The Business of EV

Foundations and Trends® in Technology,
Information and Operations Management

The Business of Electric Vehicles:
A Platform Perspective
Suggested Citation: Jonas Boehm, Hemant K. Bhargava and Geoffrey G. Parker (2020),
“The Business of Electric Vehicles: A Platform Perspective”, Foundations and Trends® in
Technology, Information and Operations Management: Vol. 14, No. 3, pp 203–323. DOI:
10.1561/0200000097.
Jonas Boehm
Dartmouth College
USA
[email protected]
Hemant K. Bhargava
University of California
Davis
USA
[email protected]
Geoffrey G. Parker
Dartmouth College
USA
[email protected]
This article may be used only for the purpose of research, teaching,
and/or private study. Commercial use or systematic downloading
(by robots or other automatic processes) is prohibited without ex-
plicit Publisher approval.
Boston — Delft
Contents
1 Introduction: Are You Playing a Platform Game? 205
2 Battery Electric Vehicles as a Platform Good 209

2.1 Competitive Entry: Challenging a Leader . . . . . . . . . . 210
2.2 A BEV is a Platform Good . . . . . . . . . . . . . . . . . 213
2.3 The Charging Station Dilemma . . . . . . . . . . . . . . . 218
2.4 The Buyer’s Dilemma: Gasoline or Electric Vehicles . . . . 219
2.5 Needed: A Platform-Aware Strategy and
Policy for BEVs . . . . . . . . . . . . . . . . . . . . . . . 221
2.6 Organization and Summary . . . . . . . . . . . . . . . . . 222
3 BEV Industry to Date: Decisions and Challenges 224

3.1 Toward Sustainable Mobility with
Electric Driving (1830–2000) . . . . . . . . . . . . . . . . 224
3.2 Early Experimentation (2000–2010) . . . . . . . . . . . . 226
3.3 Conquering Mass Markets (2010–2018) . . . . . . . . . . 227
3.4 Challenges . . . . . . . . . . . . . . . . . . . . . . . . . . 236
3.5 New Generations and Consumer Choice
(2020 and Beyond) . . . . . . . . . . . . . . . . . . . . . 237
3.6 General Economics and Operational Aspects of BEVs . . . 239
4 Introduction to Platform Literature 242
4.1 What Are Multi-Sided Platforms (MSP)? . . . . . . . . . 242
4.2 View Electric Vehicles as MSPs . . . . . . . . . . . . . . . 244
4.3 Platforms Face Specific Challenges . . . . . . . . . . . . . 245
5 Understanding Actors’ Decisions

in the BEV Market 263
5.1 Platform Launch and the Chicken-and-Egg Problem . . . . 264
5.2 Aiming for Growth and Potentially the
Dominant Platform . . . . . . . . . . . . . . . . . . . . . 272
5.3 Management of Value Chains versus Platforms . . . . . . . 279
5.4 Governing Openness . . . . . . . . . . . . . . . . . . . . . 282
6 Outlining Future Strategic Directions 289

6.1 Finding an Answer for Both Sides of the Market . . . . . . 289
6.2 How OEMs Will Deal with Tesla’s Lead in
Supercharger Stations . . . . . . . . . . . . . . . . . . . . 290
6.3 Tesla Switches the Game, But When? . . . . . . . . . . . 291
6.4 Effectively Work Scarce Capacity and
Fragmented Markets . . . . . . . . . . . . . . . . . . . . . 293
6.5 Create and Make Use of Good Quality and Dense Data . . 293
6.6 Investors Need to Accept the “Platform Game” . . . . . . 294
6.7 Productivity Gains in Building Charging Network . . . . . 294
6.8 Ultimately: Prepare for a “Joint Industry Wide
Supercharging Network” . . . . . . . . . . . . . . . . . . . 295
6.9 What Should Policy Makers Do, If Anything,
to Promote Competition? . . . . . . . . . . . . . . . . . . 296
7 Research Agenda 298

