Battery Electric Vehicles (BEVs)

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bev

Strategic Management Of Technological Innovation An Academic Case Study Concerning Electric Vehicles And Concentrated On Electrical Zero CO2 Mobilization

BEV Sajjad Khaksari Ahmad Shabir Mirko Tartarotti E Polito Car Polytechnic of Turin Spring 2016-17

Initially, the authors desire to acknowledge and thank Professor Francesca Montagna and her assistance, Ph.D candidate Stefania Altavilla, for their interactive supports during the lectures and LAB activities.

PREFACE

e polito car

Innovation is a lovely beautiful thing, and that is an energy with both appreciative and realistic proposal. The subject of the following essay is studying the Battery Electric Vehicles (BEVs). However, the items and their corresponding materials did not restrict only around BEVs, but they tried to submit a comprehensive study of electric vehicles and electric trucks industry. The following essay attempts to illustrate and embeds to together the valuable results of an Academic Strategic Management of Technological Innovation Project, which realized by Professor Francesca Montagna (Polytechnic of Turin) during the master degree of Engineering & Management course, from March 2016 to July 2016. The Project Terms (Amedeo’s Family Company and concerning Questions of 7 Cases) are trying to create a kind of real practical research and development (R&D) condition for students. The marking system of chapters recalls and indicates the actual number of that chapter in the course textbook.1 Therefore, the understanding and getting familiar with the following essay would be easier when readers can deepen the theoretical concepts through the textbook. The essay contains an Introduction and seven (7) cases. The Introduction speaks in general about Electric Vehicles (EVs) and composes a list of reasons concerning the decision of E.PoliTo.Car’s members regarding their arrangement to work on Battery Electric Vehicles (BEVs). The Case 1 contains Chapter 1 and 2, focusing on innovation business and society, and essential technological knowledge and term of organizational learning. The Case 2 based on types of innovation and S-Curve theory. In Case 3, there is ample opportunity for expression base in Chapter 4 of textbook concerning the dynamic of innovation and its diffusion. The Case 4 introduces a real (Workhorse Group Inc.: http://workhorse.com). Also, it nominates the

company case Canvas Business

Model and it contains Chapter 6, 7, 8, and 9. In addition, the “AHP Workhorse.sdmod” - the SuperDecisions Software2 format and the “PPM-F.xls” EXCEL file formats are available in Attachment. The .sdmod format has used in in Chapter 9 (part c) regarding the definition of an Analytic Hierarchy Process (AHP)3 tree and the arguments concerning innovation strategy as project portfolio management. While the “PPM-F.xls” file regards directly the Solver and results of Chapter 9 (part a and b). 1

Marco Cantamessa, Francesca Montagna (2016); “Management of Innovation and Product Development, Integrating Business and Technological Perspectives”; Springer, London. ISBN 978-1-4471-6723-5 2

Thomas L. Saaty - The Super Decisions: www.superdecisions.com

3

The analytic hierarchy process (AHP)

vii

Notice that the Chapter 5 and then later the Chapter 10 and 12 as three preparatory stages are exceeded. However, put forward for consideration, the study of these chapters might propose since a better understanding of the distant subjects. The Case 5 includes Chapter 11 concerning the issue of product development process, and it offers a Simulation EXCEL file that is available either in attachment. Unfortunately, the numerical results of “Case5Simulation” EXCEL file regarding the Net Present Value (NPV), Costs, Profits and Cash Flow analysis are not reliable enough. The authors strongly invite all readers to improve and develop the calculus of the Case 5 individually. Also, the authors refer all readers to read the results of other group such as Ferrero, Santagati, GeCARli, Vogel, FRANCAS, NACEF, BARZEGAR, Jamyn, JWVC, SWEIT, and Green Team. Additionally, the Chapter 13 has illustrated in Case 6, from the idea, method, and real case of a marketing research to product positioning. The attachments files regarding this case are titled as following: “Case 6. ePoliToCar.sav”, “Component Matrix.sav”, “Output3.spv”, and “Rotated Output.spv”. The .spv format identifies the SPSS4 files those used to analyze the results of the Amedeo's Family Questionnaire database. In part 6e of Case 6, once the database was well organized, clean, and deprived of errors and unwanted text, all data insert into SPSS software and analyzed by Factor Analysis (FA)5 tools. Ultimately, the Case 7 covers two parts: Part I and Part II. Virtually, all contents of Case 7 have written regard the car seat manufacturing. Since the Amedeo Family made an investment decision and they acquired a majority stake in a car seat manufacturer which called ABC. However, the Part I includes Chapter 14 and 15, and It covers a list of sources for deriving information, a Kano model, and a preliminary list of the main needs. Beside, Part II incorporates Chapter 16 concerning design and redesign of product architecture. Also, it comprises a breakdown function tree, a FAST diagram, some frameworks, value analysis, and ideas regarding seat of the future's car. In conclusion of this preface, the authors wish to thank Professor Francesca Montagna for her academic teaching contribution to the development of their understanding regarding the management of strategic innovation projects. However, the authors feel responsible for highlighting that they are responsible for any possible errors in the following essay. Also, all possible misrepresentation of theories or any negative results might return to authors not to anyone else. Please, mention that this essay is merely a kind of technical report concerning an academic case study and that is written by students. - Sajjad Khaksari, E PoliTo Car Team Leader - 25 March 2017 - Torino (Italy)

4

IBM SPSS predictive analytics software

5

Karl L. Wuensch, “Factor Analysis with SPSS”, East Carolina University, 2005

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Brief Contents INTRODUCTION CASE 1 Chapter 1: Innovation in Business and Society Chapter 2: Technological Knowledge and Organizational Learning CASE 2 Chapter 3: The Many Types of Innovation CASE 3 Chapter 4: The Dynamics of Innovation CASE 4 Chapter 6: The Many Approaches to Innovation Strategy Chapter 7: Business Model Innovation Chapter 8: Innovation Strategy as the Management of Competencies Chapter 9: Innovation Strategy as Project Portfolio Management CASE 5 Chapter 11: The Product Development Process CASE 6 Chapter 13: From Market Research to Product Positioning CASE 7 Chapter 14: Specifying the Product Chapter 15: Designing the Product Chapter 16: Design and Redesign of Product Architecture INDEX

ix

x

Contents INTRODUCTION Introduction: Electric Automobile Of Future

1

CASE 1 Chapter 1: Innovation in Business and Society

5

a. Rough model of the innovation process 5 b. Who is funding research and innovation 6 c. Try identifying the main actors 7 d. Which are the main issues that could represent a risk of market failure e. What positive and negative societal impacts of innovation 11 Chapter 2: Technological Knowledge and Organizational Learning

8

15

a. What are the main knowledge elements that pertain to the development b. In which of these areas are firms already operating 20 c. The “competency trap” for the companies 22

15

CASE 2 Chapter 3: The Many Types of Innovation

23

a. What is the s-curve for a car? 23 b. Search for relevant data, and trace this S-curve! 25 c. Representation of the evolution in automotive industry 26 d. Alternative technologies 26 e. Future paradigms for cars 27 f. Political, economic, socio-cultural and technological (PEST) factors g. Sketching the block diagrams for a traditional & future car 28 h. Use the different definitions taxonomies for innovation 29 i. Sketching the usage process for traditional cars 30 j. “Supra-systems” for the “car of the future” 30

27

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k. Research for information considering a few main players 31 m. The factors that lead radical innovations 32 n. The factors that prevent radical innovations 33 o. Introducing or preventing the disruptive innovation 34

CASE 3 Chapter 4: The Dynamics of Innovation

35

a. The diffusion curves of the traditional automobile 35 b. Characterizing Rogers’ market segments 36 c. Applying the Abernathy and Utter-back model 37 d. Stages of the Abernathy-Utter-back model 39 e. A hype-cycle for relevant technologies 39 f. The lock-in effect created by the current dominant design g. The degree of vertical integration 41 h. the potential advantages and disadvantages 41 i. Strategic standards 42 j. The field of standardization 42

40

CASE 4 Chapter 6: The Many Approaches to Innovation Strategy

43

a. Defining Workhorse Group Inc. 43 b. Approach to corporate strategy 46 c. Applying Porter’s 5 Forces framework to analyze Workhorse d. Analyze the Intellectual Property assets of Workhorse 53 e. defining a “Blue Ocean” strategy 55 Chapter 7: Business Model Innovation

51

59

a. Workhorse’s Business Model - Canvas - Current (As-Is) model 59 b. A critical analysis of Business Model 64 c. Drafting a (To-Be) business model 66 d. Defining a rough-cut development plan 67 e. The inner coherence concerning “To-Be” business model 69

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Chapter 8: Innovation Strategy as the Management of Competencies

71

a. The core competencies of Workhorse 71 b. Evaluating of Amedeo’s proposal regard linking Workhorse to IVECO 75 c. Competency Portfolio 78 d. Addressing markets leverage on Workhorse’s core competencies 80 e. A competency-based innovation strategy for the European subsidiary 81 Chapter 9: Innovation Strategy as Project Portfolio Management a. Categorizing Workhorse R&D and innovation activities b. The project portfolio - Excel Solver 84 c. An AHP tree to demonstrate the strategic criteria 87

83 83

CASE 5 Chapter 11: The Product Development Process

95

a. Operate under a deterministic scenario & most expected values 99 b. The alternative scenarios - CRG Nonlinear - Solving Method 100 c. Setting up a Monte Carlo analysis by using the YASAI_W add-in 101 d. Projecting the IMOD 102

CASE 6 Chapter 13: From Market Research to Product Positioning

103

a. A critical analysis of developing a market research project 104 b. Uncovering the list of tertiary needs 111 c. Tertiary Needs into a list of Secondary Needs 114 d. Download the common questionnaire and the dataset 116 e. Applying the Factor Analysis 119 f. Applying the Factor Scoring and creation of synthetic variables 133 g. Some conclusion on the market for “future cars” 139

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CASE 7 Chapter 14: Specifying the Product

141

a. Amedeo Family investment decision - Car seat manufacturing Chapter 15: Designing the Product

142

144

a. Making a list of sources to derive information 144 b. Making a preliminary list of the main customers needs c. The usability of the car seat 152 Chapter 16: Design and Redesign of Product Architecture

149

161

a. Developing a function tree for a current car seat - Break down functions 161 b. The product structure as a functional block diagram & FAST 164 c. The Gero’s FBS framework in order to describe the 3 classes of variables 165 d. The “elementary component - elementary function” interface 168 e. Types of architectures characterize the current car seat 171 f. Defining a component adjacency matrix 174 g. Applying phase 1 and phase 3 of Value Analysis 179 h. Conceiving a “seat of the future” - incorporate functions & subsystems 181 i. Applying TRIZ method in order to reinvent the car seat 183 j. Other innovative proposals - Brainstorming & Gamification 186 k. The final concept for the car seat of the future 189

INDEX Index

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introduction

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Introduction

e-PoliTo Car

Sajjad Khaksari (178401)

Group of e-PoliTo Car

Ahmad Shabir (s219115)

Innovation Management and Product Development course Politecnico di Torino

Prof. Francesca Montagna March 17, 2016

Electric Automobile of Future

Fig.1: Mercedes Benz SLS AMG Coupe Electric Drive

Since the beginning of the time and the nascent of human been on this planet, the mobility or transportation stand between the first desires of humanity. Either, walking on its own is a kind of creative method of mobility for humans. Imagine newborn babies whereby attempt to walk on legs and stand up on the ground and move forward quickly and autonomously. That natural genuine and substantial desire manifested in whole age cycles in the manner of racing horses up to ride the bike or to drive the Formula 1 vehicles.

Introduction to Future Vehicle

Page 1

Introduction

e-PoliTo Car

However, the human is once again in an “actual window of opportunity” in which the old fuel base vehicles or in another word, the traditional cars those produced and truly are producing right now an enormous amount of noxious emissions, are going to lose their needs in reference market. Also, on another side, the performance of electric cars as a new (clean) technology is going to outmatch the current desire of the customers, notably in North Europe. Figure (Fig. 1) illustrates an example of that performance, the Mercedes Benz SLS AMG Coupe Electric Drive which is well know as the faster electric car has ever created. In another hand, Might the investors can not afford to go to operate the future financial risks and, in that case, saying "I can not begin to explain how sorry I am" (as innovation advisor), would not solve the debts and an approximately economic problem of the company.

Hybrid-electric Vehicles (HEVs), Plug-in Hybrid Vehicles (PHEVs), Fuel-cell Vehicles (FCVs) and Battery-electric Vehicles (BEVs) Probable future cars

Fig.2: HEV, PHEV, FCV and BEV as possible future technologies

However, sometime some innovative startup could resolve the problem and reduce the risk and reward in the innovation process1. Such as “a startup called Prieto Battery2, spun out of Colorado State University in Fort Collins, has succeeded in producing what founder Amy Prieto calls “the first true 3-D battery that can be charged and discharged and that will hold a charge”. In other words, that fills the basic requirements of a conventional battery.”3 1

Marco Cantamessa, Francesca Montagna (2016); “Management of Innovation and Product Development, Integrating Business and Technological Perspectives”; Springer, London. Chapter 1, sub-chapter 1.2 2

MIT Technology Review: Prietro Battery: Startup called Prieto Battery

3

Mike Orcutt, MIT Technology Review’s research editor.


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Introduction

e-PoliTo Car

Probable future car features: Forecasting of vehicle demand4 in close future and either in sustainable future time period seems fundamental to identify the future needs line of the futuristic “needs of current reference market” but there is four kind of technologies which probability would be the smart vehicle of future and those called Hybrid-electric Vehicles (HEVs), Plug-in Hybrid Vehicles (PHEVs), Fuel-cell Vehicles (FCVs) and Battery-electric Vehicles (BEVs). Fig. 2 illustrates these possible future innovative technologies. Before conclusion of this brief introduction into the base idea of e-PoliTo Car group grant the right to take in to the account what CEO of Tesla shared with his listeners. Elon Musk5 says “Tesla vehicles will drive themselves in two years” and he added, the “Most major automakers, including Google, are working on autonomous driving technologies of varying degrees. Google GOOG6 -0.20% is testing a fully autonomous prototype7 that replaces the driver completely. It hopes to commercialize its technology by 2020.”8 In fact, Fig. 3 illustrates some current technologies in crescent phase which either might became the future technology of vehicles such as E-Trucks, Road-rail Vehicles and Solar electric cars.

