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Energy Policy 60 (2013) 531–539

Contents lists available at SciVerse ScienceDirect

Energy Policy
journal homepage: www.elsevier.com/locate/enpol

Socio-technical inertia: Understanding the barriers to electric vehicles


Simone Steinhilber a,1, Peter Wells b,2, Samarthia Thankappan c,n
a
Fraunhofer Institute for Systems and Innovation Research ISI, Breslauer Strasse 48, 76139 Karlsruhe, Germany
b
Cardiff Business School, Cardiff University, Aberconway Building, Colum Drive, Cardiff, CF10 3EU, United Kingdom
c
Environment Department, University of York, Heslington, York, YO10 5DD, United Kingdom

H I G H L I G H T S

 Immature developing technology reason behind non-commercialisation of EVs.


 EVs currently do not present a significant benefit to the electricity sector.
 EVs rely on a mix of regulatory and government measures for their development.
 EVs face lock-in problem of unsustainable technologies and related barriers.
 Positive milieu for innovation in vehicle technology and business models are required.

art ic l e i nf o a b s t r a c t

Article history: It is widely accepted that electrification of the transport sector is one of several technological trajectories
Received 26 April 2013 that could redress some of the environmental issues associated with the growth in travel demand
Accepted 30 April 2013 including climate change and oil demand at a global scale, and air quality and noise pollution at the
Available online 27 May 2013
urban scale. Electric vehicles have been considered a promising technology at repeated intervals over the
Keywords: last century, but this promise has not been realised. This paper is a contribution to understanding the key
Electric vehicles tools and strategies that might enable the successful introduction of new technologies and innovations
Transitions management by exploring the key barriers to electric vehicles encountered in two countries (UK and Germany) where
Socio-technical systems the automobile industry has been historically significant. The study evaluates stakeholders' opinions on
relevant regulation, infrastructure investment, R&D incentives, and consumer incentives. The key
findings of the research are that the introduction and penetration of EVs is confronted by several
barriers that inhibit a larger market penetration under current conditions, which in turn casts doubt on
the assumptions of strategic niche management and transitions theory.
& 2013 Elsevier Ltd. All rights reserved.

1. Introduction Potter (2007) explored consumer attitudes-action gap towards


cleaner vehicles. The techno-economic barriers discussed by Dijk
Electric Vehicles (EVs) have been considered a promising and Yarime (2010) are better understood in the light of the extent
technology at repeated intervals over the last century (EFTE, of changes that may ensue with a major technology shift.
2009). However, they have failed to compete with the internal The International Transport Forum (2010) concludes that low-
combustion engine (ibid). Sovacool and Hirsh (2008) emphasize ering CO2 emissions by controlling the volume of transport is
that the introduction of EV technology faces technical barriers, but unlikely; in other words behavioural changes were considered
social and political hurdles are equally important. Such hurdles unlikely to allow significant reductions in CO2 emissions. Instead,
include improper assessment of discount rates and future fuel in their view, emissions targets will mainly have to be achieved via
savings by consumers, as well as their hesitation in trusting new, technological improvements, which mean more efficient internal
radical technologies, and institutional and business barriers. Ewing combustion engines (ICE) in the short run, and new technologies
and Sarigollu (2000) assessed consumer preference, and Lane and such as electrification in the long run. No single technology
however will be able to satisfy all transport demands (Jorgensen,
2008; Magnusson and Berggren, 2011). The King Review on Low
n
Corresponding author. Tel.: +44 1904 324324. Emissions Vehicles (King, 2007, 2008) sees different roles for
E-mail addresses: simone.steinhilber@isi.fraunhofer.de (S. Steinhilber),
WellsPE@cf.ac.uk (P. Wells), samarthia.thankappan@york.ac.uk (S. Thankappan).
different fuels, but emphasizes that in the long run, only truly
1
Tel.: +49 721 6809281. zero-emission technologies should prevail. In this respect, elec-
2
Tel.: +44 2920 875 717. trification of the transport sector is one of several technological

0301-4215/$ - see front matter & 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.enpol.2013.04.076
532 S. Steinhilber et al. / Energy Policy 60 (2013) 531–539

