Purpose of this research

This research aims to describe the diversifying patterns of automotive OEMs’ behavior against the innovation of new powertrain, such as Battery EV, Plug-in Hybrid EV, Fuel Cell EV, and so on. Key research questions of this project are as below:

1. Why are the varied patterns of technological solutions adopted to develop vehicles with innovative power train by each OEMs? 
   
2. What is the efficient and effective process and Organizations to develop vehicles with innovative power train?
   
3. How do OEMs establish the new process and organization suitable to develop vehicles with innovative power train?

Current situation of the automotive industry and Electric Vehicles

It has passed about seven years since practical electric vehicle launched in the market. In addition, it has passed more than 15 years since the car using an electric motor for hybrid power train by Toyota. These facts suggest that it is appropriate timing to examine the impact and effect of the electrical power train as a "disruptive" technology for the automotive industry.

On the other hand, when we see the current situation of the automotive industry, it is doubtful that a specific disruptive technology will establish a dominant position in the future. In fact, the market share of EVs in Europe, USA, and Japan are only less than 1% as Table 1 shows. Moreover, the emergence of innovation of electrical power train possibly bring diversity, not the domination, into the automotive industry.

Table 1: Number of EVs sold and its market share in Europe, USA, and Japan

Prior Research on innovation and the reaction of companies

In the research domain of innovation management, there is a sort of articles examining the impact of new innovation and technologies for the company and industrial structures, such as Abernathy (1978)[1], Henderson & Clark (1990)[2], and Christensen and Bauer (1996)[3].

Abernathy (1978) presented the product-process life cycle hypothesis. An Emergence of the dominant design in a certain industry triggered the conversion of product design pattern. And after the dominant design emerged, the frequency of process innovation increases while the frequency of product innovation decreases. Henderson & Clark (1990) pointed out that the Architectural innovation that new entrant of the industry introduced precedes existing companies to defeat because of their cognition of innovation from the case of the semiconductor equipment industry.  In addition, Christensen & Bauer (1996) described the pattern of resource allocation within the existing large company leads to the fail corresponding against the "disruptive innovation" from the case of hard disk drive industry.

These studies describe the process of new technology dominates the industry finally in detail, as well as the way to recognize the disruptive technology as exogenous events by companies. And both of Henderson & Clark (1990) and Christensen & Bower (1996) conclude that existing companies defeat and exit from the industry in most cases.

Prior Research on new product development process in the Automotive Industry

There are a number of prior research about the new product development process in automobile OEMs, such as Clark & Fujimoto (1991)[4], Thomke & Fujimoto (2000)[5], and Beaume, Maniak, and Midler (2009)[6]. Clark & Fujimoto (1991) and Thomke & Fujimoto (2000) pointed out the organizational process such as “overlapping” and "Frontloading” process of development from cases of Japanese OEMs. Beaume et.al. (2009) found that effective process to integrate innovative features in the newly developed vehicle model. However, the scope of these researches is limited into the development and innovation of “cars with internal combustion engines and steel monocque body."

As Abernathy (1978) stated, there has been a stable dominant design of cars and until the beginning of the 2000s. Therefore, prior research on the new product development process in the automotive industry have been built on the fact that the dominant design is shared within the industry.

Then, does the current phenomenon show the possible change of dominant design of cars? This question should be answered. 


Will any new architecture of vehicle dominate the automotive industry in near future?

The answer would be “No.” Unlike the last few decades of the 20th century, the architecture of cars is becoming more and more diversified1.

As the author mentioned above, in the last few decades of the 20th century, almost all the cars produced were equipped with internal combustion engines (ICEs) with steel constructed bodies. So called “Dominant design” by Abernathy (1978) dominated the industry.
On the other hand, in 2016, though the cars seem to be very similar at a glance, its technological character inside is more diversified than that of the end of the 20th century. There are a number of patterns of technological choice. Patterns of power train of cars are now hugely diversified. Such as gasoline, diesel, Hybrid EV (HEV), Plugin HEV, Battery EV (BEV), BEV with Range Extender, Fuel Cell EV (FCEV). Furthermore, Hybrid EVs have diversified “counterparts” such as internal combustion engines and fuel cells.

Table 2: Types of Power Train of vehicles as of 2016 

The material and structure of bodies are diversified as well. Especially, when we look at the vehicles with innovative powertrain, the diversity of body material and structure is higher than that of vehicles with conventional powertrain.

Table 3: Patterns of Body Structure and Power Train of Vehicles with Electrical Power Train

How do OEMs manage the introduction of the innovative power train?

Products adopted new architecture and technology require the consistent organization and process of new product development. On the other hand, as Christensen and Bower (1996) pointed out, the resource allocation process in the enterprise can prevent promoting the development, production, and sales of products with a disruptive architecture.

Thus, existing automotive OEMs intuitively would prefer to keep material and structures of body for carrying over their production equipment. However, some existing OEMs introduce new body materials and structure.

This fact shows that the automotive OEMs are now being required to manage the diversity of its product architecture inside the market. They need a strategic decision of choosing the architecture and to commit investing along with their decision. In other words, OEMs have to find the “Niche” for their vehicle with innovative powertrain, or they have to develop vehicles that can cover the majority of the market.


Two-way approach of the research

The study will be done by two perspectives. One is the market point of view, the other is an internal point of view. From the market point of view, the author analyses the “fit” between customer requirement and the characteristics of vehicle performance. From the internal point of view, the author analyses the behavior of automotive OEMs through case studies.

Applying this two-way approach on this research, the author would grasp the cognition, resource allocation, and the organizational change in the automotive OEMs along with the emergence of the possibly disruptive innovation. With the expected outcome, it will become able to generate better suggestion for the actors of its ecosystem, including OEMs, governments, and suppliers to deal with the innovation of electric power train.