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NORTH- llOIJ.AND

Escaping Lock-In: The Case of the Electric Vehicle

R O B I N C O W A N a n d S T A F F A N H U L T I ~ N

ABSTRACT

The study addresses the issue of technological "lock-in" and the possibilities of escape from it. Earlier literature on technological lock-in has tended to focus on intraindustry sources o f positive feedbacks that are at the core o f the technological lock-in phenomena. This study draws attention to the importance of interindustry sources in contributing to technological lock-in. Several possible avenues of escape from lock-in are discussed: crisis in existing technology, regulation, technological breakthroughs, changes in taste, emergence of niche mar- kets, and new scientific results. The study includes a brief history o f the competition among automobile technolo- gies. The analysis of the current state of the electric vehicle, its technology, and the surrounding supporting industries and infrastructures is relatively pessimistic about a rapid transition away from the internal combustion engine technological lock-in. However, regulation could create enough niche markets so that some self-reinforcing processes would become possible. In this way, the electric vehicle might emerge as a visible part of the automo- bile market.

L o c k - I n o f T e c h n o l o g i e s Many established technologies are presently being challenged as n o t meeting the

demands o f m o d e r n study. The problem can be that they do n o t represent the best k n o w n technology, for example the Q W E R T Y keyboard [11] and light water nuclear reactors [5], or that they produce negative environmental effects, for example pesticides in agricul- ture [6] and chlorofluorocarbons (CFCs) in refrigerators [23]. What m a k e s these chal- lenges interesting and difficult is that m a n y o f these technologies appear to be very well- entrenched in the technological system.

This article discusses the possibility o f escaping lock-in after a technology has achieved d o m i n a n c e in the market and has been able to enhance its comparative advantages over many decades. The case discussed is that o f the secular competition between the electric vehicle and the gasoline car. The competition can be separated into five phases: (1) the formative years o f the a u t o m o b i l e industry, 1885-1905, when n o t e c h n o l o g y dominated; (2) the establishment o f the gasoline car as dominant, 1905-1920; (3) the consolidation o f the position o f the gasoline car, 1920-1973; (4) the questioning o f the gasoline car,

ROBIN COWAN is Assistant Professor o f Economics, University of Western Ontario, London, On- tario, Canada.

STAFFAN HULTI~N is Assistant Professor at the Stockholm School of Economics, Stockholm, Sweden. Address reprint requests to Professor R. Cowan, Department of Economics, University o f Western Ontario,

London, Ontario, N6A 5C2, Canada.

Technological Forecasting and Social C h a n g e 53, 61-79 (1996) © 1996 Elsevier Science Inc. 0040-1625/96/$15.00 655 Avenue o f the Americas, New York, NY 10010 P I I S0040-1625(96)00059-5

62 R. COWAN AND S. HULTI~N

1973-1998; a n d p e r h a p s (5) t h e l e g i s l a t e d , f o r c e d i n t r o d u c t i o n o f l a r g e - s c a l e p r o d u c t i o n o f electric vehicles a f t e r 1998.

T h e first f o u r p h a s e s r e p r e s e n t t h e h i s t o r y o f a t e c h n o l o g i c a l l o c k - i n , w i t h t h e g a s o l i n e c a r b e c o m i n g m o r e a n d m o r e firmly e n t r e n c h e d . T h e fifth p h a s e , i f it o c c u r s , will be a n e x a m p l e o f a n e s c a p e (or p a r t i a l e s c a p e ) f r o m t e c h n o l o g i c a l lock-in.~ C o n c e r n s a b o u t n o i s e a n d p o l l u t i o n , e s p e c i a l l y in i n n e r cities, h a v e r a i s e d q u e s t i o n s a b o u t w h e t h e r such a n e s c a p e is p o s s i b l e .

I n t h e 1970s, m a n y p r o j e c t i o n s o f t h e p e n e t r a t i o n o f t h e e l e c t r i c vehicle in t h e a u t o m o - b i l e m a r k e t w e r e m a d e . T h e p r e d i c t i o n s were a b o u t t h e p r o p o r t i o n o f the 1995 a u t o m o b i l e m a r k e t t h a t w o u l d be h e l d b y t h e electric vehicle. T h e y r a n g e d f r o m a low o f 0 . 3 % o f t h e m a r k e t t o a high o f 100%, with a n a v e r a g e o f 6 . 7 % , w h i c h was t h o u g h t w o u l d a m o u n t t o 3.16 m i l l i o n cars. ( E s t i m a t e s m a d e o r c o m m i s s i o n e d b y E x x o n a n d G u l f Oil were 5 % a n d 2 5 % , r e s p e c t i v e l y ) . P r o j e c t i o n s m a d e in 1995 f o r t h e y e a r 2005 a r e even m o r e o p t i m i s - tic. T h e c u r r e n t s t o c k o f electric a u t o m o b i l e s is m u c h closer t o 10,000 t h a n 3 m i l l i o n c a r s , h o w e v e r . N o n e t h e l e s s , a F r e n c h P a r l i a m e n t a r y r e p o r t h a s s t a t e d t h a t t h e electric c a r w i t h i n 30 y e a r s m a y b e a serious c o n t e n d e r o f t h e g a s o l i n e c a r ( p a g e 13 [20]).

A n i m p o r t a n t p a r t o f t h e e x p l a n a t i o n f o r t h e u n d e r - p e r f o r m a n c e o f t h e m a r k e t r e l a t i v e t o p r o j e c t i o n s is t h a t p r o g r e s s in b a t t e r y t e c h n o l o g y d i d n o t live u p t o e x p e c t a t i o n s . C u r r e n t e l e c t r i c vehicle t e c h n o l o g y uses l e a d - a c i d b a t t e r i e s - t h e s a m e b a s i c t e c h n o l o g y u s e d 90 y e a r s a g o . T h e s e b a t t e r i e s a r e h e a v y a n d h a v e low s t o r a g e c a p a c i t y . C u r r e n t l y , t h e y can s t o r e a b o u t 40 w a t t - h o u r s p e r k i l o g r a m ( W h / k g ) . G a s o l i n e , b y c o n t r a s t , stores 13,000 W h / k g . A l t h o u g h these t w o n u m b e r s a r e f a r f r o m telling t h e e n t i r e t e c h n o l o g i c a l s t o r y , t h e y d o p o i n t to t h e h e a r t o f t h e m a t t e r - e l e c t r i c c a r s d o n o t h a v e t h e p e r f o r m a n c e f e a t u r e s (in p a r t i c u l a r r a n g e a n d s p e e d ) t h o u g h t n e c e s s a r y b y t o d a y ' s c o n s u m e r . O p t i m i s t s p o i n t o u t t h a t in spite o f this p r o b l e m t h e e l e c t r i c a l vehicle d o e s r e p r e s e n t a r e a s o n a b l e s u b s t i t u t e f o r s o m e u r b a n u s e s , 2 e v e n t h o u g h it is n o t yet a s e r i o u s c o n t e n d e r f o r e x t e n d e d h i g h w a y use.