solutions which can help redress the issues associated with Faber and Frenken (2009) are of the view that when a critical
growth in travel demand, including climate change and oil mass of adopters simultaneously switches to the new technology
demand at a global scale, regional issues such as infrastructure through some form of coordination, all others will follow and
needs, and air pollution, health impacts, safety, equity, traffic adopt the new technology as well.
congestion, and noise at a local level. In recent years, at least two well-developed evolutionary
This paper first outlines briefly socio-technical transitions sustainable innovation policy approaches have stood out which
theory and the related concept of strategic niche management in attempt to integrate the insights gained in innovation policy
the context of EVs. We argue that, while socio-technical transitions practice: strategic niche management; and transitions theory.
theory has been a powerful tool in helping understanding of how First, the strategic niche management (SNM) approach, described
and why changes occur in the social application of technology, by Rip (1992) and later elaborated by Schot et al. (1996), Kemp
there has been a relative neglect of how embedded regimes may (1997) and Hoogma et al. (2002) is a framework to induce and
have diverse evolutionary pathways including non-change. This manage technological regime shifts (Kemp et al., 2001) and is used
section then identifies six key regime characteristics from the to explain the success or failure of promising technologies. Based
literature that are explored in the empirical research as vectors or on the analysis as well as recent innovation literature van der Laak
barriers to change. Section 3 then presents the methodology used et al. (2007) developed a list of niche development guidelines that
in the research, while Section 4 presents the main outcomes in is important to consider when developing bio-fuel policies for
each of the six characteristics: Regulation and governance; infra- example. Through SNM concepts one can systematically document
structure; R&D incentives; technology and standardisation; busi- the initial activities and processes that lead to the eventual
ness models; and consumer incentives. In Section 5 the discussion adoption and broad diffusion of new technologies in society, and
is opened up around the central issue: How far can socio-technical with which one can take stock of important stimulating and
transitions be managed? Drawing from the two case study constraining factors in that process (Hoogma et al., 2002; Kemp
countries it is evident that contemporary attempts to enact a et al., 1998, 2001; Weber et al., 1999; Elzen et al., 2004; Raven,
transition to EVs have manifestly failed. It is concluded in Section 6 2005, 2006). van Eijck and Romijn (2008) used SNM as a principle
that more attention needs to be paid to how existing regimes may analytical tool to analyse how the scope for an energy transition is
either remain intact or, as explored by Turnheim and Geels (2012) influenced by factors at three societal levels: the overarching
in the case of the UK coal industry, may fragment; perhaps those ‘landscape’; the sectoral setting or ‘regime’; and the ‘niche’ level
concerned with the management of socio-technical transitions where innovation develops and diffuses. This so-called multi-level
need to focus more on the dismantling of the existing regime perspective has become a key organising principle in many
rather than the nurturing of a new one. applications of transitions theory.
Second, the Transition Management approach which evolved
from insights from the SNM approach with its broader scope on
2. Socio-technical transitions and electric vehicle mobility system changes and system innovation, and reliance on evolving
adaptive portfolios (e.g. Rotmans et al., 2001; Kemp and Loorbach,
Kemp et al. (2012), posit that the transition to low carbon 2006). The Transition Management approach seeks sustainable
transport requires a new notion of mobility, a group of several transitions to tackle problems that require system innovation
new technologies and further reinforced by more sustainable (Rotmans et al., 2000; Kemp and Loorbach, 2006; Loorbach and
behaviour. It can be anticipated that technological innovation can Kemp, 2007; Loorbach, 2007). The fundamental underlying policy
help impede the process of transition to a more efficient and is that of goal-oriented modulation to attain a socially acceptable
sustainable transport system by focussing on key factors like: the transition. Furthermore, several transition paths can be formulated
efficiency of the vehicle; cleaner energy use; and safer, more secure to avoid lock-ins. Transition Management therefore serves as a
infrastructure operations. self-correction mechanism based on policy and social learning.
In policy terms, the intermixed character of low carbon trans- The literature focuses on the use of socio-technical experi-
port systems with many other policy fields makes integrated ments, and explicitly, Strategic Niche Management for the execu-
strategies necessary but also more problematic (Wells, 2012). tion and administration of protected niches for propitious societal
Intervention has been premised on strategies intended to enable explorations. Kemp et al. (2000) propose that the primary aim
an early adoption of low carbon vehicles within an intelligent, should be to assess the functioning, outcome, economic feasibility
responsive and adaptive transport system. This paper offers a and social appeal of the technology and the resultant knowledge
critique of the ‘shortest paths’ approach to the adoption of low should be used to inform private and public policies to enable
carbon transport technologies. further development. As Rosenberg (1982) highlights in his study,
The theorisation of socio-technical systems has become more that new technology often requires effective policy support, as a
sophisticated and empirically informed over time. Early studies of new technology may not be cost-efficient in all applications
innovation diffusion emphasised the significance of social interac- especially during the early stages of its development. New tech-
tion and learning in accelerating the adoption of an innovation nologies continuously need to be enhanced in terms of meeting
(Foster, 1986; Abernathy and Utterback, 1978). Bruckner et al. producer and user needs. Further, it may also require another
(1996) developed an elementary evolutionary model to under- technology and infrastructure that can harmonise its production
stand the conditions that lead to technological substitution. They and use. The case for SNM establishes resolutely for such advance-
demonstrated that an apparently ‘superior’ technology can be ments contributing towards wider sustainability (Kemp et al.,
confronted with barriers that constrain market share. A key 1998; Weber and Dorda, 1999).
concept in the evolutionary approach is that of the niche, wherein Strategic niche management has its own criticisms for being
a technology may be nurtured or managed (Hoogma et al., 2002). more of a bottom-up strategy. However this strategy can still be
It is claimed that in such environments new technologies can be viewed as useful for assessing technology needs, imperfections
supported by user groups willing to pay a significant premium for and strategies to overcome any associated issues (Hoogma et al.,
the superior characteristics. After introduction, users may also 2002; van der Laak et al., 2007).
introduce subsequent improvements. Such a gradual process Nill and Zundel (2001), Zundel et al. (2005) propose the
allows the technology to diffuse through niches (Geels, 2002; concept of “time strategies” that focuses on political preparedness
Levinthal, 1998) and thereby initiate a process of regime transition. and utilisation of time windows of opportunities during the
S. Steinhilber et al. / Energy Policy 60 (2013) 531–539 533

