Disruptive innovations: The case for hydrogen fuel cells and battery electric vehicles

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Disruptive innovations: The case for hydrogen fuel cells and battery electric vehicles Scott Hardman a,*, Robert Steinberger-Wilckens a, Dan van der Horst b a Centre for Hydrogen and Fuel Cell Research, Chemical Engineering, University of Birmingham, Birmingham B15 2TT, UK b School of Geosciences, The University of Edinburgh, Grant Institute, King’s Buildings, West Mains Road, Edinburgh EH9 3JW, UK

article info

abstract

Article history:

The investment of private money in technological innovation is driven by the expectation

Received 18 July 2013

of successful market penetration. This decision to invest is less risky when the innovation

Received in revised form

represents gradual improvement of existing technologies. The term disruptive innovation

11 September 2013

is used to describe the opposite case, i.e. innovations that are so different that their

Accepted 14 September 2013

establishment in the market causes a disruption to the pre-existing system. The existing

Available online 9 October 2013

literature on disruptive innovations provides us with historic case studies of successful market capture by new technologies, but this in itself is insufficient to clarify the chances

Keywords:

of success for nascent technologies. This paper sets out to bring greater clarity to the

Disruptive technologies

characteristics of disruptive innovation in a way that informs the debate on the viability of

Battery electric vehicles

emerging technologies. Whilst existing definitions are based on technologies that were

Niche markets

successful, this paper proposes a three part criteria to define candidate disruptive tech-

Fuel cell vehicles

nologies: disruption should relate to manufacturers and/or infrastructure (the two often being inter-related), whilst innovation must provide more than the equivalence of service to the end-user. A review of seven historical case studies of successful disruptive technologies reveals seven characteristics of candidate disruptive technologies at the stage of niche market penetration. Examining battery electric and hydrogen fuel cell vehicles against these seven characteristics, shows that both candidate disruptive technologies share the same challenges as those identified in the successful historic case studies and also helps to identify potential pathways to greater market penetration in the future for these technologies. Copyright ª 2013, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved.

1.

Introduction

Many emergent technologies, especially those that are markedly different from existing technologies, are potentially

beneficial to society but struggle to establish themselves and compete successfully with the incumbent technologies. The aim of this paper is to determine what defines candidate disruptive technologies and what characterises those

* Corresponding author. Tel.: þ44 7540452857. E-mail address: [email protected] (S. Hardman). 0360-3199/$ e see front matter Copyright ª 2013, Hydrogen Energy Publications, LLC. Published by Elsevier Ltd. All rights reserved. http://dx.doi.org/10.1016/j.ijhydene.2013.09.088

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candidate disruptive technologies that succeed to displace the incumbent when we examine them at the moment they are starting to penetrate the market. This aim is achieved by reviewing historical studies of successful disruptive technologies and by reviewing an example of a candidate disruptive technology that is currently in the niche market penetration phase, the battery-electric vehicle (BEV). An integral aspect of understanding disruptive technologies is the need for a clear definition. An improved definition is proposed after reviewing the findings of the historical successful disruptive technologies and the BEV. These findings allowed fundamental characteristics of successful disruptive technologies to be identified. These fundamental characteristics are then used to form criteria, which can be used to identify if a technology is, or will be a candidate disruptive technology. These criteria will allow us to explicitly define what we mean by disruptive technology for the first time. Finally these findings are applied to Fuel Cell Vehicles (FCVs) for two reasons. Firstly there is a need to confirm that FCVs are a disruptive technology and secondly so a greater understanding of a disruptive technology that is seeking market entry at present can be obtained. Initially it was thought that models such as Clayton Christensen’s disruptive innovation model [1] could be used to increase the understanding of disruptive technologies. However models lack the complexity of real world socio-technical transitions, and the definition of disruptive technology was not clear. Therefore it was decided that using case studies of disruptive technologies would lead to a wider range of issues being identified. Often in the literature disruptive technologies are reviewed in isolation. In this paper findings from existing case studies of successful disruptive technologies are bought together in one place in order to achieve a more holistic approach. The findings allow us to understand how disruptive technologies in the past achieved successful market entry. Seven common characteristics of successful disruptive technologies are identified, many of these characterises are commonly present in successful disruptive technologies, but they are not exclusive to successful disruptive technologies, and not all successful disruptive technologies have these characteristics. An additional short case study is undertaken on a current disruptive technological market entry, this is the BEV. The BEV is a disruptive technology currently seeking greater levels of market penetration; this technology is included as it is an event we can witness first hand, therefore it may provide more information of disruptive technology market entry. The findings from the historical case studies and the BEV are used to develop an improved definition of disruptive technologies. From the seven common characterises of successful disruptive technologies three fundamental characteristics are identified. These fundamental characteristics are found to be always present in successful disruptive technologies and are exclusive to successful disruptive technologies, there are however some exceptions to this. These fundamental characteristics are used to develop a three part criteria, this criteria allows us to decide when a technology is a disruptive technology. This is the first criteria for disruptive technologies, the criteria is predictive allowing easy identification of when a technology is, or will be, a disruptive technology, and hence is an important addition to the literature on disruptive technology. This predictive nature of the criteria is

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one of its most valuable assets. When new technologies are being introduced to markets marketers and product developers need to understand whether the innovation is a disruptive one so that they can adapt their market entry strategy accordingly. Existing market leaders also need to understand when a new technology is a disruptive innovation, with this information they will be able to take applicable action whether it be adopting the new technology, adapting to the threat or resisting the innovation. All of these findings are then applied to FCVs, which are a candidate disruptive technology approaching market entry. Firstly the three part criteria is used establish whether or not FCVs are a candidate disruptive technology, it is then possible to suggest a market introduction strategy for FCVs. This paper continues the work done by Steinberger-Wilckens [2], which looked at a number of case studies of successful disruptive technologies, in the context of added value. It is suggested that the easiest route to market is one of niche market entry with products value added features; the added values will justify the inherent price premiums that are likely to be present. Entering the top of a market with added value products is also known as high-end encroachment [3].

1.1.

Disruptive innovation, technology and products

‘Disruptive Innovation’ is a term widely used within the literature; Clayton Christensen originally introduced the term [1]. Disruptive innovation is defined by Christensen as ‘a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors’. Disruptive technology predates the term disruptive innovation. Christensen changed the term to disruptive innovation so that it would include services as well as products. Often within the literature the terms are used interchangeably. Despite the widespread use of both terms by Christensen and other academics, there is still some ambiguity surrounding the definition of disruptive innovation. Tellis [4] argues that Christensen’s definition is not measurable and has little predictive value. Christensen’s theory states that ‘Disruptive Technologies Displace Incumbent Technologies’, but that is something which can only be ascertained with hindsight. For both the developers of the technology and existing market leaders it would be very useful to be able to assess in advance to what extent a technology has the potential to become a disruptive technology. Developers and marketers need to be aware of the disruptiveness of their technologies in order to be able to tailor their strategy around it. Market leaders also need to know when technologies are disruptive as they pose a great threat to their business model. Danneels [5] is in agreement that more work is needed on disruptive innovation. He raises the question of ‘what is a disruptive technology?’ He states that Christensen’s original work does not establish clear criteria to determine whether a technology is a disruptive technology. Danneels does put forward his own definition of disruptive technology: ‘A disruptive technology is a technology that changes the bases of competition by changing the performance metrics along which firms compete.’ Whilst this definition does add to the literature it does not make it easier to identify when a technology is a disruptive technology.

