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TRANSCRIPT
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!