et al., 2015).

Although some manufacturers in the market solely produce EVs (e.g., Tesla) many of the key players

in the market are established firms such as Nissan and Daimler. This suggests that incumbent firms

are adopting the electric vehicle, a feat that according to (Christensen, 1997), is the best method to

confront a disruptive technology. Christensen also claimed that disruptive technologies will

eventually grow to dominate the market, which, as of yet, cannot be applied to EVs. Some academics,

such as Markides apply a modified version of disruptive innovation with the idea of business-model

innovation, where the new way of competing in the business can grow, to a certain percent of the

market, but can fail to completely overtake the traditional way of competing (Markides, 2006);

perhaps a more apt evaluation of EVs.

Many established firms are currently in partnership with battery manufacturers such as Ford and

Toshiba, BMW and SBL and Daimler and Sanyo (see fig.3 in appendix). These partnerships can be

seen as affective methods of gaining competitive advantage and assisting the companies to diffuse

their innovations.

According to Everett Roger’s innovation diffusion model, FEVs are still in the early stages of

adoption (Rogers, 2003). The next step for them is establishing themselves in the mass market, or as

(Moore, 1998) phrases it, ‘Crossing the Chasm’. They have succeeded to spread their products across

the innovators and early adopters; they must now advance into the ‘early majority’ or mass market.

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4. Conclusion

From my findings I can see that there is a definite correlation between improving battery technology

and sales of EVs. One of the fundamental points that Christensen makes is that disruptive

technological innovations will continue to grow until they dominate the market, however it is difficult

to predict whether or not this will happen in this case as EVs still have a tiny portion of the market

share; 3.66% of all vehicles sold in the US between January-September 2014 (Flemming, 2014). The

EV is still in the early stages of adoption and more development is needed in order to achieve

substantial market success. In order to render EVs more disruptive, higher energy densities, with less

capacity fading need to be developed in batteries. Increased energy density means energy storage

systems will require less active material, fewer cells, and less cell and module hardware (International

Energy Agency, 2009). These improvements, in turn, will result in batteries, and by extension

EVs/PHEVs, that are lighter, smaller and less expensive; allowing EVs to –according to Christensen’s

theory – become a fully disruptive innovation.

4.1 Limitations & Further Research

It is not certain whether we can put the rise in electric vehicle sales down to innovation in battery

technology or if it is down to increased pressure from the government to switch to EVs or whether

they are becoming more popular because of how they look, not whether they perform well. Therefore,

further research needs to be done into business models that will enable EVs to breakthrough into the

mass market as well as more developing a better understanding of driving behaviour and likely EV

purchase and use patterns. Christensen’s book is coming up to 20 years old, therefore some of the

assumptions he made may have changed since then. Another issue with my research is that it lacks

primary data, which would have improved my data interpretation and made it more accurate.

Word Count: 1,592

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5. Appendices

Regulations:

The Clean Air Act Amendment and the 1992 Energy Policy Act Increases in the Corporate Average Fuel Economy (CAFE) standards The National Highway Traffic Safety Administration (NHTSA) published a rule raising

CAFE standards for both cars and light trucks (The Department of Energy, 2011)

Fig.3,

Source: (International Energy Agency, 2009)

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References1. Christensen, C., 1997. The Innovator's Dilemma: When New Technologies Cause Great Firms to

Fail. 1st ed. Boston: Harvard Business Review Press.

2. Flemming, C., 2014. Los Angeles Times: Electrified car sales stall as buyers back away from hybrids. [Online] Available at: http://www.latimes.com/business/autos/la-fi-hy-electric-vehicle-sales-20140903-story.html[Accessed 16 March 2015].

3. Hayner, C. M., Zhao, X. & Kung, H. H., 2012. Materials for Rechargeable Lithium-Ion Batteries. Annual Review of Chemical and Biomolecular Engineering, Volume 3, pp. 445-471.

4. International Energy Agency, 2009. Technology Roadmap: Electric and plug-in hybrid electric vehicles, s.l.: International Energy Agency.

5. Lee, S. W. et al., 2010. High-power lithium batteries from functionalized carbon-nanotube electrodes. Nature Nanotechnology, Volume 5, pp. 531-537.

6. Markides, C., 2006. Disruptive Innovation: In Need of Better Theory. The Journal of Product Innovation Management, Volume 23, pp. 19-25.

7. Moore, G. A., 1998. Crossing The Chasm: Marketing and Selling Technology Products to Mainstream Customers. 2nd ed. Chichester: Capstone Publishing Limited (a Wiley Company).

8. Poullikkas, A., 2015. Sustainable options for electric vehicle technologies. Renewable and Sustainable Energy Reviews, Volume 41, pp. 1277-1287.

9. PRWeb, 2012. New Lithium Si-Graphene Battery Material Opens Doors. [Online] Available at: http://www.prweb.com/releases/2012/10/prweb10055151.htm[Accessed 17 March 2015].

10. Rogers, E. M., 2003. Diffusion of Innovations. 5th ed. London: Simon & Schuster.

11. Shahan, Z., 2015. Tesla Model S, Nissan LEAF, & BMW i3 Top US Electric Car Sales in February. [Online] Available at: http://cleantechnica.com/2015/03/06/tesla-model-s-nissan-leaf-bmw-i3-top-us-electric-car-sales-in-february/[Accessed 16 March 2015].

12. The Department of Energy, 2011. One Million Electric Vehicles by 2015. [Online] Available at: http://www1.eere.energy.gov/vehiclesandfuels/pdfs/1_million_electric_vehicles_rpt.pdf[Accessed 20 February 2015].

13. The Department of Energy, 2014. The History of the Electric Car. [Online] Available at: http://energy.gov/articles/history-electric-car[Accessed 3 March 2015].

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14. Tuttle, B., 2015. Time. [Online] Available at: http://time.com/money/3677021/obama-electric-cars-gas/[Accessed 15 March 2015].

15. U.S. Department of Energy: Energy Efficiency & Renewable Energy, 2014. Alternative Fuels Data Center. [Online] Available at: http://www.afdc.energy.gov/data/[Accessed 15 March 2015].

16. Zhang, J. et al., 2015. Silicon-nanoparticles isolated by in situ grown polycrystalline graphene hollow spheres for enhanced lithium ion storage. Journal of Materials Chemistry A, Volume Pending Article.

17. Zhao, X., Hayner, C. M., Kung, C. M. & Kung, H. H., 2011. In-plane Vacancy-Enabled High-Power Si-Graphene Composite Electrode for Lithium-ion Batteries. Advanced Energy Materials, Volume 1, pp. 1079-1084.

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