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The most recent addition to the literature of disruptive innovation comes from Gilbert [6], who defines a disruptive innovation as ‘A new technology that unexpectedly displaces an established one’. The advantage of Gilbert’s definition is that it highlights one particular factor about what makes a technology disruptive; the often-unexpected nature of the disruption and the fact that established technologies are affected. But it still is missing some key factors and it does not allow us to determine if a new technology is likely to become a disruptive technology. Again, it only really allows us to decide if a technology has been disruptive after the disruption has occurred in the market place. And secondly, it does not deal with the level of disruption. It is clear from existing literature that a better operational definition of disruptive technology is needed. What is needed, are criteria, which allow us to assess how disruptive a particular technology might become. Before such criteria are developed, a greater understanding of disruptive technologies is needed.

2.

Historical disruptive technologies

2.1.

Disruptive technologies in the literature

The literature presents many examples of successful disruptive technologies, learning from these examples may help us to realise how to implement the market introduction of hydrogen fuel cells (FCs). Seven case studies of past successful disruptive technologies have been undertaken in order to improve the understanding of how disruptive technologies enter markets. The case studies reviewed were: 1. The introduction of the quartz watch in the 1970s which lead to the demise of the Swiss watch industry and mechanical watches [7e9]. 2. The introduction of the mass produced automobile which eventually served as a replacement to horse drawn carriages [10]. 3. The introduction of digital cameras in the 1990s which eventually took the mass market share in the photography sector away from film cameras and the market leader Kodak [5,11]. 4. The introduction of steam ships which eventually replaced sail driven ships [10]. 5. The introduction of hydraulic excavators as an alternative to conventional cable driven machines [1,5]. 6. The recent introduction of eReaders (and tablets such as the iPad) that have already had an impact on book sales (and possibly laptop sales) and are predicted to reduce sales further. 7. The introduction of mp3 players, especially the iPod in 2001. Which saw the replacement of personal CD and tape players [12,13].

2.2. Common characteristics of successful disruptive technologies After reviewing the above examples of disruptive technologies some common characteristics of successful disruptive

technologies have been identified. These unique observations of successful disruptive technologies are outlined below: 1. The threat of the new technology is not often recognised by existing market leaders. Even when the threat is recognised, no significant action is taken to adopt the disruptive technology. The action usually taken is explained by the ‘sailing ship’ effect where incumbent technologies seek to maintain their market share via cost reductions or technological improvements. These efforts are helpless and the organisations that fail to adopt will be negatively impacted. Examples of this include Kodak failing to adopt digital camera’s in sufficient time for them to remain a market leading company, HMV failing to adopt to music and film downloads and Bucyrus-Eire failing to adopt hydraulic excavators. Many companies disappear completely after failing to adapt to disruptive technologies. Some companies do recover, though. The Swiss watch industry was almost wiped out by quartz watches in the period known as the Quartz Crisis. Swiss watches accounted for 95% of the watch industry revenue prior to the Quartz Crisis [7]. Exports of Swiss watches fell from 40 million units in 1973 to 3 million units in 1983 [9]. But now the Swiss watch industry has recovered. Partly this is due to the industry adapting quartz movements, which dramatically reduced the price of Swiss watches. It is also because the industry has been able to fill high value watch niches across the world. In 2011 the Swiss watch industry achieved revenue of £13 billion [14]. It is clear that all disruptive technologies, if successful, will dramatically change the face of the markets that they enter. 2. Disruptive technologies are initially more expensive than the incumbent technologies. This is known as high-end encroachment. Low end encroachment is also possible, but high end encroachment seen here has a quicker and more dramatic effect on the market [15]. The successful disruptive technologies reviewed are far more expensive upon market entry. Table 1 shows how disruptive technologies are 4e30 times more expensive than incumbent technologies at the time of market entry. The high prices are usually due to complex manufacturing processes, the new technologies requiring high cost materials, not yet benefiting from economies of scale and the early attempt at retrieving development costs. After the technologies enter niche markets unit sales increase and costs will fall due to manufacturing optimisations. This occurred when automobiles began disrupting the horse drawn carriage market. Automobiles did not become significantly disruptive until mass production had been established and prices were more affordable to a larger number of people. The costs of successful disruptive technologies will eventually fall to a price that is competitive to the incumbent technologies. 3. The quality of the disruptive technology initially is often worse then the quality of the technologies they seek to replace.

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Table 1 e Cost comparison between the incumbent technology and the successful disruptive technology. Costs are taken from the years show. Data from Refs. [10,16,18e22]. Market area

Incumbent technology

Photography Road transport Mining/construction Watches Boats Reading Personal music

Film cameras Horse drawn carriages Cable excavators Mechanical watches Sailing ships Books Personal CD player

Price

Disruptive technology

Price

Year

$135 $20 No data available $30e$500 £16,500 $5e20 $80

Digital cameras Mass produced automobile Hydraulic excavators Quartz watches Steam ships eReaders iPod

$995 $850 No data available $1250 £117,000 $400 $400

1990 1908

Often new technologies are technologically inferior in some way. The technologies investigated here all have shortcomings in some key areas compared to the incumbent technologies. These included; reliability, build quality, operating costs, purchase price, speed and vehicle range. Table 2 summarises the disadvantages and advantages of the new technologies compared to the incumbent technologies they were disruptive to. Hydraulic excavators had a shorter reach, smaller bucket size and lower weight limit than conventional cable driven excavators. This meant that the amount of earth they could move was lower than with the incumbent machines. Early machines could only haul 0.25 cubic metres and could only reach 6 feet. After niche market penetration had began hydraulic excavator bucket capacity increased 15% year on year between 1948 and 1974 [1]. The early hydraulic systems proved to be unreliable and maintenance infrastructure was under-developed. The reliability of hydraulic excavators did eventually surpass the reliability of cable driven excavators due to the systems having less moving parts, and maintenance infrastructure increased along with market penetration. 4. The technologies have some form of ‘added value’ to the consumer. The added value can be hard to anticipate and define beyond a technologies noticeable functional advantage. Convenience, running costs, accuracy and speed will only be advantageous in a technology if the consumer desires them. Added value, though can arise unexpectedly, this mainly

