2020 Measurement area finding

Business model

Module 9, business model, assesses whether each company is actively developing business models for a low-carbon future across three categories: 1. Business activities that reduce structural barriers to consumer uptake of advanced vehicles. 2. Activities that aid low-carbon personal mobility, such as a change in preferred modes of transport (‘modal shifts’), car-pooling, ride-hailing and car sharing. 3. Design and manufacture of vehicles that can facilitate modal shifts in mobility.

All but one company has at least one new business model. The analysis looked for evidence that the business activity is profitable, of a substantial size, and that the company has plans to expand the activity in question over a clearly defined timescale. This module accounts for 1.8 out of the overall performance assessment score of 20.

The three most significant new business models across the 30 keystone companies are:

  • development of low-carbon infrastructure (30 percent of the examples),
  • car sharing schemes (21 percent), and
  • manufacturing low-carbon mass transport, such as electric buses (14 percent).

Low-carbon infrastructure development primarily constitutes the roll-out of battery charging networks, although Daimler, Hyundai & Toyota are also developing hydrogen infrastructure. Some form of car-sharing is being developed by 13 companies and 24 of the companies assessed have some form of Mobility as a Service (MaaS) offering including car-sharing, pooling and/or rental. However, the number of actual vehicles currently involved is small. All but one of the ten examples of manufacturing low-carbon mass transport is development and build of low-carbon buses, with only BYD developing urban elevated light-rail systems.

Some of the other business models with most scope for enabling the transition to the low-carbon economy are:

  • Honda, Mitsubishi and Tesla all have variations on ‘grouped’ offerings of energy generation, storage, electric vehicle and MaaS.
  • Renault subsidiary, Renault Environment, develops new businesses to make the whole life of its vehicles more sustainable, based on circular economy principles. This includes recovering parts and materials from end-of-life vehicles through recycling networks, repairing or refurbishing batteries from electric vehicles and selling refurbished parts.
  • A number of manufacturers – BMW, Daimler, Ford, Volkswagen and Kia – have collaborated to create the IONITY charging network in Europe. In contrast, Tesla has gone it alone with its Supercharger network across parts of Asia, Europe, the Middle East and North America. While this has been successful in driving the development of charging networks a collaborative approach appears a more efficient and effective approach to reducing this key barrier to uptake of electric vehicles.

Only 6 percent of the business models identified are considered to be mature and profitable. 18 percent are considered to be of significant size for the company and just under a quarter of the business models have a clear timescale for expansion and good growth potential. It is not clear whether this lack of stronger performance is mainly because of a lack of disclosure or because these companies do not have mature, profitable business models which will allow them to thrive in a low-carbon economy. Companies do not reveal sufficient detail to show how they see their businesses are transitioning. A key challenge for the automotive sector is to be more transparent in showing how it can and will move away from a model based on the unsustainable approach of individual ownership of fossil-fuel vehicles.

Next finding

All findings

Measurement area finding

Policy engagement

Read more