E a r l y t h i s c e n t u r y , w h e n t h e e l e c t r i c vehicle was o n e o f t h e t h r e e p r o s p e c t i v e t e c h n o l o - gies, r e s e a r c h o n b a t t e r y t e c h n o l o g y effected significant i m p r o v e m e n t s in t h e i r c a p a c i t y . In t h e 1890s b a t t e r y c a p a c i t i e s were in t h e v i c i n i t y o f 10 W h / k g . By 1901 t h i s h a d b e e n i m p r o v e d t o 18 W h / k g a n d b y 1911 was c l o s e t o 25 W h / k g . This t r a j e c t o r y o f t e c h n o l o g i c a l i m p r o v e m e n t was s t o p p e d at t h a t p o i n t , h o w e v e r , a n d it has t a k e n close t o 80 y e a r s t o d o u b l e t h e c a p a c i t y . A k e y f a c t o r in t h e h a l t o f p r o g r e s s was t h e i n t r o d u c t i o n o f the s t a r t i n g - l i g h t i n g i g n i t i o n i n t o t h e g a s o l i n e car. This t e c h n o l o g y m e a n t t h a t e v e r y g a s o l i n e c a r w o u l d use a b a t t e r y , a n d it was i n t r o d u c e d a t a p o i n t w h e r e sales o f g a s o l i n e c a r s were b e g i n n i n g t o g r o w v e r y r a p i d l y . T h i s m a r k e d a d r a m a t i c c h a n g e in t h e n a t u r e o f d e m a n d f o r b a t t e r i e s , a n d b a t t e r y m a n u f a c t u r e r s c h a n g e d t h e i r R & D s t r a t e g i e s a c c o r d - ingly, a w a y f r o m i n c r e a s i n g c a p a c i t y , b e c a u s e this was n o t n e a r l y so i m p o r t a n t t o t h e g a s o l i n e c a r , t o w a r d l a r g e - s c a l e p r o d u c t i o n .

T h e r e is s o m e e v i d e n c e n o w t h a t t h e t e c h n o l o g i c a l t r a j e c t o r y a b a n d o n e d a r o u n d 1915 is a g a i n b e i n g p i c k e d u p . N i c k e l - c a d m i u m b a t t e r i e s n o w h a v e c a p a c i t i e s o f 65 W h / k g , a n d z i n c - a i r b a t t e r i e s a r e u p t o 120 W h / k g . S o m e o f this p r o g r e s s is n o d o u b t d u e t o t h e new m a r k e t f o r b a t t e r i e s , n a m e l y as a p a r t o f p o r t a b l e e l e c t r o n i c g o o d s . T h e g r o w t h in this m a r k e t , a n d t h e a c c o m p a n y i n g d e m a n d f o r l i g h t e r , l o n g - l a s t i n g b a t t e r i e s t h a t can b e q u i c k l y r e c h a r g e d , h a s c r e a t e d a s t r o n g e n o u g h d e m a n d f o r i m p r o v e m e n t s t h a t t h e y

By "escape from lock-in," we refer to a sequence of events wherein the position of the dominant technology is weakened, as some other technology begins to have a presence in the market.

2 Currently, electric cars have a range of about 85 km, and a top speed of about 90 km/h.

E S C A P I N G L O C K - I N 63

are in fact taking place. 3 These improvements, combined with advances in more exotic technologies, suggest that the battery m a y cease to be the main bottleneck for the penetra- tion o f the electric vehicle into the automobile marketplace.

I f we suppose this to be a reasonable conjecture, and that the battery problem will, finally, be solved, should we also suppose that the penetration o f the electric vehicle into the automobile m a r k e t is straightforward? We will argue that the answer must be no. There are m a n y things besides technological considerations that affect whether a technology is capable o f entering a m a r k e t and competing successfully with existing technologies. Technological learning, which has been emphasized in the literature, is not the only source o f lock-in. In particular, links with other industries, b o t h upstream and downstream, are very important factors that determine the success or failure o f a technology.

P A T H - D E P E N D E N T , P A T H - I N T E R D E P E N D E N T , A N D P A T H - I N D E P E N D E N T

T E C H N I C A L C H A N G E The path that leads to the lock-in o f a technology often starts with a small historical

event or a sequence o f such events. The historical event is often an accident, 4 a haphazard marketing gadget, 5 or a political p r o b l e m demanding immediate action. 6 In standard models o f p a t h dependence, an initial advantage gained by one technology can create a snowballing effect, based on learning by doing, learning by using, and learning a b o u t pay-offs, which quickly makes the technology preferred to others (page 543 [5]).

The path-dependence model has tended to focus on situations in which competing technologies already exist, and where most o f the decisive technological development is produced within the industry. We b r o a d e n this assumption and acknowledge that the development o f a technology is linked to developments elsewhere in the economy and that ruptures that appear to be independent o f the technology m a y affect its development. Thus, the p a t h dependence o f a particular technology is path interdependent with eco- nomic, technical, and political decisions that gradually develop in the economy. 7 A techno- logical interdependency m a y be a reciprocal, constructive interaction between technolo- gies or may prevent developments in other technologies (page 154 [28], pages 69-70 [12]). The economic-technical linkages that exist between industries have been highlighted in Dahm6n's development block concept. A development block is a set o f interrelated com-

3 It is not clear, of course, just how much of the R&D on batteries for portable electronics will facilitate improvements in the batteries for electric vehicles, because the two are very different. The technological trajectory of batteries for the electric vehicle, which is now on a path of improvement, may again be derailed because demand for improvements in battery technology arises from a very different sector. To the extent that the knowledge generated is general, R&D in one place will be of benefit in the other, and the considerable sums spent on improvements in the portability of electronic goods will be of benefit to the electric vehicle industry.

4 The legislation against steam road coaches in 19th century Britain gained momentum after a boiler on a steam coach exploded in 1840, killing five passengers and injuring 20 others (page 38 [18]). Or more recently, crashes of the first generation of civil jet planes occurred because of the unlucky decision of De Havilland to mount quadrangular windows on their jet plane, the "Comet," in 1952. The planes crashed after metal fatigue, and Boeing captured nearly the whole market with the Boeing 707. The Comet accidents changed the future path of the industry in three ways: (1) the Boeing 707 was a much larger plane, (2) the development of jet planes was moved from Britain to the United States, and (3) the wing and motor designs of the jet planes were altered.

5 David [11] points at the advantages o f the QWERTY keyboard when writing the brand name: TYPE- WRITER.

6 Cowan (page 543 [5]) claims that light water power plants gained dominance because the Soviet nuclear bomb in 1949 caused a civilian power project to be rushed forward.

7 In addition, military considerations and decisions have impact on the relative strength of technologies. Cowan (page 566, [5]) points out the interdependency between the development o f light water nuclear reactors in submarines and the construction of light water nuclear reactor power plants. See also Basalla (page 163 [1]).

64 R. C O W A N A N D S. HULTI~N

plementaries that connect firms f r o m different industries into a network.S The complemen- taries a p p e a r sequentially as inventors and innovators solve economic-technical problems that have blocked the realization o f the economic benefits o f earlier innovations. These problems have been labeled bottlenecks, reverse salients, or structural tensions. The prob- lem-solving involved in this development process is not confined within industrial bound- aries. Hence, the resolution o f a p r o b l e m in an industry can often find a much wider application t h a n was originally imagined, and conversely, relevant innovations may be made by actors only loosely related to the industry. 9

P a t h interdependency consists o f three types o f positive externalities: knowledge spillovers; economies o f scale through demand f o r the same inputs; and positive user externalities through technologies using the same infrastructure. As an example, the motives for choosing digital rather t h a n analogue transmission for the p a n - E u r o p e a n standard o f mobile telephony were that it benefited more f r o m advances in electronics (knowledge spillovers), the decreasing costs o f electronic components (economies o f scale in the production o f c o m m o n inputs), and the possibilities o f using the mobile telephone network for value-added services (positive m a r k e t externalities through multiple use o f the network).

Whereas p a t h dependence, and to a lesser extent path interdependence, have received attention in the literature on technology in recent years, the neo-institutionalists direct our attention to the possibility o f path-independent development o f institutional struc- tures and industries. In an institutional context, ruptures are changes in the institutional structure that are independent o f "prior historical circumstance, ideational habit or behav- ioral regularity" (page 4 [32]). But in the Schumpeterian sense, economic development is b o t h p a t h dependent a n d path independent. Inventions, regardless o f their impact on society, are new combinations developed f r o m within the e c o n o m y and built on the existing stock o f knowledgeJ ° T h o u g h we tend to think o f the railway, f o r example, as revolutionary, and therefore path independent, the path-dependent aspect is evident when considering that the transition f r o m horses to steam locomotives lasted for nearly 2 decades. Even when the first i m p o r t a n t railway (the Stockton & Darlington) opened in 1825 it had to be constructed so as to a c c o m m o d a t e b o t h steam-driven and horse-powered trains. Indeed, for 8 years steam locomotives competed with horses as the power source on this railway (pages 137-140 [27]).