1969 1845 2011 2001

comes in the form of emotional values such as prestige and lifestyle values. If a desirable added value can be purposely designed into a technology then market penetration may become far easier. The iPod had advantages of user friendliness, mass storage and convenience over portable CD players but consumers especially viewed it as ‘cool’. This allowed it to expand from the niche into mass markets with an impressive trajectory. The iPod was launched in 2001, by June 2003 one million had been sold [16]. 5. The disruptive technologies will fill niches markets first, here they spread to other niches, the meso level and eventually reach the macro level of the market. Disruptive technologies are at their most disruptive to incumbent technologies when they reach the mass-market level, but to reach here they must first occupy the niche and meso levels where they are less disruptive. Hydraulic excavators were no use to the mining, excavation or sewage construction industries that represented the mass markets for excavators. These industries had no interest in the short reaches and small capacity buckets. Early hydraulic machines were introduced into the residential construction industry for digging small areas, which were previously dug by hand. This niche market was in growth thanks to the boom in residential construction post WWII in the USA. Upon filling this niche, revenue generation from increased unit sales helped with technology development. Bucket sizes began to increase, as did arm reach, weight capacity and reliability [5]. This led to hydraulic excavators eventually being attractive to the

Table 2 e The advantages and disadvantages of the successful disruptive technologies compared to the incumbent technologies that they replaced, at the time of the market introduction. Information from Refs. [1,5,7e14]. Technology Quartz watches Digital cameras Hydraulic excavators

Automobiles Steam ships eBooks iPod

Advantages Accuracy, prestige, reduced complexity Convenience, no film required Quicker operation and more mobile, convenience, cheaper production, fewer moving parts Prestige, recreational uses, thrill seeking Larger size, bigger capacity, not restricted by wind speed Convenience, cheaper book price, environmentally friendly? User friendly, mass storage (1000 songs), convenience, prestige

Disadvantages Price, poor quality Price, picture quality, speed Cost, shorter reach, smaller bucket, lighter load limit, lack of maintenance infrastructure Price, speed, reliability, lack of infrastructure Price, fuel costs, speed Price, legibility, reliability Price, reliability, poor battery life

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construction and mining industries; eventually hydraulic machines became comparable to cable driven machines. When performance was comparable, the increased reliability of hydraulic machines saw them outcompete incumbent cable driven devices. The easier operation also gave them advantages because they could penetrate vertically into the earth, something that conventional dragline cable machines could not do. The hydraulic excavator took off in this niche due to these added values. 6. The incumbent technology is never wiped out all together; it in turn becomes the technology for niche market applications. Many incumbent technologies will eventually end up in niche markets, similar to where they began. The technologies will still have characteristics that are desirable to some individuals. 34 mm film cameras are still used today in many niche applications. Many professional photographers and artists use films cameras to produce specialist photographs. Disposable film cameras are also used for their low costs. Today horse draw carriages and horses are used for recreational purposes in the first world; they are still used for transportation in the 3rd world and by minority communities such as travellers and Amish people. Cable driven excavators are still used in mining applications; the biggest machines are still far larger then any hydraulic excavator. Sail driven ships are still used for recreational purposes and for racing. There is also a renewed interest in hybrid sail driven freight ships to help reduce fuel costs and increase efficiency [17]. 7. Socio-technical systems are ever evolving. Socio-technical and socio-economic systems are complex and fast moving. It is rare that these systems are ever in a state of equilibrium. Incumbent and innovative ideas are continually competing for market shares. No incumbent will remain in the mass market indefinitely. The incumbent technology was at a time the disruptive technology, which entered a niche and eventually penetrated the meso and macro levels of the market. The incumbent technology will be replaced by a new technology that will eventually occupy the macro market and become the incumbent. This new incumbent will one day become redundant and will be replaced by a new technology in the future. As a result of the fast paced nature of markets many companies struggle to keep pace with new innovations and will die out. Companies have to work hard and make positive management decisions if they are to remain market leaders in their sector. Often companies will have to make decisions that are counter intuitive and may appear to be illogical. Niche markets will look financially unappealing to companies occupying macro markets. Companies will dismiss the niche due to low unit volumes and hence low revenue generation. But if market leaders do not enter the niche in the early stages of the technology they will fall behind innovative upstart companies. An example of this is IBM who for years dominated the mainframe market but did not manage to capitalise on the mini computer market. The Swiss watch industry also initially failed to introduce Swiss made quartz watches and

left the way for Asian companies to dominate the market. This is despite the fact that quartz was a Swiss invention.

3.

The case of battery electric vehicles

3.1.

The introduction of battery electric vehicles (BEVs)

The introduction of BEVs is a disruption we are able to witness first hand in a large socio-technical system. The market penetration by BEVs can be seen as a bridging technology for FCVs [23]. This example is especially useful because it is hoped that fuel cell vehicles (FCVs) will be able to take a market share of the automotive sector like battery BEVs are pushing for today. It is also useful because BEVs are a bridging technology for FCVs Many of the technologies used and developed for BEVs will directly be used in FCVs. This study will therefore go on to discuss the introduction of BEVs in more detail. In the automotive sector internal combustion engine (ICE) vehicles are the incumbents. And it is inevitable that a new technology will eventually replace them. BEVs are a disruptive technology [24,25]. Potentially, new companies produce BEVs, they require different infrastructure and they provide additional service over ICE vehicles. In this special case, the incumbent OEM’s are largely the producers of BEV. Nevertheless, the drive train components being built into these vehicles come from a completely different set of suppliers; there are also indications, that BEV are an internally disruptive technology within the portfolio of the OEM, moving their business into a new field whilst abandoning the incumbent technology. After investigating the range of BEVs on sale today it is clear that there exists two different successful market entry strategies.

3.2.

BEVs for mass markets

The first types of vehicles being developed are cars aimed at mass-market applications. These examples include the Nissan Leaf [26], Peugeot iOn [27], Mitsubishi i-MiEV [28], Renault Twizy and Zoe [29], Smart Electric [30] and a few more examples. All of these vehicles are produced to a price as low as possible without loosing too much of the quality and performance of modern vehicles. These vehicles have been well received by much of the motoring press [27,31,32]. The performance and quality is somewhat comparable to petrol and diesel cars (though range will be much lower) and running cost are extremely low. These vehicles are being aimed at every day vehicle users who use their cars primarily as transportation devices. They do not have much added value; they are designed with today’s functionality expectations towards a passenger vehicle as the main consideration. In the UK BEVs have seen their greatest success in London. The UK government, wanting far greater uptake of BEVs in the UK and especially London, purposely created this niche. One quarter of all BEVs registered in the UK are based in London [33]. Electric cars can be parked for free in London, they do not pay the congestion charge and charge points are well distributed throughout the city. These policies were implemented so that a niche environment could be created. Range is not an issue in the city as distances travelled

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are short and low top speed is not an issue as vehicles rarely exceed 30 mph. Despite these measures the mass market BEV is still struggling. This is because costs are too high in comparison with conventional ICE vehicles and they have little added value to justify this price premium.

3.3.

