The transition challenge for hydrogen vehicles; analysis of adoption dynamics

1. The transition challenge for hydrogen vehicles; analysis of adoption dynamics Jeroen Struben*) MIT Sloan School of Management April 30 2004 *) Many thanks to John Sterman for support and discussions throughout

2. Hydrogen vehicles: a certain trajectory?

3. Agenda • Context: the Hydrogen transition challenge • Adoption structure for the vehicle propulsion platform • Reduced/partial models analysis • Insights and future work

4. Modeling the hydrogen transition challenge - motivation • Formal model literature on technology adoption • diffusion (Bass ’69, Rogers ‘62) • industry evolution (Abernathy/Utterback ’78,…) • learning/scale/spillover (…) • increasing returns and lock-in (Arthur ’89) • energy modeling (Farrell ’03)

5. Scope of the hydrogen challenge

6. The adoption structure for vehicle propulsion technologies Basic Bass Structure • Extensions to Basic Bass Model • Multiple platforms/vehicle types • Familiarity • Forgetting • Valence with attractiveness (experience, WOM,..)

7. Dynamic Hypothesis

8. Dynamic Hypothesis

9. Dynamic Hypothesis

10. Dynamic Hypothesis

11. Case 1: first order model • Assumptions • 1 platform • drivers held constant • Familiarity dynamics are independent

12. 1st order model - stock and flow structure

13. exposures on exposure The effect of exposures on familiarity loss

14. Analysis: dynamics of familiarity

15. Analysis: dynamics of familiarity

16. Analysis: dynamics of familiarity

17. Analysis: dynamics of familiarity

18. Case 2: drivers and familiarity • Endogenous adoption • 4th order model • Competition between entrant (e.g. hydrogen) and incumbent (e.g. ICE) • Introduce “relative attractiveness”

19. 2nd order model

20. 2nd order model + Marketing effectiveness

21. Time trajectory 2nd order model of entrant • Reduce to 2nd order through:

22. Analysis of 2nd order model: phase-plane

23. Modes of behavior for entrant – equilibrium search

24. Trajectories in phase plane view with low marketing effectiveness Familiarity of non-drivers of platform 2 (fa2) + Marketing effectiveness 0.4 Drivers of platform 2 (d2 =1-d1)

25. Drivers of platform 2 (d2 =1-d1) Trajectories in phase plane view with low vs high marketing effectiveness Familiarity of non-drivers of platform 2 (fa2) 0.4 Drivers of platform 2 (d2 =1-d1)

26. How long to sponsor the hydrogen platform!?

27. Conclusions / Insights • Innovation systems require attention beyond mere acknowledgement of lock-in/dominance/… • Identify role of particular loops/structures • Here we have modeled and analyzed the more interpretive side adoption • Can already identify policies on what prevents/promotes diffusion • word-of-mouth through non-drivers • less efficient hybrids could grow faster and takeover (as no infrastructure, spillover issues)

28. Future Steps • Extend study in similar fashion • developments in infrastructure • spillovers • organizational/institutional increasing returns • Historical analysis of the 19th century transition towards the horseless age • Formulating research questions…