1、BEV-SDV CompetitionCapability-Architecture-Performance(CAP)Approach to Automobile Industrial CompetitionNovember 2023Takahiro FujimotoProfessor,Waseda university,Emeritus professor,Tokyo university1The industrial phenomenon that should be explained:The industrial phenomenon that should be explained:

2、Rapid expansion of Chinas BEV market after 2020Rapid expansion of Chinas BEV market after 2020Tesla Shanghai FactoryGovernment Supports to BEVRapid Growth of BEV-SDV DemandChinaChinaChinaChinaChinaManufacturing(monozukuri)Capability（local concentration）Product-ProcessArchitecture(Selected by Product

3、s）Comparative Advantage ofDesign SitesFit？Capability-Building EnvironmentCustomer or MarketRequirementsConstraints imposed by SocietyDecisions and Behaviors of Designers Other Environmental Factors,and ChancesCapability-Building CompetitionCapability-Building CapabilityConstraints imposed by Technol

4、ogyCapabilityTakahiro FujimotoCapability-Architecture-Performance(CAP)FrameworkArchitecturePerformance3Manufacturing(monozukuri)Capability（local concentration）Product-ProcessArchitecture(Selected by Products）Comparative Advantage ofDesign SitesFit？Capability-Building EnvironmentCustomer or MarketReq

5、uirementsConstraints imposed by SocietyDecisions and Behaviors of Designers Other Environmental Factors,and ChancesCapability-Building CompetitionCapability-Building CapabilityConstraints imposed by TechnologyStable Architecture Stable Architecture CapabilityCapability-building mattersbuilding matte

6、rsArchitecturalArchitectural changes changes Core capability set changes Core capability set changes Lean Capability-building for Integral Architecture Products(Hardware)Partial Architectural Canges?(e.g.,Software-Defined Vehicle)Core capability set changes4Takahiro FujimotoFit？CapabilityArchitectur

7、eArchitecture and Competition in the Digital EraArchitecture and Competition in the Digital Era-High Sky,Low Sky Ground High Sky,Low Sky Ground-Ground CompetitionGround Competitionfor Outperforming Rivals Productsfor Outperforming Rivals Productsbetween mostly between mostly ClosedClosed-integral Ar

8、chitecture integral Architecture Goods/Service Goods/Service LowLow-sky Competitionsky Competitionfor Balancing for Balancing Global Network Power Global Network Power and Local/Physical Knowledgeand Local/Physical KnowledgeHighHigh-sky Competitionsky Competitionfor Outfor Out-Building Building Ecos

9、ystem with Ecosystem with Open ArchitectureOpen ArchitecturePlatforms and Products Platforms and Products High SkyCyber Layer Weight-freeLogic,LanguageLow SkyCyber-physical LayerInterfaceGroundPhysical LayerWeightyPhysical law5Takahiro FujimotoManufacturing(monozukuri)Capability（local concentration）

10、Product-ProcessArchitecture(Selected by Products）Comparative Advantage ofDesign SitesFit？Capability-Building EnvironmentCustomer or MarketRequirementsConstraints imposed by SocietyDecisions and Behaviors of Designers Other Environmental Factors,and ChancesCapability-Building CompetitionCapability-Bu

11、ilding CapabilityConstraints imposed by TechnologyTakahiro FujimotoPerformanceCapability-Architecture-Performance(CAP)Framework6Takahiro FujimotoOrganizationalCapability in ManufacturingProductivePerformanceMarketPerformanceProfitPerformanceManufacturing sites ability to be selected by the firm.good

12、ness of the flowProducts ability to be selected in the product marketFirms ability to be selected in the capital marketA system of organizational routines that govern flows of value-carrying design informatione.g.,physical productivityproduction lead time conformance qualitydevelopment lead timedesi

13、gn quality,etc.e.g.,levelization,kanban,kaizen,5S,shojinka,mixed-model line,autonomation,etc.e.g.,market share(ex post)price,deliveryperceived quality,etc.e.g.,stock price(ex post)profit ratiocash flow,etc.domain of capability-building competitionCapability Series of Performances Profit/Market/Produ