Technological lock-in has roots both within and outside the industry in which the technology operates. This suggests that the p r o b l e m o f lock-in m a y be even m o r e serious than is suggested by the competing technologies literature. Thus, to examine the possibility o f escaping lock-in, we must look outside the industry, beyond the technologies them- selves, to address other factors that m a y impinge.

E S C A P I N G L O C K - I N Some initiating events m a y give a technology an early advantage, but it is the processes

that emerge in response that produce the vested interests that lock in the technology.

s Dahm6n (page 24 [10]). Stated, "Such initiatives may be taken by existing, or new, actors without concerted activities, that is simply as a reaction to market "price signals," or within the framework o f network relations outside what is traditionally called a 'market'."

9 The concept structural tension is used by Dahm6n [8, 9l and the concept reverse salient by T. Hughes. Other concepts that emphasize the interdependence between technical evolution in interrelated industries are, for example, Schumpeter's new combination and Basalla's artifactual continuity.

l0 Schumpeter [30] and Basalla l l ] . Basalla (page 45 [1]) claims that "Any new thing that appears in the made world is based on some object already in existence."

E S C A P I N G L O C K - I N 65

Users b e c o m e unwilling to switch technologies because they have invested time and money in the technology that dominates; producers benefit f r o m production economies o f scale and investments in R & D . "

T o escape lock-in, therefore, it is not enough t h a t the competing technology is better. David suggests that time savings o f 20°70 to 30% o f using the Dvorak keyboards rather than Q W E R T Y are not enough to spur the users and producers to change k e y b o a r d ) 2 T o overcome lock-in, it is necessary that some extraordinary events occur, We discuss the possible impact o f six factors whose existence or strength could help the automobile m a r k e t escape (or unlock) the lock-in o f the gasoline car technology.

1. Crisis in the existing technology. This factor has, in some cases, stopped the use o f pesticides in agriculture, where conventional technologies have begun to fail to control damaging pests [6].

2. Regulation. This option is currently being used in the case o f CFCs in refrigerators, as concerns about the ozone layer p r o m p t regulations aimed at reducing the damage done to it [23].

3. Technological breakthrough producing a (real or imagined) cost breakthrough. The ascendancy o f the gasoline car was propelled by the implementation o f Tay- lorism and factory automation by Henry Ford. Light water nuclear reactor power plants gained m o m e n t u m through the believed future cost breakthrough that was to emerge when the industry m a t u r e d [5].

4. Changes in taste. The growing awareness o f the environmental effects o f some products has created mass markets for environmentally adapted products.

5. Niche markets. The growth o f emerging technologies is facilitated if there exists a relatively large n u m b e r o f consumers willing to invest in the new technology before low cost production, (internal production economies), and well developed after-sales services, (external consumption externalities) emerge. Early adopters provide the learning and scale economies needed to generate these externalities.

6. Scientific results. Science m a y provide tools to better measure the external effects o f an industry or m a y enable inventors and entrepreneurs to t r a n s f o r m basic science into inventions and innovations. Consequently, scientific results can put development pressure on an old technology both by questioning its global effi- ciency and by providing knowledge a b o u t alternative technologies.

Initial D e f e a t o f the Electric V e h i c l e A brief history o f the competition a m o n g automobile technologies that t o o k place

at the turn o f the century is useful in drawing attention to factors that m a y be important in future developments.

The automobile industry began to develop rapidly in the 1890s. Developments in the U.S. m a r k e t lagged behind the leading nations in Europe until the turn o f the century, but the general patterns are similar. F r o m the start o f the industry in the United States, electric, steam, and gasoline cars competed for the market. Not until 1896 was more than one car o f the same design made in the United States, and at the turn o f the century the most p o p u l a r car was the steamer, the "Locomobile" (page 236 [13]).

H David (page 334 [11]) highlights three features that caused QWERTY to become locked in. These were technical interrelatedness, economies o f scale, and the quasi-irreversibility o f investment.

t2 Liebowitz and Margolis [21], question the accuracy of this figure. They report test results showing that typing with Dvorak is 2% to 5% faster than QWERTY, which is much less impressive than David's figure. David's lock-in argument remains valid regardless of the relative efficiencies of the two keyboards.

66 R. C O W A N A N D S. HULTI~N

In a counterfactual history, 1899 could have been a crucial year in a story o f how the electric vehicle won the competition for the automobile market.

The U.S. market for automobiles was principally divided between electric and steam. In 1899, 1,575 electric vehicles, 1,681 steam cars, and 936 gasoline cars were sold [13]. In February o f that year, the Electric Vehicle Company ordered 200 vehicles and the next month announced that it would introduce electric taxicabs on a massive scale [29]. The industrial and technological network underpinning the electric vehicle industry also seemed to be strong. The producers o f electric vehicles had easy access to commercially obtainable components, because they used the same motors, controllers, switches, and batteries as the streetcars, albeit in smaller size (page 255 [29]). T. A. Edison promised that the problem o f the battery's poor capacity to store energy was about to be solved. The crucial patent for the gasoline car i n d u s t r y - t h e so-called Selden p a t e n t - w a s pur- chased by the Electric Vehicle Company. ~3 The next year it began a successful litigation against the then leading producers o f gasoline automobiles. Further, the electric car seemed more technically advanced than its rivals: that year an electric vehicle, "La Jamais Contente," became the first car to reach 100 k m / h .

All this looked promising for the future prospects o f the electric vehicle, but the early promise did not last. Whereas the sales o f electric vehicles more than doubled in the United States from 1899 to 1909, the sales o f gasoline cars increased more than 120 times. The Selden patent seemed not to hinder new firms from producing gasoline cars. The trade association A L A M , which was formed by a small group o f manufacturers to exploit the patent, was never able to stop infringement, and finally in 1911 they lost a decisive patent infringement case against Henry Ford.~4 By the early years o f this century, the gasoline car had surpassed its competitors in the U.S. market. The same development had taken place in France, Great Britain, and Germany a few years earlier. However, whereas in Europe the automobile continued to be produced in small series targeted for the rich, the growth o f the production o f gasoline cars in the United States was synonymous with large-scale production, lower prices, and the creation o f a mass market. ~5

The success o f the gasoline car was not triggered by any single small historical event or accident. The case histories o f the early automobile industry suggest that the interaction o f several economic and technical factors gave the gasoline car a decisive advantage between 1900 and 1905.

Production and Marketing Gasoline car producers as a group pursued a larger variety of strategies than their

competitors in the steam car and electric vehicle industries. Price, however, became a key factor. In 1900, the range o f prices for electric vehicles was $1,250 to $3,500, in contrast to $1,000 to $2,000 for gasoline cars and $650 to $1,500 for steam automobiles. Thereafter the price differences increased, largely because o f differences in the strategic

~3 According to Schallenberg (page 266 [29]) the Electric Vehicle Company bought the Selden patent after the firm started to have problems with the batteries in its first generation of electric cabs.

~4 The Court found that Ford had not infringed the Selden patient because he (and nearly all other gasoline car manufactures) had used the Otto four-stroke engine, whereas the Selden patent mentioned a two-stroke engine. See Flink (pages 325 [13]).

~5 The most important competitor for all car makes was, o f course, the horse. In 1908, the number of farm horses in the United States was 19,992,000 compared with 198,000 registered motor vehicles. The same year a government report stated that motor vehicles had replaced 60,000 horses, which was many fewer than the 500,000 horses replaced by electricity in the urban street car service Flink (page 54 [13]). The horse even gave the title to one o f the leading motor journals: The Horseless Age.

