Electric vehicles and renewable energies in the automotive industry: the case of Renault

The fundamental condition for the success of electric vehicles is the emergence of a dominant design for the type of batteries. This is important because only the reaching of a mass production can drive down the price and make this type of cars economically convenient.
The concept of dominant design was introduced by Suarez and Utterback, who define it as a specific path, along an industry’s design hierarchy, which establish dominance among competing design paths. Moreover, a dominant design has the effect of enforcing standardization, so that production economies can be sought, and this is the reason why we affirmed that this aspect is the key of success for electric vehicles.
The emergence of a dominant design is considered to be a combination of technological, economic and organizational factors. As a matter of fact it is not always the most technological innovation, and for this reason there are other factors that can influence the dominance of a given design:
1. Possession of collateral assets;
2. Industry regulation and government intervention;
3. Strategic maneuvering at the firm level;
4. Existence of bandwagon effects or network externalities in the industry.
Technology evolution seems to be in a way linked to these factors.
Collateral or co-specialized assets seem to have a two-way relationship with the emergence of a dominant design. On one hand a firm with collateral assets will have some advantages vis-à-vis its competitors in terms of enforcing its products as a dominant design. On the other hand the value of collateral assets to a firm will be greater after a dominant design is in place. Hence, it’s more convenient for a firm to acquire collateral assets after the emergence of its design as dominant, thus, the opposite relationship may also hold: a dominant design will stimulate the creation or acquisition of collateral assets which in turn will strengthen its dominance.
Industry regulations have the obvious power to enforce a standard and for this reason define a dominant design. The role of the government must not be restricted to regulations; in fact it can influence the emergence of a dominant design also with the purchases of a given product.
Also at firm level it is possible to isolate factors, as the strategic maneuvering, that can affect the emergence of a dominant design. As a matter of fact the type of strategy followed by a firm with respect to its product vis-à-vis that of competitors may determine which firm product becomes dominant.
In the presence of bandwagon effects or positive network externalities a good is more valuable to a user the more users adopt the same good or compatible ones. Hence, this type of effect can push up the sales faster and create economies of scale that will play a major role in the determination of a dominant design. Moreover, in the presence of bandwagon effect, strategic maneuvering becomes a powerful force to drive the emergence of a dominant design.
Now that we have a clear picture of what can facilitate and help the emergence of a dominant design we can try to apply this scheme to the two type of batteries that are suitable for an electric vehicle, that are nickel and lithium-ion batteries.
Nowadays the most common batteries used on hybrid vehicles are the nickel ones, but this present some drawbacks, like self discharge and low energy density, which does not make them suitable for complete electric vehicles of the future, this is the reason why lithium-ion batteries have been developed in this late years. Unfortunately also these types of batteries have important drawbacks, like the price and the fact that they are extremely dangerous.