Using a Servitized Business Model to Facilitate Adoption of Electric Vehicles for the Chinese Private Car Market

Abstract

The automobile industry is facing a technological shift from internal combustion engines to battery driven electric vehicles, a shift called electrification. Since 2015, when it surpassed the U.S. market, the Chinese market has been the world’s largest electric vehicle market. Electrification gives rise to a new set of consumer anxieties, primarily related to battery charging and range, but also price. In addition to the ongoing electrification, the automobile industry is also subject to a servitization trend, meaning that manufacturers are integrating a higher level of services in their offers. Further, innovative leasing and car pool related offers are rapidly emerging on the Chinese electric vehicle market. These trends suggest that car manufacturers need to develop new innovative business models to facilitate technology adoption and stay competitive. This study investigates characteristics of servitized business models and how servitized business models can be used to overcome the obstacles concerning diffusion of electric vehicles on the Chinese market. The report’s theoretical framework and findings are therefore structured based on the business model framework provided by Chesbrough and Rosenbloom (2002). Through interviews with researchers and industry representatives, and by studying market reports for the Chinese EV market, the study maps the components and attributes of a servitized business model from the perspective of the Chinese electric vehicle market. By doing this, it contributes to the theoretical field of servitization in B2C industries. It is found that the Chinese electric vehicle market is rapidly growing, but consumer anxieties and preferences are continuously changing. The study concludes that several attributes of servitized business models, such as more agile development and closer customer relationships, could facilitate adoption of electric vehicles on the Chinese automobile market. Thus, to implement and benefit from a servitized business model, it is concluded that manufacturing companies must develop capabilities for gaining and acting on consumer insights. One way of doing this is by increasing the number of customer touch points, either physical or digital, throughout the usage life cycle.