E S C A P I N G L O C K - I N 6 7

choices made by the manufacturers. In particular, low-cost mass production practices were introduced earlier and more vigorously in the gasoline car industry than in the competing car industries. The first mass-produced gasoline car, the Oldsmobile Curved Dash, appeared in 1901. It cost only $650, and more than 2,000 were sold in 1902.

The choice o f mass production by the gasoline car industry is in sharp contrast with production and marketing decisions made by steam and electric manufacturers. In 1902 the leading manufacturer o f steam cars, Locomobile, switched over entirely to the produc- tion o f gasoline automobiles. This left the Stanley brothers, considered the most inventive producer o f steam cars, as the largest firm. They produced only 600 to 700 cars a year: a small output, but enough to enable the owners to live comfortably. ~6 They focussed on high-performance cars and sold all cars on cash payment. Critically, they also refused to move to mass production and were averse to advertising. If there was excess demand for their cars, their rationing criteria were based on the "suitability" of prospective buyers.

During this early period, the electric vehicle industry followed a different market structure trajectory and was moving toward a vertically integrated m o n o p o l y - f r o m production to use as electric taxicabs. But its architect, the capitalist W. C. Whitney "was backing the wrong horse" (page 264 [29]). Whitney's principal business activity consisted of the streetcar lines in New York owned by his syndicate, the Metropolitan Traction Company. His attempt at vertical integration involved the Metropolitan Traction Company and the Electric Vehicle Company, which he also controlled. This attempt signaled the beginning of the decline o f the Electric Vehicle Company, however. The firm explored several different business opportunities before 1907 when it filed for bankruptcy (pages 272-273 [29]).

A lasting feature of the majority o f the other electric vehicle companies was that they were more interested in selling their cars to the right customers at a high price than they were in developing a mass market. In 1914, the average price for the 18 listed electric vehicles was $2,950. The leading manufacturer of electric vehicles, Detroit Electric, with a yearly production stabilized around 1,000 vehicles, charged $2,850 for a standard four- seat Detroit Electric. It is true that some producers of electric cars imitated the design o f stylish gasoline cars, thus lowering the prices. In 1914, for example, the Columbia Electric Vehicle Company sold such a car for $785. The same year, a Ford town car cost $640, though, and a four-seat roadster only $440 [page 253, [29]).

T e c h n i c a l S o l u t i o n s Although all three technologies exhibited early technical problems, gasoline car man-

ufactures rapidly found solutions, whereas the producers of steam and electric vehicles were unable or unwilling to reduce the faults o f their cars.

The deficiencies o f the gasoline car were that they: (1) were noisy, a problem that still has not been solved; (2) were difficult to start; (3) consumed a lot o f water; (4) had a relatively short range; and (5) had low maximum speed. The internal combustion engine car technology developed rapidly during the first decade of the 20th century. Inventions helped to reduce water leakages, increase the range, and give higher speeds. This can be seen for example in the speed records. After a steam car set the speed record in 1902, nine gasoline cars consecutively set new speed records. A Stanley steamer in 1906 raised the speed record from 105 to 122 mph, but this was the last steam-held record. It was beaten

~6 J a m i s o n ( p a g e s 4 1 - 4 5 [18]) c l a i m s t h a t " s t e a m c a r s w e r e n o t t e c h n i c a l l y i n f e r i o r t o g a s - p o w e r e d vehicles b u t w e r e s i m p l y a v i c t i m o f h i s t o r i c a l a c c i d e n t . " I n his view, t h e a c c i d e n t w a s t h e set o f c h o i c e s m a d e b y t h e S t a n l e y b r o t h e r s (in t h e i r r o l e a s d o m i n a n t s t e a m p r o d u c e r ) r e f e r r e d t o in t h e text.

68 R. C O W A N A N D S. HULTI~N

in 1909 b y a gasoline car. After that, the internal combustion-engined cars dominated for m a n y decades. With the introduction o f the starting-lightning-ignition (SLI) in the 1912 Cadillac, the gasoline car manufacturers satisfactorily solved the last four problems (pages 103-107 [26]).

Problems with the steam cars were that they (1) needed heating up 20 minutes before travel, and (2) they consumed immense amounts o f water. The first problem was solved after a few years, but the p r o b l e m o f water consumption remained until the disappearance o f the steam car industry in 1920.17

The electric vehicle's m a j o r drawbacks were that (1) they couldn't climb steep hills, (2) they had a short range, and (3) they had low top speed. All these problems were related to the p o o r electric power storage capacity o f the batteries, and because the batteries were very slow to develop, the problems ultimately remained.

Advances were made in electric vehicle technology, but they were outpaced by techni- cal change in the internal combustion engine. By increasing the storage efficiency o f batteries the range o f the electric vehicles was increased f r o m 30 kilometers in 1900 to 80-130 kilometers in 1914. In addition, a network o f recharging stations was built: Boston had 32 by 1903; and in 1905 New York had 41 (pages 240-241 [13]). Although this appears to be the beginning o f a strong electric vehicle system on the downstream side, on the upstream side we observe, perhaps, one o f the negative effects o f path interdependence. The apparent spillovers f r o m electric streetcars to electric automobiles were not as benefi- cial as one might have expected. Batteries originally designed and constructed for the streetcars were used in the electric cabs produced in 1899-1900. They were not well suited, however, and had a lifetime o f only six months. Battery technology did improve at the beginning o f the century, but it t o o k 10 years to fulfill the expectations o f 1900. It was too late, though. In 1910 the p e r f o r m a n c e o f batteries was still uncompetitive, because o f advances that had taken place in the gasoline car technology.

The arrival o f the S L I in gasoline cars in 1912 was the concluding disaster for the electric car. There are two reasons. First, it eliminated the need for a crank start, which was one o f the most undesirable features o f the gasoline car. This removed one o f the perceived advantages o f the electric vehicle, namely that women could drive them. Second, the SLI concentrated the R&D efforts o f battery manufacturers on mass production techniques f o r relatively low capacity batteries, rather than on increasing storage capacity, which would have been necessary for the competitive position o f the electric vehicle (pages 275-276 and pages 286-287 [29]).

Interlude 1920-1973 By 1920, the gasoline-powered car was clearly dominant. In 1924, 381 electric vehicles

were produced in the United States, c o m p a r e d with 3,185,490 gasoline cars. ~8 The next 50 years saw the consolidation o f the position that had evolved in the first 2 decades o f the century. Networks o f petrol stations were constructed, and the p e t r o l e u m refining industry grew, both in size and in technical capability. In addition, a network o f mechanics specialized in the repair o f gasoline engines emerged. As the sophistication o f the a u t o m o - bile has increased, the network o f car dealerships, petrol stations, and a u t o mechanics have become intimately linked. The three networks are stable, extensive, a n d strong, and

~7 Jamison [18] writes that the Stanleys refused to equip their steam cars with condensers to eliminate the steam billowing from the boiler until the city governments of Boston and Chicago threatened to ban the steamer from the streets.

~8 Nicholon (page 28 [22]). His reference for the figures is Hartman et al. (page 15 [16]).

E S C A P I N G L O C K - I N 69

provide an important source of the externalities that make the position of the gasoline car difficult to assail.

The gasoline car also influenced society in a manner unparalleled by other products. Where people lived, how far they could commute, and how they spent their leisure time were all affected by this technology. 19 Gasoline cars were instrumental in promoting the growth of middle class suburban areas. People started to go on holidays in their own cars, and many teenagers spent much o f their free time "cruising." The car industry became one o f the biggest industries in most developed countries, and new manufacturing techniques were tested there ahead o f their implementation in other industries. The car was also used for races and as a status symbol. Its impact was felt more or less everywhere in society, and as the society changed in response to the development of the gasoline car, its properties and operating characteristics came to form the definition of what an automobile is.