Alongside of Battery-electric Vehicles (BEVs) other innovative project are going forward such as Electric and Hybrid Trucks, Road-rail vehicle, Google Car and Solar vehicles. Parallel future cars Fig.3: Electric and Hybrid-Trucks, Road-rail Vehicle, Google Car and Solar electric cars

4

(EcoProduction) Daniel Boudoin, Christian Morel (auth.), Jesus Gonzalez-Feliu, Frédéric Semet, Jean-Louis Routhier (eds.); Sustainable Urban Logistics Concepts, Methods and Information Systems; Springer 2014 5

Elon Musk on Wikipedia

6

Google GOOG: fortune.com/company/goog/

7

Fully autonomous prototype: fortune.com/2015/09/30/google-self-driving-car-test-drive/

8

Elon Musk says http://fortune.com/2015/12/21/elon-musk-interview/


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Introduction

e-PoliTo Car



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CASE 1


1. Innovation in Business and Society

Chapter 1:

e-PoliTo Car Sajjad Khaksari (178401) Ahmad Shabir (s219115)

a. rough model of the innovation process is based on a linear chain, moving from basic research all the way to product development. Try explaining what is currently going on in each phase of this chain. The rough but linear link of discovery, invention, innovation and product development is simply, linked, and illustrated in Figure 1.11 by Marco Cantamessa2 and Francesca Montagna3. However, the sharp innovation line which is more complicated in the opinion of Kline4, Edgerton5 and Alter6 include simple phases such as the Basic Research, Applied Research, Pre-competitive and Competitive phase. Annotate that the pre-competitive and competitive phases are categorized under the Product Development circumstances. Additionally, while the time dedicated to research phase, the role of industry increase and became the core of productivity and effectivity. On the other hand, the duty of academic centers or research centers, both private or governmental, in Research and Applied Research phase is very heavy and risky. In fact, the risk and rate of failure in these two initial phases is significantly high. The probability for these above-mentioned reasons, unlike Researchers, the Industry is some time afraid to invest in base research and raw innovative ideas. As respects, the most successful existence companies in the third millennium fast running industrialization, are not petrified or scared to invest in Research and Development (R&D) projects. For example, the “Glaxo Smith Kline” on 2010 ranked 13th of Top 20 Global R&D Spender7 as one of the larger health care conglomerates in the world (Why Culture Is Key) and well-known principally for its babies nutritious substances (products). 1

Marco Cantamessa, Francesca Montagna; Management of Innovation and Product Development, Integrating Business and Technological Perspectives; Springer, Verlag London (2016) 2

Marco Cantamessa, Politecnico di Torino

3

Francesca Montagna, Politecnico di Torino

4

Kline S.J.; Research, invention, innovation and production: models and reality; Report INN-1, Mechanical Engineering Department, Stanford University (1985) 5

Edgerton D.;’”The linear model” did not exist: reflections on the history and historiography of science and research in industry in the twentieth century. In: Grandinand K, Wormbs N (eds) The science-industry nexus: history, policy, Implications. Watson, New York (2004) 6

A. LaPlante and A. E. Alter, “Corning, Inc: The Stage-Gate Innovation Process,” Computer- world 28, no. 44 (1994)

7

B. Jaruzelski, J. O’Loehr, R. Holman, “Why Culture Is Key: The Global Innovation 1000,” Strategy+Business (2011)


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e-PoliTo Car


b. Who is funding research and innovation in this industry? How much money is involved? Is it growing? As highlighted in Introduction segment, the e-PoliTO Car group work, decided to study and work on the Battery Electric Vehicles (BEVs), in which the “research funds” in parallel with academic research centers, normally are invested by biggest car manufactures companies such as Toyota8, Volkswagen e-Mobility9, Mercedes-Benz10 and Audi11 and Tesla12. The following scheme illustrates some of the most important technologies and western and eastern countries or research institutes those work on such kind of particular proposes. Western Countries Research Center

University S-electric Technology

European Countries University

Research Center

Eastern Countries University

Research Center

Tesla

SLS electric Technology

Mercedes Benz

i-Road Technology

Toyota

e-tron® Technology

Audi

Table1: Local and Global Presentation of Electric Technologies

Table 1 presents technologies correspond with the global location of technology producer. Additionally, the results illustrate such philosophy in which the deployment is not just a way for the competitive firms to earn revenues from their innovations but the deployment is a core part of the innovation process itself. In fact the Tesla, Mercedes Benz, Audi and Toyota as some worldwide famous car producers in Western, European and Eastern countries spent significant amount of energy and time to develop and improve their innovative technology to create some sufficiently great compatible barriers in front of their current or future car manufacturer opponents those are potentially strong competitors in the market.

8

Toyota-Electric: Zero CO2 emissions

9

Volkswagen e-Mobility: e-up, e-Golf, Golf GTE and Passat GTE

10

The SLS-electric series of Mercedes Benz: Most famous worldwide Fastest Electric Super Car has ever built

11

Audi Plugin Hybrid Electric Car: The A3 Sportback e-tron®

12

Tesla S-electric Car Model, Tesla Premium Electric Vehicle and TESLA Model X


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e-PoliTo Car

c. Try identifying the main actors that are operating along the innovation chain in this nascent industry. Production planning swings between13 “Identifying Customer Needs” and “Opportunity Identification”. Therefore, identifying the key players those are operating along the BEVs inventory and manufacturing chain requires in the background some tackle identification of market legislative policy and after that, it needs for the particular pinpointing purpose14 of future BEVs costumers’ needs (Fig. 1.1) and desires of coming automobile consumers.15 If innovation can be defined as the “economic exploitation of an invention” as Roberts16 proposed in 1987, currently, the main major actors in Battery Electric Vehicles industry might be the Mercedes Benz17 and the Audi18 as two principal European car manufacturers,

Fig. 1.1: The Key Players in BEVs Industry

Toyota19 and Honda20 as two leading Asian players and Tesla21 as an American car producer.

13

Terwiesch, Christian, and Karl T.Ulrich, Innovation Tournaments: Creating and Identifying Exceptional Opportunities, Harvard Business Press, Boston, 2009 14

Francesco Aggogeria, Giulio Barbatob, Gianfranco Gentab, Raffaello Levi; Statistical modeling of industrial process parameters; Published by Elsevier, 2014 15

Steven A. Melnyk, Christopher W. Zobel, John R. Macdonald, Stanley E. Griffis; Making sense of transient responses in simulation studies; International Journal of Production Research, July 2013 16

Roberts EB; Generating technological innovation; Oxford, New York, 1987

17

Mercedes Benz: https://www.mercedes-benz.com/en/

18

Audi: http://www.audi.com/index.html

19

Toyota: http://www.toyota-global.com and Toyota Ultra-compact electronic vehicles (EVs)

20

Honda: http://automobiles.honda.com/fit-ev/

21

Tesla: https://www.teslamotors.com


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d. Which are the main issues that could represent a risk of market failure for the companies in this industry? What could governments at all levels do (from city halls up to supranational entities such as the EU) throughout this innovation chain? What are they actually doing? Do not reach the goals, represents a failure.22 The failure grounds debts23 and created failure persist the remained sunk costs which should have no bearing on the comprehensive economic analysis and project decisions but uncompromising ignore it could be a difficult task.24 Paying debts off a financial obligation is something that any governor or determiner, supranational entity, production manager or product producer, does not desire to risk.25 The “dread of risk” and the “fear of betting” on an “innovative project” illustrated in figure 1.1 of “Management of Innovation and Product Development”26 which fundamentally is a kind of beautiful harvest, pictured from “the linear model of innovation”. In fact, Fig. 1.2 illustrates the main issues those could represent the market failure in BEVs industry. They are categorized in New-technology threats, Competitors threats, Administrative threats and Community threats. It means an “innovation gambler” who does not desire to risk losing thousands of dollars for the chance of winning project might prefer a certain gain of the certain minimum amount of dollars.27 This approximation means that a “gambler” who bet on an “innovative project” regarding “Break-even Analysis” which refers to the determination of the balanced performance level where “project income” is equal to “project expenditure”, desires to cover the Total Cost (TC) and additionally gain sustainable profit.28 In BEVs particular situation, one of the risk issues is the gap between some artifact electric technologies demonstrated in academia with an appeared commercial product in vehicle market.29 22

David Hillson; “Managing Risk in Projects”; Gower Publication, 2009 - Chapter 1, Page 1-10

23

John M. Nicholas, Herman Steyn; "Project Management for Engineering, Business and Technology", 4th Edition; Taylor & Francis Group, © 2012 Routledge 24

Adedeji B. Badiru, Olufemi A. Omitaomu; Handbook of Industrial Engineering Equations, Formulas and Calculations; CRC Press 2011 - Part 5-25 Computations for Economic Analysis 25

Aswath Damodaran; "Applied Corporate Finance"; WILEY, 4th Edition, New York, 2015 - Chap. 3: Basic of Risk

26

Marco Cantamessa, Francesca Montagna; Management of Innovation and Product Development, Integrating Business and Technological Perspectives; © Springer-Verlag London, 2016 - Chapter 1 (Fig.1.1) and 13.3 27

Morris H. DeGroot, Mark J. Schervish; "Probability and Statistics", 4th Edition; PEARSON 2012

28

Adedeji B. Badiru, Olufemi A. Omitaomu; Handbook of Industrial Engineering Equations, Formulas and Calculations; CRC Press 2011 - Part 5-41 Computations for Economic Analysis 29

Advanced batteries for electric-drive vehicles: A technology and costs- effectiveness assessment for battery electric vehicles, power assisted hybrid electric vehicles and plug-in hybrid electric vehicles. Palo Alto, CA: EPRI 2004


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The theory of utility in Economics was developed during the 1930s and 1940s to describe a person’s preference among gambles30 and in BEVs circumstances according to Utility theory, an electric car customer will prefer a sustainable technology for which the expectation of a certain beneficial function is a maximum, rather than a technology for which simply the expected gain is a maximum.31 The “innovation process” is a “lasting marathon” and it is exceedingly risky in Battery Electric Vehicle32 industry, unless the “global oil price”33 does not sadly remain cheep as it is nowadays because of long-existent war34 between supported or wanted dictators in Middle East35 those guarantee36 instability37 in petroleum38 countries.39

NEW-TECHNOLOGY threats, COMPETITORS threats, ADMINISTRATIVE threats and COMMUNITY threats BEVs Potential Threats and Perils

Fig. 1.2: The Major Issues of Potential Market Failure in BEVs Industry

30

Daron Acemoglu, David Laibson, John A. List; "Microeconomics"; Pearson Global Edition, 2016

31

Simeon Ehui, John K. Lynam, I. Okike; “Adapting Social Science to the Changing Focus of International Agricultural Research: Proceedings of a Rockefeller Foundation”; ILCA Social Science Research, November 1994 32

Björn Sandén (ed.); "Systems Perspectives on Electromobility"; CHALMERS, 2013 - Chapter 2

33

Morgan Downey, "Oil 101"; Wooden Table Press, 2009

34

William Engdahl; “A century of war: Anglo-American Oil Politics and the New World Order”; Pluto Press, 2004

35

Sajjad Khaksari (2015); “Muslim Lunar’s Blindness”; Torino; DOI: 10.13140/RG.2.1.2530.8883

36

Mohsen Mehrara, Abbas Rezazadeh Karsalari, Fateme Haghiri; “Oil Fund and the Instability of Macro-Economy in Oil-Rich Countries”; World Applied Sciences Journal, 2012 37

Dr. Edmund M. Daukoru: Oil market stability: the role of OPEC, September 2006; OPEC Countries Conference

38

Alessandro Roncaglia; “The International Oil Market: A Case of Trilateral Oligopoly”, Springer, Mar 4, 1985

39

Alessandro Roncaglia; “Piero Sraffa And The Reconstruction Of Political Economy”, Spain, Madrid, Nómadas. Revista Crítica De Ciencias Sociales Y Jurídicas, 2011 And “The Wealth of Ideas: A History of Economic Thought”


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As an indisputable business strategy, side-by-side with pioneer companies such as Toyota, Mercedes Benz and Tesla, the protagonist car manufacturers such as BMW40, Citroen41, Suzuki42 and Yamaha43 work on BMW i3 Electric Car44, C-zero45, Suzuki-Electric46 and MOTIV.e47. Theses companies because of their van marketing systems perceive that once an innovational investment tend to be brisk, more products become available and it is what actually they can do for planning a survive business model in vigorous market of future’s automobile. In fact, the vigorously of the future’s electric car will be either tougher because of smart representation48 of smarter competitors49 such as Smart electric car manufacturer.50

Fig. 1.3: The Competitive Worldwide Market of BEVs Industry

Throughout the BEVs innovation chain, ensure economic success is what government might step in and offers into innovative firms in regional, national and international level, to provide them fund ability to resist in the fully-risky competitive market of electric car which illustrated in Fig. 1.3 while governments usually have a direct role down to the so-called pre-competitive. 40

BMW International 360° Electric

41

Citroen International: http://www.citroen.com/en

42

Suzuki Global: http://www.globalsuzuki.com

43

Yamaha Motor Company: http://www.yamaha-motor.com

44

BMW i3 Electric Car: http://www.bmw.co.uk/en_GB/new-vehicles/bmw-i/i3/2015/introduction.html

45

Citroen C-zero electric car: http://www.citroen.co.uk/new-cars-and-vans/citroen-range/citroen-c-zero

46

Green Car Report Blog: Suzuki Electric Car Does 800 Miles, Sets New Japanese Range Record; Nov. 2013

47

gas2.org: Yamaha electric city car MOTIV.e and Yamaha electric city motorcycle EC-03

48

The Smart ED of the Smart electric car manufacturer is an example of that strictly future competitive market. The ED is the latest version of tiny two-seat city car and it is a vast improvement over Smart’s previous all-electric versions. Measuring just over 106 inches from tip to tail, and a shade under 62 inches tall and wide, the Smart ForTwo Electric Drive is small enough to occupy the smallest of spaces. And it's the only EV available with a convertible top: http://www.plugincars.com/smart-ed 49

Smart usa: http://www.smartusa.com

50

Smart electric car manufacturer: http://int.smart.com/en/en/index.html


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e. What positive and negative societal impacts of this innovation do you think are possible? While technological innovation is generally considered as a desirable phenomenon, it does not only create positive effects.51 The negative social impact of technology might begin with the Industrial Revolution in 17th century52 from the child labour in England textile industry53 into irreversibly potential destructive nuclear power.54 The synonyms of industrialization might impact employments by technological displacement while in following phrases the social impacts of Battery Electric Vehicles are categorized in negative and positive tracks.

