Key Trends Facing the Automobile Transportation Industry over the Decade - Essay Example

Analysis of Better Place’s Business Key trends and uncertainties facing the automobile/ personal transportation industry over the decade The key problem in personal transportation is the issue of oil dependency. Many countries are not endowed with the natural resource, so they have to rely on external sources for their fuel. Sometimes this leads to fluctuations in market prices as the world oil market is beyond any country’s control (Moriarty and Damon, 2008). Economies have been under turmoil owing to this arrangement. Additionally, the automobile industry is plagued with the problem of environmental sustainability. The most predominant type of vehicles is the Internal Combustion Engine (ICE) automobile, which emits a lot of hydrocarbons into the atmosphere and thus augments the total amount of greenhouse gases in the atmosphere. This is not environmentally sustainable as it contributes tremendously to global warming. For this reason, automobile companies have consistently tried to alter their respective products in order to accommodate emission abatement targets set by their governments. One uncertainty that pervaded automobile industry players is the availability of infrastructure required to make their technologies work. It is for this reason that ethanol vehicles, compressed natural gas fuels, hybrid electric vehicles, and hydrogen fuels cells have failed. Most of these companies entered the market with the hope of providing more sustainable alternatives. However, they did not live up to expectations because there were no dedicated networks of refueling stations, pipelines, storage and transmission of the fuel sources. Efficiency has also been a key uncertainty in personal transportation as consumers often expect value for money. Most of the conventional automobiles in the market did not use their value sources efficiently, so this caused wastage and required greater consumer expenditure in order to make up for the lost energy. Several companies have been trying to introduce new automobiles that would consume most of the fuel and whose lifecycle was not expensive. Ethanol vehicles failed at this attempt because agricultural expenditure and the overall cost of producing food crops were costlier than the savings garnered from the automobile technology. Similarly, this problem has plagued a number of sustainability-driven auto firms as critics claim that the efficiencies enjoyed by consumers were offset by large scale producers of electricity or any other green energy. Therefore, organisations have been striving to maintain a balance between energy efficiency and cost efficiency. Consumers require a vehicle that is practical, or one that can get them to where they need to go. Companies must provide an automobile with high/ reasonable mileage. One of the greatest objections to earlier forms of electric vehicles was the need to constantly refuel or recharge them in order to keep them going. Additionally, companies must also provide vehicles that are relatively easy and inexpensive to maintain; for electric vehicles, this implies having batteries that have a long life span (Woody, 2009. Two possible scenarios can emerge for Better Place; it could provide a vehicle that is both environmentally sustainable and practical or it could miss out on one of these components and thus fail as a brand. The first possibility can only occur if the company tackles most of the challenges that have plagued the personal transportation industry. It can do this may setting up an electric vehicle network in conjunction with other competitors, governments and electricity providers (Gunther, 2013). It should also work on sensitising the market about the possibilities inherent in electric vehicles. Battery range and vehicle costs are a major concern for consumers, so the organization needs to embark on a campaign that showcases the product’s capabilities (UTS, 2010). The other scenario would simply involve ignoring any of these aspects in vehicle production and it would lead to fatal consequences. Better Place’s strategy should thus accommodate demand and supply side dynamics (Etzion and Struben, 2011. It needs to start with markets where the demand for electric vehicles is high and the population density is relatively high as well. It should also collaborate with various stakeholders in order to establish charging infrastructure that make the electric vehicle inexpensive and convenient to use. Better Place’s key stakeholders The most relevant stakeholder for Better place is the consumer, whose needs are being met. If the company does not meet consumers’ expectations, then its viability might be at stake. This means that whole populations are a concern for the company. Places with huge demand for personal transportation are highly relevant, especially if they spend a lot of money on non fuel efficient sources. People who live in areas that have large interconnections of roads are also helpful, so urban centres that are close to each other are applicable (Godelnik, 2013). Electricity generators are also critical in the organization’s success. These must specialize in renewable energy like solar or wind. They must also be willing to work with the company in order to provide constant sources of electricity even if their main source is intermittent (Berkowitz, 2013). Utility firms are also involved because they are in charge of providing the infrastructure needed for recharge stations. They are also in charge of connecting recharge stations to the grid; their role was fundamental as they would study consumer demand through IT and also decide on the most feasible method for charging clients. Petrol stations may also be involved as they could modify their stations to include EV recharge points. Automobile manufacturers are also involved because while Better Place will provide the network, it needs to have vehicles that meet its battery specifications. Getting commitments from these firms has been difficult because most of them do not see the profitability in electric vehicles. The government also plays a significant role in the electric vehicle market as it has the ability to encourage proliferation of the technology. If it gives tax incentives, then more car manufacturers will be encouraged to build EVs; tax rebates on consumer purchases also help (Fehrenbacher, 2013). Furthermore, they have the capacity to build road infrastructure that makes it easy to apply electric vehicle technology. Since several grids are government-owned, the government’s ability to accommodate new loads also matters to Better Place. It can also give incentives to several other Better Place stakeholders like solar energy manufacturers and petrol stations. Investors matter to the organization because they fund the company’s visions and ambitions (Thompson, 2014). It has partnered with several venture capitalists that have an interest in sustainable energy. Battery manufacturers are also separate from car owners as the batteries are selected and managed by Better Place (Environmental Leader, 2013). The following is a power/ interest grid of the above stakeholders: References Berkowitz, J., 2013. Following Coda and Fisker, Spring of EV carnage claims Israeli stratup Better Place. Available at: http://blog.caranddriver.com/following-coda-and-fisker-spring-of-ev-carnage-claims-israeli-startup-better-place-analysis/[Accessed 6 November 2014] Environmental Leader, 2013. How battery technology killed Better Place. Available at: http://www.environmentalleader.com/2013/05/30/how-battery-technology-killed-better-place-2/ [Accessed 6 November 2014] Etzion, D. and Struben, J., 2011. Better place: Shifting paradigms in the automotive industry. Available at: http://www.oikos-international.org/academic/case-collection/free-cases [Accessed 6 November 2014] Fehrenbacher, K., 2013. Report: Better place to file for bankruptcy. Available at: https://gigaom.com/2013/05/24/report-better-place-to-file-for-bankruptcy/ [Accessed 6 November 2014] Godelnik, R., 2013. 4 lessons in green product development from the failure of Better Place. Available at: http://www.triplepundit.com/2013/05/4-lessons-green-product-development-failure-better-place/ [Accessed 6 November 2014] Gunther, M., 2013. Why a highly promising electric car start up is failing. Available at: http://e360.yale.edu/feature/gunther_why_israel_electric_car_startup_better_place_failed/2624/ [Accessed 6 November 2014] Moriarty, P. and Damon, H., 2008. The prospects for global green car mobility. Journal of Cleaner Production, 16, (16), pp. 1717-1726. Thompson, R., 2014. Stakeholder analysis. Available at: http://www.mindtools.com/pages/article/newPPM_07.htm [Accessed 6 November 2014] UTS, 2010. Better Place: The future is electric. Available at: http://www.lib.uts.edu.au/gta/14569/better-place-future-electric [Accessed 6 November 2014] Woody, T., 2009. Shai Agassi: Green’s Steve Jobs. Grist, 1 May 2009, p. 14. Read More