R e n e w e d Interest in the Electric V e h i c l e 1 9 7 3 - 1 9 9 0 Eventually, however, the gasoline car was called into question. Congestion in the

road networks o f large cities, car accidents that yearly claimed thousands o f lives, and air pollution were the three reasons that prompted doubts about the ultimate value o f the technology. In addition, the oil crises in 1973-74 made many politicians think about the dependence of the major transport system on the politics of unstable political regimes in the Middle East.

The oil crises in particular promoted the creation of the electric vehicle programs in many advanced capitalist states. One o f the most ambitious programs was launched in France. In the 1970s, a network o f big French firms, aided by state funding, sought to construct a market for electric vehicles in France. The most active firm was the French electric energy producer EdF. This firm initiated the creation of a group o f public organiza- tions that were potential users o f electric vehicles. Members o f the group were the French Post Office, EdF, Paris airport, SNCF, the local transport organization in Paris RATP, among others. The goal o f the work in the group was to evaluate the needs o f potential users, which would enable the industry to specify its possibilities in relation to the requests and measure the gap between the required performance with the technically possible. It quickly became apparent that the demands were impossible to meet with the then existing battery technology. 2°

In 1976, the U.S. Senate authorized the Energy Research and Development Associa- tion to launch a federal program for the development o f the electric and hybrid vehicles. The program had a budget o f 160 million dollars, which was to be used to develop nickel-iron and nickel-zinc batteries on the one hand and vehicles on the other. The aim was to facilitate building 2,500 electric and hybrid cars between June 1978 and December 1979, and later to increase production to 5,000 and to 50,000 vehicles yearly. The program never fulfilled the ambitious plans, and it was stopped by the Reagan administration for budgetary reasons in 1982-1983 (pages 54-55 [22]).

Japan began a redevelopment program for electric vehicles in 1965. This was consid- ered a fundamental technical research program. From 1971 to 1976, 19 million dollars was spent in a large national project headed by MITI. During this period two generations

t9 Kirsch d e s c r i b e s h o w in 1967 electric vehicles were s u g g e s t e d as a r e m e d y t o the air p o l l u t i o n p r o b l e m p r o d u c e d b y g a s o l i n e cars.

20 N i c h o l o n [22]. F o r a s o c i a l c o n s t r u c t i v i s t i n t e r p r e t a t i o n o f the F r e n c h efforts to d e v e l o p the electric vehicle, see C a l l o n [3].

7 0 R . C O W A N A N D S. H U L T I ~ N

o f electric vehicles were developed, and some 300 vehicles of different types were con- structed. In 1976 the Japanese Electric Vehicle Council fixed an objective o f 200,000 electric vehicles in 1986 (pages 51-53 [22]). This objective was of course not reached.

Similar research projects were carried out in many other countries. Nowhere in the 1970s and the 1980s did the projects result in mass production o f electric vehicles, though. The majority o f the projects launched in the 1970s built on the assumption that the batteries could be improved rapidly. This did not happen, and electric and hybrid vehicles have remained uncompetitive.

Toward Legislated Introduction of Electric Vehicles? 1990- The first example o f legislation to promote the development o f electric vehicles is

written by California Air Resource Board (CARB). To overcome health problems in Los Angeles, CARB decided in 1990 that by 1998 2°70 o f all new cars sold in California must be "zero emission." In the year 2000, all new cars sold must be either "low emission," "ultra low emission," or "zero emission." And by 2003, 75070 will be low-emission, 15070 ultra-low-emission, and 10070 zero-emission cars. Most experts believe that only electric or hybrid vehicles can be made zero emission.

The legislation in California has attracted considerable interest, and 10 additional U.S. states have decided to apply the same regulation. I f the legislation is enforced, it implies that a market for 300,000 to 400,000 electric vehicles will exist in the United States by 2003. In other countries, local regulations about air pollution have also given some support to electric vehicles. This has been the case, for example, in Switzerland.

Ultimately, regulation notwithstanding, the keys to success o f a technology lie in demanders and suppliers--the market for it and the supply o f it. Connected with this, o f course, is the state o f the technology itself. In the next three sections, we discuss these aspects o f the electric vehicle.

Market for Electric Vehicles When the car was a novelty, electric cars attracted wealthy women. 21 This is clearly

expressed in this advertisement from 1914 for Detroit Electric:

A t the i n t e r s e c t i o n y o u p a u s e a n d are s u d d e n l y startled a t the car s l o w i n g t o y o u r r i g h t - a l a d y d r i v i n g a n a u t o m o b i l e !

But t h e n y o u see it's a D e t r o i t E l e c t r i c a n d k n o w it is q u i t e w i t h i n t h e b o u n d s o f r e a s o n - Y o u s h a k e y o u r h e a d w i t h a little s m i l e , k n o w i n g t h a t in this marvel-filled d a y o f 1914, the D e t r o i t Electric has p u t safe a n d h a p p y m o t o r i n g in th e h a n d s o f o u r w o m e n f o l k - - a s well as o u r g e n t l e m e n d r i v e r s (page 2 [25]).

The next substantial market for electric vehicles developed in Great Britain after the first world war. The driving force behind this market was a regulation stating that delivery vehicles making repeated stops in housing areas must be nonpolluting. The rudi- mentary technology underpinning this industry has not changed and has attracted very little research.22 In 1968 there were 45,000 such small electric vehicles in service. Currently, fewer than 25,000 a r e u s e d . 23

2~ Mrs. H e n r y F o r d o w n e d a n electric car. 22 T h e s e c o n d w o r l d w a r p r o d u c e d a r e n e w e d interest in electric vehicles, b u t the fleets p r o d u c e d d u r i n g the

w a r were n o t large a n d w i t h few e x c e p t i o n s n o t e c h n o l o g i c a l i m p r o v e m e n t s were m a d e . G r e g o i r e [14] r e p o r t s o n his w o r k w i t h a l i g h t - w e i g h t electric car d u r i n g th e war. I t was called C . G . E . - T u d o r . A m o d i f i e d ver s ion o f t h i s car t r a v e l l e d 250 k i l o m e t e r s w i t h a n a v e r a g e speed o f 42 k i n / h r .

23 P a p a n e k (pages 265 [24]) a n d N i c h o l o n ( p a g e s 55 [22]). A c c o r d i n g to N i c h o l o n t h e y e a r l y p r o d u c t i o n in the 1980s was 1,200 t o 1,500 vehicles.

ESCAPING LOCK-IN

TABLE 1 Numbers o f Electric Vehicles in Selected European Countries In 1993

71

Great Britain 20,000-25,000 Switzerland 1,500-2,000 Sweden 200-300* France 600-1,000 Germany 3,000-4,000

* In Sweden, 367 electric vehicles were registered in 1993. This sum includes golf carts and minor trucks.

T o d a y , electric vehicles are m a i n l y owned b y large c o m p a n i e s and public organiza- tions. E u r o p e ' s biggest o w n e r o f electric vehicles is E d F , the F r e n c h state electric c o m p a n y , with a fleet o f 300 t o 400 electric vehicles o u t o f a total o f 60,000 vehicles. I n Sweden, the m o s t i m p o r t a n t electric vehicle users are local authorities a n d electric power plant c o m p a n i e s a n d electric c u r r e n t distributors. A substantial n u m b e r o f electric vehicles in E u r o p e f o r m part o f e v a l u a t i o n projects measuring the technical p e r f o r m a n c e o f the cars.

Car m a n u f a c t u r e r s , c o m p o n e n t suppliers, public utilities, a n d g o v e r n m e n t agencies participate in electric vehicle d e v e l o p m e n t projects. I n the F r e n c h t o w n L a Rochelle, a test o f 50 electric C i t r o e n A X a n d P e u g e o t 106 began in 1993. P e u g e o t o w n s the cars a n d leases t h e m at a very competitive price t o the u s e r s - private consumers, public organi- zations, a n d firms.