7.1 Final Observations . . . . . . . . . . . . . . . . . . . . . . 301
References 302
The Business of Electric Vehicles:
A Platform Perspective
Jonas Boehm1 , Hemant K. Bhargava2 and Geoffrey G. Parker3
1 Dartmouth College, USA; [email protected]
2 University
of California, Davis, USA; [email protected]
3 Dartmouth College, USA; [email protected]
ABSTRACT
Platform business tactics are highly visible and dominant in
business today. Prominent firms in industries such as infor-
mation services, retail, and travel, have embraced platform
thinking. Still, many others are engaged in a platform game
without realizing it, often to negative consequences. This
monograph develops this theme with an illustrative focus
on the battery electric vehicle segment of the automobile
industry. It traces the development of the industry, identifies
key decisions by various participants, and analyzes these
decisions from a platform strategy lens.
We emphasize that platform characteristics and network ef-
fects are at the core of the electric vehicle industry. A battery
electric vehicle is not just a vehicle whose fuel happens to be
supplied by the battery. Rather, the vehicle purchase deci-
sion is heavily influenced by the availability of a widespread
supercharging network as a complementary good. Hence,
it is vital for the vehicle maker to ensure that customers
have access to both sides of the market—an exciting vehicle
and robust supercharging network. An electric vehicle dif-
fers from gasoline-powered vehicles in this regard because
Jonas Boehm, Hemant K. Bhargava and Geoffrey G. Parker (2020), “The Business
of Electric Vehicles: A Platform Perspective”, Foundations and Trends® in Technol-
ogy, Information and Operations Management: Vol. 14, No. 3, pp 203–323. DOI:
10.1561/0200000097.
204
the refueling network for gasoline vehicles is already robust,

widespread, and interoperable across brands, thereby be-
coming inconsequential to customer adoption decision and
firms’ strategy.
For electric vehicles, the two-sided platform nature of the
industry underlines the need for a well-coordinated strategy
on both sides of the market. Our analysis reveals that in-
dustry participants (vehicle producers, providers of charging
locations, government and policy makers)—with the notable
exception of an industry newcomer, Tesla, which has astutely
employed platform thinking in its core decisions—have exe-
cuted a flawed strategy that fails to recognize and leverage
the platform aspect of the industry.
1
Introduction: Are You Playing a Platform Game?
The most successful companies of the last decade have all been platform
businesses. Platform businesses create value in unprecedented ways.
In April 2020, the five largest stocks in the S&P 500 accounted for 20%
of its total market cap, exceeding the 18% concentration level reached
during the dot-com bubble. Those stocks are Microsoft, Apple, Amazon,
Alphabet (Google), and Facebook. All of them are platform businesses
and, with other often cited examples such as Alibaba, AirBnB, Uber
and the like, they spearhead what has come to be known as the platform
economy.
Looking beyond the headlines, however, chances are quite good that
firms are developing platform products even when they don’t recognize
them as such. This is because platform thinking extends far beyond the
digital platforms and tech giants that everybody is now able to spot.
One example is the electric car industry; the various entry approaches
of traditional automakers and newer disruptors, such as Tesla, provide
the backdrop for our analysis throughout this monograph.
In particular, platform firms increasingly depend upon external
actors to provide the necessary complements to create a complete
system that delivers value to end users. Another feature of platforms in
205
206 Introduction: Are You Playing a Platform Game?
the way that we discuss them is that the value to a platform’s user is
dependent upon the number of other users who also affiliate with the
system. This leads to a simplified test to help spot a platform: a product
or service value is a combination of an independent product/service
value and network value. This means that the utility to a user can
be expressed as a function of the standalone value that a user derives
from the product or service plus the value that the user gains because
other users also join the system. That is, user i’s utility for brand j
with quality level qj is of the form Vij = Vi (qj ) + f (Nj ) where Nj is
the network or number of users of brand j. The implication of this
network effect is that, unlike traditional goods, a user’s utility is not a
constant, and increases as more buyers adopt the good. This creates
opportunity for the firm to continue expanding the market as previously
low-value users develop higher utility as Nj grows, as well as to increase
its product monetization e.g., through recurring fees or add-on features.
But this network effect also creates some distinctive challenges which
call for distinctive business strategies which we discuss in Sections 4
and 5.
Recognizing that a firm is in the platform game is important, as
platform markets are fundamentally different from traditional markets,
and these differences must lead to distinctive business tactics and
strategies. A rule of thumb goes as follows: Platforms exist if a firm
is working on a platform product where the value of their product is
a function of standalone value and network value consisting of value
from same-side (Katz and Shapiro, 1985) and cross-side network effects
(Parker and Van Alstyne, 2005; Rochet and Tirole, 2003). Consider,
for example, Microsoft’s spreadsheet program, Excel. Excel offers the
single user a broad spectrum of functions and features, and delivers
great value to users even when they act alone. This value increases even
further because users can easily share spreadsheets and collaborate with
one another. This collaboration makes it highly unlikely that users who
must collaborate would adopt different spreadsheet programs because
they would forgo the network component of the value proposition.
Over the last years, a solid theory of multi-sided platforms has been
developed and has diffused into management practice, often by using the
famous digital platforms mentioned above to explain the mechanisms.
207
By now, many managers won’t have trouble spotting and understanding

