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Go Green in the Automotive Industry

Open and Networked Innovation applied by Tesla Motors and Renault

Written by E. Adén, A. Barray

Paper category

Master Thesis

Subject

Economics

Year

2008

Abstract

Master Thesis: Introduction to Global Warming Today, the world is facing an environmental crisis. Global warming and the greenhouse effect are becoming a topic of current concern. According to an article written by Tom Brown (2008), the first person to issue a warning about ozone depletion was Nobel Laureate in Chemistry Mario Molina. He is not the only one involved in the struggle for a better living environment. Many actors, such as governments, non-governmental organizations, etc., are taking active actions to raise people's awareness of environmental issues. citizen. For example, on the 60th birthday of the World Health Organization headquartered in Geneva, China’s Director-General Chen Fengfuzhen announced that she is concerned about climate change and that the World Health Organization will hardly fight global warming because human health is at risk. Medium (Baert, 2008). Facts have proved that in urban areas, cars and trucks are the main sources of air pollution, accounting for more than 50% of airborne hydrocarbon, carbon monoxide and nitrogen dioxide (NOx) emissions, as well as the formation of ozone (Calef and Goble, 2007 ). Therefore, the process of releasing energy from fuel changes our atmosphere. Transportation caused by human activities is causing global warming. Derivative gases such as NOx can cause local pollution and death (Agassi, 2007a). As you can observe in the figure below, in Los Angeles, California and Paris, France, there are many days when ozone is considered too high and unsafe for residents. From an environmental point of view, the transportation system must be reconsidered. However, even if environmental issues are the most important reason for the switch to green energy in the near future, it is not the only reason. In fact, there are economic reasons for the change (Agassi, 2007a). The world is totally dependent on oil. The problem is that oil shortages are emerging. Oil prices do fluctuate. Today, the cost of a barrel of oil is about $100. This price is at least nine times what it was eight years ago, and current forecasts describe future price increases (Agassi, 2007b). In short, since the main sources of pollution are cars and trucks in metropolitan areas, automakers need to take this into consideration when proposing breakthrough innovations in the automotive industry. Guillaume Zambaux (2008) mentioned that the automobile industry causes 12% of the world's pollution. Car manufacturers must rethink the product life cycle from concept to car recycling. Tesla has a rather unusual history because the company has almost no connection with the traditional American auto industry. The founder had no experience in the automotive industry when he decided to build the world's first high-performance electric car (Grabianowski, 2008). The founder of eBay, billionaire Jeff Skoll, the founder of PayPal, Elon Musk, and the founders of Google Larry Page and Sergey Brin all donated to Tesla Motors 40 million US dollars, because they all want to see electric cars become the means of transportation of the future. (Clean Break, 2006) Martin Eberhard and Marc Tarpenning founded their company based on portable e-book readers. They were frustrated that the mainstream auto industry was unable to create effective electric vehicles that could appeal to the masses. Therefore, Eberhard decided to build a car by himself instead of building the whole car from scratch. Eberhard took advantage of outsourcing. The new company cooperated with Lotus and chose a design from the UK (Clean Break, 2006). The partnership between Tesla and Lotus is very good for many reasons. The Lotus factory in the United Kingdom is very suitable for small batch production of cars, which allows Tesla to basically produce the cars on order, avoiding spending a lot of money on cars that have not been sold in the warehouse. Another reason for using the Lotus factory in the UK is that the Tesla sports car is based on the Lotus Elise. The car has the same basic chassis and other components. This can save material costs. (Clean Break, 2006) In Tesla's business plan, it is mentioned that innovative technology is usually very expensive, and very wealthy customers are usually the first to adopt it. First, when the price drops, the technology may become more readily available on the market. This is why Tesla's first car is a limited edition exclusive sports car. (Clean Break, 2006) Electric cars may always be more expensive than gasoline cars, and when customers look at fuel costs and their environmental impact, it will save customers costs. Electric vehicles are always zero-emissions, but if you calculate the emissions generated during power generation, then even if the electricity comes from coal-fired power plants, electric vehicles are more environmentally friendly. (Clean Break, 2006) Ebhard claims that the energy provided by a gallon of gasoline can be used to drive an electric car for 110 miles. In addition, if you compare the prices of gasoline and electricity, you can drive 150 miles at the price of a gallon of gasoline. (Clean Break, 2006) Tesla Motors Chairman Musk said that the company has the potential to become one of the greatest car manufacturers in the 21st century. Read Less