T h e total n u m b e r o f electric vehicles worldwide remains insignificant c o m p a r e d with ownership o f gasoline cars. I n Sweden there were 367 registered electric vehicles in 1993, in Switzerland there were nearly 2,000, a n d in G e r m a n y just over 1,800. Switzerland is in m a n y respects the m o s t a d v a n c e d electric vehicle c o u n t r y in E u r o p e . There, vehicles are t o a large extent o w n e d b y individuals, a n d the relative i m p o r t a n c e o f electric vehicles is higher t h a n in a n y o t h e r c o u n t r y . H o w e v e r , sales have decreased f r o m 686 vehicles in 1991 t o 220 vehicles in 1992. G e r m a n y shows signs o f being the next f r o n t r u n n e r in electric vehicles sales. A l t h o u g h total n u m b e r s are still small, f r o m 1989 t o 1993 the n u m b e r o f electric a u t o m o b i l e s (which excludes things like milk floats, g o l f carts, forklifts, a n d so on) has increased 10-fold (see Table 1).

U n d o u b t e d l y there exists an unsatisfied d e m a n d f o r electric vehicles a n d other envi- r o n m e n t a l l y a d a p t e d vehicles. W h e n Volvo presented its h y b r i d car, the V o l v o E C C , a leading spokesperson f o r the e n v i r o n m e n t a l m o v e m e n t wrote in a daily paper that he w a n t e d t o o r d e r one, but t o n o avail. General M o t o r s received s p o n t a n e o u s orders after the c o m p a n y presented its electric car, the " I m p a c t . " " I n some cases, people sent a letter c o n t a i n i n g a check as an initial p a y m e n t . This o c c u r r e d even t h o u g h n o p r o d u c t i o n plans existed. These checks were, o f course, returned with t h a n k s " [7].

M a n y private car o w n e r s take the pains t o rebuild their gasoline cars into electric cars. A n d even larger n u m b e r s o f car o w n e r s have switched f r o m gasoline t o electric cars despite the fact t h a t the latter are relatively low p e r f o r m a n c e a n d relatively expensive: in 1993 a two-seat electric car with a range o f 60 t o 80 k i l o m e t e r s - f o r example the D a n i s h K e w e t - c o s t as m u c h as a V W G o l f with either a gasoline o r a diesel engine. A n electric G o l f costs twice as m u c h as a gasoline G o l f .

T h e price differential between electric a n d gasoline cars is expected t o d r o p substan- tially within a few years t h o u g h . T h e F r e n c h car m a n u f a c t u r e r s Renault a n d P e u g e o t claim t h a t a p r o d u c t i o n o f 1,000 cars annually reduces the price gap t o 30°70. P e u g e o t calculates t h a t the price difference will disappear in 1998 when the firm p r o d u c e s 50,000 electric cars per year. This claim is slightly disingenuous, since the prices referred to b y P e u g e o t d o n o t include batteries. I n t h e fall o f 1995 P e u g e o t a n d Renault launched their

72 R. COWAN AND S. HULTI~N

T A B L E 2 Prices and Key Data fo r Electric Vehicles in 1993

Maximum Price of Price of Range speed electric gasoline

Model Seats (kin) (km/hr) model model Kewet 2 50-100 70 129,000 SEK Erad Junior 2 70-80 75 74,000 FRF 48,500 FRF VW Golf 4 71 100 288,000 SEK 110,000 SEK Microcar Lyra 2 65 75 146,000 FRF 69,900 FRF Puli City 2 50-80 65 88,000 SEK Elektro Marbella 4 50-100 80 149,000 SEK 60,000 SEK Renault Clio 4 177,000 FRF 79,500 FRF

Prices include batteries and are for basic models.

first electric vehicles t a r g e t e d f o r the p r i v a t e m a r k e t . T h e p r i c e s a r e 40°70-50°70 h i g h e r t h a n t h e c h e a p e s t v e r s i o n o f t h e e q u i v a l e n t g a s o l i n e m a k e s . T h e p r i c e s i n c l u d e a r e d u c t i o n o f 5,000 F R F in s t a t e a i d a n d 10,000 F R F in a i d f r o m E D F t h e s t a t e o w n e d s u p p l i e r o f electric e n e r g y .

T a b l e 2 p r e s e n t s t h e 1993 prices f o r a selection o f electric c a r s a n d vehicles a n d prices f o r t h e i r p e t r o l c o u n t e r p a r t s .

F u t u r e u s e r s o f e l e c t r i c vehicles h a v e b e c o m e m u c h m o r e active in r e c e n t years. I n S w e d e n in 1994 t h e w o r l d ' s largest b u y e r c o n s o r t i u m p r o m i s e d t o b u y at l e a s t 200 electrics i f t h e s u p p l i e r s c o u l d m e e t a set o f specified d e m a n d s . T h e c o n s o r t i u m c o n s i s t s o f t w o s u b c o n s o r t i a : o n e f o r b u y i n g electric c a r s a n d t h e o t h e r f o r b u y i n g electric vans. T h r e e o f t h e key p e r f o r m a n c e f a c t o r s a r e a 90- to 1 0 0 - k m / h m a x i m u m speed, a r a n g e in city traffic o f 100 k i l o m e t e r s a n d a b a t t e r y life o f 750 cycles. T h e s p e c i f i c a t i o n s set b y t h e c o n s o r t i a a l s o i n c l u d e d p r i c e limits a n d a d e m a n d f o r a f t e r - s a l e s services. O f c o u r s e t h e vehicles m u s t a l s o m e e t t h e e m i s s i o n r e q u i r e m e n t s set in t h e C a l i f o r n i a r e g u l a t i o n . T h e s e r e q u i r e m e n t s a r e m e t b y t h e c a r s c u r r e n t l y u s e d in t h e L a R o c h e l l e test. M e m b e r s o f t h e c o n s o r t i a c o m e f r o m m a n y different sectors o f t h e e c o n o m y - l o c a l a u t h o r i t i e s , s t a t e agencies, t h e p o s t office, r e a l e s t a t e o w n e r s , electric p o w e r s u p p l y c o m p a n i e s , h a r b o r a n d a i r p o r t a u t h o r i t i e s , c a r r e n t a l agencies, a n d f r e i g h t t r a n s p o r t c o m p a n i e s , a n d t h e i r m o t i v e s v a r y c o n s i d e r a b l y . T h e p u b l i c o r g a n i z a t i o n s a r e i n t e r e s t e d in t h e e n v i r o n m e n t a l benefits; t h e f r e i g h t t r a n s p o r t firms w o u l d like t o o v e r c o m e l o c a l r e g u l a t i o n s l i m i t i n g t h e access t o c i t y centers; t h e r e a l e s t a t e o w n e r s a r e k e e n o n l i m i t i n g t h e d i s t u r b a n c e o f t h e i r t r a n s p o r t s in t h e h o u s i n g areas; t h e c a r r e n t a l f i r m ' s o w n e r believes in v a r i e t y ; o t h e r o r g a n i z a t i o n s a r e i n t e r e s t e d in i m p r o v i n g t h e i r e n v i r o n m e n t a l p r o f i l e . T h e c o n s o r t i u m p l a n s , as in m a n y o f t h e e v a l u a t i o n p r o j e c t s , t o m o n i t o r the use o f t h e cars.