Negative Social Impact of BEV’s Technology 1. Electric Vehicle Components: Most of components of BEV’s are very expensive and availability of those components are very difficult in markets. These components are totally different from components of Traditional vehicles.55 The motor, inverter and controller are the most expensive components after the battery and special attention is paid to these components. The other components of interest include the DC/DC converter for 14 Volt supply for the lights and ignition (in a PHEV), high voltage wiring harness, the special heating ventilation, air conditioning (HVAC) unit and the regenerative brake.56 2. Safety Issues: There are many safety issue regarding silent BEV’s vehicles present a safety hazard for visually impaired, cyclists, runners, small children, and other pedestrians.57 The problem can be especially acute at urban intersections with loud background noise and where blind pedestrians make decisions about crossing streets based on what they can hear in their environment. The current trend appears to be moving toward the vehicle based solutions as the most practical implementation measure.58 51

Marco Cantamessa, Francesca Montagna; Management of Innovation and Product Development, Integrating Business and Technological Perspectives; © Springer-Verlag London, 2016 - Chapter 1.3: Social Impact of Tech. 52

Encyclopædia Britannica: Revolution and the growth of industrial society, 1789–1914

53

Child Labour Industrial Revolution: https://en.wikipedia.org/wiki/Child_labour

54

Tom Vanderbilt; "Survival City, Adventures among the ruins of atomic America"; The University of Chicago Press, Chicago & London, 2002 - Introduction and Chapter One: Dead City 55 56

Impact of Electric Vehicals by Huib van Essen, Bettina Kampman Study Program; "Basics of Electric Vehicles, Design and Function"; ©2013 Volkswagen Group of America, Inc.

57

Gopalakrishnan Duleep (ICF), Huib van Essen (CE Delft), Bettina Kampman (CE Delft), Max Grünig (Ecologic); "Impacts of Electric Vehicles - Deliverable 2, Assessment of electric vehicle and battery technology"; Delf, 2011 58

Impacts of Electric Vehicles – Summary report, Delft, CE Delft, April 2011


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3. Recharging Stations: In the country, there is less number of battery recharging stations, charging an electric car seems difficult and automotive consumers get away from buying e-cars.59 However, the customers can charge their car’s battery at their home but for long driving it occurs problems.60 While in north Europe, in England or in Scandinavian countries, where the recharging stations are more extended, electric car consumers have upper relevant numbers.61

Fig. 1.4: The e-Car Charge Station

The Fig. 1.4 illustrates a NISSAN electric-Car62 battery charging station in England. These similar characteristics of e-car affectionate battery stations, might create some competitive advantages for BEVs manufacturers.63 While in other hand, fund providing by government only on a specific technology could strangle other edgy potential enriching technology.64 4. Higher Cost of BEV’s: The cost of BEV’s is much higher than Tradition vehicles. The current crop of electric cars are mostly priced between $30,000 and $40,000.65 That is cons side of today but not forthcoming’s electric cars, because of its initially extensive expensive costs compared with traditional fossil fuel consumption automobiles.

Positive Impact of BEV’s 1. Reduction of Pollution: Electric Vehicles (EVs) are a wonderful technology for drastically minimizing the environmental burden of road transport.66

59

John D. Graham, Joshua Cisney, Sanya Carley, John Rupp; “No Time for Pessimism about Electric Cars”; 2014 / The national push to adopt electric cars should be sustained until at least 2017, when a review of fed auto policies is scheduled. A distinctive feature of U.S. energy and environmental policy is a strong push to commercialize electric vehicles (EVs). 60

S. Guttowski, S. Weber, E. Hoene, W. John, Herbert Reichl; “EMC issues in cars with electric drives”; Conference: Electromagnetic Compatibility, 2003 IEEE International Symposium on, Volume: 2, Berlin, Germany 61

Antje Klitkou, Teis Hansen, Nina Wessberg, Mads Borup; “Path creation in Nordic energy and road transport systems”; Renewable Energy Research Conference (RERC), Oslo, Norway, 2014; DOI: 10.13140/2.1.3228.0967 62

Nissan’s Electric Cars: Nissan’s 100% Electric Vehicle Range

63

Interactive Tesla Supercharger Map (http://supercharge.info) by TESLARATI.com

64

Aoife M Foley, Ian Winning, Brian P. Ó Gallachóir; “Electric vehicle: infrastructure regulatory requirements”; 2010

65

Brad Berman; “Electric Cars Pros and Cons”; October 14, 2014

66

IMPACT OF ELECTRIC VEHICLES; http://cedelft.eu/publicatie/impact_of_electric_vehicles/1153


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More than a decade ago and also more recently, they were advocated by various actors as an important element in reducing emissions of CO2, air pollutants and noise of particularly passenger cars and light commercial vehicles.67 2. Home Charging: The battery charging is easy and possible even in domestic areas68 contrariwise of the hazard fuel69 stations. The batteries are chargeable by vehicle consumer at home with minimum cost and disturbance70 as well as free of any nowadays fuel cost floatation.71 Fig. 1.5 illustrates a screenshot of the BMW e-mobility in which home charging highlighted.

Fig. 1.5: The Home Battery Charging of BEVs & BMW Casual Case

67

[Seminar] Materials : 12th Apr 2012 : "Energy Materials for Automotive Applications"

68

US Department of Energy: Charging Plug-In Electric Vehicles at Home

69

Sajjad Khaksari; “ADR in Italian Transport Companies Far Away From Theory To Practice”; July 2015

70

Emre Can Kara, Jason S. Macdonald, Douglas Black, Mario Bérges, Gabriela Hug, Sila Kiliccote; “Estimating the Benefits of Electric Vehicle Smart Charging at Non-Residential Locations: A Data-Driven Approach”; March 2015 71

Stacy C. Davis, Susan W. Diegel, Robert G. Boundy; "Transportation Energy Data Book", Edition 34; Center for Transportation, Analysis Energy and Transportation Science Division, August 2015 - In 2014 the U.S. produced almost 12 million barrels of petroleum per day (mmbd), or 13% of the world’s 87.9 mmbd. / see either Figure 1.5: Costs of Oil Dependence to the U.S. Economy, 1970–2013 - Page 1 - 12


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2. Technological Knowledge and Organizational Learning

Sajjad Khaksari (178401) Ahmad Shabir (s219115)

Chapter 2:

a. What are the main knowledge elements that pertain to the development of a traditional car and what are the ones that are likely to be of significant importance in a “car of the future”? (as a support, you can follow the scheme below). Traditional cars, conventionally are fossil fuel consumption vehicles type. The key knowledge factors those are connected with development of traditional car are illustrated in Table 2.1 while the Casual Knowledge is about Know-why and it is a high level of knowledge. Traditional Car Factual K

Casual K

Car of Future Factual K

Casual K

ENGINE diesel

BMW M50d

benzine electric hydrogen

electric MAZDA

Fuel System Carburetor

Edelbrock

injector

XAM H2PoliTO

generator

Electric generator

Solar generator

BATTERY liquid

Trojan Battery

not liquid

Future Battery

CAR BODY Monocoque

monocoque chassis

Chassis-base Space-framed

ASF

Chapter 2: Technological Knowledge and Organizational Learning

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Traditional Car Factual K

Car of Future

Casual K

Factual K

Casual K

Automatic

Autonomous Car

TRANSMISSION SYSTEM Manual Gearbox

ZF6

Automatic Gearbox SICURITY SYSTEMS Manual Remote

RC

Smart lock

smart + App

SAFETY seat belt

safe driver life

physical structures Airbag

Traditional Airbags

ACC Safety

Smart Bag

Table 2.1: The key knowledge factors of Traditional Car & BEVs

Additionally, the following technologies [Global Position System (GPS) Navigation System1, Electric Engine (or Hydrogen Electric2), Safety Systems and Autonomously of Automobile], and the segments they involved might be significantly important in feature of the future’s car. a.1) Global Position System (GPS) Navigation System: Rolling, moving, voyaging, traveling, navigating into exact direction of initially desired destination, rolled with men in whole history of human been.3 The GPS navigation system in newest vehicles is one of major innovative difference compared with traditional cars.4 The Navigation Technology might be one of the important components installed in future’s car or in any conveyance transportation systems.5 1

Global Position System (GPS): http://www.gps.gov

2

Forze Delft - Hydrogen Electric Racing; TU Delft, Netherlands. http://www.forze-delft.nl

3

Global Position System Advantages: Advantages and Disadvantages Global Positioning System

4

JAMIE LENDINO; The History of Car GPS Navigation; 2012 / Michal Stencl (co-founder and CEO of Sygic)

5

Adam Theiss, David C. Yen, Cheng-Yuan Ku; “Global Positioning Systems: an analysis of applications, current development and future implementations”; Computer Standards & Interfaces 27(2):89-100 · January 2005


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a.2) Electric Engine: In electric vehicles6 industry, in close future the technology of Electric Engines7 might dominates other traditional (diesel and benzine) fossil fuel engines, specially in particular place of expected increase of fossil fuel price in globally economic level.8 In this approach Norway has become a global forerunner in the field of electromobility and the BEV market share is far higher than in any other country. One likely reason for this is strong incentives for promoting purchase and ownership of BEVs.9

a.3) Safety First:10 In automobile safety technology11 it would be more efficient components in future. Driving smarter12 and safer with Airbag13 as "passive safety" system and “blind spot” as an “active safety” system. In latest vehicles, the primarily airbags, seat-belts and the physical structure of vehicle, comes to the aid of protecting the occupants during a crash.14 In future automotive industry, the active safety systems15 might be casually more expansed. An example of such innovations is Volvo Truck company16 which works on “Volvo Enhanced Stability Technology (VEST)”, “the blind spot” and “Full control with ESP”17 systems. Additionally, the example of Structural Safety System in safety issues might be the Volvo FMX18 which is the toughest truck Volvo ever built. Fig. 2.1 represents the screen shot of “how Volvo epitomizes its tough product”.

6

David Lennström; "Assessment and Control of Tonal Components in Electric Vehicles"; Luleå University of Technology, SE-971 87 Luleå, Sweden 7

Jacek F. Gieras, Izabella A Gieras; “Recent Developments In Electrical Motors And Drives”; East Hartford, 2014

8

Michael Hoel, Snorre Kverndokk; “Depletion of Fossil Fuels and the Impacts of Global Warming”; Resource and Energy Economics 18(2):115-136 · February 1996, DOI: 10.1016/0928-7655(96)00005-X 9

Kristin Ystmark Bjerkan, Tom E. Nørbech, Marianne Elvsaas Nordtømme (2016), “Incentives for promoting Battery Electric Vehicle (BEV) adoption in Norway”, Transportation Research Part D, http://dx.doi.org/10.1016/j.trd.2015.12.002 10

Alireza Talebpour, Hani S. Mahmassani, Samer H. Hamdar; "Safety First: Microsimulation Approach To Assessing Congestion Effects On Risk Experienced By Drivers"; Transportation Research Record Journal Of The Transportation Research Board, January 2012 11

Automobile safety technologies history: https://en.wikipedia.org/wiki/Automobile_safety

12

Driving Smarter by Andrew Low

13

Airbag System: https://en.wikipedia.org/wiki/Airbag

14

American Honda safety page: http://corporate.honda.com/safety/

15

Volvo truck Active safety (VEST): http://www.volvotrucks.us/why-volvo/safety/active-safety/

16

Volvo Truck Active Safety System Visual explanation

17

The blind spot and Full control with ESP systems

18

The Volvo FMX truck: A true construction truck,packed with innovative solutions; Since 2012


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The FMX driving test is an interesting alive test19 handed by a child called Sophie Brown who drives a Heavy Truck with an Automatic Traction Control instrument which has tested and carried out by Volvo’s professionals in a closed-off area where all building were empty, locked and sealed. In addition, analyzer might recognize the differentiate between three sets of determinants which affect EV adoption: technological aspects, consumer characteristics and context factors [such as fuel prices, electricity costs and availability of charging stations].20

Fig. 2.1: Sophie Brown drives a FMX Heavy Truck

19

The FMX alive driving test: Volvo Trucks - Look Who’s Driving feat. 4-year-old Sophie (Live Test)

20

Sierzchula, W., Bakker, S., Maat, K., van Wee, B., 2014. The influence of financial incentives and other socioeconomic factors on electric vehicle adoption. Energy Policy 68, 183–194.


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a.4) Autonomous Car:21 In the history of human been, the autonomy has desired frequently.22 The wish of creation autonomous machines or self-intelligent-auto-run equipments invited the creative inventors to be under the impression, imagine and invent the required gadgets. Concerning that naturally routine progress, the Autonomous Vehicle might be the car of future which could satisfied the antiquated request of men. However, the Google Self-Driving Car23 thus developed by Google[x]24 is a factual example of human preferred, that is engaging actively in present and probably in future market of driverless-car market.25 Autonomous Car technology is in its Fluid Phase concerning (Moore, 1991) Dynamic of Innovation Theory. Nevertheless, if Autonomous Vehicle Technology could improve adequately and shift to the Diffusion Phase, the Heavy-Duty Transportation26 and truck drivers would appreciate that effort. The reason is in the background of professional truck drivers and the environment in which truck drivers experience the risky conditions such as accidents and shift works. Considering all those factors, truck drivers have been identified as a high-risk group for various health conditions27 including cardiovascular disease, obesity, diabetes, sleep apnoea28 and stress. While researches and studies addressing that study of “the adult's transportation needs”29 is important, the Autonomous Vehicle Technology can potentially improve the health and wellbeing of people with a sedentary lifestyle such as truck drivers. Additionally, autonomous technology, if controlled by a Brain-Computer Interface, robotically is able to help patients either disable persons.30 21

Autonomous car Wikipedia: An autonomous car (driverless car, self-driving car, robotic car) is a vehicle that is capable of sensing its environment and navigating without human input. Autonomous vehicles detect surroundings using radar, lidar, GPS, Odometry, and computer vision. 22

Leonardo Da Vinci Autonomous Machines - Da Vinci’s Inventions (http://www.leonardodavincisinventions.com)

23

Google self-driving car: https://en.wikipedia.org/wiki/Google_self-driving_car

24

Google[x] : https://www.solveforx.com

25

Driverless car market watch: http://www.driverless-future.com/?page_id=774

26

Sajjad Khaksari (2015), "Problem Tree & Production Functions (PF's) and Italian Transport Family-run Companies”, Production and Manufacturing Analysis Course, Polytechnic of Turin, Italy, DOI: 10.13140/RG.2.1.2756.5840 27

Rama Greenfield, Ellen Busink, Cybele P. Wong, Eva Riboli-Sasco, Geva Greenfield, Azeem Majeed, Josip Car, Petra A Wark (2016), "Truck drivers' perceptions on wearable devices and health promotion: A qualitative study", BMC Public Health 16(1). DOI: 10.1186/s12889-016-3323-3 28

L. A. LAITINEN, Ulla Anttalainen, Anne Pietinalho, P Hämäläinen, K Koskela (2003), "Sleep apnoea: Finnish National guidelines for prevention and treatment 2002-2012", Respiratory Medicine 97(4):337-65 · May 2003, Source: PubMed, DOI: 10.1053/rmed.2002.1449 29

Cecilia Feeley (2015), "Detour to the Right Place: A Study with Recommendations for Addressing the Transportation Needs and Barriers of Adults on the Autism Spectrum in New Jersey", Rutgers University Center for Advanced Infrastructure and Transportation, New Jersey, USA. 30

Sandra Torres Müller, André Ferreira, J Garcia, Richard Godinez Tello, Teodiano Bastos, Mário Sarcinelli-Filho (2014), "Brain-Computer Interfaces Applied to a Robotic Wheelchair and an Autonomous Car", UFU, Brasil.