BEVs for niche markets

The second type of BEV being marketed differs greatly to those being developed by some of the world’s largest automotive manufactures. One car company stand out: Tesla Motors. Tesla is developing vehicles for niche markets. The company is one of the youngest car manufactures operating today, Tesla was founded in 2003 [34]. Many new technologies such as the mass produced automobile and mobile phone have been the result of a visionary and innovative few. Almost every new technology is initially not recognised by the majority of industrial leaders and consumers. How does Tesla differ from their mass-market rivals mentioned above? The standout reason is that Tesla has dismissed the route of cost minimisation in order to make their technologies cost competitive with ICE vehicles. They are seeking to take advantage of added value for BEVs and market their vehicles to niches. People have been found to be willing to pay a premium for Tesla BEVs. Hidrue et al. [35] suggest that people are willing to pay an additional $6000e$16,000 for an EV. In reality people have been willing to pay an even greater premium. Tesla has sold BEVs in impressive numbers in the $100,000 price bracket. This is more than $16,000 above the price of an ICE vehicle alternative. There is a clear gap between the findings of Hidrue et al. [36] and what is occurring in reality. The Tesla Roadster is $54,850 more than the Lotus Elise S [37]. The Tesla is built on the same chassis as the Elise, shares many parts and the performance is comparable. This clearly demonstrates that some individuals are willing to pay a significant premium for an electric vehicle that has added value. Tesla first began selling their vehicles in 2008. They did not choose a hatchback, family car or saloon for their first vehicle; they chose a roadster. The Tesla roadster was expensive at $109,000; it was also faster than is required with a 0e60 mph time of 3.7 seconds. Tesla was clearly aiming at the high-end performance market for its vehicles. By making an expensive, high performance car with striking looks the technology quickly gains added value. This has led to there being Tesla “enthusiasts” who take their cars to automotive shows, racing events and take them touring, there is even a Tesla motors club. The bold move seems to have paid off. Since 2008 Tesla has sold 2300 units of its Roadster model [34], impressive sales figures for a young company marketing a disruptive technology. By creating revenue streams Tesla has been able to invest earnings into future products. The company is currently working on introducing a BEV for more widespread applications, the Model S. They began selling this 4-door luxury family car to larger markets at a price of $52,000 in 2012. The Model S has now sold 4750 units and Tesla plans on producing 20,000 units of the Model S yearly [34]. They will also be releasing a BEV SUV in 2014 called the Model X [38]. Tesla’s method of market introduction of BEVs has been a remarkable story so far. On the 2nd April 2013 Tesla formally announced that it had become profitable [39]. If in 2013 they

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are able to produce and sell 20,000 units they will have made a further step to a mass market BEV. Tesla’s method of market entry for a disruptive technology offers us a perfect case study to apply to FCs and other high value technologies. If this market entry model can be used for FCs they may have a chance at market penetration on a shorter time frame than previously thought possible. The introduction of the BEV is so far proving to be difficult. Many successful disruptive technologies have had much easier market introductions. The reason for the introduction of BEVs being quite problematic is likely due to the technological lock-in of petrol and diesel vehicles [40], the issues of any socio-technical change [41e43] and the issues of public perceptions and consumer preferences [44]. The story of the BEV demonstrates how technologies beneficial to society will not always achieve great success. Indeed BEVs still haven’t been able to take the mass vehicle sector. But the adoption of BEVs into niches is a promising sign and the work of Tesla gives a promising outlook for the future of BEVs. Tesla’s technologies are well aligned with the seven case studies of disruptive technologies. The seven observations made for historical disruptive technologies are true for Tesla. What is especially true is that their technologies are more expensive than incumbent vehicle technologies, the performance is worse in some aspects, they are currently only used in niche markets but they do have added value. These added values are what have allowed Tesla’s automobiles to become successful disruptive technologies within the niche markets they targeted.

4.

The disruptive technology criteria

After reviewing the historic successful disruptive technologies and the BEV it has been possible to develop an improved understanding of disruptive technologies, this has allowed the creation a three point criteria that allows us to identify when a technology is a disruptive technology. This criteria is based on the common characteristics outlined in section 2.2. From these seven common characteristics three fundamental characteristics of disruptive technologies were identified (Table 3). These fundamental characterises are found to be always present in disruptive technologies, and are exclusive to disruptive technologies. However there are exceptions to this, and for a technology to be a disruptive technology it must meet at least two of these three criteria. This flexibility makes it easier to identify when a technology is a disruptive technology, as in hindsight it was revealed that some technologies are still disruptive even when only fitting two of the criteria, such as quartz watches; quartz was disruptive to market leaders and disruptive to end users changing the way in which watches could be used, but quartz watches were not heavily relent upon new infrastructure. The Nissan leaf is disruptive to infrastructure and end users, but an existing market leader within the automotive sector produces the leaf. The more criteria that a technology meets the more disruptive the technology is, if a technology only meets two of the criteria it is only disruptive on two levels, if a technology meets three criteria it is disruptive on three levels and this is the highest level of disruption. If a technology is found to only meet one of

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Table 3 e The three point disruptive technology criteria. 1. Disruptive to Market Leaders: The manufactures of the disruptive technology are different companies than those producing the incumbent technologies. 2. Disruptive to End Users: Disruptive technologies provide greater than equivalence of service over incumbent technologies meaning they are disruptive to the end user, changing the way in which technologies are used. 3. Disruptive to Infrastructure: The disruptive technology requires different infrastructure than the incumbent technology and/or negatively effects existing infrastructure.

the criteria then it is not a disruptive technology, it is likely that it is a sustaining technology and will not cause disruption to the markets status quo. The criteria can be used in three ways. Firstly it can be used to assess if a technology was a successful disruptive technology upon market entry. It can be used to confirm that the historic case studies of disruptive technologies in section 2.2 were disruptive technologies. Secondly the criteria can be used to assess whether a technology in the market penetration stage is a disruptive technology to the current market. In this way it can be used to confirm that the BEV is a disruptive technology. Finally the criteria can be used to predict whether a new or innovative technology will be a candidate disruptive technology upon market entry, the criteria allows us to decide if a technology has the potential to become a disruptive technology. In this way the criteria is used to conclusively state that FCs are a candidate disruptive technology within the automotive sector and indeed many of the markets they could enter. The predictive nature of the model is one of its most valuable assets. In this application the model is useful to both developers of disruptive technologies and to existing market leaders. Developers of disruptive technologies need to know if a technology is a disruptive technology so that they can develop a market entry strategy specific to their needs. The knowledge of the disruptive nature will also allow identification of potential barriers to market entry. Therefore it is hoped that the predictive nature of the model would lead to easier market entry for disruptive technologies. The predictive nature is also valuable to existing market leaders, existing market leaders need to know if a new product entering their market sector will be disruptive to the status quo. Upon ascertaining that a technology is disruptive the market leaders can decide what action to take. Possible action could be adopting the technology or resisting it. Many past failed companies such as Bucyrus-Eire and Kodak would have benefitted from the knowledge that the new market entrants would be disruptive to them. The predictive nature of the criteria could prevent the failure of firms due to disruptive technologies taking market shares away from them. In order to use the three point criteria to assess successful disruptive technology, is a disruptive technology or will be a candidate disruptive technology some information is required regarding the incumbent and the potential disruptor. For the incumbent we need to establish who the market leaders are in the disruptors target market, we need to know what the technology is currently used for and how it is used, finally we need to know what infrastructure the technology has associated with it. Now for the disruptor we need to establish who is producing the technology, we need to know how the technology will be used and how it provides greater services than