unstable phases of technological competition. Further, van den brings the electric power generation and distributions industries
Bergh et al. (2007) include evolutionary-economic principles for into the emergent market for mobility.
policy such as extended level playing field which presents a R&D incentives and government funded R&D programmes are
scheme for evaluating government policies (environmental, inno- clearly one of the mechanisms by which SNM might operate to
vation and economic policy). achieve change. Such programmes can nurture socio-technical
The impact of heterogeneity of preferences on technological niches, shielding them from the full impact of market forces until
change has been studied extensively in evolutionary models of the niche can be considered sufficiently robust to be competitive.
technology adoption using a variety of modelling approaches, Analytical theories on technology proposed by Orlikowski
including diffusion models with increasing returns (Dalle, 1997; (1992) for example identify three models: technological necessity
Weisbuch et al., 2008), co-evolutionary models of users and (considering organizational characteristics); strategic span (with a
producers (Windrum and Birchenhall, 1998, 2005); Janssen and view on how framework and approach of decision-makers and
Jager, 2002) and extensions of the Nelson-and-Winter model users influences technology); and technology as a stimulant of
(Malerba et al., 2007; Jonard and Yildizoglu, 1998). These models fundamental transformation (focusing on technology as a social
reiterate the view that niches are important for technological entity). Similarly, Desanctis and Poole (1994) present three views
transitions to take place, as the new technology can be developed of technology's effects: decision-making; established discipline;
within the niche before being introduced more widely. Such and an integrated outlook.
models conceptually support policy measures and regulations Technology is the mainstay of SNM and transitions theory,
aimed to have environmental technologies mature in niche mar- however, with an embedded substance of novelty. The funda-
kets, a notion that has been recognized in the policy concept of mental notion being that less efficient technologies are replaced
strategic niche management (Kemp et al., 1998; Schot et al., 1994). by better technologies. In some cases the early advantage of the
Empirical analysis of innovation systems has previously sought new technology may be marginal or imperfect but sufficient
identification of systems failures in terms of market mechanisms enough to permit niche applications to develop.
failing to achieve socially-defined objectives, thereby underwriting Teece (2010) view business models as typical characteristics of
the rationale for public policy intervention (Edquist, 2002). How- market economies where competition, consumer choice, opera-
ever, EVs are different in some important respects with regard to tional costs, and a diverse group of consumers and producers exist.
transitions theory and strategic niche management. First, EVs are However it is also essential that business models need must
not a technically superior product in respect of some important transform over time as changing markets, technologies and legal
product characteristics. Second, EVs have been subject to pro- structures permit or force to change. Business models, and
longed and extensive ‘management’ in which strategic niches have particularly innovations in such models, are a potential causal
been identified and attempts to stimulate the mass market have mechanism for change within socio-technical transitions that
been made. The failure to achieve market penetration thus gives remains under-explored—though they are popular with consul-
rise to concerns with the prescriptions of SNM and transitions tants and analysts (Berger, 2011). Transitions theory is systemic,
theory. long-term, and macro in orientation whereas the business models
Based on the literature, this paper draws on six key instru- literature has emerged out of studies of business and the firm.
ments which also constitute the principle mechanisms for change Business models can be considered as the mediators between
in transition theory. The rationales for the choice of these six technologies and consumers, potentially offering new modes of
instruments are discussed in the following paragraphs. consumption and value creation (Teece, 2010) and thereby over-
Laclau and Mouffe (1985) and Jessop (1990) suggest that the come performance ‘gaps’ with innovative technologies.
theories of governance and regulation theory both entail that it is There is a plethora of evidence to highlight that consumer
in and through governance that the basic elements of their adoption of a technology can be attributed to government incen-
interests are altered through complex representation into explicit tives, at least in part (Chetty et al., 2007; Finkelstein, 2009; Sallee,
moments within a given mode of governance (or regulation). 2011; Bento et al., 2009; Klier and Linn, 2010). Consumer or user
Regulation and governance are the cornerstones of transitions acceptance is vital for technology diffusion on a scale that matters,
theory in that the focus is on how production and consumption beyond the trivial, but is an aspect slightly under-emphasised in
systems are constructed and sustained in steady systems. A system transitions theory. Studies of innovation diffusion using concepts
robustly produces and reproduces the conditions for its own such as technology acceptance give weight to how useful a
continuation (Geels, 2002); a systemic shift is therefore partly technology is, and how easy it is to use (Bagozzi et al., 1992;
achieved by intentionally creating new conditions, new rules of Davis, 1989; Davis et al., 1989), and hence implicitly takes a
governance, and new metrics of regulation. rationalist perspective on human choice. More recently there has
Empirical evidences highlight that investing in infrastructure been an attempt to understand broader concepts such as ‘lifestyle’
may trigger technical change by affecting incentives for R&D, and and ‘cultures of automobility’ as they relate to technology choices
can be viewed as a complementary contribution to private and and cars (Urry, 2007; Heffner et al., 2007) because consumption is
human capital growth (Fernald, 1999; Bougheas et al., 2000; seen as part of identity construction, conveying social meaning to
Hulten et al., 2006). Schiffbauer (2007), draws a positive relation- others.
ship between the infrastructure capital availability and the incen-
tives to invest in R&D, postulating that infrastructure capital
reduces transportation inefficiencies and other management costs
that result from the use of a range of intermediate goods in the 3. Methodology
production sector.
Infrastructure investments are key in the context of the transi- Within the transport realm, qualitative methods are more
tion to EVs because any mobility system requires the parallel commonly used for inductive purposes to identify concepts and
deployment of an infrastructure and vehicles. The existing infra- interpretations from transport users' perspective (Gardner and
structure of roads, parking facilities, repair facilities, and other Abraham, 2007; Mann and Abraham, 2006). Our study adopts a
institutional arrangements represent large sunk investments into qualitative approach with intent to capture attitudinal, affective
which EVs must be inserted. Additionally, EVs require some and behavioural responses inherent to stakeholder experiences
dedicated infrastructure investments of their own, which in turn and reveal barriers to or enablers of Electric Vehicle adoption.
534 S. Steinhilber et al. / Energy Policy 60 (2013) 531–539

