Shifting Paradigms in the Automotive Industry
Author(s): Dror Etzion, Jeroen Struben
Institution: McGill University, Canada
Competition year: 2011
Place: 1st place
Track: Social Entrepreneurship
Key words: Sustainability, Environmental management, Better Place, Automotive industry, Transportation, Electric car, Energy
Courses: Strategy, Business and Sustainability, Technology Entrepreneurship
In a bold bid to dramatically reshape the automotive industry, start-up company Better Place is attempting to shift transportation from reliance on the environmentally destructive internal combustion engine to electric power from renewable sources. In order to overcome the limitations of current technology and utilize off-the-shelf hardware, Better Place is rolling out an extensive infrastructure to provide ubiquitous charging opportunities in the hope that this would satisfy virtually all driver requirements.
In pursuing this massive transformation, Better Place is promoting a paradigm shift in the business model for personal transportation, by shifting sales from products (cars and gasoline) to services, by selling its customers “miles”. The end goal is to truly make the world a better place by substantially reducing the environmental and social impacts of the transportation sector’s reliance on petroleum.
The case highlights the challenges of transforming a mature industry which is central to modern society. It includes a brief history of the automotive industry to date, illustrates various unintended consequences of its expansion, as well as provides overviews of various competing automotive technologies (hybrids, hydrogen fuel cells, etc.)
The case surveys the various aspects of the Better Place model, and probes its advantages and shortcomings. It also examines the Better Place rollout strategy, as an upstart entrepreneurial company attempting to grow and expand internationally at a very rapid pace. Besides a complex economic business model specifying large upfront investments in multiple dispersed international locations, key challenges include: How to convince established automotive producers (or newcomers) that EVs are the way forward? Whether and how to coordinate infrastructure and standards? And, not least, how to convince consumers to make the leap of faith and switch to an electric car.
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