I n 1995, t h e c o n s o r t i u m f o u n d t h a t n o offer f r o m 14 p a r t i c i p a t i n g o r g a n i z a t i o n s , in E u r o p e , t h e U n i t e d S t a t e s , a n d T a i w a n fulfilled t h e t e c h n i c a l d e m a n d s w i t h i n t h e p r i c e r e s t r i c t i o n s . T h e offers f r o m P e u g e o t a n d R e n a u l t were c o n s i d e r e d t o b e t h e best, a n d t h e s e firms w e r e i n v i t e d t o sell 10 c a r s e a c h . T h e s e c a r s will be t e s t e d f o r 1 y e a r b e f o r e a new d e c i s i o n will be t a k e n at the e n d o f 1996. 24

PRODUCERS OF ELECTRIC VEHICLES I n t h e m i d 1960s, m a n y i m p o r t a n t c a r p r o d u c e r s s t a r t e d R & D p r o j e c t s o n electric

vehicles. C o m m o n t o all p r o j e c t s were t h a t t h e p r o t o t y p e s were e x p e n s i v e a n d u n c o m p e t i - tive. T h e R & D efforts c o n t i n u e d in t h e 1970s a n d t h e 1980s, b u t n o m a r k e t a b l e electrics

24 See NUTEK Energi, 1995, Elbilar/Jr p~ v/ig (information leaflet), June 1995.

E S C A P I N G L O C K - I N 73

T A B L E 3 P r o d u c t i o n o f Electric Vehicles and o f Gasoline Cars

Electric Gasoline (1993) (1987)

General Motors U.S. Renault 100-200 Peugeot/Citroen 100-200 Volta 150 Kewet 200 Ligier 150 Erad 450 Microcar 200

7,765,000 1,965,000 1,886,000

1,000

emerged. In 1990-92, the sales figures for electrics produced b y the large (gas) automobile producers were so unimpressive that it was possible to list nearly all buyers on one page in a leaflet.

Electric vehicles are currently being produced by between 10 and 20 firms in Europe (the precise n u m b e r varies due to the rapid entry and exit o f firms; the figure today is p r o b a b l y closer to 20) b u t the total output is fewer than 2,000 electric vehicles annually (see Table 3). In 1993, production was still largely dominated by small producers, for example the Danish Kewet, the French Volta, Ligier, and Microcar, and the Swiss Puli. A few large gasoline car producers sell electric cars, for example Volkswagen, P e u g e o t / CitroEn, and Renault. In addition, gasoline cars are being t r a n s f o r m e d to electric vehicles by some very small firms.

I f the projections m a d e by some o f the established car producers are fulfilled, the output will have grown 10-fold by 1998. Renault planned in 1993 to produce 4,000 electrics in 1995, 3,000 are planned to be o f the model Clio. Peugeot aims at producing 50,000 electrics in 1998. Even if the projected growth emerges, though, total sales o f electric vehicle will remain insignificant relative to the production o f gasoline cars. Other manufac- turers have already developed advanced, potentially competitive prototypes with futuristic designs: Volvo's ECC, G M ' s Impact, R e n a u l t / M a t r a ' s Z o o m , and CitroEn's Citela. In 1995, an electric car rally organized in Sweden and Norway saw some fairly powerful electric cars competing. The t o p speeds o f the winning cars ranged f r o m 125-150 k m / h .

Technical Possibilities The electric vehicle's most significant problems are small-scale production, the heat-

ing and cooling o f the passenger space, and the p o o r energy storage capacity o f the batteries. In combination, these m a k e the electrics expensive and relative unattractive.

T o d a y n o electric vehicle industry exists in the same way as does the gasoline car industry. The components o f electric vehicles are mostly supplied f r o m other industries: the electric m o t o r s in French electrics are taken f r o m electric trucks; the chassis and bodies are identical either to minicars o r standard gasoline cars; and the heating equipment is normally an Eberspr~icher heater, the same m a k e that heated the air-cooled Volkswa- gen Beetle.

In general, unlike in the petrol car industry, production numbers are so small that parts specifically designed and built for electric cars do not exist. Thus, there is an inability to take advantage o f increasing returns to scale in custom part manufacture because the market is too small. Nonetheless, there have been some advances in electric vehicle tech- nology.

74 R. COWAN AND S. HULTI~N

T A B L E 4 Development of the Storage Capacity of Batteries

Type Year Storage capacity

Lead 1901 18 Wh/kg Lead 1943 24 Wh/kg Lead 1950 27 Wh/kg Lead 1978 33 Wh/kg Nickel-cadmium 1984 35 Wh/kg (test) Lead 1990 40 Wh/kg Nickel-cadmium 1993 55 Wh/kg Nickel-cadmium 1995 65 Wh/kg (planned) USABC Mid-term goal 80 Wh/kg USABC Long-term goal 200 Wh/kg Zinc-air 1993 120-300 Wh/kg (test) Zinc-air Theoretical possibility 1070 Wh/kg Aluminium-oxygen Theoretical possibility 4030 Wh/kg Gasoline 13,000 Wh/kg

Sources: [4, 17].

Initially, we observe that some o f the problems associated with small-scale production are being addressed, as specialty parts begin to emerge. Regenerative brakes are available, and electronic devices designed for electric vehicle power trains are being offered. These advances are linked to the fact that more and more car models exist as electric prototypes. The emergence o f specialty parts due to an increase in the number o f units produced will lower the price o f the units. I f this price change increases demand, this clearly has features o f a virtuous circle.

Batteries remain a problem. The storage capacity o f the batteries in the first electric vehicles in 1890-1900 was less than 10 W h / k g . This figure was nearly doubled within a couple o f years, but after that the lead-acid battery technology went into a technological stalemate. It took 80 years to double the energy storage o f lead-acid batteries after the rapid improvements in the first decade o f the 20th century. Alternative technologies existed but did not improve sufficiently to replace lead-acid. As the 1998 CARB regulation is approaching, car manufactures still plan to make do with the lead-acid batteries (page 339 [2], [7]).

Many hundreds o f millions o f dollars have been spent on R&D that aims at new batteries tailormade for electric vehicles. Advances in the last 3 to 4 years suggest that competing battery technologies may become commercially viable. The U.S. Advanced Battery Consortium (USABC), which comprises the three big American car manufacturers and a number o f power generating utilities, states that the storage capacity of batteries needs to be 10 times higher than today's commercially available batteries. This is not considered to be realistic, and consequently USABC has formulated less ambitious goals for the mid-term and long-term horizons (see Table 4). According to information from organizations that market nickel-cadmium batteries, their batteries can already compete on cost with diesel vehicles; in cooperation with Renault, a test was conducted with light utility transport vehicles that is said to prove the cost competitiveness o f electric vehicles. Nickel-cadmium batteries are also increasingly being used in test cars in Europe. Test results from Germany indicate that zinc-air batteries have moved from theoretically inter- esting to high-performance batteries [20]. Table 4 describes the development o f battery technology in the last I00 years.

E S C A P I N G L O C K - I N 75

With mass production, many o f the technical problems facing the electric vehicle industry would be solved. B u s i n e s s W e e k reports that the costs o f AC drive motors will go down from $4,000 to $500 if production runs are 5,000 to 10000 [2]. The electronic components will also become much cheaper if demand increases. The electrics may be helped by the increasing use of electrical and electronic components in gasoline cars. These components currently account for 25°7o to 30070 of total production costs [4]. The battery problem remains, however, at least in the short-run.

Discussion We stated earlier that six factors can provide ways of escaping lock-in. Let us review

these factors in the light o f the recent developments in the electrical vehicle industry. 1. Is t h e r e a crisis o f the existing t e c h n o l o g y ? There is no real crisis o f the existing technology. Gasoline or diesel cars are still

regarded as the best means of private transportation by most consumers. The technology performs as people expect it to at predictable costs. In fact it defines our perception o f automobiles and private transportation. [15]. In addition, a steady rate o f technical progress continues to make the gasoline car gradually better. The total amount invested in R&D far surpasses all other technologies. To take a whimsical example, the combined salaries of the top three Formula 1 drivers ($30 to 50 million annually) amounts to the total worldwide annual investments, excluding R&D in battery technology, in the electrical vehicle industry.

