Market introduction strategies for alternative powertrains in long-range passenger cars under competition. (June 2016)

• Record Type: Journal Article
• Authors: Thies, Christian; Kieckhäfer, Karsten; Spengler, Thomas Stefan
• Is Part Of: Transportation research. Volume 45(2016)
• Page Start: 4
• Page End: 27
• Publication Date: 2016-06
• Subjects: System dynamics -- Automotive market -- Alternative powertrain -- Emission reduction -- Competition -- Technology spillover; Transportation -- Research -- Periodicals; Transportation -- Environmental aspects -- Periodicals; 354.76
• DOI: 10.1016/j.trd.2015.05.002
• Languages: English
• ISSNs: 1361-9209

Abstract

Highlights: We integrate competition into a system dynamics model of the automotive market. We analyze the manufacturers' influence on the success of alternative powertrains. Competition can increase market penetration and thus CO2 emission reduction. Technology spillover has a higher impact for new technologies with high costs. Our results facilitate the formulation of suitable market introduction strategies. Abstract: Alternative powertrains are considered as a promising option to significantly reduce CO2 emissions from passenger cars. One major prerequisite is their successful market introduction. In this paper, we present a system dynamics model that allows for the evaluation of strategies for the market introduction of alternative powertrain technologies in long-range passenger cars (⩾400 km) under competition. The model considers two competing manufacturers, one first-mover and one follower, each introducing plug-in hybrids and fuel cell electric vehicles according to exogenously defined strategies, which comprise timing, pricing, and technology parameters. The manufacturers can learn from each other due to technology spillover, leading to cost reductions of the powertrains. We use an exemplary dataset for the German car market to study the manufacturers' influence on the market success of alternative powertrains as well as the underlying mechanisms. The results indicate that in general more competition leads to higher market shares of alternatively powered vehicles and thus allows for a higher reduction of emissions. However, this might cause decreasing profits for both manufacturers, especially if the follower pursues an aggressive pricing strategy when entering the market to gain market shares from its competitor. Also, technology spillover has a positive effect on the market penetration. This particularly holds true for a low level of technology experience where high cost reductions can be achieved and for fuel cell electric vehicles where the costs of the powertrain are much higher compared to plug-in hybrids.