The Slow Reorientation of the American Car Industry - Report Writing Management Assignment Help

Assignment Task:

1. Introduction

Climate change is one of the ‘grand challenges’ facing society, requiring low-carbon innovation in many sectors and industries. This paper is about low-carbon innovation and reorientation in the American car industry, which can be expected to be a difficult process for several reasons. First, climate change constitutes a major threatto the industry’s core technology (internal combustion engines (ICE)) and vested interests linked to sunk investments in factories, skills and supply chains. So, to defend their interests and investments, firms are likely to be reluctant or hesitant to engage in low-carbon reorientation, and may actively resist (especially in early phases of the process).

Second, if automakers accept the need for low-carbon reorientation, they will have to invest in radical innovations, which in capital- and scale-intensive industries such as car manufacturing is very costly (not just because of R&D, but also because of factory retooling, new production processes, establishment of supplier networks, etc.) and risky (there is no guarantee that technical reorientations succeed). These risks are compounded by the existence of multiple low-carbon innovations, which include: (a) advanced internal combustion engines (aICE), based on improved fuel-injection systems, turbo charging, advanced valve management, etc.; (b) bio-fuel and flex-fuels vehicles (FFV), which also build on existing technical competencies; (c) fuel cell vehicles (FCV); (d) battery-electric vehicles (BEV), which both would disrupt existing competencies, and (e) hybrid-electric vehicles (HEV) and plug-in hybrid vehicles (PHEV), which combine existing ICEcompetencies and new battery and electronic competencies. The possibility of ‘betting on the wrong horse’ makes green reorientation a risky process with long-term strategic ramifications.

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