Technological Innovations In The Automobile Industry


Thesis: The expected growth in road transport use has led to the need for significant fuel improvements on road transport to stabilize and gradually reduce greenhouse gas emissions through the Hybrid electric vehicles.

Purpose of paper: Due to the expectations in the tripling of universal light-duty vehicles, and the carbon dioxide emissions tripling, there has been a drive to address road transport fuel efficiency. Road transport efficiency has been a hotly debated agenda in the global and national energy, environment and climate change discussions. Globally, road transport accounts for 17-18% of the global carbon dioxide emissions from fossil fuels combustion.

In addition, most countries where carbon dioxide growth is being experienced, majority of the emissions are from road transport let alone the total Carbon dioxide emissions. From projections, it is clear that road transports will still dominate the market despite sea and air transportation growth. In order to significantly experience stable and gradually decreasing green house gas emissions from road transport sector, development of hybrid electrical vehicles have been innovated.

Overview of paper: This paper will evaluate HEV in terms of competence destruction and enhancement, factors influencing consumer rate of HEVs adoptions; advantages and disadvantages of Honda and Toyota vehicle using the same engine; recommendations on Honda’s engine production strategy and reasons why Honda is developing simultaneous vehicle hybrids, diesel, natural gas and fuel cars.

Body discussion

Question one:  I think hybrid electrical vehicles are an incremental innovation. This is because they are made on existing technology of engines. These cars do not also require any changes in consumer behavior or fueling infrastructure.  Hybrid electric vehicles are made such that they combine the combustion engine and electric motor to power them. This design therefore makes HEVs more efficient on energy as they can achieve twice fuel-millage which reduces substantially the emissions from the tailpipe (UNEP, 2009, p.16).

HEVs are competence enhancing for the customers, petroleum companies and automakers. However, they are competence destroying for the automakers not willing to manufacture HEVs (Innovation Zen, 2006). Fuel cell vehicles are more of radical innovations which call for great changes to be made on the vehicle’s body, fuel infrastructure, and engine and consumer behavior. This makes them competence destroying to the petroleum industry and automakers while to the battery makers they are competence enhancing.

Question two: Some factors that affect the rate at which consumers adopt hybrid Electrical vehicles include consumers’ lack of information about the quality, durability and performance of this new technology. The introduction of the HEVs has led to the need for training and education to consumers on how to use the vehicles.  Knowledge the affects consumer calculation like price, fuel consumption speed and others will mean fewer purchases for HEVs (Huetel, and Muehlegger, 2008).

However, lack of sufficient information on HEVs will mean less consumption especially at the initial stages of introduction to the market (Gallagher and Muchlegger, 2008, p. 3). Presence of strong prevalence among some consumers is important as it sets the pace for the other HEV consumers to adopt the technology. This group is determined to own hybrid vehicles and will do so the very first time they are introduced into the market. If upon introduction to the market the manufacturers learn of new consumer preferences and decide to change, this will cause delay in consumer adoption of the HEV technology.  Government incentives also influence consumer adaptation of HEVs since they will be provided at affordable prices for many to afford. The availability or ancillary services like HEV servicing stations, mechanics and spare parts will also affect consumer adaptation of HEVs. The recent fuel prices fluctuations have affected gas prices and consumers may opt to wait for more stable and friendly prices.

Question three: By using the same standards of engines for Honda and Toyota, the two companies would gain from economies of scale and learning. This would result to faster production of engines, thereby lowering the vehicle prices. Due to these increased demand in the market, consumers and dealers are more likely to become certain of the future of the engines’ technology. Such certainty would also be replicated on the service technicians and mechanics. This is the greatest advantage.

Conversely, using the same engine technology by Honda and Toyota would lead to the establishment and endorsement of two engine standards variations which allow the two companies to venture into variant paths of technology. In so doing, one would dominate the other (Brainmass, 2012). The same engine standard would also lead to the establishment of minor differentiation sources between these two vehicles a move that would discourage price competition. However, due to the prevailing levels of competition between the two companies, the production of such technologies would be less likely given their differences in production cultures.

Question four:Honda is smaller vehicle manufacturer than Toyota. If its initial intentions for HEV were to make them mass market cars, then licensing would have been more applicable.

Additionally, Honda would have decided to increase its advertising dramatically. This would be intended to serve as a tool to speed up consumer HEV-adoption and acquisition of economies of scale (Rodrigeuz and Page, 2004). Since this was not its real intention, Honda probably used it as a way of conducting market research before the actual provision of HEV technology into a market that was already conversant with Honda models such as Civic and Accord.  This strategy would have meant less advertising.

Despite being a small company, Honda has significant performance in the auto industry as it does fall way above the minimum efficient scale based on its auto pricing and the profitability of its usual auto models. I would recommend no collaborations with Toyota since it would have much to lose given its current position in the market. For the US automakers Honda would gain a pooling scale in the US and this would make collaboration commendable.

Question five: Honda initially ventured into the HEV vehicles world with the aim of producing environmental friendly prototypes of its intended auto ahead of time (Schilling, 2010). The track record for this company has as a result been lengthy and consistent, providing the public with both environment and energy security. The contribution to this achievement is credited to the company’s long-term research and development strategy as it enables the company to be a first mover and always remain on the frontier of technology. Its quality as a first mover is visible during the roll out of commercial version technologies. Honda should pick on fuel cell vehicles despite their long time to become viable commercially. In this model, Honda must begin investing in it now in order to dominate the auto industry in coming days.


Summary of key points: Hybrid electrical vehicles are an incremental technology build on existing knowledge. Fuel cell vehicle are radical innovation technology build upon new knowledge and resources. Factors like prices, market education and knowledge, government incentive, gas prices and certainty are factors affecting consumer adaptation of HEVs. Despite being unlikely, the possibility of same engine standard for Honda and Toyota would provide economies of scale and learning hence lowering the price. This would however mean direct price competition and lack of differentiation. Honda’s strategy is a good one as it serves as a tool for market research and feedback is incorporated into the commercial models. Although Honda is unbeatable in environmental friendly vehicles, Fuel cell vehicles can place it as a leader in automobile if invested on now.

Key learning and recommendations

There is no good strategy for technology management. All that is needed is to presence of resources and efficient resources management and the need to remain competitive. Given the current competition in the HEV production, I recommend that any auto company intending to venture in the field must be willing and ready to invest in research and development to keep up with the veterans like Honda and Toyota.


Brainmass, (2012). Honda and hybrid electric vehicles. Retrieved from

Gallagher, K., and Muehlegger, E., (2008). Giving green to get green. Retrieved from

Heutel, G., and Muehlegger, E., (2010). Consumer learning and hybrid vehicle adoption. Harvard Kennedy School.  Retrieved from

Innovation Zen, (2006). Incremental vs. radical innovation. Retrieved from

Melissa A. Schilling, 2010. Strategic Management of Technological Innovation, 3/e, New York University, McGraw Hill New York, NY. ISBN: 007338156x

Roudriguez, A., and Page, C., (2004). A comparison of Toyota and Honda hybrid vehicle marketing. Rocky mountain institute. Retrieved from

United Nations Environmental Program, (2009). Hybrid electrical vehicles. UNEP. Retrieved from


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