the mechanisms at play when a new digital platform emerges. However,
the phenomenon extends far beyond digital platforms and chances are
good that you are in the midst of developing a platform product, but
don’t recognize it.
We use the case of electric cars and charging networks to highlight
the differences in business strategies between product and platform
thinking, and to give a detailed analysis of these to explore the reasons
why firms make different choices depending upon the lens they use.
Indeed, as we shall demonstrate below, electric cars follow the same
platform architectural logic as the widely known examples of digital
platforms. The platform logic, in essence, is the idea that there are
two sides in the market, one side is the network of car owners and the
other is the network of charging stations. The platform is the entity
that coordinates both sides, ensures they grow in suitable balance, and
it may own proprietary technologies relevant to one or both sides.
There are three key issues for managers of platform products in
the electric car industry. First, managers need to actively work both
sides and doing so opens additional strategic options. For example,
Tesla actively manages both sides and has the option to switch sides,
while traditional car makers who have been passive and have waited for
others to solve the problem have given up many strategic options. Second,
openness is a critical decision variable. Only when you manage both sides
(such as Tesla does) can you afford to have a closed system, otherwise
you need to actively pursue an ecosystem strategy. Third, revenue models
are not straight forward and can sometimes be counterintuitive. For
example, it is almost impossible to develop viable independent business
models only for the electric vehicle charger market. The ability to
cross-subsidize depends upon participating in more than one part of a
multi-sided platform. Firms that operate only on one side of a multi-
sided platform are constrained in the business models that they can
deploy.
As a case in point, our analysis supports the view that Tesla’s—to
many unexplainable—success and lead in the EV segment is predomi-
nantly on account of pursuing a platform strategy. In fact, Tesla has
achieved and maintained this leadership despite substantial weakness
208 Introduction: Are You Playing a Platform Game?
on the product front. Journalists and industry analysts alike have often
pointed out or even belittled the product performance of the Tesla
vehicles: Tesla ranks last on JD Power quality survey with 250 problems
per 100 vehicles, for a long time didn’t seem to get basic production
right and lived through the infamous production hell, turned to outside
body shops to repair scratches and paint defects before cars were deliv-
ered to customers. However, from a platform’s good perspective, that is
the vehicle and its complementary charging infrastructure, Tesla has
the best product and the best options to monetize either side of this
multi-sided platform.
This monograph elaborates on these perspectives by highlighting the
platform strategy elements that are relevant in this industry, and then
analyzing the crucial factors that have led to the competitive outcomes
we observe today.
2
Battery Electric Vehicles as a Platform Good
Moving toward carbon-free societies and economies is a widely pro-

claimed “grand challenge” of the 21st century (BBC, 2019; European
Union, 2018; White House, 2010). One of the most attractive options
for addressing this challenge is the mass adoption of Electric Vehicles
(EVs). The transportation sector accounted for 28.7% of total carbon
dioxide emissions in 2017. EVs present a popular technology to decar-
bonize this sector with fewer negative consequences than other options
for reducing our carbon footprint (Parker et al., 2019), and creating a
consensus for action among society, industry, and policymakers. Many
politicians and agencies have called for a rapid shift toward EVs from
traditional gasoline-powered transportation and have set ambitious goals
(UNFCCC, 2015). Increasingly, these policies and goals are backed by
research (Stern, 2007) and evolving public sentiment, with buyers willing
to pay premium prices for EVs (Hidrue et al., 2011).
However, the results are sobering. Despite enormous public attention,
government support, “car of the year” awards, and high acclaim garnered
by some EVs (notably, those produced by an industry newcomer, Tesla1 ),
the ambitious goals around EVs have largely been missed. The real
1
https://carsurance.net/blog/tesla-statistics/.
209
210 Battery Electric Vehicles as a Platform Good
adoption of Battery Electronic Vehicles (BEVs) adoption is lagging well