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b. In which of these areas are firms already operating in the industry likely to be favored (i.e., their competitive advantage may be confirmed or strengthened) and in which are they likely to be disadvantaged (i.e., their competitive advantage may be eroded)? The answer of this question is depends into technologies and components. For example, in Engine as just an individual components, the LAND ROVER31 company has a competitive advantage and it has a reliable engine compared with Audi, BMW and Volkswagen32, in opinion of 4W-Drivers while its failure rate according to Warranty Direct is 1 in 72 cases.33 On other hand, in Fuel System case, the Carburetor technology was a traditional application but it was worldwide extension as the fossil fuel system in whole car industry. However, after 1986 with the revolutionary innovation of Injector System34, the require of global engine customers has changed insurrectionary.35 Injector inventory was a radical innovation which changed both underlying technology and product architecture. Additionally, side-by-side with commercial car producers such as Fiat36 company, some academic auto-mechanic teams such as XAM of H2politO37 and SquadraCorse38 related to Polytechnic of Turin39 work stiffly.

The Battery technology is Achilles’ heel of Battery Electric Vehicles (BEVs) industry. However, the newest innovation in battery technology40 are Lithium-Ion Batteries, Solid State Batteries, Aluminum-Ion Batteries, Lithium-Sulfur Batteries and Metal-Air Batteries.41 The Solid State Batteries, traditionally offers stability but at the cost of electrolyte transmissions. The paper published by Toyota scientists42 illustrated the test’s results of a Solid State Battery43 which

31

The LAND ROVER Company: ???

32

Volkswagen (German Car Manufacturer): http://www.vw.com

33

Engine reliability: the top 10 brands

34

The Injector System: https://en.wikipedia.org/wiki/Fuel_injection

35

Auto Education: The Fuel System

36

Fiat company: http://www.fiat.com

37

The H2 PoliTO Team: The XAM H2PoliTO Car

38

SquadraCorse: http://squadracorse-polito.com/WP/

39

Polytechnic of Turin: http://www.polito.it

40

Five emerging battery technologies for electric vehicles

41

The newest innovations in battery technology

42

High-power all-solid-state batteries using sulfide superionic conductors

43

Solid state battery: https://en.wikipedia.org/wiki/Solid-state_battery


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used Sulfide Super-Ionic Conductors.44 While the main disadvantage of solid state batteries is that they can not work low as minus 30 degree Celsius and up to 100. In case of Car Body the Monocoque chassis design45 has futuristic advantage compared with traditional Ladder Chassis Design.46 While in Design Phase the monocoque body-shell is difficult to design, as in performance the monocoque is a lighter design which is a plus for fuel efficiency, and it has more torsional stiffness and it is by far the better chassis for performance oriented vehicles. The heavy nature of the ladder chassis makes it tough and it is much better than the monocoque for carrying heavy loads and towing heavier objects.47 Additionally, in Transmission System48 the Automatic Gearbox Systems has more competitive advantage rather than manual one because of its performance and its strict influence on fuel consumption rate. It means the automatic gearboxes help reduction of fuel usage indirectly while in point of consumer view the initial cost and maintenance costs of an automatic gearbox is higher than manual components. In fact, most modern North American, some European and Japanese cars have an automatic transmission that selects an appropriate gear ratio without any operator intervention.49 Though valuable, organizational knowledge can be a double-edged sword when the descending effectiveness of its old-exploration project cross the increasing effectiveness of the innovative-exploration project launched by competitors. Competency Trap Risk

Fig. 2.2: The Dramatic Change In The Market Of Fuel System & Competency Trap

44

Future batteries, coming soon: charge in seconds

45

Formula SAE-A Electric Chassis Design, Michael Taggart, Honors Thesis Engineering at Flinders University

46

Formula SAE Hybrid Carbon Fiber Monocoque / Steel Tube Frame Chassis

47

Monocoque is a lighter design: Monocoque vs Ladder Chassis

48

Transmission system in automobile: https://en.wikipedia.org/wiki/Transmission_(mechanics)

49

Automatic transmission that selects an appropriate gear: https://en.wikipedia.org/wiki/Automatic_transmission


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c. Which do you think could be the possibilities of falling into the “competency trap” for the companies operating in this industry? The Organizational Learning is generalized in Innate Learning, Experimental Learning, Vicarious Learning, Grafting Learning50 and newest theory of Connectivisim51 by Siemens.52 Though valuable, organizational knowledge can be a double-edged sword for firms53 and on that portion of time, the phenomenon of “competency trap” might occurs. The firm will be in its own trap when the descending effectiveness of its old-exploration project cross the increasing effectiveness of the innovative-exploration project launched by competitors. The above Fig. 2.2 illustrates the dramatic change in the market of Fuel System from the traditional Carburetor technology to the new-exploration Injector System. Fig. 2.2 is a factual and historical example of competency trap in which the environment of the market changed dramatically but the traditional firms in market were not able to adopt themselves (update their company before the dramatic change). Those companies by ignoring or by do not prepare for the future change in technological needs of the market, they pushed themselves into a completely failure. While in case of BEVs industry, the brisk market seems to explore supplementary. Nevertheless, an incentive idea for promoting Battery Electric Vehicle (BEV) adoption around the globe increases and pursued the innovative electric car projects, to do not hide or ignore other technologies those have the potential capacity to across the existence electric technologies54 or incoming electric vehicle technologies especially in the case of Battery Applications/Structure55 and the manufacturing technologies concerning the batteries structures and batteries technologies.56

50

The Organizational Learning: Marco Cantamessa, Francesca Montagna; Management of Innovation and Product Development, Integrating Business and Technological Perspectives; © Springer-Verlag London, 2016 - Chapter 2.4 51

Connectivism Learning Theory: Connectivism is a learning theory promoted by Stephen Downes and George Siemens. Called a learning theory for a digital age, it seeks to explain complex learning in a rapidly changing social digital world. In our technological and networked world, educators should consider the work of thinkers like Siemens and Downes. https://en.wikipedia.org/wiki/Connectivism 52

Stephen Downes and George Siemens: http://education-2020.wikispaces.com/Connectivism

53

Zhou KZ, Wu F; Technological capability, strategic flexibility, and product innovation; Strategic Management, 2010

54

David Dallinger (2012), Plug-in electric vehicles integrating fluctuating renewable electricity, Universität Kassel

55

Yin Ting Teng, Fengxia Wei, Rachid Yazami (2015), "Synthesis of NixCo(1x)F2 (x 1⁄4 0, 0.25, 0.50, 0.75, 1.0) and application in lithium ion batteries", Journal of Alloys and Compounds, DOI: 10.1016/j.jallcom.2015.09.036 56

Mahdi Sedghi, Masoud Aliakbar Golkar (2017), "Optimal battery planning in active distribution network considering different technologies under uncertain technical and economic conditions", Iranian Electric Industry Journal Of Quality And Productivity, IRAN


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3. The Many Types of Innovation

Sajjad Khaksari (178401) Ahmad Shabir (s219115)

Chapter 3:

a. What is the s-curve for a car? What could the performance indicator on the Y axis be? Is this performance indicator associated to the car or to some key component? Is it associated to absolute performance or to a “per dollar” performance? Can we find proxies for cumulative R&D investment, or should we just use time on the X axis? Time to time the structural innovation push technology to change and that is what S-Curves illustrate. The rough but linear link of discovery and crescent trajectories of technologies levitates while in . The fist S-curve plotted by Gabriel Trade as a measurement of the speed of adoption of an innovation. The following figure (Fig. 3.1) illustrates that recent progress.

Relevant Performance Battery Electric Vehicle

Electric Self-Drive Car

Injector Engine

Fuel Engine Vehicle

Carburetor Fuel System Rail Wheel Vehicle

Rigid Wheel Vehicle

1904

1961

1913

2000

2015

2020

Time

Fig. 3.1: The +100 Years Of S-Curve Progress For Car

Chapter 3: The Many Types of Innovation

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The X axis of the Fig. 3.1 S-curve shown vehicles (automobile) evolution in recent 20th century. The performance indicators might generalized in driving performances, speed performances, fuel consumption performances. Notwithstanding, in recent years by arising the idea of sustainable manufacturing and Green Transport Mobility movement, the performance of relevant vehicles (automobile) increase significantly in Y axis. By going forward with the abscissas (X = time), the S-curve obtains the evolution of the vehicles in a technological way at the time. In such circumstances, even in the case of environmental study while the life-cycle performance1 increase [sustainability & sustainable manufacturing2 increase], the CO2 emissions decreases. In another side, in the last century the automotive manufacturing tools and equipments were not applied, qualified3 and optimized enough as it supposes to be. In fact, concerning the case of Driving Performance, in 1900s the very earliest vehicles were on the rail or with solid wheels. The driving those cars was not comfort and the speed was about 14 mph or 23 km/h. In 1961, with new-exploration of Fossil Fuel Systems, the power, the speed (increase to 97 km/h) and generally, the driving performances increased revolutionarily. In sequence, in 1990s with invention of Injector system the traditional Carburetors past away and fuel consumption performance increased as well. Finally in 2000s, with increase of Global Oil Price and due to the Green House effect, the requires of Environment-Friend automobiles expanded. In consequence, the academic and R&D centers and administrative offices with national and international car manufacturers, began to protect human planet. The General Motors EV14 in 1996 is an example of these first serious attempt trough a clean green world. Protect the universe from emission of Carbon Dioxide (CO2) is the absolute performance of EVs. The per-dollar performance of Battery Electric Vehicles (BEVs) is featuring steady, composed driving, prices handling and a high-tech instrument cluster. However, the cumulative R&D investment in BEVs industry, base on the imitation from an innovative improvement of competitors might not be sustainable strategy. Therefore, the Tesla which is the global leader in the EV field, has made remarkable headway since its launch in 2010 and with very high risk investment proposition to be actively pioneer in market and does not just wields the X axis.

1

M.F. Ashby, Materials and the Environment. Copyright © 2013 Elsevier Inc.

2

Michael F. Ashby (2009); Materials and the Environment, Eco-informed Material Choice; Butterworth-Heinemann.

3

Laurentiu - Aurel Mihail (2015), "Applying Quality Tools for Managing the Production of Automotive Parts", Brasov University, Romania. DOI: 10.4028/www.scientific.net/AMM.809-810.1299 4

The General Motors EV1


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b. Search for relevant data, and trace this S-curve! The above Fig. 3.1 has entitled “The +100 Years Of S-Curve Progress For Car” represents the trace of automobile generations and their relevant critical data. Furthermore, Fig. 3.1 graphically illustrates the research results and relevant data concerning automobile industry. The S-curve takes into consideration the superior performance is strictly related to the technology subjects. The economic impact and environmental view sometimes have changed radically by changing in engine efficiency and its relevant technology. The engine efficiency was/is/will be substantial and significant for minimizing the energy demand (fuel application), and for imposing engine efficiency. Therefore, the Powertrain development signifies minor fuel consumption and fewer CO2 effusion. Emission-reduction is a crucial indicator because of its potential power to influence the environmental and economic development (GDP) of metropolises.5 Also, S-curve illustrates the status in which incumbents might focus on failures of “old technology use” companies. In the actual window of opportunity for the old technology, unfortunately, companies lead their decisions by looking at their reference market. When old companies are forgetting/ignoring, or only they pretend to wish their success in future. However, they neglect about the actual performance of the new technology. Despite old company's core competencies and notwithstanding of its available resources, that is important for future of company to be one of the first movers in the new industry rather than ignoring that or underestimating the performance of the new technology. Might for that reason, Gary P. Pisano6 in his You Need an Innovation Strategy, highlighted: “Routine innovation is often called myopic or suicidal. That thinking is simplistic.”

7

Also, relevant data

(e.g. the performance/cost of Industrial Building Projects) could be used to define a cumulated S-curve of an innovation project actual cost. Additionally, the logistics models and nonlinear S-curve might consider the specific initial behavior of a project schedule.8

5

Ricardo Candea Sa Barreto (2015), "Desenvolvimento regional e convergência de renda nos municípios Regional development and income convergence in the cities", Novas Edições Academicas. 6

Gary P. Pisano - Biography

7

Gary P. Pisano (2015), "You Need an Innovation Strategy", Harvard Business Publishing (HBP), USA

8

Alberto De Marco, Diego Briccarello, Carlo Rafele (2009), "Monitoring of Industrial Building Cost and Schedule Monitoring of Industrial Building Projects: Case Study", Journal of Construction Engineering and Management 135(9) · September 2009. DOI: 10.1061/(ASCE)CO.1943-7862.0000055


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c. At present, how can you represent the evolution of the automotive industry? In 1884, Thomas Parker built the principal practical composition electric car in London, using his private mainly sketched high-capacity rechargeable batteries. Electric cars were among the selected methods for automobile propulsion in the late 19th century and early 20th century, presenting a level of convenience and efficiency of operation that did not achieve by the gasoline vehicles of the time. In 1990, manufacturers developed electric car models, including the Chrysler TEVan, Ford Ranger EV pickup truck, GM EV1, Honda EV, Nissan Altra EV mini-wagon, and Toyota RAV4 EV.9 While the California electric automaker, Tesla Motors began development in 2004 on the Tesla Roadster and its concrete models released to the global market between 2010 and 2015 include the Tesla Model S. The automotive manufacturing is gradually slipping from producing traditional cars powered by internal combustion engines (ICE) to wicked carbon-intensive drive technologies, including fully battery-electric (FBE) as well as Hybrid-Electric Vehicles (HEVs). For example, the Battery-electric vehicles (BEV), need new generations of influential batteries, electric motors, and inverters; and they no longer require some of the core technologies of traditional cars, such as internal combustion engines and gearboxes.10

d. What alternative technologies may be competing to define the next S-curve and paradigm? Due to Fig. 3.1 results the next futuristic generation of car might be the Self-Drive car and Google with its Google[x] is the global protagonist of Autonomous Vehicle Technology. It further practices the LIDAR data to make a 360-degree world model that follows and prophesies movements for every nearby vehicle, pedestrians, and additional obstacles.11 Although, in driverless-car industry the GPS navigation and smart-motion recognition has an essential role, for Tesla motor which is the warrior in EVs market, the Battery technology improvement and performed design are the key players. Also, Mapping-radars, V to V (Vehicle to Vehicle) communication, Solar Energy Autonomy, Accidents Prevention, and future of Batteries industry (concerning BEVs) potentially can offer the new alternative technology.

