The Automotive Industry in an Era of Eco-Austerity

The Automotive Industry in an Era of Eco-Austerity

Creating an Industry as if the Planet Mattered

Peter E. Wells

This unique book seeks to combine economic analysis with the environmental research to arrive at a comprehensive understanding of the forces that shape change in the automotive industry. It eschews the usual focus on technologies, and gives more attention to the impact of change on the business models and strategies adopted by the vehicle manufacturers, the scope for new entrants, and the implications for policy-makers. This richly textured book concludes that the achievement of a sustainable automotive industry will not be possible with ‘one best way’, but that myriad technologies and business concepts, grounded in the distinct needs of different places and consumers, will be the basis of the future of mobility.

Chapter 5: Alternative Business Models as the Basis of a New Industrial Ecology of the Automobile

Peter E. Wells

Subjects: business and management, corporate social responsibility, management and sustainability, strategic management, economics and finance, industrial economics, transport, environment, climate change, corporate social responsibility, environmental management, environmental sociology, transport, urban and regional studies, transport

Extract

INTRODUCTION 5.1 This chapter explains why new business models are needed as the mechanism for the delivery of a sustainable automotive industry. As such, it will draw on a range of existing examples including Tata Nano, Project Better Place, Gordon Murray Design, the MDI Air Car and Riversimple to demonstrate the scope for different approaches to the manufacture and use of cars. It will further argue that innovative technologies may create the space within which alternative business models can prosper, while the crisis that has engulfed the mainstream industry may significantly reduce the ability to retain barriers to entry. The core idea here is that ‘technology’ as such is not the problem. The technologies that could underpin sustainable automobility and a sustainable automotive industry are there, or nearly so; the problem lies in finding an economic incentive and structure for businesses to benefit from these technologies. It is notable that a significant report on the adoption of electric vehicles in the USA highlighted that the twin business model innovations of switchable batteries and pay-per-mile contracts would be the key to the rapid expansion of the market share of these vehicles (Becker, 2009). The creation of alternative business models requires a degree of fit with prevailing cultures of automobility, but also in many cases changes to such cultures, probably resulting in a much-reduced reliance on the car. The first half of this chapter is primarily concerned with elaborating the meaning of alternative business models while the second half provides a range...

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