The Innovation of Electric Cars and Its Commercial Impact - Essay Example

Innovation of Electric Cars Introduction An electric car uses electrical energy to propel its electrical motors. The electrical energy is stored in a rechargeable battery installed in the car (“The History”, 2015). The production of electric cars started in the 80s, and they have been in use since then up to today (“The History”, 2015). They were developed to help reduce air pollution due to their green nature and increased oil prices. This essay discusses the innovation of electric cars and its commercial impact. Electric Cars Industry The electric car industry started with the development of the first electric car models and has grown to a bigger and a wider industry today. The first people to develop the electric cars originated from such countries as the Netherlands, United States and Hungary. They invented with the idea of using a battery to power a vehicle that enabled them to develop small-scale electric vehicles. In the 2nd half of the 19th century, the first practical electric car was designed the French and the English innovators (“The History”, 2015). In the US, William Morrison was among the first people to come up with an electric car in 1890. The popularity of these vehicles started growing in the 1900. In the same period, the electric cars occupied a third of all the vehicles on the road in the United States. The electric car industry before the 1900 was composed of the few models of the ancient innovators. For instance, Ferdinand Porsche developed an electric car in the 1898 called P1. Today, Ferdinand Porsche is the founder of a sports car company (“The History”, 2015). Companies started having an interest in the industry in the year 1900 after many factors convinced many companies to invest in an electric car. Such factors included the ever increasing costs of fuel and the environmental pollution by the cars that used gasoline. Henry Ford, who is the founder of the Ford Company, produced an electric car called Model T that came as a blow to the auto industry because it cost almost the same as any other car. For instance, in the year 1912, cars using gasoline cost $650 while the Model T car cost $1750. Due to increased development and discoveries of the gas oil, the production of electric cars declined until 1960s when it revived. The cheap prices of gasoline had also made the demand of electric cars decrease hindering other companies from investing in the industry (“The History”, 2015). In the 1970s, the American Motor Company and GM Motor Company produced electric cars. This signaled the revival of the electric car industry. Companies such as Citroen, Mitsubishi, Peugeot, GM Motor Company, Toyota, Honda and Tesla Motor have been developing and producing new electric models in the industry. They have led to a massive growth in the industry. The electric cars are today being used in most parts of the world since the electric power is available across the globe. The electric car industry has therefore expanded from the United States where most of the discoveries were made to other places in the world such as China (“The History”, 2015). The electric car industry remains to be unique up to today and has been adding more and more sectors of the industry. For instance, it has recently incorporated a car-like micro vehicle produced in Europe. The industry has also integrated the hybrid cars as one of the main products together with the primary product that is the electric car. For instance, Nissan has produced a hybrid car. Other companies such as Apple Inc. are showing interest in producing new models of the electric cars (“The History”, 2015). Size of the Electric Car Industry According to Perkowski (2014), the United States provided the largest market for electric cars worldwide. 83647 electric cars were sold only in America in the month of November. In the previous year, approximately 70000 electric cars were sold in the same market. In Europe, 72419 electric cars were sold in October only, in the 2013. In China, 42493 electric cars were sold in January 2014. According to these statistics, the electric car industry is huge since it produces enough cars to satisfy these vast markets (Perkowski, 2014). Key Players in the Electric Car Industry The key players and stakeholders in the electric car industry are the governments and companies. States are interested in the industry because of the green nature of electric cars. The electric cars don’t emit any pollutants thus making them the best cars for environmental conservation. On the other hand, the companies involved in the electric car industry range from the IT firms, huge multinational car manufacturing companies and companies investing in charge supply. The IT firms provide the necessary technology to the development of new models while the car manufacturing companies do the construction of the models the rechargeable batteries. The car manufacturing companies includes Toyota, GM, Honda, Nissan, Citroen, Mitsubishi, Peugeot, and Tesla. The charge supply companies invest in the development of charge points that provide the electric cars with the electric energy. Companies such as Gaeltec Utilities Ltd, EC Charging, and Elektromotive Ltd specialize in the development of electric charge points (“Electric Car”, 2015). The players in the electric cars compete by coming up with innovations that will outdo the competitors model. Customers prefer an improved version of the electric car thus they would pay attention to a more developed car. Tesla Motors has been controlling a huge market share because of its series of innovations. For instance, Tesla Motors has produced Model X, which is more developed electric car compared with the Model S and the competitor`s cars. It has an exhilarating acceleration, falcon wing windows and three rows of sitting. The players in this industry also compete on the prices of their products. Some reduce the prices of their products so as to beat the competitor in the market. For instance, Tesla Model S base model costs $70000 while the base models of other competitors cost approximately $20000 to $30000. Consumers who are price sensitive and have little income will undoubtedly be attracted to the cheaper model. Prices have therefore created a huge competing platform in the electric car industry ("Electric Car Industry”, 2014). An Innovation in Electric Car Industry One of the most unique and innovative electric car to be made was the Tesla Model S electric car, which was a high-performance electric Sedan produced, in 2012, to face out the Tesla Roadster. The design and the production of Model S were so unique that no any other car manufacturer had produced the same. The uniqueness of this model was discovered when the HIS Technology Teardown Team dismantled the Tesla Model S in 2014. The following differences were considered to compare it to any other electric