9

Electric car history: https://en.wikipedia.org/wiki/Electric_car

10

Tilman Altenburg; From Combustion Engines to Electric Vehicles; Bonn, 2014

11

Kyle Vogt; “What is the difference between Tesla's Autopilot system and Google's driver-less car?”; 2015


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e. What future paradigms for cars could you think of? What are the constituent elements of each? How are they related to alternative technologies? In the automotive industry, electric mobility is nothing less than a complete shift in paradigm. Its future will need to continue developing vehicles that are reliable with high quality and making them attractive and competitive. Once again, Fig. 3.1 shown this necessary evolution. An important part of the automotive architecture needs to be redesign. Any radically novel designs include engines that replaced in the wheels and auto-bodies made from carbon fibre instead of steel and it implies how they associated to alternative technologies. This transformation to new technologies in an automotive architecture goes along with new capability requirements, opening up opportunities for newcomers while the substitution of old ones threatens incumbents. That is potentially far-reaching implications for the entire automotive supply chain. Additionally, the paradigm shift requires new infrastructure solutions. Wherever, Electric Vehicles charge from electric grids, a recharging infrastructure is crucial to settle into the ground the technological require of clients while in another hand, linking the automotive fleet to the electrical grid demands a range of solutions to adapt an application to network capacity.

f. Which political, economic, socio-cultural and technological (PEST) factors and trends may influence the emergence of each paradigm? Which paradigm would you consider to be more likely? The Political, Economical, Social and Technological analysis of the market or with other words the PEST analyze is essential for build a sustainable Business Model. In Political Factor analyzing section, the EV has the positive legislative impact. Through producing the environmentally friendly electric vehicles and diminish dependency on petrol. Many Western countries are trying to reduce their dependence covering oil. The energy Policy Act of 2005 established a federal income tax credit up to$3,400 for the new hybrid vehicles, purchased or placed into service.12 Also in Economic factors analyzing of Electric Vehicles industry which might impact many countries around the world. Formerly, the number of consumers would increase base on the benefits of fossil fuel savings overtime which determines the paid back reduction. Moreover, the cost of insurance and road tax are further reasonable.

12

academia.edu: PESTLE Analysis on Toyota Prius


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The social circumstances and the climate conditions change become a serious topic nowadays. Many automobile companies need to produce a vehicle which will not only depend on fossil fuel. Additionally, as technological factors, the idea of using the battery powered car is fascinating auto-mechanic engineers. The recharging time is 1.5 hours for 240V AC or 3 hours for 120V AC and the maximum of the electric vehicle cruising range is approximately 15 miles at 62 mph speed. However, as mentioned in Chapter 2 - part b, the Battery Technology recognized as an Achilles’ heel in Battery Electric Vehicles (BEVs) industry.

g. Try sketching block diagrams for a traditional internal combustion engine car and for the “cars of the future”. The heart of traditional vehicles core, beats with consuming fossil fuels. Carburetor and Injector Fuel Systems are two major recently used technologies in Traditional Internal Combustion Engines (ICEs). Fig. 3.2 illustrates a sketching block of a semi truck (Benz 2628)13 with Fuller Gearbox14 and 6x4 combination. Dangerous Emissions - CO2 etc. Exhaust System

Battery Wheel Wheels

Internal Combustion Engine m

ion Syste

s Transmis

Wheels

Wheels

Fig. 3.2: The Sketching Block Diagram For The Traditional Car

13

Mercedes Benz 2628 - Wiki / Iran Khodro Diesel Company

14

wikihow.com - How to Shift a Semi Truck


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Vice versa, beside the traditional engines (Fig. 3.2), the Battery Electric Vehicles (Fig. 3.3) benefits are deeply environment advocate. That is because of their Electric Engines structure.

AC/AC

Battery Storages (Sources of Energy)

E-Motor.2

Power Inverter

E-Motor.1

E-Motor.3 E-Motor.4

DC/DC

Fig. 3.3: The Sketching Block Diagram For The Car Of Future (BEV)

h. Use the different definitions taxonomies for innovation you have learnt of, and debate what kind of innovation the “car of the future” might be. The automotive industry is changing rapidly, much more quickly than at any point in the last 20 years. There’s a major shift towards green technologies and increased fuel economy, driven by both regulations and consumer demand. In the next 5 to 10 years, every car on sale will offer a hybrid, plug-in hybrid or full Electric variant, and the adoption rate of these technologies will increase dramatically. Manufacturing is always a challenge, and as the EV industry scales up (Henderson and Clark 1990). Since there is going to be much room for people. Who can figure out how to reduce the cost of batteries' manufacturing, electric engines, and control electronics that are at the heart of electric cars. There is still going to be a lot of work for engineers, though less focus on internal combustion engines than in the past 20 years. Expertise in batteries, electric motors, and advanced computer and electrical systems will become more highly valued, but in general, all engineers will have to continue to be more well-rounded. Vehicles have become more technologically advanced, and that is a significant issue to understand areas outside of taxonomy expertise's fields.15 15

Nicholas Roche: http://careers2030.cst.org/articles/future-electric-cars/


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i. Try sketching the usage process for traditional cars and for the “cars of the future”, and the corresponding “supra-systems” supporting it. Since the Innovations can be defined as incremental or radical16 by looking at the technical features of the product, the innovation significantly could change the technical trade-offs that define it significantly. Comparing between the BEVs and fuel consumption traditional cars, the organization mirrors product architectures are different. Therefore, as represented recently in Fig. 3.2 and Fig. 3.3, the main difference is where in Traditional car the internal combustion engine is emission producers while in BEVs the engine is Zero-CO2. Electric cars also use stored chemical energy, though they release it electrochemically, without any kind of combustion, as electrons ping from their slowly discharging batteries; there's no burning of fuel, no air pollution spewing from the tailpipe, and no emissions of any kind are produced by the car itself.17 Traditional cars are simpler and cheaper. For this reason, they are the go-to choice for the majority of new car buyers. Its well improved technology, the overall fuel economy of gasoline-powered bars is getting closer to that of Electric cars.18

j. Use the different definitions taxonomies for innovation you have learnt of, and debate what kind of innovation you might have in these “supra-systems” for the “car of the future”. The taxonomies for existence and future possible innovations in BEVs industry defined in following table (Table 3.1). The table demonstrates when Reference Technology and Relationships Between Components change concurrently, vehicle manufacturers face a Radical Innovation. As mentioned in previous topics, if companies do not benefit from the actual window of opportunity, they will remain forever in their individual competency trap. Then, once the performance of new technology (a radical innovation) enters in its diffusion phase, companies can not incorporate the latest technological developments, and that causes a widespread devastation, and ultimately that trends them to complete bankruptcy. Wheresoever Fuel Stations, Commercial Organizations and Vehicles' Merchants recognized as “supra-systems” in “BEVs” industry, more than any supra-system, the traditional Fossil Fuel Stations need to innovate and concordance their infrastructures. 16

Dutton J, Thomas A (1984) Treating progress functions as a managerial opportunity. Acad.Manag. Rev 9:235–24

17

reference..Electric car http://www.explainthatstuff.com/electriccars.html

18

GEtting Closer To That Of Electric Cars:http://www.foxbusiness.com/features/2012/05/11/decision-pointshybrid-cars-versus-traditional-gas-cars.html


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Table 3.1: The Taxonomies Of Battery Electric Technologies

Relationships Between Components Do Not Change

Change

Change

High Capacity and Fast Chargeable in Battery Technology of BEVs is a Modular Innovation

Electric Engines individually, compared with internal combustion engine was a Radical Innovation

Do Not Change

Restore the newest Power Inverter Systems with earliest one might be an example of Incremental Innovation

Replacing the Injector System with traditional Carburetor is an example of Architectural Innovation

Reference Technologies

k. Consider a few main players in the industry (incumbents, new entrants and prospective entrants). Research for information that may allow filling out the following table for the players you think are most important. Table 3.2 illustrates the previous competencies and assets relevant to traditional cars and if Are These Competencies And Assets Still Valuable For The Car of Future, and if the Previous Competencies and Assets that Have Become Valuable for the Car of the Future, with concerning the automobile manufacturers Tesla, Benz, Toyota and Honda. The Car

Company

Previous Competencie s And Assets Relevant To Traditional Cars

Are These Competencie s And Assets Still Valuable For The Car of Future?

The Usage Process Previous Competencie s and Assets that Have Become Valuable for the Car of the Future

Previous Competencie s And Assets Relevant To Traditional Cars

Are These Competencie s And Assets Still Valuable For The Car of Future?

Previous Competencie s and Assets that Have Become Valuable for the Car of the Future

TESLA

Hybrid Motor

Yes/No

Electric Engine parts

Production Line

Yes

Yes

BENZ

Old Style

No

Model XS

Suppliers

Yes

Yes

Acord

No

electric

Yes

Comments

In case of Hybrid cars the fuel consumption part could not be useful

TOYOTA HONDA

Honda electric

Table 3.2: Comparing The Key Player In The Electric Market Chapter 3: The Many Types of Innovation

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i. By examining the table, which is exclusively focused on the perspective of corporate competencies and assets (no financial data in there!), whom would you guess might be the potential losers and winners in this industry? That is particularly useful in identifying the winners and losers of BEVs industry. There are various approaches to analyze the power of stakeholders19 and manufacturers. Institution or business, to check the success of an organization and to plan for a change, if producers are incorporated with their competitors. For example, the perspective of corporate competencies and financed assets of stakeholders or individuals can affect the future of EVs and BEVs.

m. Consider the factors that – according to literature – lead radical innovations to be disruptive. How could you apply them to the car industry? According to the literature, the "Disability to join an Emerging Paradigm", "Inadvertence of an Emerging Market", "timing of entry"20, and "Differences in goals of incumbents" are probably the primary deductions for directing a radical innovation to be disruptive.21

Fig. 3.4: Disruptive Progress Of Automotive And Digital Services

In many section, the disruptive innovation in the international automotive industry identified as a key success reason, specifically for pioneers companies, those related concepts into radical or disruptive innovation in BEV which roll around the Battery Technology. In a few words, radical innovation in Battery Technology might considered another disruptive technology in future of automotive industry and in addition that would create dissents between EVs’ market and battery industries about how to benefit from the further MKT circumstances. 19

James Mayers; Stockholders Power Analysis; IIED, 2005

20

Swinney R, Cachon GP, Netessine S (2011), “Capacity investment timing by start-ups and established firms in new markets”, Management Science 57(4):763–777 21

Christensen, Clayton M. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Boston, MA: Harvard Business School Press, 1997.


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The automotive industry has the most ambitious plans in two areas – technology and the customer experience, where they expect 38-40% of innovation to break new ground.22 In other spheres like products, services, and systems, and processes, the numbers for significant advances hover around the 30% mark. In two areas—supply chain and business models – breakthrough and radical innovations are in the 20% range. These disruptive digital services (conceptualized in Fig. 3.4), many of those are still assumed, and they are likely to be highly disruptive to the automobile industry. The other phenomena are coal-powered electric vehicle from renewable sources23 due to the death rate of the human being which caused by air pollution is more than 5.5 million inhabitants per year.24 Accordingly, they will reinvent existing business models, create new models, change the auto ecosystem and redesign customer engagement and expectations. Once again, the inability of incumbents to join the emerging paradigm leads them to disruptive innovation. That occurs when the paradigm shifts and the new technology is considerably far from the old one. The incompetency of switching paradigm belongs to both objective and subjective factors.

n. Consider the factors that – according to literature – prevent radical innovations from becoming disruptive. How could you apply them to the case? Predict the winners in a race for innovative growth might be the reason, why the BEV producers did not to prevent radical innovations. Considering the attributes of the change, when innovations are brisk and capable. The factors such as Zero-CO2 in traffic jams, speed limits, and safety concerns constrain the market while the results could change everything revolutionary. The propriety of alternative developments typically depends on the type of innovation and the principal cause of uncertainty. For example, listed EVs are not an expanding amount but sustaining innovation about Electric Technologies and its application to Zero-CO2 in R&D phase, with applying and supporting of manufacturers into radical innovation in electricity industry is appreciated. Concerning “Christensen effect”, automotive manufacturers are required to decide an immediate but not a tautological action regarding how they might react strategically to digital disruption and further how they should prevent carbon dioxide and toxic gas emission. The innovation of electric car replaces the fuel engine to electric engine with rechargeable batteries is very help to prevent the emission of carbon dioxide. 22

The highway to growth Strategies for automotive innovation

23

Claire Weiller, Ramteen Sioshansi (2016), "The Role of Plug-In Electric Vehicles with Renewable Resources in Electricity Systems", Revue d’E ́conomie Industrielle. 24

Justin Worland (2016), "Air Pollution Kills More Than 5 Million People Around the World Every Year", TIME Health.


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o. Consider the companies you listed and their intention to either introduce or prevent disruptive innovation. What strategy are they following? Do you think it is the right strategy? A disruptive innovation sometimes forces companies to create or enter a new market. However, the existing market and existing network value by evaluation of disruptive innovation bents to be interrupted. There are many listed automobile companies like Honda25, Nissan26, Toyota27, Tesla28, Volvo Truck - Electric Hybrid Powertrain29, Benz e-Truck30, those work vigorously for the future of vehicles' industry dealing EVs, likewise to prevent or in other words, to adopt their company with a futuristic disruptive innovation. These companies try to survive their future’s marketshare in strictly competitive of future automobile industry by preparing their production troops for a recalcitrant technological future's battle. Though, In last century, the absolute majority of traditional cars consist the fossil fuel engines and Internal Combustion Engines (ICE) technology. Sadly, the ICEs generated a tremendous amount of harmful emission include carbon dioxide (CO2), and they caused the greenhouse effect (side-by-side with the distribution of toxic gases from recent centuries industrialization). In this critical condition, as an example, Nissan stepped forward and fix advanced its strategy to introduce environment-friendly vehicles those might overcome the emission of carbon dioxide and decrease - or at least - do not increase the global warming level. Consequently, Nissan introduced its Nissan LEAF® - 100% Electric Car31 possessing the electric engine and rechargeable batteries. The business strategy of Nissan (and other car manufacturers those are currently active in electric vehicles industry), was to benefit from its traditional cars selling income and use a notable slice of that profit to increase Nissan's financial investment in Research and Development (R&D) projects concerning Plug-in Electric Vehicles (PEVs) and the Battery Electric Vehicles (EVs). As the result of that smart and sustainable initiative, in December 2015, the LEAF® was the world's all-time best-selling highway-capable plug-in electric car with over 200,000 units sold since its introduction.32 25

HondaLink® EV - Honda electric vehicles

26

Nissan’s electric cars - Nissan’s 100% Electric Vehicle Range

27

Toyota-Electric: Zero CO2 emissions

28

Tesla S-electric Car Model, Tesla Premium Electric Vehicle and TESLA Model X

29

Volvo Hybrid Trucks / Electric Cars Report (2017), "Volvo Trucks testing electric hybrid powertrain in Concept Truck"

30

Daimler Trucks (2016), "Mercedes-Benz: First fully electric truck", Stuttgart.