14、ctive Performance7Profit Profit PerformancePerformanceMarket Market PerformancePerformanceProductive Productive PerformancePerformancecapabilityProductive PerformanceAssembly Productivity,IMVP Round 4(2006)8 Productivity（man-hour/vehicle）10.714.220.625.425.541.50.05.010.015.020.025.030.035.040.045.0

15、Japan Average(10)Korea&Taiwan Average(6)Taiwan Average(3)Thailand Average(6)China&India Average()India Average(3)labor-hours per vehicle(hpv)OrganizationalCapability in ManufacturingProductivePerformanceMarketPerformanceProfitPerformanceManufacturing sites ability to be selected by the firm.goodness

16、 of the flowProducts ability to be selected in the product marketFirms ability to be selected in the capital marketA system of organizational routines that govern flows of value-carrying design informatione.g.,physical productivityproduction lead time conformance qualitydevelopment lead timedesign q

17、uality,etc.e.g.,levelization,kanban,kaizen,5S,shojinka,mixed-model line,autonomation,etc.e.g.,market share(ex post)price,deliveryperceived quality,etc.e.g.,stock price(ex post)profit ratiocash flow,etc.domain of capability-building competition8Lean production still mattersMarket Performance(Global S

18、hare Matrix)Takahiro FujimotoOrganizationalCapability in ManufacturingProductivePerformanceMarketPerformanceProfitPerformanceManufacturing sites ability to be selected by the firm.goodness of the flowProducts ability to be selected in the product marketFirms ability to be selected in the capital mar

19、ketA system of organizational routines that govern flows of value-carrying design informatione.g.,physical productivityproduction lead time conformance qualitydevelopment lead timedesign quality,etc.e.g.,levelization,kanban,kaizen,5S,shojinka,mixed-model line,autonomation,etc.e.g.,market share(ex po

20、st)price,deliveryperceived quality,etc.e.g.,stock price(ex post)profit ratiocash flow,etc.domain of capability-building competitionManufacturing(monozukuri)Capability（local concentration）Product-ProcessArchitecture(Selected by Products）Comparative Advantage ofDesign SitesFit？Capability-Building Envi

21、ronmentCustomer or MarketRequirementsConstraints imposed by SocietyDecisions and Behaviors of Designers Other Environmental Factors,and ChancesCapability-Building CompetitionCapability-Building CapabilityConstraints imposed by TechnologyTakahiro FujimotoCapabilityManufacturing(Monozukuri)CapabilityS

22、tructure,Function,Generation Evolutionary Approach10The Lean Principle(Toyota-style Manufacturing Capability)Design Information is Transmitted to Materials Creating Good Flows of Design(Value)to CustomersReducing MUDA(Non-Value-Adding Time)Maximizing Value Adding Time RatioTotal Process First,Indivi

23、dual Operations NextLead Time Reduction First,Cost Cutting NextSQTC=Safety Quality leadTime Cost/ProductivityPursuing High Quality Quantity Follows as a ResultCreating Good Flows of Design(Value)to CustomersTakahiro Fujimoto,University of TokyoTaiichi Ohno11Figure 9 Organizational Capability Regardi

24、ng Productuvity and Throughput Time(Toyota)M+AProduct Design(M+A+B)product design for manufacturabilityAsuppliers Kaizen(impronements)supplierMreduction of work-in-processiinventory or piece-by-piece transfer process step 2process step 1Bregular pace of information transmission(levelization,small lo

25、t)Worker and EquipmentWorker and EquipmentcustomerWork Design Equipment DesignParts Design(M)parts design for manufacturabilityblack box parts systemAABBWork Design Equipment Designreduction of raw material inventory reduction of finished goods inventory designing process flow pror to work&equipment

26、 designM+A+Blow cost automationin-house design of equipmentrevision of work designs by supervisorsmaximizing value-adding timeflexible equipmentworkers participate in Kaizen(improvements)quick set-up changemulti-skilled workerpull systemmixed-model(small lot)assemblylshort-term levelization of produ

27、ction volumedealervisualizing non-value time(JIT,andon,line stop cord)levelization of product mix(heijunka)MMMsupplier Kanban JIT deliverycommunicationpreventive maintenanceflexible task assignment(shojinka)incremental impovement of equipmentFlow Diagram and Manufacturing Routines/Capability For Hig

