Nowadays, low-emission vehicles such as electric cars make headlines on a daily basis. Doctoral researcher René Bohnsack studied how this trend emerged, and what the strategies of car companies and the role of governments were in the development of low-emission vehicles (LEVs). Bohnsack will defend his dissertation on Friday, 25 October at the University of Amsterdam.
Global challenges such as climate change, resource depletion and energy security, as well as local challenges including air pollution and congestion have led governments around the world to require the car industry to become more sustainable and to invest in more environmentally friendly products, especially low-emission vehicles. While cars with an internal combustion engine have been made more efficient by established car companies to defend its dominance, these firms have also increasingly engaged in various low-emission vehicle technologies, such as hybrid, electric and fuel-cell cars. Bohnsack studied the car industry and the evolution of low-emission vehicles under the influence of policy interventions to find out how low-emission vehicles evolved internationally, what the role of governments and car companies were in this process, and what the strategic motivations were of car firms to engage in electric vehicles considering their potential to disrupt the car industry.
Low-emission vehicles are globally still niche products because they are too expensive, have a short driving range and lack suitable recharging infrastructure. Nevertheless, surprisingly more and more companies are investing in low-emission vehicles, especially electric cars according to Bohnsack.
In describing how the development of low-emission vehicles has been stimulated, explanations commonly refer to government regulation, tax incentives or public-private projects. Bohnsack found that not only governments but also car companies had a significant influence on the emergence of low-emission vehicles. In particular, it was competition between companies and the uncertainty about what the competitor's next move would be that stimulated car companies to invest in LEVs. For example, after Toyota was successful with the hybrid vehicle Prius, most other major car companies also started to invest in hybrids.
Bohnsack's research also shows that government stimuli can cause companies to take counter-economic choices. ‘After the U.S. government started to offer generous incentives for electric cars, ‘Think’ – a small car company from Norway that built Smart-sized electric cars – decided to produce and sell their cars in the U.S. However, the car didn't really fit the U.S. market and the company eventually ended up going bankrupt in 2011.’ While this points to the potential dangers that government stimuli could represent, it also shows that electric cars need innovative business models to overcome technological barriers. However, this is usually difficult because car companies often stick to their old practices. One solution could be to start a new company, such as Daimler, which initiated the popular car2go project in Amsterdam under a different company.
Lastly, considering the small market that electric cars represent – less than 1% of the total volume – it is surprising that car companies invested billions in them. Typical explanations suggest that car companies aimed to gain first-mover advantages, that the investment is part of their corporate social responsibility (CSR) activities or that they prepared for possible stricter regulation. Bohnsack found an additional explanation: ‘All the car companies that have recently committed themselves to electric cars were in a difficult position, mostly financially, and used the electric car as an instrument to change their fortunes.’ This sort of turnaround strategy within the car industry might also explain investments in sustainable technologies in other industries.
Bohnsack’s study is based on a large dataset of multiple industry and newspaper sources from 1997 until 2010. The dataset included almost 10, 000 articles and was analysed using qualitative data analysis software.
R.Bohnsack, Car Firms and Low-Emission Vehicles: The Evolution of Incumbents’ Strategies in Relation to Policy Developments.Thesis supervisor: Prof. Ans Kolk. Co-supervisor: Dr Jonatan Pinkse.
The graduation ceremony will take place on Friday, 25 October at 12:00.
Location: Agnietenkapel, Oudezijds Voorburgwal 231, Amsterdam