the incumbent. Finally we need to know what sort of infrastructure the disruptor will require to support its market entry. When this information is known the disruptor can be compared to the incumbent using the three part criteria in Table 3. If the disruptor meets two or three of the criteria then it is a candidate disruptive technology. Below the three point criteria are discussed and in turn their usage is illustrated through a particular case study technology, the BEV. 1. Disruptive to Market Leaders: The manufactures of the disruptive technology are different companies to those producing the incumbent technologies. The companies producing the disruptive technologies are not the same companies as the ones producing the incumbent technology. In the case of BEV this may not necessarily apply to the OEM themselves, but it definitely does apply to the component suppliers. Drive train components come from the electric industry and not anymore from engine suppliers (also including exhaust systems, gear boxes, carburettors etc.). New market entrants disrupt existing companies producing the incumbent technologies leading to lost revenue and reduced market share. Non-market leading companies took many successful disruptive technologies to the market. However there are exceptions to this rule, and on occasions, market leaders do develop disruptive technologies. For example electric vehicles directed at the mass-market are manufactured by mainstream OEMs, but they are still clearly a disruptive technology, disrupting component supply chain, infrastructure and end users. Examples include the Nissan Leaf [45] and the Peugeot iOn [46]. These BEVs produced by existing market leaders are less disruptive than a BEV being produced by a new market entrant. For example Tesla’s BEVs [34] are more disruptive to the existing automotive industry, Tesla is a new company with a disruptive technology entering a market with established market leaders and technologies. The Tesla Roadster is disruptive to market leaders, end users and infrastructure. 2. Disruptive to End Users: The different characteristics of disruptive technologies mean they are disruptive to end users, changing the way in which the technologies are used. Disruptive technologies are disruptive to end users and consumers. The disruption arises because of a change in the way in which end users interact with the technology; successful disruptive technologies often required behavioural change. One aspect of this could be the way in which users are required to interact with infrastructure. The BEV for example

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would be used differently to an ICE vehicle, it would be plugged in at home over night to be refuelled rather than being driven to a refuelling station. Another aspect of disruption to end-users arises because BEVs supply more service to the user than was available from the incumbent technologies. They provide an increased equivalence of service meaning the basic function of the technology will compete the same tasks as the incumbent, but this will be done in an improved way, more service is supplied by the disruptive technology. The BEV is disruptive in this respect because it fulfils the same task as an ICE vehicle, but has additional functionality over an ICE. The BEV has additional service because it is silent in operation, has zero tail pipe emissions and reduced running costs compared to an ICE. The economic advantages that have been imposed by the government in the UK mean BEV’s pay no road tax, no congestion charge and can be parked for free in some urban locations. The additional uses of a disruptive technology often make them disruptive because they offer a compelling reason to buy over incumbents. The Tesla Roadster had additional functionality due to its rapid acceleration compared to some ICE sports cars. 3. Disruptive to Infrastructure: The disruptive technology requires different infrastructure than the incumbent technology. The need for changing infrastructure is often the most significant aspect of disruption. This is especially true in the automotive industry. The introduction of BEVs would lead to massive disruption to the petroleum industry and its infrastructure. Existing infrastructure would be impacted negatively and new infrastructure would be needed. Significant investment is required to install a recharging network for BEVs. Currently charge points are sparsely distributed with most vehicles using electricity supply from buildings, which results in slower charge times than is possible with infrastructure such as the Tesla Supercharger network [47]. Not all disruptive technologies do require new infrastructure however. This is because not all technologies are heavily reliant upon infrastructure, additionally some disruptive technologies can utilise existing infrastructure. Fisker range extended BEV is equipped with an ICE that is fuelled with petrol, this ICE then charges the batteries in the vehicle [48]. Fisker is a new company so is disruptive to market leaders and being able to operate as a full electric vehicle means the Fisker Karma is disruptive to end users.

5.

The case for fuel cell vehicles

5.1. Fuel cell vehicles (FCV) e a candidate disruptive technology Fuel cells are a disruptive technology, generally being produced by companies that are not existing market leaders, requiring new infrastructure and allowing for additional uses over incumbent technologies. One of the most high profile applications for hydrogen fuel cells is in the automotive sector. Proponents of fuel cells hope that FCVs will replace the internal combustion engine (ICE) and be the main source of

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motive power for vehicles [49e52]. Hydrogen FCVs will change technological and value chains in the automotive sector and some changes in the business models of energy producers could be anticipated. The control of the automotive energy supply chain could move away from traditional oil companies like BP, Exxon Mobile, Shell and Chevron to hydrogen producing companies like Air Products, Praxair, Air Liquide and Linde [23]. Motive power is not the only market for FCs. The basic function of a FC is to produce electrical energy. They have an extremely wide variety of applications due to their versatility [53]. Many of the possible applications of hydrogen FCs will lead to technological disruption. There is a clear need to confirm that FCs and FCVs are disruptive technologies so that an appropriate market entry strategy for this technology can be developed.

5.2.

Market introduction of FCVs

Table 3 allows us to confirm that FCs on their own are a candidate disruptive technology, it shows that FCs on their own are disruptive on all three levels being produced by new companies, allowing for additional uses and requiring new infrastructure compared to incumbent technologies. FCVs however are usually only disruptive on two levels according to Table 3. This is because the majority of FCVs are produced by existing automotive OEMs. There are a minority of FCVs produced by companies that are not existing market leaders, for example the MicroCab [54] and Riversimple [55] vehicles and these would be disruptive on all three levels. Polymer Electrolyte Fuel Cells (PEFCs) in both high temperature and low temperature formats are being considered for automotive applications [56]. FCVs can be 100% FC powered or FC hybrid electric vehicles [53]. This flexible nature of FCVs means that they can be applied to almost any automotive application and hence they have the potential to be disruptive to the entire automotive sector. FCVs have some key advantages over ICE vehicles they are; noiseless, highly efficient, have long ranges, are emissions free and have low environmental impacts [57]. These characteristics will add some value to FCVs and allow them to fit into niche markets. However currently costs are too high for them to be released to mass markets, developing greater added value will justify higher price points for FCVs. Many of the academics in the field of hydrogen fuel cells are fixated on cost reductions and technological improvements [49,50,56,58,59]; and some authors insist that FCVs are not economically competitive with conventionally fuelled vehicles [60]. Frenette & Forthoffer [61] suggest that FCVs need to be fully competitive with conventional vehicles in order to achieve success. These academics could benefit from lessons of successful disruptive technological changes and from Tesla’s BEV. The stand-out lesson should be that higher cost technologies can enter markets, if corresponding added value can be found. All past disruptive technologies reviewed were successful on market penetration because added value could be identified and monetised, and the end product fitted niche markets. The success of FCVs on the short term is reliant on added value being developed and niche markets being found. An important step in taking FCVs to market will be the identification of such viable niche markets. The automotive sector is a large market and there are niches within the

