CARS - Affiliates News
Class on Electric Vehicles at
Business School - Final Statements
On December 3, the class "Strategic Thinking in Action - In Business and
Beyond" at the Stanford Graduate School of Business (GSB), which focused
this autumn quarter on electric vehicles in the US and China, ended with
summaries from the students and instructors. The students described in their
case studies that it would be especially important for the evolving electric
vehicle industry to understand the business on a global level and apply their
individual strategies to the regional situations. The two teams that observed
the US and China described the very different policies and government
involvements in the two markets. It was noted that the Chinese government seems
to prioritize actions, subsidies, incentives, and mandates better than the
administration in the United States. The role of the government was generally
highlighted, as the electrification of the individual transportation sector is
too immense to expect that the self-regulation of the market could solve the
challenges regarding industry transformation, consumer change, and the
implementation of a charging infrastructure.
Both student teams were given the opportunity to draft a strategy paper that will be sent to U.S. Secretary of Energy, Steven Chu. The "Team US" presented a paper suggesting that the United States should carefully revisit its plans to become the technology leader for electric vehicles and also consider alternatives such as an "early adopter strategy" and establish policies quickly to steer consumer interest in EVs and implement the necessary charging infrastructure to secure the transportation security. The "Team China" presented a paper explaining that the relevance of the automobile in China is much lower compared to the US (e.g. transportation sector accounts only for 5% of the country's CO2 emission) and therefore it is expected that the rapidly growing electric vehicle industry will export its products to other countries, primarily the United States. With these statements, both teams agree that the two markets and administrations are completely different but will complement each other in terms of supply and demand.
Andy Grove, the former CEO of Intel and one of the two instructors for the class, summarized the course that it can currently barely be predicted how the electric vehicle markets in the US and China will develop. In the United States the consumer willingness to change will be the all-determining factor only followed by the progress in battery technology. This in return will be the determining factor for the Chinese electric vehicle industry as it is expected that the batteries and eventually vehicles will be exported mainly to the United States.
Robert Burgelman, faculty at the GSB and instructor of the class, forecasted that an oil price of $150 per barrel could be a tipping point for the electric vehicle in the United States. In that case the situation could change from an "internal ecology" dynamic to a system in which a "rational actor" takes over and drives industry supply and consumer demand in a new direction. It was noted that this scenario could become very real within the next 5-10 years. This would also have a strong impact on China, which is expected to become the supplier of battery technology and eventually vehicles to the US in that scenario. For the domestic market however, small and efficient combustion engines were presented as the only realistic technology option for Chinese vehicles because the CO2 emission of the transportation sector is relatively irrelevant compared to electricity generation in the country.
CARS has followed the class over the course of the autumn quarter and observed great relevance for the affiliates program. It is suggested to pursue further collaboration with the GSB faculty and students, which has already started as students attended some of the lectures in the CARS class "The Future of the Automobile".
For further information contact Sven Beiker (beiker@stanford.edu).
December 5, 2009 - 8:30PM