A vast literature on technology transitions within industries suggests that early phases of new technologies are marked by periods of intense experimentation, but we know little about the conditions under which these periods emerge. We apply inductive, grounded theory-building techniques to examine what prompts firms to experiment across one emerging technology platform—plug-in electric vehicles (PEVs)—in China. Triangulating annual vehicle make and model sales data from 2003-2016 (plus monthly data from 2010-2016); 112 English and Mandarin archival documents from industry, academic, and news outlets; and 51 semi-structured interviews with industry, government, and academic stakeholders, we develop four in-depth case studies. We find that in contrast to the innovation trajectories of multinational and Chinese arms of joint venture (JV) firms, independent domestic Chinese firms (those with no history of international JV partnerships) are undertaking significant experimentation across multiple levels—infrastructure, core system, subsystem, and component—of the emerging PEV technology platform. We propose the concept of “institutional complementarities” to describe how interactions among institutions— here the national JV regulation and local market support and subsidies—may have turned regional markets into protected laboratories, extending the incubation periods for independent domestic firm experimentation. While this diverse experimentation may be an important antecedent of technology transition, consolidation induced by national policy standardization or competitive pressure may be required for PEV innovations to scale beyond their early, protected regional markets.
Pooled discrete choice models combine revealed preference (RP) data and stated preference (SP) data to exploit advantages of each. SP data is often treated with suspicion because consumers may respond differently in a hypothetical survey context than they do in the marketplace. However, models built on RP data can suffer from endogeneity bias when attributes that drive consumer choices are unobserved by the modeler and correlated with observed variables. Using a synthetic data experiment, we test the performance of pooled RP–SP models in recovering the preference parameters that generated the market data under conditions that choice modelers are likely to face, including (1) when there is potential for endogeneity problems in the RP data, such as omitted variable bias, and (2) when consumer willingness to pay for attributes may differ from the survey context to the market context. We identify situations where pooling RP and SP data does and does not mitigate each data source’s respective weaknesses. We also show that the likelihood ratio test, which has been widely used to determine whether pooling is statistically justifiable, (1) can fail to identify the case where SP context preference differences and RP endogeneity bias shift the parameter estimates of both models in the same direction and magnitude and (2) is unreliable when the product attributes are fixed within a small number of choice sets, which is typical of automotive RP data. Our findings offer new insights into when pooling data sources may or may not be advisable for accurately estimating market preference parameters, including consideration of the conditions and context under which the data were generated as well as the relative balance of information between data sources.
We model consumer preferences for conventional, hybrid electric, plug-in hybrid electric (PHEV), and battery electric (BEV) vehicle technologies in China and the U.S. using data from choice-based conjoint surveys fielded in 2012–2013 in both countries. We find that with the combined bundle of attributes offered by vehicles available today, gasoline vehicles continue in both countries to be most attractive to consumers, and American respondents have significantly lower relative willingness-to-pay for BEV technology than Chinese respondents. While U.S. and Chinese subsidies are similar, favoring vehicles with larger battery packs, differences in consumer preferences lead to different outcomes. Our results suggest that with or without each country’s 2012–2013 subsidies, Chinese consumers are willing to adopt today’s BEVs and mid-range PHEVs at similar rates relative to their respective gasoline counterparts, whereas American consumers prefer low-range PHEVs despite subsidies. This implies potential for earlier BEV adoption in China, given adequate supply. While there are clear national security benefits for adoption of BEVs in China, the local and global social impact is unclear: With higher electricity generation emissions in China, a transition to BEVs may reduce oil consumption at the expense of increased air pollution and/or greenhouse gas emissions. On the other hand, demand from China could increase global incentives for electric vehicle technology development with the potential to reduce emissions in countries where electricity generation is associated with lower emissions.