car that had been produced before. The technical, manufacturing, development, service and the powertrain differences were some of the distinguishing characters observed by this team (“Tesla Motors: A Case Study”, 2015). According to this team, Model S had a technical innovation that includes the following; the car has a 17 inch touchscreen infotainment system at the center stack. There has never been a car on the road with such an innovation. The screen applied a technology that is exactly like that used in smartphones. The screen has a display of 1920 by 1200 WVGA resolution. This screen has Google Earth overlays that help in navigation and direction. The screen has some other settings such as the suspension, headlights, sunroof, door locks, window locks, and other vehicle settings. It also provides audio and Bluetooth services. Furthermore, the manufacturing differences of Model S innovation were as follows; Tesla Motors came up with the idea of outsourcing most of the manufacturing services from an electronic company. The Electronic Manufacturing Services (EMS) did the creation of the infotainment for Model S. Also Tesla used the knowledge of both the engineers at Silicon Valley and EMS to come up with a model that integrated hardware and software at the same time. Other companies tried to imitate Tesla`s Model S to integrate the hardware and the software, but the cars kept on failing due to the problems associated with the software. The software kept on asking for updates. An example of such companies was Ford whose product was faced with problems while in the market (“Tesla Motors: A Case Study”, 2015). In addition, Model S innovation was unique than other vehicles because of its exclusive method of development. Since Tesla Motor Company is located in Silicon Valley, the people used to develop the idea of Model S came from the leading technology firms located in Silicon Valley. This created the uniqueness of the model since the developers could make to integrate hardware and software. Another characteristic of Model S innovation was its new way of service (“Tesla Model S Outsold”, 2015). Due to the presence of infotainment that was controlled by software, its service was new and unique since it was through the air. This way of service had never been there before since all the other type of vehicles had to travel physically to a physical garage for services. They became the market leader in the integrating software and hardware forcing another car manufacturer to follow suit. The final characteristic that was unique with Model S innovation was its electric propulsion system. The system was composed of battery, gearbox, motor and drive inverter. The battery was microprocessor lithium controlled; the gearbox had a single speed gear while the motor was a three face with four AC poles. Tesla`s powertrain was an innovation and development that captured the attention of all the other manufacturers of electric cars (“Tesla Motors: A Case Study”, 2015). The innovation of Model S in the electric car industry changed Tesla Motor Company because it made it become one of the largest electric producers in the world. Tesla was not in the market for long compared to other multinational companies that had been producing cars for decades. Model S made Tesla Motor company hold 250 patents covering it from the competitors. It therefore increased the growth of the company since no any other company would use the same innovation without Tesla consultation and agreement (“Tesla Motors: A Case Study”, 2015). Tesla innovation created a panic in the whole industry since it came to form a competition of higher magnitude compared to before its entrance into the industry. GM Motors was among the first companies to be affected by the innovation of Tesla. It decided to develop a new model that would compete with Tesla new model. The innovation changed the way customers controlled the market by creating a model that would make customers purchase it even though it was much expensive (“Tesla Model S Outsold”, 2015). In the beginning, the companies that were already in the market competed on prices of their electric cars thus were making the customer the determiner in the market. Model S innovation made the whole industry start integrating software and hardware in their models. Companies followed suit for them to remain relevant in the market and also create a healthy competition (“Tesla Motors: A Case Study”, 2015). Position of Model S in the market Model S has been among the most selling cars in the market both in the United States and other countries globally. According to the 2013 electric car sales, Tesla Model S was declared to be the leading model. This is because, 17650 Model S cars were sold in the United States while only 10932 BMW 7 Series, 13303, 10727 Lexus LS, Mercedes-Benz S-Class, 6300 Audi A8 and 5421 Porsche Panamera were sold. The Model S cars, therefore, control a good market share compare to other electric cars (“Tesla Model S Outsold”, 2015). Conclusion The electric car has become the other choice of many consumers due to the increased gasoline prices thus making them expensive to service. Many governments also have been at the front line to call for the development of electric cars because they help in conserving the environment. The two factors have led to the expansion of the electric car industry since almost all car manufacturing companies have engaged in the production of electric cars. The players in the industry have been increasing due to much demand of electric cars. The car manufacturers, IT firms, electrical energy suppliers and the government have been some of the key players in this industry. Tesla `s Model S has been one of the most envied innovation that brought a revolution in the electric car industry. References Electric Car Industry Grows More Competitive. (2014). Retrieved 6 April 2015, from http://techpageone.dell.com/business/electric-car-industry-grows-more-competitive/ Electric Car, Electric Vehicle Enterprise Opportunities, Business, Companies. (2015). Retrieved 6 April 2015, from https://www.esb.ie/electric-cars/electric-car-enterprise/electric-car-industry.jsp Perkowski, J. (2014). Electric Cars: A Review of 2014. Forbes. Retrieved 6 April 2015, from http://www.forbes.com/sites/jackperkowski/2014/12/12/electric-cars-a-review-of-2014/ Tesla Model S Outsold Mercedes-Benz S-Class, BMW 7 Series, Audi A8, Lexus LS and Porsche Panamera | Forums | Tesla Motors. (2015). Retrieved 6 April 2015, from http://my.teslamotors.com/de_DE/forum/forums/tesla-model-s-outsold-mercedesbenz-sclass-bmw-7-series-audi-a8-lexus-ls-and-porsche-pan Tesla Motors: A Case Study In Disruptive Innovation | IHS Quarterly. (2015). Retrieved 6 April 2015, from https://www.ihs.com/articles/features/tesla-motors.html The History of the Electric Car. (2015). Retrieved 5 April 2015, from http://energy.gov/articles/history-electric-car Read More