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automotive sector which FCVs may be able to take advantage of. An example could be the high value roadster market like the one in which Tesla marketed their Roadster model. An important aspect in finding niche markets for FCVs will be identifying markets with tolerance to the high costs, for instance such markets that recognise the added value a FCV offers and are prepared to pay a premium price for this. Examples of added value could be noiseless operation, lack of noxious emissions, high acceleration, driving fun etc. Niche markets are especially important for disruptive, innovate and radical technologies [42,62]. Niches offer a safe environment for growth, unlike the highly competitive meso and macro levels of the market. Arguments by academics that costs are currently too high [63e66], and that more research development is needed [60] will be made void if added income is mobilised by marketing high value FCVs to the right markets with the proper understanding of their added value. We have already seen that BEVs have achieved some success in highend luxury car markets. It is likely that FCVs would be more costly than Tesla’s BEVs. Current estimates for the cost of the Honda Clarity FCV range from $120,000e$150,000 [67]. Cost targets are down to $50,000 [68]. Honda are currently not selling the vehicle, but it can be leased for around $600/month. A reason for Honda not selling the Clarity FCV is because $120,000 is a high price for a mass-market vehicle. But as we have seen, BEVs with added value have been successfully marketed in this price bracket to niche markets. Perhaps then there currently exists a market for hydrogen FCVs. Honda [69], Mercedes [70], Hyundai [71], Intelligent Energy [72] and others have proven the concept of FCVs. FC electric drive system technologies are now able to be applied to all types of vehicle chassis [23]. Hyundai are beginning to commercialise a FC version of their ix35 SUV and have developed a production line for its manufacture, Hyundai plan on producing 1000 units for use in Europe between now and 2015 [73]. FCVs can now achieve ranges similar to that of petrol and diesel cars. The vehicle technology exists, the electric motor and battery technology exist and arguably the FC technology exists. What is needed now is for business leaders to realise that there is a market for FCVs in this high price bracket and for them to begin technology development and marketing. By marketing FCVs initially in low volume high cost markets this problem can be overcome, as limited run productions are possible. Small-scale market introductions will lead to increased investment and R&D, which will yield technological improvements.

5.3. entry

Fuel cell vehicles and disruptive technology market

The method by which new and disruptive technologies enter markets is arguably a universal process regardless of the market sector. This process can be seen in Fig. 1. Hydrogen FCVs are mostly still in the initial technology development phase. A limited number of FC applications are being used for niche market applications. These include SFC Energy’s EFOY fuel cell [74], Horizon’s MiniPack [75] and Lilliputian Systems Nectar fuel cell [76]. BEVs on the other hand are currently well into the niche market penetration phase and expansion out of these niches could be expected within this decade.

Fig. 1 e The route of market introduction for new and disruptive technologies.

The position that FCVs are in today is similar to the position that many of the past successful disruptive technologies were upon market entry. In addition to FCVs fitting threepoint disruptive technology criteria, they are also well aligned with the common characteristics in section 2.2. The similarities between FCs and past successful disruptive technologies are outlined below: 1. Many mainstream automotive companies are not recognising the extent of the threat that FCVs pose to their current business models; many of the world’s largest automotive manufactures are investing into FC technologies, however investments are small and progress is slow in comparison with the continual research and investment that goes into incumbent technologies. They are seen as hesitant and the public does not understand that they are pushing for the new technology. It rather appears that they are reacting to political pressure rather than adding major progress to FC technology. FCVs are currently more expensive than incumbent ICE vehicles. A majority within the FC community view this as a major barrier to the market entry of FC. This is not the case; the high prices of FCs should be viewed as an opportunity to market them to high value niche markets. 2. The current state of FCVs technologies are below that of ICE vehicle technologies. FC technologies are less well developed than ICE technologies. The disadvantages of FCVs can be minimised when they are applied to the correct systems. For example lower power outputs will not be an issue in lightweight vehicles. 3. FCs have added value. The high prices of FCs will be justified because of the added value they can bring. In reality, added value may even not come from the FC but how the technology is marketed. In Tesla’s case the main source of added value is not the battery but the nature of the vehicle. 4. FC technologies have now begun entering niche markets in small but not insignificant numbers. FCVs are being used in some very niche applications in the form of demonstration

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projects. This is a sign that they are approaching more widespread commercialisation. 5. ICE vehicles will not be totally wiped out by FCVs and neither will the battery vehicle. In the future it is easy to see how the automotive sector will be made up of a mix of ICE vehicles, BEVs and FCVs. 6. In an ever-evolving socio-technical system it is inevitable that the incumbent will be replaced. FCVs or BEVs are the next logical step in the transportation sector. The transition from ICE vehicles to a disruptive technology is unavoidable.

5.4.

Fuel cell vehicle added value

Fig. 1 shows how price falls over time, and how price is near to its minimum during the macro level penetration. Added value will be vitally important for FCV niche market penetration. Added value is the value of a technology that is added to it by its additional features or characteristics, it is sometimes referred to as ‘value added’ [77]. Added value means that higher prices are more acceptable to consumers that recognise the added value and are able to pay a premium price. For FCVs this could mean the more added value the greater level of market penetration. Added value falls into five categories: 1. Functional: The product’s ability to perform its functional, utilitarian or physical purpose [78]. Such values could be due to a vehicles speed, acceleration, range, number of seats etc. A FCV may have greater range than an incumbent ICE vehicle increasing its functionality. 2. Social: The social consequences of what the technology communicates to others [79]. This may be a technology with a positive social image. For example a FC could have a positive image because it is has zero tailpipe emissions. 3. Emotional: The utility derived from the feelings of affective states that a technology generates [79]. This could be positive such as enjoyment or pleasure. These values could be present in a high performance FCV that provides pleasure due to its fast acceleration. 4. Epistemic: This is to do with the aspiration for knowledge; this could be due to intellectual curiosity or by seeking something innovative. Early adopters of technologies often hold these values. Innovators who aspire to purchase new and innovative technologies exactly because they are new and innovative hold these values, FCs may appeal to these groups. 5. Conditional: This relates to the functional and social values. When a set of circumstances creates temporary functional or social values. Such conditional values can be influenced by a variety or socio-economic systems [79]. An example of this could be high fuel prices resulting in an alternatively fuelled vehicle being valued higher than they were previously, a satiation similar to this could make FCs more economically appealing to consumers. In order for one of these to be considered as an added value the added value should be higher than the value assigned to the same characteristic of the incumbent technology. For example for FCVs to have functional added value, the performance of a FCV, based on one or more performance