The primary source of data for this research was obtained from The results of this study are not meant to be representative for
semi-structured interviews with key stakeholders within the all stakeholders in the UK and Germany, but provide a good
automotive sector in the UK and Germany to identify the strategies overview of the barriers faced in the introduction of this radical
they employ in response to government policies, and their opinion innovation, and how far the prescriptions of SNM and transitions
on current regulation, infrastructure investments, R&D incentives, theory have influenced the penetration of EVs.
and consumer incentives. The stakeholders were representatives
of German and UK institutions and were selected for this study
due to their involvement in electric cars or electricity provision, 4. Results
either due to commercial interests, as promoters, research or
policy makers. Table 1 lists the key stakeholders interviewed Stakeholders from the automotive and energy sector inter-
during this research. viewed in this research identified several open issues, which are
The data was further supplemented through scientific litera- discussed below. Inevitably, in view of the problems surrounding
ture, published documents by the UK and German governments, the introduction of EVs in these countries, some aspects of these
local governments, EV pilot projects, and other stakeholders in the highlighted issues are subject to strategy change in the industry
automotive and energy sector, to provide empirical background. and policy change in government in both the countries.
Justification of selection of the two countries for the research is
primarily their historical relationship with automotive industry. 4.1. Regulation and governance
This research collated the statements and opinions of repre-
sentatives from various interest groups. Interview partners were 4.1.1. Electricity billing and infrastructure ownership
chosen to cover a wide range of institutions, representing the The findings of the research highlighted that with current
automotive and energy sectors to research institutions and policy numbers of EVs still low; some institutions allow EV drivers to
makers. use their charging infrastructure for free, as billing would incur a
Transcripts of the interviews were coded, using grounded higher cost than the revenues obtained from the sale of electricity.
theory to identify thematic categories. The coding procedure A representative of ADAC in Germany (Europe's largest automobile
involved an initial ‘open’ coding to assign conceptual labels and club) highlighted that the car club has put up 25 free charging
these labels were further fine-tuned. Consequently, ‘axial’ coding spots and perceives them more as an indicator in support for EV
was carried out to construct links between concepts, which were technology than anything else.
organised into higher-order categories. Further, ‘selective’ coding Charging infrastructure operators face decisions about how to
enabled us to understand the inter-linkages between the cate- design charging spot ownership in their business model, and how
gories, this further enabled us to identify a ‘central category’ this would be supported by the legal framework. This was high-
(Strauss and Corbin, 1998). lighted for example by Vattenfall in Germany who currently
To demonstrate the validity of the analysis, in this article the operate a small number of publicly accessible test charging spots
authors include illustrative quotes (from the stakeholders) as evidence. in Berlin. The grid operator would then allow any electricity

Table 1
List of interviewees.