28、her Productivity and Shorter Lead TimeTakahiro Fujimoto,University of Tokyo12Starting from an Enterprise Level Map Experts of Company Xat Tokyo UniversityMake a Large-Scale Map(Business Unit Level)First Identify Problematic Area(Many Red Post-its)Zoom in and Make Smaller-Scale MapsCombination of Vet

29、erans and Rookies May WorkFujimoto,University of Tokyo1314Value Stream Map Victor Gasket,IndiaValue Stream Map Victor Gasket,IndiaManufacturing(monozukuri)Capability（local concentration）Product-ProcessArchitecture(Selected by Products）Comparative Advantage ofDesign SitesFit？Capability-Building Envir

30、onmentCustomer or MarketRequirementsConstraints imposed by SocietyDecisions and Behaviors of Designers Other Environmental Factors,and ChancesCapability-Building CompetitionCapability-Building CapabilityConstraints imposed by TechnologyArchitecture as a Basis of Comparative AdvantageTakahiro Fujimot

31、oArchitecture15Basic Classifications of Product-Process ArchitectureModular architecture Coordination-Savingone-to-one correspondencebetween functionaland structural elementsIntegral architecture-Coordination Intensivemany-to-many correspondencebetween the functionaland structural elementsBodySuspen

32、sionEngineHandlingRideFuel EfficiencyPCPC SystemAutomobileComputingPrinterProjectionProjectorPrintingOpen architectureOpen architecture：Open Open industryindustry-standard interface standard interface between parts/productsbetween parts/productsClosed architectureClosed architecture：Closed&Closed&fi

33、rmfirm-specific interface specific interface between parts/products between parts/products Takahiro Fujimoto,University of Tokyo16CoordinationCoordination(1)Closed-integral,(2)Closed-modular,(3)Open-modularThree Basic Types of Product ArchitectureTakahiro Fujimoto,University of TokyoClosed-Integral

34、Closed-Modular Open-Modular 17Closed-Integral Architecturee.g.,Fuel-efficient automobileswith monocoque bodyHigh-functional industrial machinesand industrial robotsHigh-functional chemical/steelClosed-Modular Architecturee.g.,Mainframe computersTruck-type automobilesSystem furnitureBlock toy(LEGO,et

35、c.)Open-Modular Architecturee.g.,Personal computer systemsSmart phones&app.softwareInternet servicesBicyclesClosedArchitectureOpenArchitectureIntegral ArchitectureModular ArchitectureNot considered for logical reasonClosed-IntegralClosed-ModularOpen-ModularClosed-Integral Architecture(Cars Hardware)

36、ModularModularIntegralIntegralClosedClosedsmall carscompact consumer electronicsinternetbicycleLEGO(building-block toy)motorcyclemachine toolsFigure 6 Basic Types of Product ArchitectureFigure 6 Basic Types of Product ArchitectureOpenOpengame softwaremainframe computerpersonal computer(PC)PC softwar

37、eTakahiro Fujimoto18Design Based Comparative AdvantageDesign Based Comparative AdvantageExport Ratio(Japan)and Integral Architecture IndexExport Ratio(Japan)and Integral Architecture Index（Assembly productsAssembly products：52sample52sample）Ratio of Export and Integral Architecture IndexScatter char

38、t（assembly products：52sample）0.0%10.0%20.0%30.0%40.0%50.0%60.0%70.0%80.0%90.0%100.0%-3.000-2.500-2.000-1.500-1.000-0.5000.0000.5001.0001.500WeekIntegral Architecture Index StrongRatio of ExportRatio of ExportRegression Curve Oshika and Fujimoto,MMRC,University of Tokyo19Closed-Modular Architecture(M

39、ainframe Computer)ModularModularIntegralIntegralClosedClosedsmall carscompact consumer electronicsinternetbicycleLEGO(building-block toy)motorcyclemachine toolsFigure 6 Basic Types of Product ArchitectureFigure 6 Basic Types of Product ArchitectureOpenOpengame softwaremainframe computerpersonal comp