Car sharing firms such as Zipcar and Car2go rent personal vehicles for brief periods, usually measured in minutes to hours. By sharing a fleet of vehicles across many users, car sharing businesses help reduce the overall social costs of driving by reducing road congestion and overall vehicle emissions. While the majority of car sharing firms operate traditional gasoline vehicles, new Chinese car sharing firms have begun operating battery electric vehicle (BEV) fleets, which pose different constraints and opportunities such as higher upfront cost but lower operating costs and automated refueling. Within just two years, an electric car sharing ecosystem has emerged in China and now comprises the largest fleet of shared electric vehicles in the world. In this study, we aim to understand the factors that have led to this rapid emergence by comparing four car sharing firms (three Chinese and one multinational) operating in China with respect to four aspects of their business models: operations, infrastructure, investment, and local government relations. Our findings suggest that the rapid growth and development of EV sharing firms in China is associated with the alignment between firms’ business strategies and local policies. Across diverse business models, firms that have aligned their EV sharing services with the goals of local governments have thrived while those that have not have quickly failed. In addition, we find that “heavier” asset business models with larger up-front investments and greater control over charging infrastructure build-out and operations have been more successful in survival and expansion (but not necessarily profitability) compared to “light” asset models. These findings suggest that relationships between policy and business strategy are a critical component for enabling growth in the electric car sharing industry, and China’s distributed local governance structure may be facilitating greater opportunities for experimentation with new electric car sharing business models.
Emerging automobile technologies are providing drivers a choice beyond gasoline and diesel fuels, but less is known about how consumers perceive emerging fuels. We measure and model consumer preferences for different automobile fuels by estimating discrete choice models on data from choice-based conjoint surveys we fielded in 2016, including 331 online respondents and 127 in-person respondents at U.S. refueling stations. We find that on average respondents prefer gasoline the most and have similarly low preferences for ethanol, diesel, and natural gas, though significant preference heterogeneity exists. On average, respondents prefer the fuel type they currently use; while gasoline users view all alternatives relatively negative, only diesel users do not value diesel fuel significantly differently from gasoline, and only E85 users do not value E85 fuel significantly differently from gasoline. This result suggests that strategies to increase consumer experiences with alternatives to gasoline may be important in reducing barriers to their adoption. Results also suggest that on average respondents may be willing to pay as much as 1.5 to 2 times their current cost of fuel to reduce per-mile CO2 emissions, and this effect is higher for respondents with more liberal political views and greater concern for the environment.
This dissertation is a collection of three papers that assess how characteristics of China's domestic environment, including consumer preferences, national and local institutions, market characteristics, and policy, are associated with the development and adoption of plug-in electric vehicles (PEVs) in China. PEVs are at the forefront of sustainability in the global automotive industry with promising opportunities to reduce oil consumption and harmful emissions from passenger cars. The first study measures and compares consumer willingness-to-pay for different plug-in vehicle technologies in China and the United States using a conjoint survey fielded in each country. Results show that the current subsidy environments in China and the U.S. yield different outcomes; while Chinese consumers may be more willing to adopt today’s full-electric vehicles, American consumers have stronger preferences for lower-range plug-in hybrids. The second study builds upon the methods of the first. I use a simulation experiment to critique methods for pooling market sales and survey data together in discrete choice models, providing new guidelines for understanding under what conditions pooling data sources may or may not be advisable for accurately estimating true market preference parameters. Finally, the third study uses sales data, archival data, and 51 qualitative interviews to examine the diverse experimentation among independent domestic firms in China's the plug-in vehicle sector. By developing four case studies of domestic Chinese PEV automakers, I demonstrate how the configuration of national and local institutions in China can shape not just the direction of innovation in the PEV industry but also who engages in it. National institutions—specifically the formal Joint Venture (JV) and local content requirements—which have discouraged PEV innovation in multinational firms and inhibited the capabilities of Chinese JV partners to independently develop their own PEVs resulted in a protected PEV market in which independent domestic firms have dominated. This phenomenon, combined with local institutional support in the form of additional market protection and subsidies, has helped turn regional markets into protected laboratories for independent domestic firms to experiment with a variety of innovations. As these domestic firms begin to grow beyond their protected regional markets, national institutions may need to evolve to support national standardization of policies and plug-in infrastructure.