2. Will regulations h a v e an i m p a c t on t h e car i n d u s t r y ? Regulations are clearly seen as one of the principal forces in the construction of an

electric vehicle industry. Local regulations limiting the access to city centers helped to increase the demand for electric vehicles in Switzerland. The decision in California to force the car manufacturers to supply low-, ultra-low-, and zero-emission vehicles has been instrumental as an incentive for the car industry to develop electric vehicles. But after presenting some dramatic advances of electric vehicles in the early 1990s, the large producers of gasoline cars have changed tactics. They are currently claiming that it is difficult and wasteful to build electric or hybrid cars and that the gasoline car can be made much more fuel efficient relatively easily. 25 If this claim is true, then it, combined with the ability o f established manufacturers to take advantage of existing relationships with parts and service suppliers, makes it very difficult for a new technology to break into the market, no matter how technically competitive it is.

3. H a s a technological or c o s t b r e a k t h r o u g h o c c u r r e d in the electrical vehicle in- d u s t r y ?

The electric vehicle market was, until 1980-85, dominated by the three pillars of: (1) simple delivery vans in Great Britain, (2) golf carts, and (3) homemade cars. The technology used in these cars was more or less the same as the technology used in 1910- 20. The R&D programs spurred by the second world war and the oil crisis of 1973 effectively changed nothing. The lead-acid battery kept its position, the traction system remained the same, small-scale production was omnipresent, and recharging of batteries was slow. Despite the absence of a technological breakthrough producing a major shift in the cost structure of electric vehicles, the fundamental characteristics o f the industry have begun to change. New batteries are introduced with better storage capacity and enhanced power ratings. The development of new electric motors and the recapturing

~,5 This is in i n t e r e s t i n g c o n t r a s t t o t h e i r r e s p o n s e s t o earlier e m i s s i o n a n d mileage r e g u l a t i o n s p a s s e d in the w a k e o f the oil crises o f th e 1970s.

76 R. COWAN AND S. HULTI~N

o f braking energy increase the overall performance o f the cars. The prices o f electronic components should decrease with increases in scale. Gradually the small manufacturers are increasing the size o f their plants and new entrants have plans for large-scale produc- tion. New recharging techniques make possible fast r e c h a r g i n g - 10 to 30 minutes for a 20~70 recharge instead o f 8 hours for a complete recharge.

The electric car industry has become much more serious about improving the technol- ogy in the last 10 years, and this has resulted in the improvements mentioned. To date, however, there has not been any important breakthrough in what appears to be the biggest problem, namely increasing the range at high speeds o f the electric car, and as a consequence changing it from a means o f very localized transportation into a technology that will compete directly with the personal automobile as we know it.

4. Will changes in taste propel the electric vehicle industry into self-sustained growth ? In some ways, this consideration is central. Tastes of consumers have, in general,

changed dramatically over the last decade. We refer, o f course, to the increased taste for environmental friendliness. This change has been instrumental in precipitating the policy changes described in point 2. A n d it has to a great extent been encouraged by the scientific findings discussed in point 6. Tastes must be dealt with carefully though.

In the first instance, the electric vehicle is seen as an environmentally friendly form o f transportation. This is certainly true at the local level: there is no exhaust, and the vehicle is virtually silent. One must be careful, though, because the electricity on which it runs must be generated, and exactly how this is done will determine how friendly the electric automobile really is. Coal-fired generating stations, of course are not particularly friendly; hydroelectric dams, and perhaps nuclear power.

The second issue regarding tastes is that consumer tastes, as regards automobile services, have been generated and developed in the era o f the gasoline automobile. They have been tailored to and by the gas car. This means that to compete as an automobile, the electric vehicle must provide all the services provided by the gas car, or close to all o f them plus something extra. The extra is obviously environmental. The question is, then, how much o f what the gasoline car provides are consumers willing to give up in order to gain the environmental benefits (which may turn out to be small, see point 2) the electric vehicle provides. Put another way, the taste for the environment referred to above may, and typically does, conflict with other tastes: for example the taste for individ- ual, private control over long distance travel, that is to say, desire for the kind of services that the current automobile provides. It is by no means obvious that the taste for the environment will dominate.

5. A r e there sufficiently active niche markets? The existence o f a large set o f "early adopters" is very beneficial to any technology

trying to create a market share. Early adopters form the foundation o f the installed base, and provide the experience needed for early learning by doing and learning by using. One effective way to create a large number o f early adopters is to tailor the technology to a particular niche in the market. I f the technology is very valuable to consumers in that niche, then the early adoption problem is solved. But for a niche market to provide the location o f the necessary learning and scale to make a new (or resurrected) technology a viable competitor it must be relatively large, and the demanders in it must press the suppliers for economic and technical improvements. The markets for electric milk floats in the United Kingdom and for golf carts have not provided this stimulus.

To provoke learning by using that will be effective in making the technology attractive to many more potential adopters, learning must take place on a wide front. No matter how demanding are the consumers o f golf carts, technological change made to produce

ESCAPING LOCK-IN 77

the perfect golf cart will not make the electric vehicle desirable to the highway driver. Similarly, if the overwhelming concern o f early adopters is the environment, and they are little concerned with other features o f the automobiles, they are unlikely to provoke suppliers to improve performance in other ways. If, on the other hand, early adopters present variety in their uses and reasons for adopting, they are likely to present sui~pliers with many avenues along which improvements will increase the demand for the technol- ogy. There is some evidence that the niche o f the new early adopters of the electric vehicle may be doing that. This is the case for example in the Swedish consortium referred to above. The motives of the member organizations vary and because o f this they will probably use their cars in different ways. Hence they may provide the industry with useful input for the development o f the next generation of electrics. Whether this is a large enough group of early adopters to provide enough stimulus to do that quickly remains to be seen.

6. Can scientific results help the electric vehicle industry? In fact the electric vehicle industry is thriving on scientific results that question the

global efficiency o f the competing technologies. The gasoline car produces emissions that pollute locally and globally, and there are fears, based on research on the effects of this pollution, that irreparable damage is being done to the environment by the gasoline car, among other technologies. Without scientists measuring the pollution and estimating the future effects o f it, the electric vehicle would be far less interesting. On the other hand, science has not yet provided an easy way out of the lock-in of the automobile industry. It is true that scientific measures show that 1 kilogram of an aluminum battery has the potential to store as much energy as a third of a kilogram o f gasoline. This would represent a dramatic change in the economics o f electric and gasoline cars. The problem of how to construct the battery remains however.

C o n c l u s i o n It seems clear that a rapid escape from lock-in, a move from gasoline to the electric

vehicle, is not going to happen. In the present climate, the electric vehicle has to compete with the gas vehicle under conditions established by users' 90-year relationship with the gas car, and there are technical problems that make the electric vehicle inferior. Recent developments make the battery problem seem less intractable, but an actual viable solution is not just around the corner. But secondly, even if the battery problem is solved, there are others, in particular stemming from the interdependence o f the electric car industry with other industries. Some of these problems will be solved automatically (for example the cost o f parts will fall as the scale of production increases) but others, the provision o f after-sale services for example, are more difficult to solve spontaneously.

Bearing in mind that forecasts o f this nature, as the experience from the seventies shows, are extremely speculative, a gradual shift, with the electric vehicle slowly taking a larger part o f the market, seems possible. Legislation may create niche markets, and if there is variety in the niches, which is likely to be the case if legislation is aggressive enough, technical advances will be promoted. This has two effects. The first is simply that costs will fall, especially when accompanied by the benefits from scale in production. The second is more subtle. As the technology advances in a variety of directions, more and more consumers will be willing to forego what appeared to be "necessary" features o f the automobile (as defined by the gasoline car) in order to have access to the new features o f the electric car. This type o f effect will be crucial in creating the snowball 2~

26 For a more general discussion on the condition for escaping from lock-in, see Ruttan's contribution in this issue.

78 R. COWAN AND S. HULTI~N

that gives the electric car a chance to establish itself as a significant part o f the a u t o m o - bile market.

The research f o r this study was supported by the Swedish Council f o r Planning and Coordination o f Research.

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ESCAPING LOCK-IN 79

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Accepted 19 March 1996