SE Vehicles

The Greening of Technology Push and Market Pull

Jul 26, 2016

What became known as 'Dieselgate' is a remarkable case of a huge conglomerate getting caught 'cheating on their exams', therefore having to face the dire consequences. The American EPA is to collect billions from Volkswagen, whereas the EU (European Union) simply cannot, since it bears responsibility for the manipulated testing methods with which Volkswagen thought it was in the clear.

VW will have to pay $14.7 billion in retrofits, damages and fines for exceeding the NOx limits. That's in the U.S. Diesel owners in the EU aren't entitled to any compensation. Worse, Volkswagen is allowed to continue selling the very same polluting diesel cars in the EU, that can no longer be sold in the U.S. Technology can help to extend shelf life of the car as we know them. It can also challenge us to rethink the whole car phenomenon altogether. What about ending spillage and pollution, and free up resources on a scale unseen before?

Compliance and the competitive edge
There are countless individual cases where vehicle makers and government authorities don't meet eye to eye. For instance, American car manufacturers rather purchase zero-emission credits from EV maker Tesla than 'clean up their act'. Besides emissions, CAFE goals (corporate average fuel economy) and safety regulations are also source of perpetual debate. One can only speculate what the consequences will be if NHTSA wishes to follow-up on its intention to introduce rear-impact crash testing to improve rear-passengers safety. The vehicle type that I happen to favor, deserves special mentioning. Manufacturers like Arcimoto, Polaris and Elio Motors are pitching hard, state by state in the U.S., to have their three-wheelers register as autocycles (the category of vehicles between four-wheeled automobiles and motorcycles), so they don't have to meet NCAP crash safety standards. The trade-off, of course, is that passenger safety and pedestrian safety (as these ‘autocycles’ feature protruding parts that can inflict needless harm to pedestrians and cyclists) are severely compromised. Doesn't have to be. As a matter of fact, complying with future guidelines and standards can form THE competitive edge.

Technology Push vs Market Pull
To determine the potential of early-stage compliance, let's look at the familiar diagrams regarding Technology Push versus Market Pull. Sheer technology-pushed new products are relatively rare. Best example of the past decade is of course Apple's iPhone. It felt like it came from out of the blue - new technology, new looks, new possibilities... and a whole new market. Can't think of a similar example in the car industry, with such disruptive influence... Market pull is when a new product is being developed on the basis of (shifting) market demand, a competitor's product or customers’ preferences.

The auto industry is primarily sales / shareholder driven. R&D is aimed at developing successors to existing models that hopefully sell better than the competition’s. New technology is incorporated as long as it will improve sales of cars as we know them today. Think of sat nav, that sort of thing. ‘Core new product’ development in the purest sense is almost non-existent. Obviously, there's considerable market pull due to the constant rivalry among car makers, For instance, Mercedes CLA Class hatchbacks are both meant as a followup to its failed attempt to bring a hatchback-type car (former A Class), as well as a response to BMW's successful 1 Series hatchbacks.
Silicon Valley realized that there’s so much more to “going from A to B” than selling cars. It cleared the way for new user and business models that pose a direct threat to the auto industry’s century-long hold over personal transportation. “If it doesn’t exist, make it happen”. Technology-driven in other words. Self-driving technology, car-sharing apps, incorporating transportation networking were all initiated in Silicon Valley. On the other hand, SV entrepreneurs have to deal with the social as well as regulatory acceptance - yes or no - of ride services (Uber) in different countries.

Shared interests strengthen market hold...
Is even able to create its own market with its own momentum. What Detroit and Silicon Valley don’t quite comprehend is that the present market for personal transportation isn’t some sort of uniform playing field receptive (or not) to new products. There are individual preferences and needs to cater to, sure. However, there are also shared or societal interests to consider - if not for increasingly aware consumers and customers, it is the government that makes us all conscious of the consequences of the choices we make. Government and public have a shared interest in:
- reducing fuel consumption / boost fuel economy (after all, why pay more?)
- lowering emissions, which improves our living environment
- further improving traffic safety
- better use of our road infrastructure (rather maintain and improve, than expand)
- curbing global warming (although doubted by many, more and more people are convinced of the need to do so)

Who's going to disrupt?
Better take those concerns in the equation now, than being forced later on. The industry's motto should be not only to happily comply with the new standards that serve our common interests, but also to initiate new standards! A new automotive company or venture should not be about recruiting the best engineers, not even designers. Over the past year, Apple hiring hundreds of them for its Titan car project did not prove fruitful. Many already left. It should be about 'soliciting for the brightest new concept' - that makes sense in a way that other concepts simply don't. The good thing is that it eliminates the dreaded wishful thinking and venturing element in product development! In fact, early-stage compliance can create its own perpetual circular motion, its own momentum, as symbolized by the three-arrows circle in the last diagram. Governments will be happy, so will customers… and shareholders.

Ralph Panhuyzen.

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