31

The Nissan LEAF® - Nissan 100% Electric Car with An Advanced Lithium-ion Battery

32

Jeff Cobb (2015), "Nissan Sells 200,000th Leaf Just Before Its Fifth Anniversary", hybridcars.com


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4: The Dynamics of Innovation

Sajjad Khaksari (178401)

Chapter 4:

Ahmad Shabir (s219115)

a. Consider the diffusion curves of the traditional automobile. In which stage would you say the traditional car is located today?

Fig. 4.1 shows how innovation diffusion usually works. The new ideas spread along an S-Curve. The solid line in the diagram or if they fail, they follow the curve marked B. Although, when there is a lot of hype about an idea, inventor expects that to follow the curve marked A. Incumbents that believe they have a lot of time to respond1 expect the new plan to develop the curve marked C. However, the new ideas that succeed do not follow any of these curves. Also, Fig. 4.1 illustrates why by looking at Tesla and the other electric cars that are just starting to take off. Here are some of the lessons due to the rough but linear link of discovery: New ideas spread considerably more slowly than R&D researchers expect. The first electric car was made back in the 19th century, before there was a dominant design for automobiles hence GM introduced the EV1 in 1996.2 That makes everyone expect electric vehicles to take off – that is where the hype commenced. However, the new ideas spread slowly and the time value of X is always longer than that expects to be.

Fig 4.1 Diffusion Curve of Traditional automobile

1

timkastelle.org/blog/2012/01/lessons-from-kodaks-s-curve-problems/" \t "_blank

2

https://en.wikipedia.org/wiki/General_Motors_EV1" \t "_blank

Chapter 4: The Dynamics of Innovation

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b. How could you characterize Rogers’ market segments for the “car of the future”? Who are innovators? Who are early adopters? Who are early majority customers? What would “crossing the chasm” mean from a technical and marketing perspective? Many carmakers design electric vehicles intended to satisfy the needs of almost all customers.3 Instead, they should embrace a radically new form of market segmentation. Market penetration of innovation starts with a small segment (Hawkins et al. 1998) consisting of customers with particular characteristics, needs or wants. Rogers Innovation Diffusion Theory (IDT) categorized user segments of innovation based on the point in time of adoption. In this case, relative advantage is the degree to which customer see BEV as being better than conventional vehicles. The IDT and TRA, Davis (1989) identified three variables as the main indicators to describe customers’ new technology acceptance combining innovation and customer perspective.4 The innovators, early adopters and early majority customers for BEV represented in table 4.1. SEGMENT

SEGMENT %

Typical Size of Segment Description

Reasons to Serve/Not to Serve the Segment

2%

Relatively expensive car, very high income, high mileage, would proud to be own BEV

Willing to pay for environmental benefits

15%

Adopter of electric vehicles concern more about environmental problems like CO2 emissions than other

environmental behavior as predictor for purchase intention

45%

Typically male older, high income, high number of retired, Buy medium/large cars with average MPG, medium mileage

High willing to pay for fuel economy but not environment

Innovators (enthusiasts)

Early Adopter

Early Majority

Table 4.1: The Characterizing Features Of Moore’s Market Segments

3

Nick Hodson And John Newman; Satisfy The Needs Of Almost All Customers

4

Markus Welzel, Hanna Schramm-Klein; Electric Vehicle Adapters


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Fig. 4.2 by “Geoffrey Moore” refers the mainstream consumers as “crossing the chasm”, identifying that many new technologies pulled into the market by enthusiasts, but later fail to achieve wider adoption. That is because mainstream consumers have different needs and motivations to early adopters. Hence the challenge in the years to come is to identify the EV products, technologies, and business models that will connect with mainstream needs and motivations. These “Big Ideas” will play a pivotal role in shaping the future of electric mobility.

Fig. 4.2: Market Segments Along The Technological Life-Cycle

c. Try applying the Abernathy and Utter-back model to the “car of the future”. Choose appropriate indicators and make plots of technical performance, rate of innovation and number of active firms. Abernathy and Utter-back, technology evolves through periods of incremental innovation, interrupted by periods of radical innovation. The development of a radical innovation leads to a fluid phase in industry, during which time many firms enter and compete by different product designs. Their other phases are transition phase and special phase. The phases are differentiated according to their performance, sale, Rate of Major Innovation. Fig. 4.3 illustrates the relationship between phases and Rate of Major Innovation due to the Fluid Phase, Transitional Phase and Specific Phase.


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Fig 4.3: The Abernathy-Utter-Back Model For BEVs


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d. Based on e., in what stage of the Abernathy-Utter-back model do you think the “cars of the future is? If a dominant design has not emerged yet, what are the candidates? What factors are likely to influence its emergence? Which candidate is therefore most likely to emerge? According to theory during fluid phase through early stages of innovation Electric car built by Thomas Parker, but due to low performance demand was consequent low. During Transaction phase, the design of electric car was dominant by makers of Exide batteries, formed a joint venture to produce a new electric car the Henney Kilowatt, based on the European Renault Dauphine. The car was produced in 36-volt and 72-volt configurations; the 72-volt models had a top speed approaching 96 km/h (60 mph) and could travel for nearly an hour on a single charge. During Special Phase, Many firm and automaker company like Nissan Leaf, Toyota, BMW and Tesla compete over cost and quality in a scenario characterized by growing demand. They therefore shift their focus from product to process innovation.5 As of early December 2015, global sales of electric cars are led by the Nissan Leaf with 200,000 units sold manufacturing the Leaf, the world's top selling highway-capable electric car in history. The Tesla Model S, with global deliveries of 100,000 units, is the world's second best selling all-electric car of all-time.6 The only new series production all-electric cars launched up to October 2015 were the BYD e5 and the Tesla Model X, together with several variants of the Tesla Model S line-up.

e. Can you propose a hype-cycle for technologies relevant to the “car of the future”? What are its implications? Hype cycles show the current positioning of technologies in the incubation phase, according to five quite imaginatively labeled sub-phases, along with a forecast for their “time to maturity.7 Hyper-cycle door battery electric car is shown in Fig. 4.4. As recently as 1900, EVs were a minority item on the agenda of most governments and vehicle manufacturers. This changed in 1960 (technology trigger) when, in the midst of a global economic downturn, 5

Electric car history: https://en.wikipedia.org/wiki/History_of_the_electric_vehicle

6

Electric car history, Selling Electric Car

7

Marco Cantamessa, Francesca Montagna; Management of Innovation and Product Development, Integrating Business and Technological Perspectives; Springer, Verlag London (2016)


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some vehicle manufacturers announced

Fig 4.4: Hyper Cycle Of Bev “Car Of Future

bold commitments to accelerate their electrification programmers as a strategy for recovery and reinvention.8 Since 2005 most major cities around the world were hosting infrastructure pilots and vehicle trials in support of government policies to reduce harmful pollution and petroleum dependence. The early success of these projects contributed to 2008 becoming the year of peak expectation. Cities and fleets competed for the limited numbers of EVs available and demand appeared to greatly exceed supply. 2013 was a year of contrasting outlooks, perception of slow sales of EVs in many important automotive markets.9 In 2015, many new technologies can be pulled into the market by enthusiasts, but later fail to achieve wider adoption. This is because mainstream consumers have different needs and motivations to early adopters. Hence the challenge in the years to come is to identify the EV products, technologies, and business models that will connect with mainstream needs and motivations. These "Big Ideas" will play a pivotal role in shaping the future of electric mobility.

f. Consider the lock-in effect created by the current dominant design, based on the internal combustion engine. How strong is this effect? What can companies proposing radical innovations do in order to eradicate this lock-in? What the design of current electric vehicles has over conventional gasoline-powered vehicles is the ability to mold the shape of the power-train to the vehicle’s design, improving performance. Electric vehicles do not have to be designed around a large engine. Instead, batteries can be mounted on the floor of the vehicle, which leads to a few performance advantages inherent to all EVs. The effect of this design is a strong effect overhead the internal combustion engine. Automakers companies might innovate such engine which is eco-friendly, reduce greenhouse effect, high charge batteries and less consumption of fuel to overcome the aforementioned lock-in.10

8

50 big evolution: http://evobsession.com/50-big-aspects-evolving-electric-vehicle-market/

9

50 big evolution; 2013 A Year Of Contrasting Outlooks

10

The electric car vs internal combustion engine calculus : http://ecomento.com/2015/07/23/the-electric-car-vsinternal-combustion-engine-calculus/


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g. What is the degree of vertical integration in the automotive industry today? How could different choices with respect to vertical integration play a role in the establishment of a new dominant design? What is really happening? Vertical integration (VI) is a strategy that many companies use to gain control over their industry’s value chain (Fig. 4.5). This strategy is one of the major considerations when developing corporate level strategy. Hence hypothesize that assemblers will vertically integrate when the production process, broadly defined, generates specialized, non-patentable know-how. The vertical integration of today automaker vehicles is having, ArcelorMittal, Baosteel, POSCO, Nippon Steel, fuel engine, Ladder chassis, transmission system. During last decade, several automobile companies like tesla Nissan, Toyota introduce electric motor, rechargeable batteries and automatic transmission system gives a dominant design to future car (BEV). Macaque chassis gives the a unique shape, structure and design. Whatever the macaque chassis dominated with respect to tradition examples. BEV are echo friendly and reduce green house effect.

Fig 4.5: Vertical Integration

h. Based on the main players operating in the automotive industry (consider the analysis made in the case 2 (Chapter 3), who of them can be considered first movers with respect to the various technologies? What are the potential advantages and disadvantages they are gaining? The main player of automotive industry are Tesla,Toyota,Nissan,BMW.The first automotive company which come forward to take initiative to introduce BEV (Nissan leaf) was Nissan.Nissan has various technology as compared to other competitors Drive power-train layout (Front motor, front drive), Battery (Laminated lithium-ion battery), Electric motor (power, torque), Battery capacity/power (24kWh/Over 90kW). The main advantages which they gained are Lower costs due to eliminated market transaction costs,Improved quality of supplies, Critical resources acquire through VI, Improved coordination in supply chain, Greater market share, Secured distribution channels; Facilitates investment in specialized assets (site, physical-assets and human-assets), New competencies.


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The disadvantages are Higher costs if the company is incapable of managing new activities efficiently, Increased bureaucracy and higher investments leads to reduced flexibility, Higher potential for legal repercussion due to size (An organization may become a monopoly), New competencies may clash with old ones and lead to competitive disadvantage.11

i. In which areas might strategically significant standards arise for the car of the future? What is their economic explanation? There are many strategically significant areas which rises the battery electric car are increases of emission of CO2 which cause greenhouse effect whole world is worried about the increase in the temperature of earth. The other area is rise of prices of fuel, which is out of control from the approach of common man due to such reason innovate electric cars.12 The inflation of fuel prices causes the negative effect on the nation’s gross domestic product. The higher he fuel efficiency offered by hybrid cars shields families and business from fluctuating oil prices and leaves more money available to circulate through economy.

j. What is actually happening in the field of standardization for the car of the future? What strategies might be attempted by firms attempting to establish a standards-based competitive advantage? Electric vehicle uses an AC induction motor that offers greater power and torque, extended lifetime, and regenerative braking.13 Global automotive industry might strives toward an introduction of a standardized charging infrastructure to establish the standards base competitive advantage for electric cars, to support that electric-driving towards a worldwide international standard concerning with electric car charging. The Combined Charging System (CCS) includes the connector and inlet combination as well as all the control functions. It also manages communications between the electric vehicle and the infrastructure.

11

Lead to Competitive Advantage

12

Yvonne Debye: The Approach Of Common

13

Standardized Electric Car Charging


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CASE 4


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6.a: Workhorse as a … ?

Sajjad Khaksari (s178401)

Chapter 6

Ahmad Shabir (s219115) Mirko Tartarotti (s206640)

The Many Approaches to Innovation Strategy a. Based on the available information, would you define Workhorse1 as a prospector, a defender, an analyzer or a reactor? Workhorse Group Inc. is a U.S.A.-based original equipment manufacturer of medium-duty, EPA-approved battery-electric delivery vehicles and fully integrated truck-launched2, FAA Section 333-exempt unmanned aerial systems (UAS) delivery drones.3 The company is also a developer of a cloud-based, real-time telematics performance monitoring system that tracks and displays the performance analytics and location of each Workhorse vehicle. However, AMP Holdings Inc. survived the carnage of 2012, when many electric vehicle industry companies went under. The Loveland, Ohio-based company, which converts regular drivetrain vehicles into pure electric vehicles, has gotten a new lease on life with its recent purchase of step van manufacturer Workhorse. With the purchase, AMP is ending its focus on strictly electric vehicles.4 “We want to transform Workhorse into the leading alternative power truck company. If you want an alternatively-powered work truck, that is what we want to be known for,”: AMP CEO, Stephen Burns.5

1

Workhorse Group Inc.: http://workhorse.com

2

NASDAQ Global News: Workhorse Group Inc. Signs Supply Agreement

3

UAO: Workhorse Group Seeks FAA Approval for Delivery Truck-Based UAS

4

PluginCars: AMP Buys Workhorse, And Will Electrify Its Trucks

5

Steve Burns, CEO AMP Electric Vehicles - Press Conference at NY Auto Show

Chapter 6: The Many Approaches to Innovation Strategy

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In other hand, the Workhorse Group Inc. presents at the Sidoti Emerging Growth Convention6 on March 31, 2016 in New York city7 while its overcharging innovative prospectives and highlighted them such as the combination of a first-class research and design program coupled with an efficient assembly operation along with the capability of powering the Workhorse chassis with the innovative all-electric drive train, or E-GEN electric drive train8 emergency range generator which might Workhorse a leader in the medium-duty, commercial-grade, Strip Chassis9 market. Hence the Workhorse Group Inc. is the parent company of AMP Electric Vehicles Inc.10 and AMP Trucks Inc. AMP Electric Vehicles11 manufactures electric-drive systems for medium-duty, Class 3-6, commercial truck platforms. The Workhorse Group Inc. managerial team include Stephen Burns, Duane Hughes, Marty Rucidlo, Julio Rodriguez, Don Wires And Daniel Zito.12 Additionally, Martin Rucidlo13, president of Workhorse, uttered, “The Horsefly is unique, not only because we are seeking to be the first UAS to make deliveries from a truck that is constantly moving to a different location, but because it also takes advantage of the proprietary battery and system technology that Workhorse has developed in-house for our [Environmental Protection Agency]-approved electric work trucks.”14 The Workhorse’s Annual Report, “Workhorse Group Inc. Sidoti Emerging Growth Presentation on March 2016”15, reports and contains statements that reflect current views with respect to future events of the company. Fig. 6.1 illustrates the current stock information of Workhorse Inc. which might help the analyzers to identify the financial and technological subjects and their related risk factors. Therefore, based on these available information, the author of this essay, would define Workhorse Inc. Group as an Electric Vehicle innovation defender, as a prospector and as an Electric Vehicles technology’s reactor producer in USA. (See Table 6.1)

