Reference no: EM133103335
What obstacles did PSA find in commercializing the EPV?
Case study discussion- Innovation Failure- Loosing sight of the big picture.
In 2012, electric passenger car registrations made an impressive leap forward in Europe, and more particularly in France, where a 115% rise was recorded in one year. 1 Leading the sales of electric passenger vehicles (EPVs) in France is the French automobile group PSA Peugeot Citroën (PSA) with its Peugeot Ion and Citroën C-Zero. However, in spite of an impressive growth rate, sales volumes remain limited: PSA sold 2,744 units in 2012 (representing 47% of the total French EPV market). 2 The market is still emerging and figures remain below forecasts. In 2011, PSA reached only 50% of its initial sales objectives. 3 The leading role of PSA seems to confirm its strategic choice to outsource the development and production of its electric passenger cars. Back in 2009, PSA signed an agreement with the Mitsubishi Motors Corporation (MMC) for the development of an electric vehicle (EV) for the European market based on the Japanese version of MMC's i-MiEV model. 4 Given the low sales volume, the French car manufacturer put on hold its purchases from MMC last autumn. The strategic choice of outsourcing is still somewhat surprising. The fact is that less than 20 years ago, PSA played a worldwide leading role in the development of EPVs. Its most daring project was launching a pure electric version of two of its mass-produced small passenger cars in 1995. The project ended up, however, with disappointing sales figures, far below estimates. Since then, the French car manufacturer seems to have lost interest in EPV development. The disinvestment of PSA in the EPV may be explained by the failure of the project. This assumption is confirmed by statements made by PSA staff. When interviewed in 2003, the former EV representative (1980-98) pointed out, for example, that 'our error in the years 1995/1996 was to think that our distribution network was ready to sell electric vehicles' 5 and 'the fact of targeting individuals [as customers] was an error of judgment'. His successor (1998-2000) states that 'the main responsibility for the EV failure lies with the batteries'. Surprisingly, a deeper discussion with different team members reveals that, seen over the long term, they do not consider the innovation as a failure. If that is so, then one of the major reasons for the decrease in the organization's expertise might interestingly be a non-existent failure. The present study proposes an analysis of this issue. The aim is to stress the need to commit to innovation as a long-term strategic imperative and to recognize the wider possibilities of an innovation project. The paper will take a 50-year leap back in history: first with a short presentation of the organizational background and the industrial context; then with a focus on the above-mentioned project in the 1990s. Finally, the paper will discuss the failure or success of the project.