40、uter(PC)PC softwareTakahiro Fujimoto20写真貼付Open-Modular Architecture(Personal Computer)ModularModularIntegralIntegralClosedClosedsmall carscompact consumer electronicsinternetbicycleLEGO(building-block toy)motorcyclemachine toolsFigure 6 Basic Types of Product ArchitectureFigure 6 Basic Types of Prod

41、uct ArchitectureOpenOpengame softwaremainframe computerpersonal computer(PC)PC softwareTakahiro Fujimoto21Architectural Geopolitics:Reality and Prediction in the Pacific RegionIntegral AxisModular AxisChina China JapanJapanpart of part of?India?India?KoreaKoreaTakahiro FujimotoGermanyGlobal Warming,

42、Carbon Neutral Goal,and BEV as MeansGlobal Warming,Carbon Neutral Goal,and BEV as MeansCriteria for evaluating alternative means(including BEV)Criteria for evaluating alternative means(including BEV)for the for the carboncarbon-neutral goal neutral goal should be should be W to W W to W(Well to Whee

43、lWell to Wheel)and and LCALCA（Lifecycle AssessmentLifecycle Assessment).).including CO2 emission by power generation,battery pincluding CO2 emission by power generation,battery production/recycling,etc.roduction/recycling,etc.Lifecycle CO2 emission(by vehicle types)Lifecycle CO2 emission(by vehicle

44、types)Number of automobiles in use Number of automobiles in use Number of lifetime kilometers per vehicle Number of lifetime kilometers per vehicle Number of grams of CO2 emission per kilometerNumber of grams of CO2 emission per kilometer+CO2 emission/vehicle at production(etc.)stage+CO2 emission/ve

45、hicle at production(etc.)stageE,g,Passenger cars in Japan:E,g,Passenger cars in Japan:64M units64M units7000 km/year7000 km/year200g/km 200g/km 90M ton/year90M ton/year 藤本隆宏24BEV may not always the best CN solutionBEV may not always the best CN solution-depends upon power generation,driving practice

46、,etc.depends upon power generation,driving practice,etc.Application of CAP Framework to BEV&SDVHigh Sky,Low Sky and Ground(3 Layers)Takahiro Fujimoto,High SkyHigh SkyCyberCyberInternet,CloudInternet,CloudPlatform,CompetitionPlatform,CompetitionOpen/Open/ModukarModukar ArchitectureArchitectureLow Sky

47、Low SkyCyberCyber-PhysicalPhysicalIoT,IoT,IndustrieIndustrie 4.0,Digital Twin4.0,Digital TwinAllAll-time Connection to High Skytime Connection to High SkyRealReal-Time Connection to Low SkyTime Connection to Low SkyGroundGroundPhysicalPhysicalWeighty,Physical Law Matters Weighty,Physical Law Matters

48、 Conventional Manufacturing Conventional Manufacturing Closed/Integral Architecture Closed/Integral Architecture weight-freeweightySoftwareHardwareSoft/HardArchitecturalDivision?Integral Hardware?Comparing Ford Model TIntegral Hardware?Comparing Ford Model T and Teslaand TeslaHardware ArchitectureCl

49、osed-IntegralClosed-Integral(Chassis)（many product-specific parts）Software Architecture（Closed-Modular）Open-Modular（Body as”software）（Software Defined Vehicle）Vertical IntegrationHigh(River Rouge）High(OS,charge、giga-cast）Model Variety1 platfprm 1 Platform in 2023（3/Y)Model Life Long（20 years）Long？Ro

50、adster 2008-12 (Model AS:1903-8）Model S 2012-x;Model X 2015-x;Model 3 2017-;Model Y 2020 Market ShareOverwhelmingly No.1No.1 in high-price BEV in the mass market(-2022)藤本隆宏Ford Model TTesla(Model S-Y)Software withSoftware withModular ArchitectureModular ArchitectureSoftware with Software with Integr

51、al ArchitectureIntegral Architecture Softwares Architectural TypesSoftwares Architectural TypesFunctional RequirementSoftware Compo 1e.g.,AI,OS,Applications,etc.e.g.,Embedded Software in ECU for High Performance VehiclesFunctional Requirement 2 Functional Requirement 3 Software Compo 2Software Compo

