Electric Vehicle Disruption
I had been aware of the electric car project at Dyson for some time having done some very minor consulting for various teams on the project but I did not have any strategic input. In 2017 the project was announced publicly, then in 2019 it was announced that it was canceled.
As far as Dyson’s story goes, I think Dyson took the calculated decision to take on a risk with potential reward. As part of an ongoing appraisal of that risk, Sir James Dyson was then able to avoid the sunk cost fallacy and pull the plug. Key expertise in motors and batteries and the development of their IP for other projects continues as does the wider investment plan to grow the companies R&D capabilities in the UK and Singapore. I believe the fact that Dyson is both willing and able to take these risks as well as pivot when things change speaks volumes about the sort of mindset at the company.
More broadly, there is a lot going on in the automotive market at the moment. I had my own look into the market to understand these trends, and think about what I might have done differently.
The user value offered by automotive is currently being disrupted by market, technology and regulatory forces [6]. This provides opportunities for new entrants to the area. Any new entrant must deliver different and better value propositions in selected, non-commoditized markets to be successful. Ideally they should be positioned to avoid competing directly with cash rich incumbents and leveraging protected technology.
There are a number of different and better value propositions that I believe meet these criteria.
Sensor Revenue Streams – Collected data can be sold to local authorities & other businesses (e.g. street foot-fall, air quality, parking violations, free parking spots, street maintenance required).
Transport Convenience – Dynamic bus routes blur the line between bus and taxi, reducing cost and increasing convenience for users. Autonomous cars and car services blur the line between taxis and cars. Additional information on current journey time, onward journey times, city congestion, and how full the bus is can all help improve user experience.
Time & Cost – Increased safety & efficiency of autonomous driving and utilising congestion data reduces travel time & costs.
Partnerships – Offering tourist information, tours, special services to events & travel, hotel, restaurant & experience books for onward journey opens the door to interesting partnerships with many companies.
Targeted Advertising – A car or bus is a mobile, digital billboard outside and media portal inside both of which could be valuable to partner companies.
Comfort & Experience – Without drivers, vehicles become lounges, cinemas, restaurants & offices to enjoy with other people. With drivers, electric can offer great performance.
Performance & Emissions – Electric vehicles potentially offer increased performance and the capability to run with reduced environmental emissions.
If a technology with fundamental characteristics that are causally linked to advantages in terms of these value propositions can be identified, developed and protected, this could provide a significant advantage for new entrants. A number of interesting technologies to better understand are:
Connectivity – Internet (5G, Satellite), Android Auto/Apple CarPlay, Remote Stop (On Star), Remote Diagnosis (ODBII), Car to Car Standards
Display / Light – Smart Glass (SPD, LC, chromatic), Transparent Display/Light (LCD, OLED), Edge Lit Glass Lights (Ceres Holographic), Pixel Headlights (Osram), Laser Headlights (SLD), Holographic HUD (Daqri, WaveOptics), Virtual Reality
Sensing – Lidar/ToF, Radar, Cameras (visible, IR, Stereo), Ultrasound, GPS, Mapping (Blue Vision Labs, Mapillary), Environment (CO, NO, VOC, PM, SO2), Accelerometer (insurance black box, collision detection)
Environment Control – Purification, Active Noise Cancelling, Metamaterial based Noise Tuning, Mood Lighting, Circadian Lighting, Biometric Sensors (Continuous)
Motors & Batteries – Lipo, Hydrogen Fuel Cells, Solid State Polymers, Novel Battery Chemistries
The challenge is to deliver this value in a climate of decreasing margins and shortening product cycles with large incumbents benefiting from platform sharing & economies of scale. After investment of nearly £2 billion Dyson decided it was not possible to compete with incumbents directly. As an early entrant, Tesler have a first mover advantage and are burning money to scale fast to, they hope, allow them to do this in the near future. Other companies have different strategies, niche markets are being updated to electric by the likes of Morgan or DIY companies offering conversion kits. Arrival is looking at commercial markets where value propositions are can be translated into profit and loss more obviously. Car sharing schemes such as BMW iDrive are making use of electric in the transport as a service market. There are clearly many opportunities for different software based data services, in the world of hardware, I believe a premium experience service could find a market by leveraging new electric as well as traditional cars to provide the best of all worlds while experimentation continues in the market and more complex technologies such as autonomous mature (and regulations catch up). This might take the form of a subscription that provides you access to any one of 5 cars. When requested, this car could be swapped for another in your subscription so you always had the car to suit the job at hand. By providing a car 24/7 the scheme would be more akin to product ownership and gain more traction in developing economies.
References
U.S. Department of Energy, 2016. ”Transportation Energy Data Book: Edition 35”
UN, 2017. “World Population Prospects”
International Organization of Motor Vehicle Manufacturers, 2015. “Motorization Rate Worldwide”
Statista Global Consumer Survey, 2016. “Important Factors When Buying a Car”
phys.org, 2018. “Climate goals mean Europe will overtake US in electric cars”
European Economic and Social Committee, 2017. “Paradigm shift in the car industry”
Bloomberg, 2018. “‘Peak Car’ and the End of an Industry”
Bloomberg, 2017. “Electric Vehicles to Accelerate to 54% of New Car Sales by 2040”
MIT, 2013. “Driverless Cars Are Further Away Than You Think”
Strategy&, 2017. “2017 Automotive Trends”
Mckinsey 2013, “The road to 2020 and beyond: What’s driving the global automotive industry?”
