evolutionary approach to global technological development - the case of hybrid cars

7/29/2019 Evolutionary Approach to Global Technological Development - the case of Hybrid Cars

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An Evolutionary Approach to Global Technological Development

December 11, 2012


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Introduction and Motivation Who Killed the Electric Car (2006)

http://www.youtube.com/watch?v=nsJAlrYjGz8

http://www.youtube.com/watch?v=IENnSK8Q6nE 1:20:49

Why did the US stop development in this next-generation

vehicle and how did Japanese firms come to be synonymouswith hybrids?

Semi-grounded case-study analysis of hybrid development

Conclusion:

Country-level institutional environment supported Japanese innovation

and gave them an economic head start when US institutional

environment opened
http://www.youtube.com/watch?v=nsJAlrYjGz8http://www.youtube.com/watch?v=IENnSK8Q6nEhttp://www.youtube.com/watch?v=IENnSK8Q6nEhttp://www.youtube.com/watch?v=IENnSK8Q6nEhttp://www.youtube.com/watch?v=nsJAlrYjGz8http://www.youtube.com/watch?v=nsJAlrYjGz8


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What is a Hybrid


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Evolutionary Framework Variation-Selection-Retention

Multilevel framework operating at the industry and country-level

Variation in technological development, selection at technology and

product, retention at product and country

Institutional Environment:

The neoinstitutional model essentially holds that organizationalsurvival is determined by the extent of alignment with the institutional

environment; hence, organizations have to comply with external

institutional pressures. (Kostova, Roth, and Dacin 2008)

Global Automotive Industry

US

Market

Japanese

Market

Euro

Market


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Technological Entry Data

# of Patents Firms

1 215

2 925 37

10 21

50 5

75 4

100 3

Note: Toyota Prius

launched in 1997


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Technological Development

Paice, LLC developed key hybrid 4 of the top seven most dominant patents

1992 entry

1998 follow-up patent, which they also filed in Japan

2008 lawsuit against Toyota resulted in a mandatorylicensing deal

Lawsuit won against Ford and pending against Hyundai

and Kia

Independent R&D available

on the market


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Technological Entry Data Automotive Manufacturers Nissan

First major automotive hybrid patent in this sample, applied for in 1974.Second application in 1978

Do not self-cite until their sixth hybrid patent, applied for in 1992

Ford

First hybrid patent in 1987. In 1992, followed up with Hybrid electric vehicle

regenerative braking energy recovery system. Toyota

owns 50% of the global patents on hybrid vehicles (Lloyd and Blows 2009)

Did not apply for its first patent until 1992, of the last to develop their first

hybrid patent. Started increasing quickly and built off of a battery-related

Nissan patent General Motors

First patent application in 1992 with a method for electrically-starting the

power transmission

Followed up in 1993 with a second patent focusing on the integration of the

hybrid transmission with mechanical drive components


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California Air Resources Board (CARB) 1990 Zero Emissions Vehicle Mandate (ZEV)

2% of cars sold in California by 1998 to have zero tailpipe emissions

5% by 2001

10% by 2003

2002 - GM, Daimler Chrysler, and seven California auto

dealers sue CARB to repeal the ZEV mandate The US Department of Justice files a friend of the court brief in

support of the suit and claiming that the state does not have the

authority to regulate fuel standards

Reviewed after 2003 and mandate is repealed


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Who killed the electric car? (Originally?)

Document Source: GE Internal Documents


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GMs EV1 GMs EV1 built Ovonics battery

supplier and AeroVironmenttechnology

On lease in California and Arizona

from 1996-1998

First production-level vehicle to

incorporate regenerative braking

GM CEO Rick Wagoner his worst decision: Axing the EV1 electric-car

program and not putting the right resources into hybrids. It didnt affect

profitability but did affect image. (Motor Trend, 2006)

Robert Lutz, vice chairman of product development called Toyotas launch of

the Prius a PR coup and GMs decision not to continue pursuing a hybrid car a

mistake from one aspect, and thats public relations and catering to the

environmental movement.
http://www.youtube.com/watch?v=nsJAlrYjGz8


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Consumer Demand Characteristics Driving Cycle

US drivers average double the number of

miles per year than those in Japan

Source: Transportation Energy Data Book 2010


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Consumer Demand Characteristics Gas Prices

Source: Transportation

Energy Data Book 2010


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Product Data

Launch Year Brand Car

1997 (Japan) Toyota Prius

1999 (Japan and US) Honda Insight

2000 (US) Toyota Prius

2002 Honda Civic Hybrid

2003 Toyota Prius

2004 Ford Escape Hybrid

Honda Accord Hybrid

2005 Lexus RX 400h

Toyota Highlander Hybrid

Mercury Mariner Hybrid

Honda Civic Hybrid

2006 Toyota Camry Hybrid

Lexus GS 450h

2007 Nissan Altima Hybrid

Lexus LS 600h L

Chevrolet Tahoe Hybrid

GMC Yukon Hybrid

Mazda Tribute Hybrid

Toyota in 1997 in

Japan

Honda in 1999

Ford in 2004

Chevy/GMC in

2007


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SalesVehicle 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Total

Honda Insight 17 3,788 4,726 2,216 1,200 583 666 722 0 0 20,572 20,962 55,452

Toyota Prius 5,562 15,556 20,119 24,600 53,991 107,897 106,971 181,221 158,574 139,682 140,928 955,101

Honda Civic 13,700 21,800 25,571 25,864 31,251 32,575 31,297 15,119 7,336 204,513

