Jonathan Xavier Weinert 2008

Dear Friends and colleagues,
Just wanted to share with you a brief update of my recent happenings.

1. I finished graduate school, at long long last. I received my PhD in Transportation Technology and Policy from the University of California, Davis. If any of you are interested in killing a weekend and reading my dissertation on "The Rise of Electric Two-wheelers in China", you can download it at (http://www.jonathanweinert.com/presentations/Weinert Dissertation-v1-9.pdf) (7MB...may take a while).

2. I recently started work at Chevron Energy Technology Company. My official title is Planning Engineer, and I'll be working in the Alternative Fuels and Energy Group within their Process Planning Department. Our job is to assess upcoming energy technologies (e.g. biofuels, plug-in hybrids, etc) in order to inform Chevron's strategic planning decisions. I've got a great boss and teammates, and am really looking forward to the next chapter of life here at Chevron. (And the signing of the Energy Bill a couple weeks ago was quite a timely bonus to add some extra job security)

3. I'm now a BAR.  No, not the thing you do pull-ups from, and not the thing you buy drinks at, I mean I'm a Bay Area Resident. I live in the historic bayside community of Point Richmond, close enough to walk to work, which on a clear day includes views of Golden Gate bridge. It's stones throw (if you have a great arm) from San Francisco.

Jonathan

p.s. added some pictures to document my progression back home to the US and to where I am now.
1: e-bike riding grad student in China

2. Graduation day (dissertation officially signed by my three advsiors Joan Ogden, Dan Sperling, and Andrew Burke. I couldn't have done it without their wonderful guidance and support).

3. My first day of work. Kind of looks like my first day of elementary school picture, though I've reluctantly had to replace bicycle with car and lunchbox with briefcase.

Use of electric two-wheeled vehicles (E2Ws) is growing rapidly in China. It marks the most successful case of electric-drive vehicle adoption in the world. If this trend continues, it may have a large impact on the development of batteries and electric vehicle applications. To understand the likelihood of this trend continuing into the future, we examine the forces driving and resisting a shift to E2Ws currently underway in China’s two-wheeler market using the technique of force-field analysis. Through this examination, we reveal the root causes behind these forces and important insights about the likelihood of a potential shift to electric vehicles.

 (See Presentation for Results)

I believe what's happening in the e-bike industry in China is very similar to the case of the Chinese motorcycle (MC) industry evolution a decade ago, though the "Wikinomics" effect of decentralized production is perhaps happening on a larger scale with e-bikes.

What got my thinking about this were the book Wikinomcs by Don Tapscott and Anthony D. Williams, and some great reports by Ge Dongsheng, Takahiro Fujimoto, and Yasuo Sugiyama on the Chinese motorcycle industry.  My advisor posed a few questions to me on the subject of whether there are parellels between this industry and e-bikes.

 
    1) what about patent law and intelectural property protection? In this case of motorcycles, the industry evolved before     China (and Vietnam) became concerned about IP protection. Will it change as more protections are put in place?
    2) The motorcycle technology was a mature technology, esp for small cheap motorcycles. Thus the rewards from R&D     were small
    The question is whether circumstances are different for e-bikes? It is not a mature technology, stronger IP protection is     starting to be put in place, and there is no external industry/product to imitate.

My Response:

1. IP protection is still loosely enforced. I glean this from interviews with e-bike managers at the trade shows, and it's reinforced in the models I see on the streets. National gov't has little hope of regulating the estimated 1300 e-bike producers + vast network of parts suppliers. I would argue this industry evolved with maybe even less IP protection than the MC industry (in its beginning when only China SOEs made MCs, they at least paid for the technology from Japan).  It's still very "Wild West"-style over there.  IP protection is not preventing knock-offs.

"Knock-offs of what?" you might ask. You mention the e-bike industry has no external product/industry to imitate.  I would argue that they actually have a big industry with lots of products to imitate, and they're doing a great job.  Look at the following two pictures I attached.  Can you tell which scooter is electric and which one is LPG? (hint: driver demographics give it away).   

The e-bike industry is rising up to knock out the domestic MC industry, just as the domestic MC industry rose up and knocked out the Japanese MC industry a decade ago! And they're beating them in the same way the Chinese MC industry beat the Japanese MC makers! Cost.

THey're able to produce a cheaper product that, while not quite as good as a real MC, it satisfies the modest mobility needs of most users. This "good enough" product design is exactly how the Chinese MC makers beat out their high-quality Japanese rivals, whose quality was so good they lost market share quickly in a land of price-conscience Chinese consumers.  (Sugiyma 2003)

So how is the e-bike industry able to produce such a cheap mobility product?  The secret is in its incredibly simple product architecture (i.e. the relationships amongst the components of a product). E-bikes are modular (each component has a self-contained function) and open (interface is standardized across many companies in the industry). The Chinese MC industry's product architecture is considered "quasi-open" and modular (Ge and Fujimoto 2004), which differs from the closed, "integrated" and traditionally vertical Japanese MC and auto industry.  These two traits enabled a large cluster of e-bike assemblers and suppliers to thrive in the Shanghai-Zhejiang-Jiangsu golden triangle, driving up production volume and lowering cost. If MC product architecture is "quasi-open", I'd say e-bike architecture is "uber"-open!

Consider the 3 simple steps to become an e-bike producer: 1. Choose from thick catalogue of local suppliers (ideally one within driving distance) and buy frames, in-wheel motors, huge crate of "one-size fits all" VRLA batteries, controllers, wire harnesses, and various odds and ends. 2. Hire minimum-wage workers to assemble parts together 3. Engine assembly: Stuff three batteries into a box, connect wire from box to controller, connect wire from controller to motor. Body assembly: connect parts using screws and pneumatic tools.