Institution Title/division Role of institution

OLEV (Office for Low Emissions Vehicles) Manager for Consumer Incentives Cross-Whitehall team responsible for delivering and coordinating EV-
related funding from different government departments
SMMT (Society of Motor Manufacturers and Business Development Manager - Electric Industry association promoting the interests of the UK automotive industry
Traders Limited) Vehicles Member Services and Business
Improvement
Jaguar Land Rover Head of UK Government Affairs Business encompassing the three British brands Jaguar, Land Rover, and
Range Rover, now owned by Indian automotive car manufacturer Tata. Land
Rover Jaguar designs, engineers and manufactures in the UK
E.ON UK Manager in the CABLED project, One of the leading integrated power and gas company in the UK, and part of
Engineering Department the E.ON group. Active in the CABLED project which tests EV fleets and
infrastructure
Transport for London (TfL) Manager in Electric Vehicles Delivery Body responsible for congestion charging and traffic enforcement in London
Project
Forum ElektroMobilität e.V. Branch manager EV stakeholder communication platform created by Fraunhofer Gesellschaft
and the Federal Ministry for Education and Research (BMBF)
ADAC (Allgemeiner Deutscher Automobil- Transport and Environment Division German automobile club, largest in Europe, with around 17 million
Club) members
Wirtschaftsförderung Region Stuttgart Manager responsible for coordinating Institutions responsible for coordinating the EV model region “Greater
GmbH (Stuttgart Region Economic EV model region projects Stuttgart”, one of eight model regions financed by the Ministry of Transport,
Development Corporation) Construction, and Urban Development (BMVBS)
Verband der Automobilindustrie e. V. (VDA)/ Head of Department for Environmental Department for Environment Policy and Technical Environment Protection
German Association of the Automotive Policy and Technical Environmental
Industry Protection
Öko-Institut e.V.—Institute for Applied Researcher in Infrastructure and Research institute
Ecology Enterprises Division
Verband Deutscher Verkehrsunternehmen Head of Division of Motor Vehicles, Association of public transport operators whose members cover 95% of
e.V. (VDV)—(Association of German Trolley Buses, Depots and Workshops market share in German public transport
Transport Companies)
Vattenfall Europe PowerConsult GmbH Management Consultant in Project Electricity provider running an EV test fleet in Berlin in cooperation with
Mini E Berlin BMW
Car2Go Corporate Communications Manager Daughter company of Daimler Benz running an innovative car club scheme
using Smarts
S. Steinhilber et al. / Energy Policy 60 (2013) 531–539 535