6

The Sidoti Emerging Growth Convention: http://www.sidoti.com/microcap/Presenter_Lineup.html

7

EconoTime Business: Workhorse Group Inc. To Present at the Sidoti

8

About Workhorse: http://workhorse.com/our-company

9

Ford (as a competitors for Workhorse Inc. in branch of Commercial Trucks) in 2016 offered its Stripped Chassis Commercial Trucks in which grants its F-59 WALK-IN VAN STRIPPED CHASSIS, E-350 SUPER DUTY® STRIPPED CHASSIS, E-450 SUPER DUTY® STRIPPED CHASSIS and F-53 MOTORHOME STRIPPED CHASSIS 10

Amp Electric Vehicles: https://en.wikipedia.org/wiki/Amp_Electric_Vehicles

11

AMP Electric Vehicle: http://www.ampelectricvehicles.com

12

The Workhorse Group Inc. Managerial Team: http://workhorse.com/our-company/management-team

13

Martin Rucidlo: https://www.linkedin.com/in/martin-rucidlo-a8a3728

14

PerWeb: Workhorse Files for FAA Approval to be First to Deliver Packages with Truck-based Drone

15

The Workhorse Group Inc. Presentation March 2016


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10 March High September High

March Low September Low

June High December High

June Low December Low

7.5

5

2.5

0

2013

2014

2015

Fig. 6.1: The Current Stock Information of Workhorse Group, Inc. Plus the Table 6.1 of High Stock value and Low Stock value of Workhorse in 2013, 2014 and 2015. The information are from UNITED STATES, SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549, December 2015; Workhorse Group Inc. - FORM 10-K, PART II, ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


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6.b: The Approach to Corporate Strategy

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b. Which approach to corporate strategy is Workhorse seemingly pursuing [product portfolio, competitive advantage, Resource Based View (RBV), etc.]? Is this coherent with the type of uncertainty that is surrounding it? From the very beginning of market analyze progress, the question of “which approach should be followed when thinking of innovation strategy” is a fundamental question and its answer or its solutions could build or create a sustainable strategy model regards present and future of firms. In case of Workhorse Inc. or in general, in case of BEVs manufacturers, the Product Portfolio Management Approach1 spectacles the Battery Electric Vehicle producers as a collection of Business Units (BUs) and product families or product’s kinsfolk, directed to the variety of electric car markets all around the world. Additionally, the following Fig. 6.2 as a comparative financial graph in last 16 years illustrates the attractive economics scale and cost comparison of E-Gen’s Workhorse Group Inc. vehicles versus the Gas consumption Workhorse Group Inc. vehicles.

Fig. 6.2: Attractive Economics and Cost Comparison - Workhorse E-Gen & Gas

1

M. Cantamessa and F. Montagna, Management of Innovation and Product Development, © Springer-Verlag, London, 2016; DOI 10.1007/978-1-4471-6723-5_5 - Chap. 6.2: Innovation and Product Portfolio Management “In Miles and Snow’s (1978, 1984) classical distinction, companies can act as prospectors, analyzers, defenders and reactors. Prospectors are the ones who proactively and aggressively pursue opportunities for change and innovation, both incremental and radical.” - Also see the T. Martins, H. Kato, EnANPAD 2010, Rio de Janeiro


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The Workhorse Group Inc. company is a technological company which focus on last mile delivery systems.2 The Workhorse Group Inc. design, develop, improve, manufacture and sell cost-effective, high-performance electric medium duty trucks and unmanned aerial delivery systems those fully integrated with its electric vehicles. The Workhorse vehicles, engineering expertise, and business model differentiate from other truck and drone manufacturers. The Workhorse Group Inc. might launch new product presents and increase revenue from being products, anticipated expenditures including those related to selling and merchandising, marketing, product advancement and global and administrative. The product portfolio approach considers the firm as an internal capital market, in which cash flow from mature and fruitful products finance the development of up-and-coming ones. The best-known method related to this approach is the Boston Consulting Group (BCG) matrix [from the Boston Consulting Group, the consultancy firm that introduced it in 1970]. Table 6.2 illustrates the BCG matrix for Workhorse.

Cash Flow Generation

High

Low

High

Duty Trucks, E-GEN, Chassis, E-100 Vehicles

Promotion Expenses, Drones

Low

Self-Driving Software, Batteries

Cash Flow Absorption HorseFly Aerial Vehicle (UAV)

Table 6.2: The BCG Matrix for Workhorse

2

WORKHORSE GROUP INC. Report 2016


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The BCG Matrix shows that workhorse company design, develop, manufacture and sell costeffective, high-performance electric medium duty trucks, E-GEN, Chassis and E-100 vehicles. Certain products possess high market share and high revenue. The battery pack is key to the design, development and manufacture of advanced electric vehicle power trains. Batteries enable Workhorse to pay cheap cash and pack than competitors and tends high cash flow generation. Batteries are in maturity stage and cash cow.3 HorseFly™4 is an Unmanned Aerial Vehicle (UAV)5 that is designed for the package delivery market as well as other commercial applications. UAV bring a practical, low-cost solution to making the last mile more efficient and effective for a parcel to a customer. Workhorse company focused on coupling delivery drone with delivery trucks supplementing the existing model and providing shorter term flight patterns which need more significant financial resources. Also, Promotion expenses required a generous outlay of cash to grow the market share. BCG matrix proposed over the years, such as the McKinsey/GE matrix and the A.D. Little matrix (Table 6.3 (a) and Table 6.4 (b) respectively). In these cases too, there is a connection between the mapping of products and business units with their positioning on the innovation S-Curve. Attractiveness of Industry High

Competitive Position

Strong

Medium

Low

E-GEN Drive System

Full-Electric Truck “E-100”

Medium

Weak

Table 6.3 (a): The A.D. Little Matrix - Industry Analysis 3

Workhorse Group Inc. - FORM 10-K - March 25, 2016

4

The First Test Delivery of the Workhorse Group HorseFly Drone Featured on NBC-TV Affiliate - The HorseFly 'Octocopter' Primed to Fly the Future to Your Front Door, the UC collaborates with AMP Electric Vehicles to create the ultimate unmanned aerial vehicle for safely delivering goods, 2014, University of Cincinnati 5

The Unmanned Aerial Vehicle (UAV): http://www.theuav.com


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Status In The Lifecycle

Embryonic

Competitive Position

Dominate

Growth

Maturity

Decline

Commercial Truck Chassis, Technology of Electric Vehicles and related Battery Technology Innovation and Design

Strong

E-100 electric Walk-In Vans

Positive

Sustainable

Alliance Strategies such Freightliner Drones

Weak

Unmanned Aerial Vehicle (UAV)

Table 6.4 (b): The GE/McKinsey Product Portfolio Matrices - Technology Analysis

In previous chapters has illustrated how Workhorse faces its robust competition between the current Electric Vehicle manufacturers. A few of their competitors have greater financial or different resources, continued operating histories and greater title recognition than Workhorse do and numerous of these competitors can use their exceptional resources and-or brand recognition to expand market share at Workhorse expense or could make it extremely challenging for Workhorse to stabilize market share.6 The competitive companies are currently competing very hard from embryonic status in the lifecycle of products into declined area, in fleet logistics market alternative fuel medium-duty trucks include Ford Motor Company and Freightliner7, Electric Vehicles International and Smith Electric Vehicles.

6

UNITED STATES, SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549, December 2015; Workhorse Group Inc. - FORM 10-K - Part I, Products and Technology 7

Freightliner Trucks: https://www.freightlinertrucks.com/Why-Freightliner/


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Although Workhorse knows that HorseFly™ [its unmanned aerial system (UAS) supplier], is unique in the marketplace in that it currently does not have any competitors when it comes to a UAS that works in combination with a truck, there are better-financed competitors in this emerging industry, including Google and Amazon. Google and Amazon have more significant financial resources, established market positions, long-standing relationships with customers, further notable honor recognition and a larger scope of resources including technical, marketing and sales than Workhorse does. The Workhorse Inc. company is also seeking to re-design the prospect of parcel delivery aviation. In which, the HorseFly™ is an Unmanned Aerial Vehicle (UAV) thus designed for the packet delivery market as well as additional commercial applications. Workhorse UAV works in behind with its electric trucks to bring a practical, low-cost solution to making the last mile higher efficient and costs effective for its parcel customers. Hence, the Resource Based View (RBV)8 is the closest approach to innovation management and from a theoretical perspective, it based on the evolutionary theory.9 In first recognized time, the Theory of Evolution through natural selection expressed in famous book of Darwin, called "On the Origin of Species"10 in 1859, is the process by which organisms evolve over time as a consequence of changes in heritable physical or behavioral traits. Modifications that allow an organism (in BEVs case, read a firm) to adapt extremely to its environment and it will help the company to survive and have more issues in market of future. Also, Resource Based View (RBV)11 as a path to delivering "Competitive Advantage" which emerged in the 1980s and 1990s, following the important works published by Wernerfelt12, Prahalad, Hamel, Barney and others, encourages the Workhorse Inc. to relies on tangible and intangible resources which must be heterogeneous or immobile and they have VARIO attributes to become VARIO framework13 resources that provide Competitive Advantages for Workhorse. RBV highlights that the organizations might look inside the firm to find the sources of competitive advantage instead of watching at the competitive environment for it.

8

K. Narayanan, Gina Colarelli O’Connor, “Encyclopedia of Technology and Innovation Management”, WILEY 2010

9

Stephen Keir Myers, "Evolutionary theory : a 'good' explanatory framework for research into technological innovation?", Southern Cross University, 2006 - ePublication@SCU 10

Keith A. Francis, "Charles Darwin and The Origin of Species", Greenwood Press (2007)

11

Resource Based View (RBV): https://en.wikipedia.org/wiki/Resource-based_view

12

Birger Wernerfelt, “The Resource-Based View of the Firm” - Birger Wernerfelt at MIT Sloan

13

VARIO framework: Strategic Management Insight - VARIO


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6.c: The Porter’s 5 Forces

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c. Try applying Porter’s 5 Forces framework to analyze Workhorse, and try identifying their potential source(s) of competitive advantage. According to Porter, firms need not be judged as isolated entities, as in the recent stock portfolio procedure. The firm, preferably, must be inspected as part of a value chain that connects it to upstream suppliers and downstream customers, and in the context of a competitive setting made of current and prospective rival firms. In case of Workhorse, either the analyze of its business must not be considered as an unique or separated commercial entities hence the following phrases are highlighted by them: • Priority is to establish the commercial step van as our core business. We intend to be the best choice for a vehicle in this segment regardless of the fuel type that the customer chooses. Additionally, our sales plan is to meet with the top potential customers and obtain purchase orders for new electric, extended range electric, gasoline, propane, or CNG vehicles for their production vehicle requirements. • The second segment that we are focused on is medium-duty buses. This is based on fact that we completed two 15-passenger para-transit buses for BARTA (Berks County Regional Transit Authority) in Pennsylvania. These buses are equipped with wireless charging and represent a unique solution for a number of applications (i.e. airport hotels, rental car companies and municipal transit authorities).     Once we have completed all of the relevant testing on these buses we will work with bus body builders to develop pricing and plan to offer a Workhorse/AMP chassis for sales in late 2016. • The third segment that we are focused on is UAS technology and integration in automotive market. • Finally, since our competitive advantage in the marketplace is our ability to provide purpose-built solutions to customers that have unique requirements at relatively low-volume, we have submitted proposals to companies for purpose-built vehicle applications. • AMP Trucks will promote the Workhorse brand at select trade shows, conferences and briefings.


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6.c: The Porter’s 5 Forces

“The goal of competitive strategy for a business unit in an industry is to find a position in the industry where the company can best defend itself against these competitive forces or can influence them in its favour.” Micheal Porter

Fig. 6.3: Porter’s 5 Forces Framework In Workhorse Group Inc.

Porter‘s 5 forces and industry structure are likely to be favorable in most cases for the company future growth. However, the automotive market is very competitive and attractive for big players. Therefore, Workhorse Inc. might be able to keep up with larger companies and not to be squeezed out. For example, the Scania 410 hp1 unit which has broken the world fuel-efficiency records. However, some crucial points for further businesses in which the Workhorse focused (EVs Chassis, Drones) includes intellectual properties, real asset of the company partnerships with battery manufacturers and long-term agreements with customers.

1

The Scania’s 410 hp Unit: “Scania Urban Tipper: enhancing road safety in city centers”, April 2016


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6.d: The Intellectual Property

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d. Analyze the Intellectual Property assets of Workhorse. How are they managing them? What strategy are they pursuing? Owning and Managing of the intellectual property is a backbone in brisk today’s innovative and technology industry. In other hand, keeping, saving or improving the intellectual chattels will create competitive advantage for Workhorse groups companies and will create strong barriers against potential new entrance enterprises (Fig. 6.4). Also, hooding the previous cognitive assets might assemble or draw up the Electric Vehicles customers into the Workhorse company’s door. For example, in November 2010, in one of the largest EV orders a green energy company in Iceland notified that they will signed an agreement of intent for the 1,000 electric SUVs to be delivered over five years.1 The Reykjavik's Northern Lights Energy will purchases 1,000 SUV-based Electric Vehicles from a Cincinnati-Based2 company whose flagship vehicle is a Chevrolet Equinox3 converted to run on batteries. It's especially important for cash-strapped American BEV manufacturer companies to get export orders and increase their marginal profit.4

!!

Intellectual Property

Intellectual Property

Fig. 6.4: Managing Of The Intellectual Property Is A Backbone In Technology Industry

1

CBS Interactive: AMPed Up in Iceland: 1,000 Electric SUVs on Order

2

University of Cincinnati Research Institute: http://www.ucri.org

3

The Chevrolet Equinox 2016: http://www.chevrolet.com/equinox-fuel-efficient-suv.html

4

Yahoo Groups: News From CalCars on Plug-in Hybrids


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6.d: The Intellectual Property

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Other criteria in front of Workhorse Inc. and similar electric car producer is “the need for national differentiation”. Hence the national differences in customer preferences continue to exert a powerful influence in BEV market. However, the Electric Vehicles those designed to meet the needs of the global customer tend to be unappealing to most consumers. That is a general comport, which highlighted in chapter 8 (Global strategies and the multinational corporation) of “Foundations of Strategy”5 by Robert M. Grant and Judith Jordan. “The closer an industry to the final consumer, the more important cultural factors are likely to be. It is notable that so few retailers have become successful abroad. With the exception of IKEA6, H&M7 and a handful of others, there are few international retailers that are truly global and few that have been as successful overseas as at home. For many, franchising has provided a lower risk a lower risk internationalization strategy”.8 In other hand, the Workhorse CEO might have an adequate defiance strategy against imitation because when a firm bases at least part of its competitive advantage on technology, it quickly realizes that the sustainability of this advantage is critical, since competitors will readily try to imitate its products and processes and the management of a firms’ intellectual property (IP) therefore is a key element of innovation strategy.9 In general, Intellectual Property has to do with patents, copyright, and trade-marks. The former are associated to technical inventions and are therefore central to technological innovation. In case of Workhorse Inc. this centralization is concentrated around the Loveland, Ohio. Overall, perhaps for Workhorse Inc. team management the primary goal might be maximizing the current value per share of existing stock with planning a sustainable strategy and managing their actual and potential Intellectual Properties.

