Mirroring in production? Early evidence from the scale-up of Battery Electric Vehicles (BEVs)

Abstract

The mirroring hypothesis is central to modularity theory, positing isomorphism between technical interdependencies of a product and organizational arrangements. When a product’s design becomes more modular, a full mirroring response would change both its manufacturing and its supply chain. We evaluate this prediction for Battery Electric Vehicles (BEVs), observing whether automakers have mirrored the modular BEV architecture in either internal production processes, external sourcing arrangements, or both. Our data from 19 automakers show that, to date, BEVs are manufactured in their assembly plants alongside conventional internal combustion engine vehicles (ICEVs). New automakers with fully BEV plants utilize essentially the same production process. Furthermore, automakers make—or ally to make—key Electric Vehicle (EV) systems, rather than outsourcing them. We discuss the implications of this partial mirroring for modularity theory and ask whether these arrangements will persist once BEV sales surpass ICEVs.

Exploring the structure of internal combustion engine and battery electric vehicles: implications for the architecture of the automotive industry

“…One explanation for this may be that the value of integrated technologies may outweigh the potential value of modular technologies if customers are willing to pay for a well-integrated technology and the market for this well-integrated technology is large enough. Automobiles may be one case supporting this reasoning (see also Alochet et al, 2022). A well-integrated automobile and the brand associated with it create a "look and feel" (Jacobides et al, 2016(Jacobides et al, : 1958 that is valued and, thus, paid for by customers.…”

“…ICEV incumbents do not face the huge challenges mechanical typewriter companies faced with the advent of electric typewriters and later computers leading to the demise of the leading typewriter firms (Danneels, 2011). Therefore, we expect that OEMs will also design the power train of BEVs (as Alochet et al (2022) confirm for today), and suppliers will manufacture most of its parts in the future.…”

Three major challenges in the shift to electric vehicles: Industrial organization, industrial policy, and a just transition

“…context, battery EVs are characterized as having modular rather than integrated product architectures (Alochet et al, 2023;Perkins & Murmann, 2018). The structural simplicity of an EV's powertrain compared to that of an internal combustion engine vehicle neutralizes the powertrain design capabilities of established incumbents.…”

The power of modularity today: 20 years of “Design Rules”

“…In this vein, the contributions on how design rules initially evolve (Sanchez et al, 2023) and how firms leverage modularity as a way to de-risk new technologies (Arrieta et al, 2023) are important illustrations of this potential for future research. Similarly, alongside digital technologies, new energy technologies are emerging that fundamentally change the architectures of traditional industries, such as the automotive sector (Alochet et al, 2023;Murmann et al, 2023). A deep understanding of the principles from DR1 can shed new light on firm and sector dynamics but will also drive a better understanding of organizational and sectoral dynamics, which in turn can help us refine our understanding of what drives modularity and what determines its impact.…”