retailer to use their infrastructure and charge a fee for the grid to car makers to develop more energy efficient EVs. Furthermore,
usage. The electricity retailer in turn would pass these costs on to regulation does not take into account the expected actual mileage
consumers. In such a business model, all consumers would share of a given car model.
the cost of installing EV charging points. However, the grid
operator would require approval from the Federal Grid Agency 4.2. Infrastructure investments
for the fees charged, and the fact that fees for vehicle charging
points are currently not accepted represents a regulatory obstacle. Expert opinions differ on how much publicly accessible char-
In the long run, a move towards Vehicle to Grid (V2G) ging infrastructure is needed. “You ask two experts and you can be
technology may lead to complex questions, as was highlighted sure to get two different opinions,” quoted a representative from a
by one of the interviewees representing a public body. government institution. Most of the interviewees in Germany
stated that the federal government was currently not supporting
EV owners would be able to buy their electricity from the grid
infrastructure investments on a large scale, while most test fleet
when demand is low, and feed it back into the grid for a higher
projects have an infrastructure component.
price at peak-demand times. But assuming that the degree of
A representative from Transport for London was of the view
efficiency of the charging process is below 100%, the consumer
that the currently running pilot projects will provide important
will make a loss. Who will bear the cost for this? And will the
results on how EVs are used in real life, and how much publicly
business model still be attractive then?
accessible infrastructure is really needed. For instance, as one of
Lamble (2011), shares a similar view that with the new clean the new Plugged-In Places, London is currently developing a pan-
economy built upon the ‘smart’ revolution comes a host of policy London scheme which will enable London EV owners to recharge
issues like determining how to assimilate V2G into an economy in any London Borough at any provider's charging point.
that is sluggish and possibly not yet ready for a reorganisation; While the findings from such pilot projects are considered
imagining how the existing electrical grid will be updated to valuable by all stakeholders, an interviewee from the automotive
accommodate advanced metering infrastructure and who will pay industry asserts:
for it; and deciding what role governments will have in the
development and establishment of V2G. Hutton and Hutton …we should look before we leap. Most people will be able to
(2012) go a step further and raise key questions on allocation of charge at home. […] Battery technology will be further devel-
property rights and problems of monopsony being major impedi- oped, and we may not know which might be the best charging
ments to the V2G technology. system for the batteries that will finally be used in mass rollout
of electric cars.
4.1.2. Urban planning and road traffic regulations There is a plethora of research that support the views pre-
One of the major issues that emerged from the research sented above. Bean et al., (2011) are of the view that currently
findings was the possibility of publicly accessible charging infra- there are no standards in place to guide residential customers for
structure creating new challenges for urban planners (Wells, installing at-home charging stations. They argue that infrastruc-
2012). This was highlighted by most of the interviewees in both ture upgrades are site specific and the cost of these upgrades is
Germany and the UK. still unknown. Browne et al. (2012) and Millberg and Schlenker
(2011) posit that EVs in general are perceived as not having
There is no clear regulation as to where public EV charging
sufficient driving range and owners can experience ‘range anxiety’.
spots may be installed. There are unclear regulations regarding
parking on spaces equipped with a charging spot. If local
authorities decide to proceed with the roll-out of charging 4.3. R&D incentives
infrastructure, including reserved parking spaces, in order to
promote use of EVs, then this may raise new problems. In spite of various efforts by government departments under-
way to promote research relevant to EVs, the automotive industry
Another public body representative in the UK quoted during may wish for more government funding to support their own R&D
the research interviews: effort, as the industry is still suffering from the recent financial and
economic crisis. A representative from the automotive industry
If EV are not immediately present in the anticipated large
interviewed during this research cited that it would be desirable to
numbers, this can lead to frustration among drivers of conven-
improve the general R&D investment climate in the UK, for
tional cars who see free parking spots but are not allowed to
instance in the upcoming reform of R&D tax credits. Credits are
use them, especially in inner-city areas which often suffer from
currently only attached to corporation tax profits, but not to R&D
a shortage of parking spaces.
investment in the UK. Similar views were presented by other
Must a space remain unused if not occupied by an EV? If so stakeholders interviewed in this research, for example a promi-
what signage is required to designate the restriction? What codes nent emerging concern was that Governments should ensure that
control this and who will enforce them? Are some of the parking the foreign-owned car makers not only place their manufacturing
management issues highlighted by Parker et al. (2012). in the UK, but also their R&D, as this will secure a long-term future
for the industry in the UK.
4.1.3. Fleet averages for CO2 emissions
It was evident from the research that opinions differ on the 4.4. Technology
issue of emissions, as very different interests are involved. NGOs
and environmental groups criticised the current EU regulation for In line with research reports and other scientific literature, a
considering EVs to be zero-emissions vehicles, and for giving majority of interviewees (from industry, government, and research
super-credits to a vehicle which has CO2 emissions of less than organisations), considered developments in battery technology
50 g/km. While the NGOs and environmental groups acknowledge and battery production technology as the most pressing research
that the automotive industry has no influence on the electricity need for the industry. Capabilities for large scale and low-cost
mix which determines the emission of an EV, they fear that production of battery cells are currently mainly found in Asia.
considering EVs to be zero-emissions will not provide an incentive Interviewees from the automotive industry and government-
536 S. Steinhilber et al. / Energy Policy 60 (2013) 531–539

supported pilot projects expressed an urgent need for govern- exemption from the London Congestion Charge or free parking in
ments to strategically support the re-establishment of this indus- Westminster.
try, even if this is may not be profitable in the short run. The Popular small EVs such as the G-Wiz and Mega e-City are
standardization of technical specifications such as cables and plugs classed as quadricycles, and are therefore not eligible for any
for recharging was identified widely as an important issue exemption. While some environmentalists view this as a disap-
by industry interviewees in both the countries. However, the pointing step, The Society of Motor Manufacturers and Traders
industry faces many technological pathways without clear evi- (SMMT) asserts it as a move in the right direction for the following
dence that there is going to be ‘one best way’ for the future reason:
(Berggren et al., 2010).
Ralston and Nigro (2011) have identified a number of technical ….Quadricycles are, for instance, not tested to the same safety
barriers to PHEVs, which have a broader application than EVs, standards as proper cars. But people in the street may not be
including: (a) specific energy density of the standard lithium ion able to distinguish between the two, so quadricycles have a
battery, which is in the order of 1% that of gasoline; (b) variable potential to damage the reputation of electric cars.
battery charging time and length of charging; (c) uncertain battery
lifespan and durability; (d) technical difficulties integrating with
the national grid; and (e) home charging and the provision of
charging cables from the mains may not be practical in apartment 5. Discussion: How far can socio-technical transitions
blocks or terraced houses with limited off-street parking. be managed?

