Menu

Search

  |   Insights & Views

Menu

  |   Insights & Views

Search

How Dyson can offer a challenge to Tesla and the electric car giants

Shockwaves. Momentum is with electric cars. Sergio Monsalve, CC BY-ND

British vacuum cleaner manufacturer Dyson may be steering into a brand new market. News that the company owned by inventor and entrepreneur, James Dyson, has received UK government research funds for electric vehicle research sparked excitement shortly before electric car pioneer Elon Musk launched the latest, lower-priced model of his Tesla range. The two men are at different ends of the development spectrum, but they face the same stiff challenges against the traditional incumbents.

Details around the British venture are sparse – an earlier reference to the development of an actual vehicle was apparently removed from the final document which revealed the funding. But it is clear that the transition from internal combustion engines to electric vehicles will involve the development of a series of services and products – a value chain – which will require the involvement of new players in existing automotive supply networks.

Clearly a firm like Dyson has considerable expertise in relevant areas such as electric motors, charging protocols, storage batteries, energy management software and other relevant technologies to electric vehicles. There are echoes here of China’s main electric car and bus producer, BYD, which had been primarily a producer of batteries for devices such as laptops and mobile phones. Vehicles were a sideline to this activity – admittedly increasingly important – alongside other new areas such as photovoltaics.

The next Musk? James Dyson. Conservatives/Flickr, CC BY-NC-ND

Shocks to the system

The move towards electric vehicles is disruptive in many respects and attracts new entrants with, so far, varying degrees of success. While Tesla still seems to be going from strength to strength – thanks in no small measure to considerable resources and its charismatic boss – others, such as Fisker, have been less successful.

Set up by Henrik Fisker, a car designer with an impressive track record in the mainstream internal combustion car industry and in receipt of US government support, it nevertheless slipped into receivership only to be rescued by Chinese interests to be reborn as Karma Automotive. On the less glamorous supplier side there are also various new entrants from the worlds of information and communications technology and from electronics who are making tentative steps to become automotive suppliers in this newly emerging value chain.

The diversified French group Bolloré runs shared schemes such as Autolib in Paris. Household names Apple and Google are at an early stage in their electric vehicle development – albeit with more ambitious plans in the pipeline.

Google self-driving car project.

Innovation and transition academics often assume that technological revolutions are largely driven by new entrants. Such a belief is often implicit in their work. But University of Sussex professor Mariana Mazzucato has shown that many of the truly innovative activities, which allow genuinely new technologies to be developed and then established are in fact due to visionary policy makers pushing resources in the right direction. Note that the US government not only supported General Motors, but also Tesla, Fisker and ABC Battery Systems.

Charged up

Private players can only enter markets once there is money to be made, which is rarely in the development phase. Also, it should be noted that much of the emerging electric car value chain is still in the hands of the big players from the established, petrol engine world, Tesla’s efforts notwithstanding. The world’s biggest battery electric vehicle producer is Renault-Nissan, while other significant players include those masters of traditional engine design, BMW, as well as GM, Ford and the Volkswagen Group VAG. Developments at the latter are receiving an extra boost since “dieselgate”.

Few now remember that electric cars are not an entirely new technology – to the mainstream carmakers anyway. VW offered the Golf CitySTROMer to paying customers in the 1980s, while BMW showed a number of small electric vehicles, such as the E1, in the 1990s. Peugeot made its own versions in the 1940s, while Japanese minicar and minitruck producer Daihatsu was the word’s largest producer at one stage. Other electric vehicle niches have long existed, for instance the French and Italian quadricycle producers Aixam-Mega, Ligier, Casalini and Tazzari. These products, along with those from Reva in India also helped kickstart market penetration in places such as London.

Somewhere in a parallel universe … diamond geezer/Flickr, CC BY-NC-ND

Much of the electric vehicle therefore probably exists already. The inertia and dependencies in the existing automotive “regime” are often underestimated, but they are very real. If Dyson manages to conjure a valuable addition to the market, then it will face issues such as the lack of a distribution network which present real barriers to new entrants – hence Tesla’s direct sales model. And the economies of scale inherent in mass car production, and the resulting cost penalty for anything produced at a smaller scale, are difficult to overcome.

For this reason, moves to turn basic technologies such as battery packs, motors and controllers into commodities that can be shared by a wide range of assemblers offer real hope to many would-be electric vehicle producers; it is in this kind of area that companies like Dyson could play a role as developer and supplier of key components and sub-assemblies to be used as modules by smaller independent assemblers around the world.

Emerging from all this is the realisation that the core competence of established mass car producers is not so much “metal-bashing” and internal combustion engine development, but rather systems integration; a skill set equally useful for the mass production of electric vehicles. This therefore puts the existing players at a distinct advantage over any newcomers until they can present a genuinely innovative business model in areas where the big boys cannot or will not follow them.

The ConversationPaul Nieuwenhuis does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond the academic appointment above.

Paul Nieuwenhuis, Senior Lecturer and Co-Director, Electric Vehicle Centre of Excellence (EVCE), Cardiff University

This article was originally published on The Conversation. Read the original article.

The Conversation

  • Market Data
Close

Welcome to EconoTimes

Sign up for daily updates for the most important
stories unfolding in the global economy.