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measures, should be higher than it currently is for an incumbent technology. The easiest added values to define are the ones based on functional characteristics; often these are the most obvious added values. Social, emotional, epistemic and conditional values are often harder to define and anticipate in a product. Added value often manifests itself in the form of convenience, cost savings, product prestige, lifestyle or recreation values and accuracy amongst others. Many of the five types of added value, seen above, can be found in the successful disruptive technologies reviewed, and in Tesla’s BEVs. Tesla’s vehicles are more functional than any previous BEVs and some ICE vehicles, they are viewed as socially positive, they invoke emotional responses due to their sporty nature and bold designs, they are innovative leading to epistemic values being held, and increasing environmental concerns and rising fuel prices create conditional value. All of the technologies reviewed achieved market penetration because they had added value whether it was convenience, prestige or performance related. De Chernatony et al. [80] suggest that emotional added values are the most sustainable. These values are often long lasting and resilient; such values were present when the iPod wad first launched in 2001 and are still present today. If added value can be found in FCVs there will be a market for them. For FCVs it is possible that all 5 of the above added values could be found, some examples are mentioned above. Niche markets where these values are relevant need to be targeted for FCVs. Audi are currently developing a FCV that will have greater added value than any FCV seen before, due to the vehicles high prestige. Audi are developing a FC version of their £40,000e£80,000 A7 executive four door coupe [81]. This vehicle occupies a market comparable to Tesla’s Model S. If Audi is able to commercialise a FC variant of the A7 and price it close to the incumbent ICE version the result could be the first price competitive FCV being developed. This is a promising sign from Audi and does highlight a different market entry route compared to other FCVs being developed. This route is one of adding value rather than minimising costs by producing a mass-market vehicle. The automotive sector, although it is the focus of much of this paper, is not the only market where FCs could find niche markets for added value applications. Other markets include: 1. Recreational uses People may be willing to pay price premiums for technologies that they use for recreational uses. SFC energy has achieved 20,000 unit sales of the EFOY comfort which was marketed to the recreational motorhome market [74]. 2. Lifestyle and Prestige uses Technologies that draw on lifestyle issues have added value and devices like mobile phones achieved great success because they draw on lifestyle issues to add value [2]. FC technologies that deal with everyday life style issues may have added value. A FC powered mobile phone device or laptop could have vast amounts of added value, it would have a far longer run time than a traditional battery powered

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mobile phone. This would add significant value to the product, however FC power for these devices still required further development [82]. 3. Remote power supply The high level of autonomy of FCs means they can be left in remote locations and provide continuous power for many days. In off grid locations FCs are far superior technologies to incumbent technologies [83,84]. Although a FC remote power supply system would be more expensive than a traditional system it would have functional added value. 4. Back up power and uninterruptible power supply (UPS) Power failures or power shortages have the potential to cause significant strategic or economic loss in some industry sectors. Currently the back-up power and UPS market is served by batteries or ICE generators mainly. Batteries are employed for UPS due to fast start-up times, but they have short longevity. ICE generators are used for back-up power but have low start up, they have improved longevity over batteries but diesel fuel can be exhausted quickly. A FC backup unit has fast start up and longer longevity than both batteries and ICE units when fuelled with methanol or off the natural gas grid [85,86]. FC back up power has now been proven in real world applications [87]. 5. Consumer electronics Lilliputian Systems are currently producing a FC for consumer electronics applications. The device is designed to charge electronic devices such as phones and mp3 players on the move. The unit is considerably more expensive than traditional battery charging devices but does advantage from longer run times [76]. The device clearly has functional added value and may also epistemic added value among gadget savvy consumers.

5.5.

Barriers to fuel cell vehicle market entry

The automotive sector is a large, complex socio-technical system. The automobile cannot be viewed separately from society; the two are currently inextricably linked [10]. The automotive sector is one of the most complex systems containing many stakeholders in the value chain. Society is in a state of lock-in with the petrol and diesel vehicles [40]. Lock-in is caused by increasing economics of scale of incumbent technologies, learning difficulties, and the network effect [88]. Economies of scale do not require explanation. Learning difficulties are best explained using the QWERTY keyboard. This layout was developed to prevent typewriters from jamming. It is now widely understood that the QWERTY layout is not the most efficient keyboard layout for electronic computers. But changing to a different keyboard layout would lead to reduced efficiency (efficiency refers to typing efficiency and not energy efficiency), because of user unfamiliarity of the new layout. It makes it difficult to make to change due to the initial productivity loss [43], since people would be unwilling to accept the change. The network effect is caused by a system being

dependant on the high number of users within the network. Often positive feedback mechanisms are created leading to more users. The network effect causes large complex systems to be more resilient to change then a small system [10]. The network, which governs the current transportation system, is a very large system and hence is resilient to external threats. The network effect is a leading cause of lock-in [40]. Lock-in is an issue, but it is not impossible to escape lockin. Many successful disruptive technologies enter systems with high levels of lock-in. Cowan and Hulte´n [40] suggests 6 ways of escaping lock in: 1. The existing technology reaches a state of crisis. Cowen & Hulte´n [40] use the example of fertilisers which become redudant when they fail to control the target pest species. This means that new fertilizers are necessary to fulfil the need which they incumbant are failing to meet. For ICE an oil crisis could lead to increased penetration of BEVs. 2. Regulation has an impact on the industry. Regulation can either be regulation that supports a disruptive technology or regulation that makes incumbent technology less favourable. Governments wanting to see more environmentally positive technologies often use regulation. This is at present occurring with BEVs in the UK [33]. 3. The occurrence of a technological or cost breakthrough with the new technologies. Cost breakthroughs can be achieved or expected breakthroughs. An achieved cost breakthrough will mean that the disruptive technology is now cost competitive with incumbent technologies. Expected cost breakthroughs mean that it is expected that the disruptive technologies will become cost competitive to the incumbents at some point in the future. The technologies are then initially sold at a reduced price until profitability is reached. 4. Changes in tastes that favour the new technology. Growing environmental awareness could lead to their being reduced demand in ICE vehicles and increasing demand for BEVs or FCVs. Changes in taste could also be consumer’s preferences changing from a primary performance focus to a convenience focus, as what happened in the transition from film to digital photography [5]. 5. The presence of niche markets. Niche markets are important for breaking lock-in as they allow the disruptive technology a foot in the door before it aims to take on the locked-in incumbent at the mass-market level. The importance of niche markets is especially evident in the case of the market entry of the Tesla Roadster. 6. The new technology receives support from the scientific community. The scientific community has the ability to question existing technologies negative impact on the environmental. Scientists are attempting to quantify the negative impact of ICE vehicles on global and local climates. Climate change is currently being used as a strong argument for the adoption of zero emission vehicles. In both lock-in and disruptive technological change there exists incumbent technologies and disruptive technologies. In order to escape lock-in a disruptive technology is needed to replace the incumbent locked-in product. Lock-in is present where there is a deeply entrenched incumbent technology.

