Chinese leaders have adopted a plan aimed at turning the country into one of the leading producers of hybrid and all-electric vehicles within three years, and making it the world leader in electric cars and buses after that....
What caught my eye was their plan to create tomorrow (exploration) while the incumbent industry participants tinker to fine-tune current business models (exploitation).
To some extent, China is making a virtue of a liability. It is behind the United States, Japan and other countries when it comes to making gas-powered vehicles, but by skipping the current technology, China hopes to get a jump on the next....
One of the key messages of IT-enabled transformation is: Do we think of IT's role as rectifying current weaknesses through fine-tuning the established business model or use it to create the future business model. We laid out the shift in the automotive DNA in class and this move seems to indicate that China is not keen to produce low-cost cars within the pre-established paradigm--perhaps leaving that to Tata Nano while positioning to lead in the emerging auto industry.
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The same article mentions that:
The United States Department of Energy has its own $25 billion program to develop electric-powered cars and improve battery technology, and will receive another $2 billion for battery development as part of the economic stimulus program enacted by Congress.We need the stimulus to be directed more at creating the future auto sector if we have to compete effectively against what China may offer in the world market in the coming decade.
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The thing which struck me in this article was about the infrastructure being build to make this plan successful and sustainable over long term. We have already discussed importance of right infrastructure for auto industry, especially for future cars. In China they are already setting up electricity stations in major cities when we are still discussing if the infrastructure possible over here and who will take the initiative!
ReplyDeleteI think costs are too high at this point (even after govt subsidiary) for people to purchase these cars in China. But this is a major threat, not only to Detroit but to Toyota and Honda as well. But with the kind of money and kind of power govt holds in China, I wouldn't be surprised if they come up with cheapest working (and possibly latest technology) electric auto product.
I was wondering about the prospects of electric cars in developed economies like US and Europe. Electric cars can be successful in China/India for commutes of small distance and low speed. One of the major limitations of electric cars can be the battery. For fast and long distance commutes in US/Europe traditional cars might still have an edge even after considering the environment friendly nature.
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