52、 3Functional RequirementFunctional Requirement 2 Functional Requirement 3 Software Compo 1Software Compo 2Software Compo 3Functional ElementsFunctional ElementsStructural ElementsStructural ElementsTakahiro Fujimoto,Based on Ulrich 1995 28Software Architecture and Development CapabilitySoftware Arch

53、itecture and Development CapabilityWaterfallWaterfallDevelopmentDevelopmentAgileAgileDevelopmentDevelopmentModularModularArchitectureArchitectureIntegralIntegralArchitectureArchitecturePhysical Motor VehiclesPhysical Motor VehiclesComplex Physical Products(1 ton,30K parts)Safety,Energy and Environme

54、nts MattersEV,FCV,Hybrids Energy Density MattersModularization of Integral Products20+ECUs;Software10M+lns;Wires 50 kgVehicle to Vehicle/Infra.Vehicle to Vehicle/Infra.V2V,V2I,V2XDSRC(Dedicated Short Range Comm.)LTE-V2X,ITS-ConnectedMEC(MobileEdge Computing)Vehicle to InternetVehicle to InternetMobi

55、lity Service,InfotainmentMobility Service,InfotainmentGoogle Google(Android Auto)(Android Auto)Apple(CarPlay;iOS)Apple(CarPlay;iOS)SDL(Smart Device Link)SDL(Smart Device Link)IVI(InIVI(In-Vehicle Infotainment)Vehicle Infotainment)High SkyLow SkyGroundArchitectureArchitectureDevelopmentDevelopmentCap

56、abilityCapabilityTakahiro FujimotoLayerLayer29SDV（Software Defined Vehicle）Road,InfrastructureECUEmbedded SoftwareIntegralArchitecturePhysical Motor VehiclesPhysical Motor VehiclesComplex Physical Products(1 ton,30K parts)Safety,Energy and Environments MattersEV,FCV,Hybrids Energy Density MattersMod

57、ularization of Integral Products20+ECUs;Software10M+lns;Wires 50 kgVehicle to Vehicle/Infra.Vehicle to Vehicle/Infra.V2V,V2I,V2XDSRC(Dedicated Short Range Comm.)LTE-V2X,ITS-ConnectedMEC(MobileEdge Computing)Vehicle to InternetVehicle to InternetMobility Service,InfotainmentMobility Service,Infotainm

58、entGoogle Google(Android Auto)(Android Auto)Apple(CarPlay;iOS)Apple(CarPlay;iOS)SDL(Smart Device Link)SDL(Smart Device Link)IVI(InIVI(In-Vehicle Infotainment)Vehicle Infotainment)High SkyLow SkyGroundVehicle HardwareOn-board Computer,Vehicle OSVehicle-moutedInformation TerminalCommunicationNetwork A

59、pplication,ContentsModularArchitectureLayerInside CarOutside CarIndustry StructureSoftDivided=Architecture-Divided VehicleHardVehicle OS is KeyTakahiro FujimotoVW and Toyota VW and Toyota-Software resource dependence in China?Software resource dependence in China?BEV ratioSDV advancementBYDOther Chi

60、neseTeslaVWConceptualIncumbentResource Transfer from the Leading BEV-SDV playersVertical Integration VerticalIntegrationTentative goal:Quick catch-up vs.Tesla,BYD,etcIn BEV/SDV for Chinese MarketToyotaEffectiveConceptFollowerConceptLeader(ICEBEV)&(SDVOS)Difficult!Leading in BEV-onlyOS&SDVChinese BEV

61、 Makers：Enter from BEV sideLower entry barrier Following Tesla in SDV China as WorldsLeading market ofSDV-sensitiveY-Z customersChinese New Entrants as Effective Concept Follower Chinese New Entrants as Effective Concept Follower Takahiro FujimotoThe industrial phenomenon that should be explained:Th

62、e industrial phenomenon that should be explained:Rapid expansion of Chinas BEV market after 2020Rapid expansion of Chinas BEV market after 2020Tesla Shanghai FactoryGovernment Supports to BEVRapid Growth of BEV-SDV DemandChinaChinaChinaChinaChinaBEV-SDV Hypothesis （Demand side view）Rapid growth of B

