Innovation in New Energy Vehicles

This assignment analyzes the concept of innovation in the new energy vehicle sector. It delves into various factors influencing technological disruption, comparing companies such as Tesla, Toyota, and BYD. The discussion draws upon different perspectives and research findings to determine which company emerges as a leading innovator in this field.

1
Critical Review
by
Course:
Tutor:
University:
Department:
29 October 2017

2
Innovation model analysis of new energy vehicles: taking Toyota, Tesla, and BYD as an
example
Introduction
This article focuses on the vehicle industry with regard to new energy and the innovative
models adopted by Toyota, BYD and Tesla Companies. The specific areas of innovation that
are analyzed and compared to this paper are the environmental, marketing strategy,
innovative track and corporate model (Liu and Meng 2017).
Innovation model analysis of new energy vehicles:
Toyota
Toyota is perhaps the most spread vehicle company across the globe. It is established in 27
countries worldwide with 50 manufacturing facilities and worldwide car sales in over 160
countries. The quick integration of the new energy Toyota vehicle is attributed to its global
presence, cooperation with higher institutions of learning, and creation of conducive
environment for innovation such as the establishment of research institutions. For instance,
The Research Institute (TRI) was established with the cooperation of Toyota and GM Group
when it was first introduced in the United States.
Tesla
Tesla is currently ranked one among the top ten innovative companies in the vehicle
manufacturing industry worldwide. Tesla has the advantage of innovation environment hence
the reason for its remarkable growth within ten years only and without any experience in the
automotive industry. The disruptive innovation of Tesla is attributed to the genius team
behind the company production and operation activities (Hardman, Shiu and Steinberger-
Wilckens, 2015). With Elon as the most significant member for providing Internet genes;

3
Black in charge of user experience and Tesla CTO who oversees the technological aerospace
of the company manufacturing process.
BYD
This company major in IT to achieve all its competitive advantage in the motor vehicle
industry. It combines technologies in IT, vehicle and new energy and is ranked as a high-tech
business worldwide. It is well-known for the benefits of its new energy innovation in motor
batteries among other leading technologies. Additionally, they produce their batteries and
other technology related gadgets for international companies like GM, Chrysler, etc.,
cooperated with giant global manufacturers to enhance their worldwide brand influence.
Marketing and innovative strategy of BYD, Tesla, and Toyota
BYD, Tesla, and Toyota have at least adopted the 4P approach in market positioning
(Armstrong et al., 2015). Tesla is a luxurious car customized to suit and attract the rich who
are in search for super quality and the desire for new things. BYD is the leading company in
new energy vehicles in China and is made to suit the public transportation field. This is
because of its energy saving and environmental protection features. Toyota is as well known
for its hybrid technology car which is also a cushion for unpolluted electronic technology.
The authors make four recommendations in four features of new energy vehicle innovation
model. First, in the innovative ecological environment, the companies should focus on
developing their technology in the areas of electronic control, batteries, and motor because
the new energy motor vehicle sector is a high-tech sector. Secondly, market positioning
should be aimed at the public transport sector to create awareness and then consider prices
after recognition. Third, under the innovation path, the companies should comprehend the
technology in new energy automotive to ensure long-term development. Lastly, the best

4
business model should be that which incorporates all sectors and is inclusive of the
government development business model because this will factor in much of research and
development (Lane et al., 2015).
Is Tesla a Disruptor? (And Why the Answer Matters)
Tesla is regarded as an innovative disruptor by many market analysts, fanatical customers,
and technology-oriented societies. However, there exists abundant evidence against this
conclusion. For instance, the current company debt of approximately $10 billion in addition
to its additional plan of borrowing $1.5 billion and the problem of transition to mass
production. According to Downes and Nunes (2017), Tesla doesn’t qualify to be a
technology disruptor because the company doesn’t meet the essential elements of a successful
disruption and the authors further compare it with other companies that have surpassed the
disruptor standards.
The first evidence of how Tesla isn’t a disruptive company is that it is not definite of the kind
of disruptive technology it is offering. Tesla has been producing electric cars for ten years,
and in fact, the company is not the first to manufacture electric vehicles, and neither is their
technology improved than internal combustion. For example, the performance of the Tesla
battery is much lower than fossil fuels and may not be much better for the next 50 years.
Additionally, the current state of competition in the motor vehicle industry is not promising
for Tesla, and thus no guarantee of the company is the leader in any automotive technology.
This is also true because the competitors are likely to engage same suppliers like Tesla in
addition to Tesla minimizing their advantage of proprietary inventions through its decision of
sharing all its patents in 2014 (Karamitsios, 2013).
The leading brand of the company, for now, is luxury and quality (Mangram, 2012), but this
is a feature that is abundant in the market considering examples like BMW, Lexus, and

