Dynamic and Ordinary Capabilities in Industry Transformation: The Case of the Electric Vehicle Industry

Abstract

In 2018, in the Dialogue, Debate, and Discussion section of MOR 14.3, an interesting series of articles was published in the ‘Forum on Tesla and the Global Automotive Industry’, where researchers discussed the future dynamics of the global automotive sector. In their work, Perkins and Murmann (2018) contended that, based on Tesla's success, a well-funded company could develop a new electric vehicle (EV) from scratch and move it into production within three to five years if it would invest one to two billion USD in design, development, and manufacturing. Expressing a contrasting view, MacDuffie (2018) questioned this possibility, arguing that EV product architecture is unlikely to become substantially more modular and any new entrant would therefore have to develop the ordinary capabilities that current automotive original equipment manufacturers possess, and there is no guarantee that a firm can develop such capabilities. Teece (2018) joined the debate by proposing a capability-based framework within which to analyze four paradigm shifts that have marked progress in the global automotive industry: EVs, autonomous vehicles, connected cars, and personal mobility services. He argues that these paradigm shifts have created opportunities for new entrants while posing challenges to incumbent firms. To navigate through the uncertainty associated with these paradigm shifts, incumbent firms need to enhance and refine their dynamic capabilities and leverage their integration skills. Jiang and Lu (2018) based their contribution to this debate on the development of the Chinese EV market. In MOR 15.1, published in 2019, Teece (2019) further elaborated his framework to facilitate analysis of the prospects for Chinese firms seeking a stronger foothold in the global automobile market. All these articles have been well received by MOR readers and were ranked among the top 20 articles in full-text view times between June 2021 and June 2022.