4.5. Business models It is quite evident from literature and what we found from this
research, that there is a need to create a favourable environment
To ensure that the potential of EVs be fully realised, new types for innovation in two areas: Firstly, vehicle technology, meaning
of cooperation between two major industrial sectors – automotive the development of high-performance batteries, associated vehicle
and energy – as well as other players is necessary (Kley et al., components, and their production technology, the interface to the
2011). Myriad business models are possible, however they have to electricity grid, and smart ICT-based applications to enable elec-
be tested and confirmed. A representative from the Association of tricity providers to manage loads efficiently; and secondly, busi-
German Transport Companies (VDV), an organization that repre- ness models which make electrified road transport economically
sents the vast majority of Germany's public transport operators, attractive for industry and consumers.
foresees public transport as a natural starting point for electric Given the variety of stakeholders involved, ranging from the
mobility. According to the organisation, with their fixed routes, automotive sector to energy, ICT and other sectors, it is probably
city buses do not have a range problem and only require charging/ too simplistic to talk about a single innovation which will
battery swap infrastructure at a small number of depots. With dominate in the end. Rather, the electrification of road transport
their high mileage, mostly during the day, bus batteries could use could be realized through a bundle of innovation designs or
excess electricity produced during the night, and thus help smooth innovation cluster (Rogers, 1995), though not all emerging from
out electricity demand more effectively than low-mileage private the same lead market. For example, if a country leads in the
cars can. However, a major hurdle is that an appropriate business development of high-performance batteries, another could lead in
model still needs to be developed, including issues of battery the development of integrated mobility concepts or smart load
ownership and payments between electricity suppliers and trans- management.
port operators. Both Germany and the UK may enjoy a certain demand
VDV would prefer not to own the batteries, but rather lease advantage, due to high fuel prices and because consumer groups
them from the electricity supplier. They argue that purchasing the exist which value environmental benefits highly and are willing to
batteries would render the whole idea unprofitable for them. pay a premium. Current trends indicate an increase in car owner-
A leasing model could create a win–win situation in which the ship per household and that the average consumer tends to prefer
electricity supplier profits from cheap energy storage to smooth lighter and smaller models than the previous standard models
demand, and the transport operator from lower fuel costs. (Beise and Rennings, 2005). However, a long-term trend might be
Giordana and Fulli (2012) rightly sum up the case that the emerging among young urban consumers whereby, phones and
effectiveness of new business models and regulatory frameworks other electronic equipment replace cars as the main status symbol
will significantly define the effectiveness of EV's potential to be (Heise, 2010). This may be favourable for business models in which
fully realised. consumers do not own individual cars, but mainly use public
transport and rent appropriate car models as required. On the
4.6. Consumer incentives other hand, both the UK and Germany have been nations of car
owners for several decades and consumers will have to un-learn
Contrary to the UK government, the German government is old habits to appreciate some of the new business models.
currently not planning to subsidize the purchase of EVs for Both the UK and Germany are seeking to improve their demand
consumers. However, in Germany as in the UK electric vehicles advantage, albeit in different ways. As with several European
are exempt from road tax for the first five years after first neighbours, the UK has decided to foster an early EV market
registration. The Federal Government is considering possibilities through a consumer incentive scheme, alongside procurement
to open bus lanes and extra parking spaces for EVs, and has schemes for some publicly owned fleets. Germany has so far not
announced checking the possibilities for procurement initiatives of chosen to subsidize the purchase of EV by private consumers. Both
vehicles emitting less than 50 g CO2/km for its own vehicle fleets, countries may have an export advantage because their car indus-
and to encourage provincial and municipal governments as well as tries are experienced exporters. Furthermore, German car brands
private fleet operators to do the same (German Federal have a positive image internationally, and the same applies to the
Government, 2010). international car brands now produced in the UK. Market condi-
In the UK, apart from the Plug-in Car Grant, consumer incen- tions within Europe show a certain degree of similarity, and a
tives include a vehicle excise duty exemption and an enhanced unified type approval system, making it easier to diffuse innova-
capital allowance. Additionally, there are local incentives such as tion designs within Europe.
S. Steinhilber et al. / Energy Policy 60 (2013) 531–539 537