5
Mercedes. Regarding market positioning, Tesla is commonly compared superficially with
Apple but these companies when analyzed in detail they differ regarding technology
disruption. For instance, the iPhone doesn’t have the competitively-priced Model 3, but the
reinvention of digital cameras and mobile phones and some other products enabled it to a
achieve a significant market share. Also, Apple was able to produce millions of new products
right from the beginning to the end, unlike Tesla.
The authors affirm their arguments by comparing Tesla with right Big Bang Disruption
companies such as Netflix and Amazon Kindle. A successful disruption often demands a
vigorous manufacturing distribution, constant revenue supply from established products and
capacity to supply industry demands within short order. Tesla doesn’t meet any of these, and
its uncertainty regarding government grants further worsens its situation. Even if the
company supplies all its pre-ordered 3s Models on time, the initial excitement for a new
product doesn’t imply sustainable sales in the future (Trop and Cardwell, 2014). For example,
the customers that turned up for the launch of the iWatch were all the likely customers
(Mobile Apps, 2013).
It is recommended that for Tesla to become a technological disruptor, the company should
fully automate its manufacturing and work towards improving its artificial intelligence and
robotics because these are some of the technologies that have not been fully ventured into.
Critical evaluation of the two articles
There is a lot of variation in the articles regarding the evidence provided in support of the
conclusions. Liu and Meng (2017) discuss innovation model analysis of new energy vehicles
considering three vehicle manufacturing companies namely Toyota, BYD, and Tesla. The
study and comparison are conducted considering four aspects of new energy vehicle
innovation such as innovative ecological environment, market positioning, creative path and

6
business model. On the contrary, Downes and Nunes (2017) in arguing whether Tesla is a
disruptor only considers Tesla but in comparison with companies such as Netflix and
Amazon Kindle. The other aspects considered by Downes and Nunes include the financial
capacity and revenue of the company as evidence of Tesla not being an innovative company.
Thus the article by Liu and Meng is structured and comprehensive than that of Downes and
Nunes because in analyzing new energy vehicles, it is proper that various aspects are
considered to make an informed decision.
Liu and Meng compares and contrasts innovation model analysis of new energy vehicles
using motor vehicle manufacturing companies which are in the same industry. This
comparison is unbiased because the companies are likely to face similar challenges in
resources, competition, and technology innovation. The contrast and evaluation of Downes
and Nunes are somewhat biased because the authors compare Tesla Company with Netflix
and Amazon Kindle which happen to be in different industries. The challenges faced by
Netflix and Amazon Kindle may not necessarily be similar to those faced by Tesla. Thus the
conclusion reached might as well be incomprehensive. For instance, Downes and Nunes list
the examples of success disruptor companies not in the vehicle manufacturing sector then
concludes that since Tesla doesn’t meet any of the qualifications, then it doesn’t qualify to be
an innovative company.
Liu and Meng use experimented scientific business models (Liu and Chen, 2013; Xie et al.,
2015, and Wang, Chen and Jiang, 2015) to lay the foundation of their model analysis of the
new energy vehicle innovation. Furthermore, the analysts provide some illustrations for each
company to explain the market positioning, innovative ecological environment, creative path
and the business model innovation. Whereas Downes and Nunes do not cite any researched
model to base their conclusion neither do they adopt any scientific method but rather on
logical reasoning and comparison with companies of the different sector.

7
Conclusion
The discussion on the innovation in the new energy vehicles and which company is a
technological disruptor is a debate that has received different conclusions based on the
aspects under consideration. This is because many different factors can be considered in
determining the leading technology disruptor in the motor vehicle industry. However, new
energy vehicle technology innovation needs to be developed further and the products made
available to both the private and public sector.

8
References
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction.
Pearson Education.
Downes, L., & Nunes, P., 2017. Is Tesla Really a Disruptor? (And Why the Answer Matters).
Harvard Business Review.
Hardman, S., Shiu, E. and Steinberger-Wilckens, R., 2015. Changing the fate of Fuel Cell
Vehicles: Can lessons be learnt from Tesla Motors?. international journal of hydrogen
energy, 40(4), pp.1625-1638.
Karamitsios, A., 2013. Open innovation in EVs: A case study of Tesla Motors. Accessed on
29 October 2017. http://www.diva-portal.org/smash/get/diva2:635929/FULLTEXT01.pdf
L.J. Liu, S.B. Chen, 2013. New energy vehicle technology innovation policy based on multi-
loop Competition model, Scientific Management Research, (10):41-45.
Lane, B.W., Messer–Betts, N., Hartmann, D., Carley, S., Krause, R.M. and Graham, J.D.,
2013. Government Promotion of the Electric Car: Risk Management or Industrial
Policy?. European Journal of Risk Regulation, 4(2), pp.227-245.
Liu, J.H. and Meng, Z., 2017. Innovation Model Analysis of New Energy Vehicles: Taking
Toyota, Tesla and BYD as an Example. Procedia Engineering, 174, pp.965-972.
Mangram, M.E., 2012. The globalization of Tesla Motors: a strategic marketing plan
analysis. Journal of Strategic Marketing, 20(4), pp.289-312.
Mobile Apps, A.B., 2013. iWatch by Apple. Accessed on 29 October 2017.
http://www.abmobileapps.com/iwatch-apple/

9
Trop, J. and Cardwell, D., 2014. Tesla plans 5 billion battery factory for mass-market electric
car. NY Times.
Wang, Z.Q., Chen, Y. and Jiang, Z.H., 2015. An input-output analytical method of
identification of the advanced technology and core technology: The case study of hybrid
electric vehicle technology. Studies in Science of Science, 11, pp.1612-1620.
Z.M. Xie, Y. Zhang, Z.H. He, et al., 2015. Research on Patent Trend of New Energy Vehicles
Industry, China Soft Science, (9):127-141.