63、EV makers(Tesla,BYD,etc.)in China Rapid growth of BEV makers(Tesla,BYD,etc.)in China Not just because of BEV boom or Chinese Government SupportNot just because of BEV boom or Chinese Government SupportGrowing Growing DemandDemandfor for BEVBEV-SDVSDVwith Advanced with Advanced Vehicle OSVehicle OS(S

64、oftwareSoftware-defined Vehicledefined Vehicle,Soft,Soft-hard divided,hard divided,ArchitectureArchitecture-divideddivided)SoftwareSoftware-updating speed updating speed is now free from the hardwareis now free from the hardware-updating speedupdating speedUsing Using rapid software updating rapid s

65、oftware updating as a competitive weapon for as a competitive weapon for New Business models with software subscriptions,etc.New Business models with software subscriptions,etc.StrategyStrategy:Separating and Integrating Hardware and SoftwareSeparating and Integrating Hardware and Software BEV only

66、BEV only lower technological lower technological entry barrier entry barrier Competitive advantage by fast/attractive Competitive advantage by fast/attractive software updatingsoftware updating Integral hardwareIntegral hardware（Body/Chassis,Motor,Battery,Charging System)Body/Chassis,Motor,Battery,C

67、harging System)SDVSDV-conscious Chinese Marketconscious Chinese Market:(Y(Y-Z generation Z generation young digital natives)young digital natives)Takahiro FujimotoManufacturing(monozukuri)Capability（local concentration）Product-ProcessArchitecture(Selected by Products）Comparative Advantage ofDesign S

68、itesFit？Capability-Building EnvironmentCustomer or MarketRequirementsConstraints imposed by SocietyDecisions and Behaviors of Designers Other Environmental Factors,and ChancesCapability-Building CompetitionCapability-Building CapabilityConstraints imposed by TechnologyCapabilityTakahiro FujimotoMutu

69、al Resource Dependence between New Entrants and Incumbents?ArchitecturePerformance33Comparative Advantage ofDesign SitesCapability-Building CapabilityConstraints imposed by TechnologyCapability-building capability of leading incumbents matters where product architecture is stableArchitecture-buildin

70、g capability of new entrants matters where product architecture is rapidly changingLeading Leading IncumbentsIncumbents(e.g.,Toyota)still strong in the Physical layer(Ground)(e.g.,Toyota)still strong in the Physical layer(Ground)Hardware production/engineering,dealership,SCM,etc.Hardware production/

71、engineering,dealership,SCM,etc.Toyota Toyota Record high sales/profit in 2022.Record high sales/profit in 2022.CapabilityCapability-building capability building capability matters where product/business matters where product/business architecturearchitecture is stableis stableBut,where product archi

72、tecture goes through major transformation But,where product architecture goes through major transformation ArchitectureArchitecture-building capability building capability matters matters Growth of Tesla and Chinese new entrantsGrowth of Tesla and Chinese new entrantsTeslaTesla (1)Entered the BEV in

73、dustry(1)Entered the BEV industry technical entry barrier is lowertechnical entry barrier is lower(2)Acquired productive/technical resources from leading incumbents(2)Acquired productive/technical resources from leading incumbents(NUMMI factory,body/chassis engineers,software engineers,etc.)(NUMMI f

74、actory,body/chassis engineers,software engineers,etc.)(3)Radical architectural innovation in SDVs&vehicle OS.Far ahead.(3)Radical architectural innovation in SDVs&vehicle OS.Far ahead.BYDBYD Effective conceptual follower Effective conceptual follower of Tesla in SDVs of Tesla in SDVs Additional hard

75、ware advantages(Battery production capacity and innovation)Additional hardware advantages(Battery production capacity and innovation)Mutual resource dependence between new entrants and incumbents Mutual resource dependence between new entrants and incumbents Mark !Mark !Implication to Schumpeterian CompetitionImplication to Schumpeterian Competition(Schumpeter Mark,Jacobides(Schumpeter Mark,Jacobides-MacDuffie 2023)MacDuffie 2023)34Takahiro Fujimoto