5

Foundations of Strategy: www.foundationsofstrategy.com which is a concise text written in an accessible style with the needs of students, offers a clear, comprehensive approach, underlined by sound theoretical depth. 6

IKEA: http://www.ikea.com - IKEA’s national and international successful competitive strategy might guides BEVs rivalry car manufacturers into embracing a kind of homeopathy meltdown national and global market recovery. Hence, the IKEA has provided the M. E. Porter’s diamond model with some home base national advantages through an international competitive advantage that it has been able to exploit on a global scale. The comparative study of IKEA case is important for BEVs market analyzers why so the IKEA is one of the largest furniture producers and retailers in the world and is well known for its low-cost, stylish furniture and bold, sometimes controversial, adverting campaigns and by 2010, IKEA had an estimated turnover of €23.1 billion, net profits of €2.7 billion and around 300 stores in 26 countries. (information from IKEA Annual Sustainability Report 2010) 7

H&M: www.hm.com - The H&M is growing with quality, sustainability and high profitability and offers a wide range of inspiring fashion for everyone, everywhere, with new stores the world over and online purchasing. 8

Robert M. Grant, Judith Jordan, “Foundations of Strategy”, WILEY, 2012 - Chapter 8, Page 391

9

M. Cantamessa and F. Montagna, Management of Innovation and Product Development, © Springer-Verlag, London, 2016 - Chap. 6.4: Intellectual Property Rights and Competitive Advantage


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6.e: The BlueOcean Strategy

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e. Try defining a “Blue Ocean”1 strategy for Workhorse. In search of an answer, the initial step could be the definition of the core unit of analysis for related research. To understand the roots of high performance, the business literature typically uses the company as the basic unit of analysis. Therefore, Fig. 6.5 illustrates the linchpin of Blue Ocean Strategy and thus real competitive wealth which might creates and offers an wealthy innovative products in right price and in right place that pursuits buyers from similar product’s substitutes.

f S CO

V A L U E

DI

INNOVATION WEALTH IN CUSTOMER’S OPINION

FF

ER E PU NT RS IA UI TI T ON

T

’S

BU

YE

R

S U L OW BS TI COS TU T TE S

B A R R I E R S

Fig. 6.5: Wealthy Innovation, The Linchpin of Blue Ocean Strategy

1

W.Chan Kim, Renée Mauborgne, "Blue Ocean Strategy, How to Create Uncontested Market Space and Make the Competition Irrelevant", Harvard Business School Publishing Corporation, Boston, Massachusetts, 2005


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Therefore, the Workhorse Inc., is the Multi-stop truck2 American electric vehicle manufacture and it is competing side-by-side with Amazon for Delivery Drones technology.3 However, the Workhorse Group Inc. is the brand held and owned by an American holding company called Navistar4 International Corporation5 which in earlier times well-known as International Harvester Company.6 The Navistar owns the manufacturer of International brand commercial trucks, MaxxForce7 brand diesel engines, IC Bus8 school and commercial buses, Workhorse brand chassis for motor homes and step vans, and is a private label designer and manufacturer of diesel engines for the pickup truck, van, hoes and SUV markets. The Navistar is also a provider of International® Truck9 and diesel engine parts and service. The International® Truck is Navistar’s flagship vehicle brand and offers a complete lineup of integrated vehicles ranging from class 4-8. The most well-know brand of Navistar International Truck is a class 8 commercial vehicle called International® ProStar®.10 In other hand, the Navistar cooperate with Knight Transportation11 and thrives with their ProStar fleet. Dave Williams12, of Knight Transportation13 discusses why they are partnered with Navistar and how the ProStar® with Cummins ISX is moving their fleet forward.14 In addition, Navistar announced its SuperTruck demonstration vehicle, CatalIST15, achieved a freight efficiency 2

Multi-stop truck: https://en.wikipedia.org/wiki/Multi-stop_truck - Multi-stop truck is a type of light-duty and medium-duty truck created for local deliveries to residences and businesses. 3

@Fast Company: Workhorse Competing With Amazon For Delivery Drones

4

Navistar Website: http://www.navistar.com/navistar/

5

Navistar International Corporation: https://en.wikipedia.org/wiki/Navistar_International

6

International Harvester Company: https://en.wikipedia.org/wiki/International_Harvester

7

The International MaxxPro MRAP: https://en.wikipedia.org/wiki/International_MaxxPro - The MaxxPro is famous as the Mine Resistant Ambush Protected vehicle ever produce. It is an armored fighting vehicle designed by American company Navistar International's subsidiary Navistar Defense along with the Israeli Plasan Sasa (‫)פלסן‬, (https://en.wikipedia.org/wiki/Plasan) who designed and manufactures the vehicle's armor. 8

IC Bus: https://en.wikipedia.org/wiki/IC_Bus - IC Bus (originally IC Corporation) is an American bus manufacturer that produces yellow school buses and commercial-use buses (shuttle buses) primarily for the United States and Canada, with limited exports outside of North America. The IC Bus’s headquartered is in Lisle, Illinois, hence the IC is a wholly owned subsidiary of Navistar International. http://www.icbus.com/bus/ 9

International® Truck: http://www.internationaltrucks.com/trucks

10

International® ProStar® Bruchure - Website: http://www.internationaltrucks.com/trucks/trucks/series/prostar/

11

The Knight Transportation [heavy truck producer]: http://www.knighttrans.com

12

AutomotiveWorld.com: Interview with David Williams, the vice president of Knight Transportation while he talks about the Commercial Vehicle Innovation Summits / USA 2011 - https://youtu.be/Z39JPPxHLQc 13

Knight Transportation: https://en.wikipedia.org/wiki/Knight_Transportation

14

International Truck Youtube Chanel: ProStar & Knight Transportation

15

Navistar CatalIST: http://www.ccjdigital.com/navistar-says-its-supertruck-project-obliterated-doe-goals/? utm_medium=ccj&utm_campaign=site_click&utm_source=most_popular_article_footer


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improvement of 104 percent – more than double the 50 percent goal set by the U.S. Department of Energy (DOE)16 for its SuperTruck program. On March 2015, following the announcement of a deal to provide UPS with 18 of its Workhorse E-Gen E-100 electric WalkIn Vans (to be tested in Texas), the company Amp Electric has reportedly set its sights on becoming the Tesla Motors of the delivery van and truck market. Considering the specs of the company’s trucks perhaps the claim is not a wholly inappropriate one, however some of the specs make it seem a bit more like the Nissan LEAF17 (or Mitsubishi i-MiEV) of the delivery vehicle world — the E-GEN truck is outfitted with a 60-kilowatt-hour (kWh) lithium-ion battery pack + a 200-kilowatt (268-horsepower) electric motor, and possesses a claimed all-electric range of around 60 miles per charge.18 On May 2015, the Knight Transportation as one of the nation’s leading truckload carriers, selected Volvo Trucks to supply 38 specially decorated Volvo VNL 670 models to recognize its 25th anniversary. In such previously mentioned alliance strategy, the Knight Transportation decided instead of the widely recognized red and charcoal gray trucks that Knight Transportation and Knight Refrigerated operate, each of the anniversary trucks features a silver finish with a special decal incorporating Knight’s logo realized by its major business partners for many years Volvo Trucks enterprise.19 In another side, Workhorse might create an opportunity to work and collaborate with Fiat Chrysler and Google in the Autonomous automobile manufacturing during the circumstances in which “Fiat Chrysler is in talks with Alphabet, Google’s parent, about a technology collaboration focused on self-driving cars.”20 Create or build such alliance might help Workhorse Inc. regards the definition of Blue Ocean Strategy where “Create uncontested market space” is in contrary with Red Ocean Strategy in which the company “Compete in existing market space”. In addition, when the Red Ocean invite firms to “Beat the competition”, “Exploit existing demand” and “Make the value-cost trade-off”, the Blue Ocean strategy requires “Make the competition irrelevant”, “Create and capture new demand”, “Break the value-cost trade-off”, and aligns the whole system of a firm’s activities in pursuit of differentiation and low-cost strategy. 16

Department of Energy (DOE): http://www.energy.gov

17

The Nissan LEAF: http://www.nissanusa.com/electric-cars/leaf/ - The Nissan Leaf, also formatted "LEAF" as a backronym for leading environmentally-friendly affordable family car, is a compact five-door hatchback electric car manufactured by Nissan and introduced in Japan and the United States in December 2010, followed by various European countries and Canada in 2011. (https://en.wikipedia.org/wiki/Nissan_Leaf) - The Nissan Cube-derived EV-01 test car was Nissan's first prototype with the all-electric drive train later used in the Leaf. 18

Clean Technica: AMP Electric Aiming To Be The Tesla Motors Of Delivery Trucks & Vans

19

Volvo Trucks: Knight Transportation Marks 25th Anniversary with Special Silver Volvo VNL Models

20

Financial Times: “Fiat Chrysler and Alphabet in self-driving car talks”


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7. Business Model Innovation

Chapter 7

Business Model Innovation a. Work on Workhorse’s Business Model (BM). To provide a preliminary representation, use the “Business Model Canvas” framework, and draft the current (“As-Is”) model. The Workhorse Group designs and produces battery-electric power trains in its 50,000 sq. ft. facility in Loveland, OH for its new Workhorse chassis. AMP’s approach to building its battery electric power trains uses proven, automotive-grade, mass-produced parts coupled with its custom designed, proprietary control software. Workhorse Group Inc. is an Original Equipment Manufacturer (OEM) of Class 3 - 6 Workhorse brand medium-duty truck chassis. Its 200,000 sq. ft. assembly plant enables it to build the tried and true W62 chassis and the new, narrower-track W88 chassis at price points and performance specifications sure to be attractive to fleet purchasers.1 Before get into Workhorse Group Inc. Business Model for whom those do not know about the truck classification, Fig. 7.1 might be interesting.2

Fig. 7.1: Examples of Trucks in Each Truck Class

1

Workhorse Group Inc. Facilities: http://workhorse.com/our-company/facilities

2

Stacy C. Davis, Susan W. Diegel, Robert G. Boundy, Sheila Moore, "2014 Vehicle Technologies Market Report", Oak Ridge National Laboratory, Prepared for the Vehicle Technologies Office, Office of Energy Efficiency and Renewable Energy U.S. Department of Energy, 2015 - Figure 75: Examples of Trucks in Each Truck Class

Chapter 7: Business Model Innovation

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Hence the Electric Vehicles Case Study3 is always an open case in front of vehicle technology researchers, car designers, and vehicle manufacturers as well. The importance of a framework acquisition with aid to build and create a reliable Business Model is strictly essential and not that might not be curtail. Therefore, the Workhorse is a technology company that focused on last mile delivery systems, they design, develop, manufacture and sell cost-effective, highperformance electric medium duty trucks and unmanned aerial delivery systems that are fully integrated with Workhorse EVs (see Fig. 7.2). Such strategy or framework is what Workhorse illustrated in its Annual Transition report by these words “We believe our vehicles, engineering expertise, and business model differentiates us from other truck and drone manufacturers. We recently developed Metron® which is a system that provides fleet operators ultimate energy and route efficiency while enabling them to monitor, control and update software remotely. We are also currently in the initial stages of developing a self-driving software to further differentiate us as the technology company with the most cost-effective last mile delivery system in the marketplace.”4

Fig. 7.2: WORKHORSE GROUP – BALANCE SHEET and INCOME STATEMENT

3

Michael F. Ashby; "Materials and Sustainable Development"; Butterworth - Heinemann Publication, 2016 Pages 151-166, Chapter 10: “Case Study: Electric Cars”; ISBN: 978-0-08-100176-9 4

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT, UNITED STATES, SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549, December 2015; Workhorse Group Inc. FORM 10-K, PART I: ITEM 1. BUSINESS - Overview


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The concept of “Business Model” is relatively recent, since the term came into use only at the beginning of the twenty-first century, when Internet companies started to emerge (Mahadevan 2000). Once a business model has been developed, it is possible to “put flesh on the bones” and use it to generate strategies, business plans, profit and loss and financial projections. Conversely, strategies and business plans cannot be articulated if not by referring to an underlying business model. Therefore, a firm’s business model can be viewed as a more generic concept than its business strategy and as a precursor to it. (see Table 7.1) At the same time, the former provides a high-level description of “what” the firm [in this case Workhorse Group Inc.]5 will do but stops short of the latter’s aim of stating how this can spread.6 Strategic Choices • • • • • • •

Primary segments: OEMs Commercial step vans Medium duty buses Special uses vehicles Unmanned Aerial Vehicles (UAV) Autonomy range extension. Fast charging time

Create Value

• Battery technology (rely on suppliers) • Patents pending • Workhorse is the only public company producing medium-duty electric trucks

Value Network

• There are not elongated term agreements with Vehicle OEMs. • Contracts and diminutive pre-order batches with delivery companies for integration of Workhorse’s innovative chassis on their fleets

Capture Value • Sales of n.12 passenger buses to BARTA (Berks County Regional Transit Authority) of Pennsylvania. • Sales of initial commercial step vans to delivery companies

Table 7.1: Workhorse Regularly Business Model Through Strategies And Values

The “Canvas Business Model”—or Canvas in short— (Osterwalder and Pigneur 2010)7 is a qualitative and unpretentious tool for structuring business models.

5

THE WALL STREET JOURNAL: WKHS (U.S.: Nasdaq)

6

M. Cantamessa and F. Montagna, Management of Innovation and Product Development, © Springer-Verlag, London, 2016; DOI 10.1007/978-1-4471-6723-5_5 7

Alexander Osterwalder, Yves Pigneur, "Business Model Generation", 2009 - ISBN: 978-2-8399-0580-0


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The Canvas came out of the authors’ initial research on the constituent elements of business models and their ontology (Osterwalder 2004) and—being very straightforward and intuitive— it has become a standard in both professional practice and academia. Canvas simplicity can be misleading, however, and its underlying concepts have to understand. In such circumstances, the following figure (Fig. 7.3) provides a graphical description of the Workhorse Group Inc. Canvas Model.

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