Ford Escape 2,993 18,797 20,149 21,386 17,173 14,787 11,182 106,467

Honda Accord 1,061 16,826 5,598 3,405 196 0 0 27,086

Lexus RX400h 20,674 20,161 17,291 15,200 14,464 15,119 102,909

Toyota Highlander 17,989 31,485 22,052 19,441 11,086 7,456 109,509

Mercury Mariner 998 3,174 3,722 2,329 1,693 890 12,806

Lexus GS 450h 1,784 1,645 678 469 305 4,881

Toyota Camry 31,341 54,477 46,272 22,887 14,587 169,564

Nissan Altima 8,388 8,819 9,357 6,710 33,274

Saturn Vue 4,403 2,920 2,656 50 10,029Lexus LS600hL 937 907 258 129 2,231

Saturn Aura 772 285 527 54 1,638

Chevy Tahoe 3,745 3,300 1,426 8,471

GMC Yukon 1,610 1,933 1,221 4,764

Chevy Malibu 2,093 4,162 405 6,660

Cadillac Escalade 801 1,958 1,210 3,969

Chrysler Aspen 46 33 0 79

Dodge Durango 9 0 9

Ford Fusion 15,554 20,816 36,370

Mercury Milan 1,468 1,416 2,884

Lexus HS 250h 6,699 10,663 17,362

Sierra/Silverado 1,598 2,393 3,991

BMW ActiveHybrid 7 102 102

BMW X6 205 205

Ford Lincoln MKZ 1,192 1,192

Honda CR-Z 5,249 5,249

Mazda Tribute 570 570

Mercedes ML450 627 627

Mercedes S400 801 801

Porsche Cayenne 206 206

Total 17 9,350 20,282 36,035 47,600 84,199 209,711 252,636 352,274 312,386 290,271 274,210 1,888,971

Hybrid Electric Vehicle (HEV) Sales by Model

(Thousands of Vehicles)

Source: US Department of Energy, Alternative Fuels and Advanced Vehicles Data Centerhttp://www.afdc.energy.gov/afdc/data/docs/hev_sales.xls (Davis, Boundy, and Diegel 2010)


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Demand for Green The Prius Effect

Consumers are willing to pay up toseveral thousand dollars to signal

their environmental bona fides

through their car choices (Sexton and

Sexton, 2011)

Home owners would rather put their

panels on the front even if the sunshines more in the back. (Sexton and

Sexton, 2011)

Researchers have used the Prius as

a proxy for going green

Lead users where the car premiumdid not match the fuel savings

(Berestau and Li, 2011)

Penetration rate of hybrids had a

positive diffusion effect on the Prius

(Heutel and Muehlegger)


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Government Incentives Japanese car buyers received a $3,000 rebate from the government for

new-technology automobiles (Bradsher 2000)

The United States IRS instituted a Clean Fuel vehicle tax deduction for

$2,000 from 2000-2005. This overwhelmingly benefited Japanese

automobiles

Energy Policy Act of 2005 replaced the Clean Fuel deductions with a

Hybrid Motor Vehicle Credit until 2010

The amount started at $2,400 for the first 60,000 qualified vehicles per

manufacturer and then phased out over the following year

Toyota met the 60,000 quota in October 2006, Honda in January 2008, and

Ford in April 2010.

On December 31, 2010, this credit expired.

Credits remain for even cleaner cars (electric vehicles, etc)

Early on, hybrids were allowed access to HOV lanes in California


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Propositions

Proposition 1: Technological entry and product entry are separate

decisions and can have different forces acting on them.

Proposition 2: In this context, an industry-level selection mechanism acts

to drive all firms into R&D for the next-generation vehicle, including HEVs.

Proposition 3: Country-level mechanisms mitigate the selection

mechanism and act more greatly on retention, in the form of product

launches.

Proposition 4: Even with country-level adaptation, home-countrycharacteristics can drive important decisions that affect the global market.


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Conclusions and comments Builds on Kostova, Roth, and Dacin (2008) AMR critique of

neo-institutional theory in MNCs

Knowledge capability was present in the US and in the

markets for technology

Demonstrates a VSR-evolutionary framework for the

development of hybrid-electric vehicles

Presents countries as possible lead-user markets

Combines neo-institutional theory as a starting point to

resolve economic uncertainty

Further work:

European market

Alternative Explanations

Other theoretical frameworks


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Back-up


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Alternate

Honda small motorcycles

Japanese and safety case of seatbelts

Porter (1990) - Competition

asdf


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Patent EntryAssignee Firm Freq. Percent

Honda 180 13.03

Toyota 172 12.45

Ford 116 8.4

Nissan 94 6.81

N/A (only inventor no firm-level assignee) 83 6.01

GM 67 4.85

Aisin 45 3.26

Hitachi 41 2.97

Mitsubishi 27 1.96

Suzuki 27 1.96

Equos Research 19 1.38

Bosch 15 1.09

DaimlerChrysler 15 1.09

General Electric Company 15 1.09

Denso 14 1.01

Mannesmann 12 0.87

New Venture Gear 12 0.87

Visteon 12 0.87

Chrysler 11 0.8

Caterpillar 10 0.72

Hyundai 10 0.72

Nippon 10 0.72

Fuji 9 0.65

Yamaha 9 0.65

ZF Friedrichshafen AG 9 0.65

Jatco 8 0.58

Paice 8 0.58


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Patent Entry see data files