The role of cost driver analysis in business model design : empirical evidence from automotive industry : the case of E-car

The aim of this paper is to explore the role of cost driver analysis in the context of business model design. The empirical domain of the paper addresses the automotive industry, and in particular the dynamic and complex scenario of electric cars (e-cars). We explore the potential usefulness of cost driver analysis in validating economic sustainability of a business model in this specific context, where many actors are involved and several marketing and technological aspects are still unclear. To date, the wide diffusion of e-cars is delayed by some reasons; one is the relatively high cost of batteries. No significant technological improvements are foreseen any time soon to make e-cars economically sustainable and more appealing to the masses; hence the design of a new business model or the redefinition of an existing could represent a solution for making e-cars more affordable and boost demand (revenues). This paper analyzes secondary data concerning the Better Place case study, documents concerning the drivers of battery cost and the findings collected by interviews to managers belonging to the automotive sector. Our results suggest cost drivers analysis can provide direction for research of alternative business model design in the attempt to manage the impact of cost drivers in economic sustainability. Furthermore, in the context of e-cars, the total cost of ownership for the final consumers appeared to be a valid way to evaluate the effectiveness of initiatives for managing cost drivers.