A Model-based study on Finnish electrified vehicle market
Vesa, Roope (2019)
Vesa, Roope
2019
Tietojohtaminen
Tekniikan ja luonnontieteiden tiedekunta - Faculty of Engineering and Natural Sciences
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Hyväksymispäivämäärä
2019-03-06
Julkaisun pysyvä osoite on
https://urn.fi/URN:NBN:fi:tty-201902151252
https://urn.fi/URN:NBN:fi:tty-201902151252
Tiivistelmä
Electrified vehicles are facing challenges in diffusion as they are not just being introduced to the vehicle market as a new alternative, but instead they are trying to replace a market incumbent with the same purpose, excellent performance, and a lower cost. This implies that there is a zero-sum-game where one can only benefit at the expense of the other(s). In the field of system dynamics, such a problem is also referred as a success to successful or relative achievement problem archetype. Therein, a possible closed-loop solution is to introduce an external balancing force that can bring the system to a new equilibrium. Such an external force is often applied in the form of policies and legislative actions, which in turn can be studied and developed by means of system dynamics modelling.
On this basis, the goal of the thesis was to study the Finnish electrified vehicle market by means of system dynamics modelling and thereby to increase understanding of the effectiveness of different policies in the national context and the effects of external factors on electrified vehicle diffusion. In order to do this, relevant theoretical background and existing body of research were studied, and a dynamic hypothesis of the problematic behaviour was formulated. Then, using stock-and-flow maps the hypothesis was translated into a simulation model with the help of which effectiveness and impacts of current policy measures and external factors could be studied.
The analysis showed that while policy measures are needed, and they seem to benefit especially battery electric vehicles, differences in policy effectiveness are generally small and it seems that it is the system conditions that ultimately determine the diffusion speed of electrified vehicles. Purchase subsidies can induce battery electric vehicle adoption in the short term, but investments in charging infrastructure seem to more effective in the long term. Similar observations were done in the other categories as well. Further, model results were found to be sensitive to development of cost of kWh, weight put on usage costs versus purchase price, technological development rate of battery electric vehicles, and marketing efforts of electrified vehicle platform. While these introduce factors of uncertainty to the model results, they also highlight the meaning of these variables to market development and the role of system conditions in vehicle stock development.
This study concludes that the two key drivers of electrified vehicle diffusion are social exposure and relative attractiveness of electrified vehicles. The former induces word of mouth marketing, which has found to be a strong reinforcing causal structure. Through social exposure and word of mouth consumers become more willing to consider the market entrant as a realistic option. At the same time, however, the relative performance of that alternative has to be sufficiently high in comparison to their reference point, so that those consumers will actually make a purchase.
On this basis, the goal of the thesis was to study the Finnish electrified vehicle market by means of system dynamics modelling and thereby to increase understanding of the effectiveness of different policies in the national context and the effects of external factors on electrified vehicle diffusion. In order to do this, relevant theoretical background and existing body of research were studied, and a dynamic hypothesis of the problematic behaviour was formulated. Then, using stock-and-flow maps the hypothesis was translated into a simulation model with the help of which effectiveness and impacts of current policy measures and external factors could be studied.
The analysis showed that while policy measures are needed, and they seem to benefit especially battery electric vehicles, differences in policy effectiveness are generally small and it seems that it is the system conditions that ultimately determine the diffusion speed of electrified vehicles. Purchase subsidies can induce battery electric vehicle adoption in the short term, but investments in charging infrastructure seem to more effective in the long term. Similar observations were done in the other categories as well. Further, model results were found to be sensitive to development of cost of kWh, weight put on usage costs versus purchase price, technological development rate of battery electric vehicles, and marketing efforts of electrified vehicle platform. While these introduce factors of uncertainty to the model results, they also highlight the meaning of these variables to market development and the role of system conditions in vehicle stock development.
This study concludes that the two key drivers of electrified vehicle diffusion are social exposure and relative attractiveness of electrified vehicles. The former induces word of mouth marketing, which has found to be a strong reinforcing causal structure. Through social exposure and word of mouth consumers become more willing to consider the market entrant as a realistic option. At the same time, however, the relative performance of that alternative has to be sufficiently high in comparison to their reference point, so that those consumers will actually make a purchase.