Beise and Rennings (2005) highlighted that fuel-saving innova- research was that most stakeholders assume that performance of
tions diffused well within Europe, where fuel prices are high and EVs have to be measured against the same standards as ICE
using less fuel thus represents a relatively large benefit to the vehicles, as consumers will also expect an equivalent product.
consumer. Internationally, however, only those innovations were This means EVs will not be attractive to the majority of consumers
widely adopted which combined fuel-efficiency with other fea- in the near future. If the expectations of EVs as equivalents to
tures desired by consumers, such as the high-pressure direct conventional cars were relaxed, a commercially viable market
injection technology in the 1990s, which offers not just better could be developed in urban areas earlier than many would
environmental performance, but also better acceleration. expect, which can then result in the development of a lead market
Current full EV models are considered an inferior product. This for innovative transport concepts and related technologies.
applies even when fuel cost savings are taken into account. They If consumer demand were to undergo a shift from car owner-
offer smaller range and longer refuelling times at a considerable ship to a concept of sharing cars, then this would raise a significant
price premium. This currently makes them unattractive even in question on how this is reconcilable with the automotive indus-
Europe. EVs currently do not present a significant benefit to the try's desire to sell more cars? How such a conflict would be solved
electricity sector, since they do not exist in the high numbers is also a political question. As Sovacool and Hirsh (2008) rightly
which would be needed to use them for load management. For sums the introduction of EV does not only face technological
these reasons, EVs still depend on a mixture of regulatory pressure challenges, but also social and political ones.
and government measures that motivate firms to continue their What we are witnessing is the problem of a lock-in of
development. unsustainable technologies and associated barriers to a significant
The UK and Germany enter the potential transition to EVs from shift in innovation paths. Metcalfe and Georghiou (1998) are of the
different initial positions. While Germany has traditionally been a view that these issues are a spillover between selection and
lead market in the automotive field (Beise and Rennings, 2003), its variation that inhibits the chances of radical new technologies.
expertise is focussed on ICE vehicles. German industry's innovations To assess if policies to overcome lock-in are justified from a
are set against a backdrop of an extensive skills base and well- societal perspective, Reichel (1998) for example applies the
developed networks of component suppliers and manufacturers, “lock-out efficiency” framework. However, the derivation of a clear
according to an industry representative. The industry has more to empirical result is only achieved by setting the economic and
lose than it has to gain from a radical innovation which could political framework conditions as well as the environmental
render much of their past experience, skills, and systems useless. externalities constant, which is at odds with evolutionary
For Germany, investing in this radical change early is purely a approaches.
necessity to retain one of their most important industries. The
large-scale introduction of EVs will create a level playing field in
which new players will enter whose expertise in battery technology 6. Conclusion
will make up for their lack of experience in producing cars.
The UK's automotive sector, though still of considerable impor- The introduction and penetration of EVs is confronted by
tance, has been shrinking ever since it lost its position as the several barriers that inhibit a larger market penetration under
world's main car exporter in the late 1950 s. MG Rover, the last current conditions. Several shortcomings of the technology, pre-
British-owned volume car manufacturer, failed in 2005 (Holweg sented in this study exemplify the immature status of a developing
et al., 2009). For the UK, EVs represent a window of opportunity, technology that has not achieved commercialisation yet. Other
but may not last forever. It needs to be used while it is there to barriers are a fragmented infrastructure, missing standards and
develop new market leadership in areas other than the traditional regulations and scepticism of consumers towards an emerging
ones which have already been lost. technology. A number of national governments are supporting
Both the UK and Germany are equally concerned about new their industries in preparing for the expected technological shift in
competitors from emerging economies, especially China, whose transport, but the barriers identified by early studies such as
world leadership in battery cell production is arguably on the Hoogma et al. (2002) appear to be the same as ever. The move-
horizon, and who is also quickly catching up in other technology ment has significantly gathered momentum in the last couple of
fields. Both countries' automotive industries have announced that years, as governments are directing much attention on the topic,
while they do want to develop electric vehicles in the long term, and electric vehicles are increasingly being discussed in the media.
their short run CO2 reduction solutions will be based on optimized All these countries have different strengths and weaknesses
ICE vehicles. This is understandable, given their enormous sunk regarding their innovative ability, market structure, and consumer
costs in hardware and expertise. Zapata and Nieuwenhuis (2010) preferences, and a forthcoming technological shift would repre-
confirm this by arguing that the automotive sector is slow in sent different opportunities and risks for each. Established car
taking up radical innovations. For the electricity sector, on the exporting countries may end up strengthening their lead, or losing
other hand, electro-mobility represents less of a threat to their at least part of it to new players on the field with more favourable
traditional core business, but rather a new field to conquer. The market conditions. For a market to become a lead market, it must
German electricity sector seems to be further progressed in this display certain characteristics (Beise and Cleff, 2004). Additionally,
respect than the UK, and has comparatively clear ideas of possible in the case of environmental innovations, which involve inter-
business models and of barriers which need to be addressed. nalization of external costs and relatively long time scales, regula-
While the German government emphasises on R&D, using a very tion is a further key factor in pushing the development and
systems-orientated approach, and its policy is targeted towards diffusion of innovation. Governments must therefore find the right
creating a favourable environment for electric cars; the UK mix of regulatory pressure and funding options corresponding to
government lays significant emphasis on building an early market the current condition of its national industries and markets, to
for EV using the consumer incentive, accompanied by a large-scale make innovations attractive for both the supply and demand side
infrastructure roll out in designated cities. (Porter and van der Linde, 1995; Beise and Rennings, 2005).
The overall expectation in both the UK and Germany is that, What applies equally to all countries active in this field is that
due to technological breakthroughs in battery technology, EVs will the full environmental potential of EVs will only be realized if they
in the near future fill the same role as conventional cars, with a are not simply used as a substitute for conventional ICE vehicles
comparable performance and price. What was clear from this but also as a tool for load management in the electricity grid, and
538 S. Steinhilber et al. / Energy Policy 60 (2013) 531–539

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