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However, not all incumbent technologies are locked-in with society. Disruptive technological change is an easier process when the technology is not locked-in; lock-in causes the change to be more challenging. Often lock-in is present when the market sector is heavily reliant upon infrastructure, the way in which the technology is used is clearly defined and the market leaders are well established, this is clearly an issue in the automotive sector. With FCVs the problem of infrastructure is a significant issue [59], there is no commercial hydrogen-refuelling infrastructure present in the UK and rest of the world [89]. This means that even if an individual does wish to purchase a FCV they are prohibited from doing so due to the lack of supporting infrastructure. They therefor continue to use an ICE vehicle and use the existing petrol and diesel infrastructure. The only action to prevent this would be for investors to build a hydrogen-refuelling infrastructure in order to support prospective customers. This is a major hurdle and consumers may immediately dismiss purchasing a FC technology because of the lack of hydrogen refuelling and maintenance infrastructure. A pre-development phase of installing infrastructure is needed in order to increase market penetration of FCVs. An interesting consideration with FCVs and the automotive industry is that FCVs are a disruptive technology being developed by incumbent market leaders of ICE vehicles. Today many mainstream OEMs are investing into research and development into FCs. If these programmes are successful, FCVs would impact on these market leader’s existing business models. They would be in fact causing disruption to themselves. The phenomenon has been referred to as Disruptive Strategic Innovation; it is defined as a business model that is different from and in conflict with the traditional ways of business [90]. In the case of FCVs, automotive companies have the choice to ignore the technology and eventually become outcompeted by it, as occurred with the historical case studies. Alternatively, they can adopt the technology and develop it themselves thus having control over the disruption, which in the long term will have a lesser impact on the market leading position of the companies. The company may simple make a transition from a market leading position for ICE technologies to a market leader for FC technologies.

6.

Conclusion

By reviewing the seven historical examples of successful disruptive technologies a greater understanding of the successful market entry of disruptive technologies has been developed. This understanding allowed the identification of seven common characteristics of disruptive technologies. Further to this a current market entry of a candidate disruptive technology was investigated in order to develop an understanding of the characteristics of a disruptive technology during the market penetration phase. These seven observations and the example of the BEV were then used to develop 3 fundamental characteristics of disruptive technologies, these fundamental characteristics were then used to develop the first criteria, which can be used to identify if any given technology is a candidate disruptive technology. This is an

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important addition to the literature because previous definitions of disruptive technologies were vague and unsubstantiated. The criteria highlights the main aspects of disruption, this is the disruption to market leading companies, disruption to end users and disruption to existing infrastructure. It is suggested that in order for a technology to be labelled a disruptive technology is must be disruptive in at least two of these areas. The findings were then applied to FCVs because they may be a candidate disruptive technology seeking market entry in the future. The three point criteria allowed it to be conclusively stated that FCVs are a candidate disruptive technology. The findings from the historic case studies and the current example of the BEV allowed suggestions to be made on potential FCV market entry. The broad conclusion being that FCVs with added value should be targeted to niche markets in order to achieve early market success. This market entry route will be one with less resistance to the disruptive technologies by the current market leaders. As previously mentioned, niche markets are often financially unappealing to market leaders. All of the historical successful disruptive technologies entered niche markets with ease and received less competition from incumbents than they would in mass markets, and often they received no competition at all. An additional factor that makes niche markets attractive is that incumbents may not be properly serving them. This means that there already may be a demand for the disruptive technology. The automotive sector is a large and complex socialtechnical system. Within the automotive sector there are currently a number candidate disruptive technologies, these technologies are in competition with each other, they are competitive candidate disruptive technologies trying to take market share off incumbent ICE vehicles. The closest competitors to FCVs are full BEVs, and range extended BEVs. These are cited in the literature and many studies have compared the advantages and disadvantages of FCVs, BEVs and hybrid BEVs [50,59,91,92]. It could be argued that FCVs and BEVs are not in competition with each other because they are both variations of EVs, sharing many parts. But BEVs and FCVs are both competing for a market share within the same sector, the automotive sector. FCVs and BEVs both fit the three-point criteria when compared to incumbent ICE vehicles. Additionally a comparison between FCVs and BEVs based on the criteria suggests that they are disruptive to each other on two or even three levels. Firstly BEVs and FCVs require different refuelling infrastructure, secondly they can be used in different ways and finally it is possible that different companies may produce them. The two vehicles in reality contain many of the same components but there significant differences do mean that they will be in competition to on another. Algal and crop, biodiesel and bioethanol are also a competitive disruptive technology to FCVs. Bioethanol and biodiesel fit the disruptive technology criteria when compared to the oil industry, FCVs and BEVs. Huge economic investments have been made into these technologies in the US; some companies are in the pilot project stage and are approaching commercialisation [93,94]. Biofuels do not require as much infrastructural investment, they can make use of existing infrastructure used for fossil fuels [95]. The route to market for biofuels may be simpler than the route to market for FCVs.

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This situation of competitive candidate disruptive technologies has been seen before; in the early days of the automobile when ICE vehicles, BEVs and steam engined vehicle were in competition to replace horse drawn carriages. It is clear which technology emerged as the leading technology then and now society may back one of the competitive technologies in the automotive sector preventing FCVs achieving market penetration. Currently a lack of creativity is hindering fuel cell market entry, the majority of products that have reached commercialisation or are under development have not recognised their potential for creating added value. The most common technologies that have reached commercialisation are devices whose main purpose is to produce electricity. There is a market for FC generators and FC power units, but the market is small and these technologies hardly seek to maximise added value. The FCV industry tells a similar story. The majority of FCVs that have been developed are based on existing ICE vehicle models and hence have little added value over their ICE counterparts. FCV developers need to design more imaginative products in order to create greater added value and desirability within their technologies. FCVs need to be distinguishable and superior to ICE vehicles in order for them to be successfully marketed. Once a business successfully develops a FCV with desirable and marketable added value, FCVs may finally see wide spread use in niches, begin penetration to the meso and finally reach the mass level of a market. If a business does achieve this, they will become market leaders in FCVs. Here it is suggested that high value automotive applications are a near-term added value application for FCVs. Automotive manufactures should not fight against the introduction of FCVs they should work towards it. They should do this by increasing investments and designing greater levels of added value into their FCVs in analogy to developments currently going on with BEVs. The result could be the development of desirable FCVs that can be marketed to niche markets, this could lead to further technological development and begin recovery of development costs. All innovative ideas are initially met with some kind of delusion and rejection from industrial leaders and consumers, especially innovations that are candidate disruptive technologies. Only a small minority will recognise the future potential of an innovation. FCs struggle has been longer than many innovations but recent developments give them more hope than ever. FCs are more expensive, have lower quality and many people do reject them as a market entrant. But, like all past successful disruptive technologies, FCs will enter niche markets, prove their added value, reduce their costs, and eventually move into meso and macro markets.

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