While I'm exaggerating a bit, check out the third picture to illustrate how simple and modular e-bikes really are. The local mechanic near my school built his own.   Simple, stylish! (hey, he even attached a brand label onto the front basket for completeness =))     
 
As to your second point about the maturity of the industry, I would argue that both the product and the 4 core technologies used (VRLA battery, brush or brushless motor, controller, charger) are fairly mature. Evidence exists in the vast supplier network, low margins, and product standardization. For example, e-bike batteries only come in two sizes, either 12 Ah or 20Ah), motors and controller are designed for 250W, 350W, and now 500W for 36, 48, and now 60V systems. While of course there is still plenty of room for product innovation in in-hub motors and battery technology, it's got to be cost-competitive with the incumbent "good enough" technology. This raises issues on a potential "technology lock-in" problem inhibiting future innovation in the industry (Ge, Fujimoto 2004)

As for the dirt-cheap VRLA battery technology, its product architecture is also modular and open, enabling a large network of suppliers for the electrodes, separator material, battery case, and acid.  They're hand assembled in a very low-tech process (see the pictures from a very primitive battery factory I visited: 1) a simple mold used to soder together the hand-packaged cells of each module, and 2) a view of the plant floor: a bunch of tables). This is the 3rd plant I visited, they're all variations on the same theme. Perhaps there's some room for "process innovation" here. 

The birth of this massive e-bike cluster in Eastern coastal China was definitely spurred by gov't policy banning scooters in urban areas which got the market rolling. However I think it is the low cost, driven by simple product architecture of e-bikes and cluster of assemblers/suppliers that sprung up as a result, which is the driving factor now.
 
Anyway, I need to find more hard data to back up these points and scour the innovation literature some more, but the evolution of the e-bike industry seems to fit the mold of a disruptive innovation that's attacking the incumbent MC industry. I wonder what implications this will have on MC industry in other SE Asian countries, what technology will eventually rise up to beat e-bikes, and what this all means for the electrification of 4-wheelers. Can the modular/open product architecture of electric drive two-wheelers, which enabled a vast decentralized horizontal network of suppliers, be replicated for electric four wheelers??
   
If you have any questions, comments, suggestions, on this matter or points for or against the above argument, please share. This subject will be part of my concluding paper on e-bikes.  Thanks!

I'm back in the US.  My wonderful Chinese adventure has finally come to a close (well, temporarily at least).  This final 6 month stretch in China was definitely the richest, most interesting, and most educational part of the past two years there, for many reasons.  This entry describes a sort of "epiphany" I had over there recently.    

My last three months in China, I took an internship at the Halter Financial Advisory Group. I moved out of my cozy dorm at Tongji on the rural edge of Shanghai, and took a big step up to work in the the thumping financial heart of Shanghai and the jewel of China itself, the JinMao Tower in Pudong (China's tallest skyscraper, though not for long).

What a total contrast in lifestyles from when I first arrived!  In one of my first blogs, I told of the visit and gracious hospitality of the Zhang family, the poor security guard at my school who invited me to his modest home, which lacked even plumbing for a toilet. His only transport was an old bicycle.

180 degree shift later, I found myself working day to day in the Jinmao Tower amongst Shanghai's (and thus all of China's) elite. The managers at my firm were car-owners; my colleagues, soon to be car-owners.  One day on the way to dinner, we made a little pit-stop at the Porsche dealership so one of our managers could sign the papers for her new car (following the advice of her boss, also a Porsche owner).

This is the other side of life in China that until a few months ago, I knew very little about.  This is the side that lives in the beautifully landscaped gated high-rise communities of Pudong, where wide boulevards are easily traversed by the oh so comfortable automobile.  

I spent my first year in China riding the bus and subway exclusively. It was so new to me, so it was fun.  I wanted to understand the system and the people using this system.  My concept of "full bus" was stretched each time I rode the nightbound final bus back from the city and they squeezed 100 people into a bus made for 50. I was amazed and impressed at people's ability to deal with the uber-crowded conditions of public transport. When the sweaty stomach of the guy next to me pushed against me a little closer as another passenger boarded, all I could do was grin and say, "well, this is life in CHina!"  The subway at rush hour, which I took a lot, is more of the same.     

This is life for a large portion of China's 540 million urban dwellers.  No wonder 20 million more people are expected to buy e-bikes this year, and ~5 milion people are expected to purchase cars. Personal mobility is a wonderful thing!  If one can afford to escape the hell of bus-riding, most people do.  Especially if you're a young woman (I heard some pretty scary stories of "creepy" men on crowded buses).

So during my last few months in CHina, I finally gave up on public transport.  The novelty wore off and I could luckily afford not to take it.  I commuted by e-bike during the day (which incidentally, was faster than by car), and cruised the city by night in the comfort of air-conditioned taxis. And that's when I finally came to understand and appreciate the Chinese dream of owning a car. It's a powerful driving force (literally) that, for better or worse, is going to have a huge global impact.     

My boss with his newly purchased Audi, (behind a advertisement for BMW), May 07

This video is a collage of experiences on the road throughout China, Indonesia, Japan, and Vietnam. As a student of Transportation Technology and Policy (for all you wondering what my major is), I'm particularly interested in transportation in different countries at various stages of development. This video is intended to give you a little taste of how people move in these parts of the world. It starts off at the quiet cozy electric bike shop near Tongji University (Shanghai), then takes you on a musical road-trip (guided by one of my favorite musicians) along the roads and rails of some of the East Asia's most vibrant cities.