behind projections (JPMorgan, 2015). In the U.S., about 17 million
automobiles were sold in 2019, of which only about 245,000 were BEVs.2
What has gone wrong? What are the strategies to drive EV adoption
and what strategic decisions should players now take? Are there flaws
in EV-related policy (e.g., the use and specific design of subsidies
(Langbroek et al., 2016))? Or have governments and automobile industry
leadership made strategic and tactical errors around the introduction
and management of the BEV product?
A cornerstone of our analysis is the observation that a BEV is not
merely an “automobile that is electric.” Yet, as we discuss below, the
BEV product appears to have been approached by many manufacturers
as yet another vehicle that happens to be powered by electricity stored
in batteries rather than gasoline stored in a tank. An examination of this
strategy begins with a comparison of the introductions of two widely
heralded new vehicles during the last 30 years: the Toyota Lexus LS
400 in 1989 as a challenger entrant in the luxury sedan market, and the
Audi e-Tron in 2019 as a challenger to Tesla’s present domination of
the high-end electric car market.
2.1 Competitive Entry: Challenging a Leader
In 1983, Toyota chairman, Eiji Toyoda, issued a challenge to his company

to build the world’s best car (May 2007). At that time, the market
for high-end sedans was dominated by storied German brands such as
BMW and Mercedes, while the top Japanese brands such as Honda
and Toyota were known for making boring reliable and inexpensive cars.
Toyota set out to change that with the Lexus LS 400 in 1989. Launched
after huge design investments, the LS 400 was heralded by industry
experts as a mass-market challenge to existing luxury brand leaders.
Reviews hailed its design, build, and performance, with one reviewer3
even calling it “petrifyingly good.” Car-for-car, the LS 400 matched or
exceeded the equivalent BMW and Mercedes models.
2
https://www.statista.com/statistics/698414/sales-of-all-electric-vehicles-in-
the-us-by-brand/.
3
https://www.motoringresearch.com/car-news/features/lexus-ls-400-review/.
2.1. Competitive Entry: Challenging a Leader 211
Toyota’s strategy was a winner. It had no reputation as a maker of

luxury cars when Toyota laid out the challenge. Within a decade, Lexus
had established itself as a formidable competitor in the luxury market,
matching or beating the long-time leaders in brand recognition, market
perception, and sales.
Fast forward, thirty years later, to the emerging BEV segment of the
automobile market. Although traditional automobile firms have invested
in BEV for decades, today’s dominant BEV maker, Tesla itself, was
created only a few years ago. Tesla is now the market leader, accounting
for almost 80%4 of all BEVs sold in the U.S. Today, Tesla vehicles are
known for elegant design, pleasing performance (e.g., speedy acceleration
and regenerative braking), long range, and an innovative software-
driven approach that makes it a “computer on wheels.” Teslas feature a
hi-tech cockpit instrumentation, autonomous driving technology, and
customization of interior and exterior performance via software updates.
Tesla’s dominance has led to a new breed of challengers.
Traditional auto makers, faced with inevitability of needing to
produce vehicles that use renewable energy, have started fighting hard
for the BEV segment. Numerous BEV launches were announced in
2019–2020, most prominently the Audi e-Tron all-electric mid-size SUV,
and others ranging from the low-end of the market (e.g., Kia Niro) to
the top-end with BEV launches from GM (2022 Cadillac Lyrik), Ford
(Mustang Mach-E SUV), Jaguar (I-Pace), Porsche (Taycan), Maserati
(BEV), Mercedes and newcomers such as Lucid Motors and Rivian.5
Press releases have emphasized the potential for the e-Tron (and other
high-end upcoming EVs) to end Tesla’s market dominance. The e-Tron,
for instance, boasts that, car for car, it matches vital BEV features
exemplified by Tesla S and X models (e.g., flat-floor battery with long
range, quick acceleration, powerful touchscreen, etc.) while at the same
time bringing the weight of Audi’s brand, reputation, manufacturing
capabilities, and historical strength. Industry reviewers were quick and
4
https://cleantechnica.com/2020/01/16/tesla-gobbled-up-81-of-us-electric-
vehicle-sales-in-2019/.
5
https://www.nytimes.com/2020/01/01/business/future-electric-cars-2020.
html.
unanimous in heralding the e-Tron as the challenger to Tesla, much like

the Lexus’s 1983 entry into the luxury segment.6
What is striking about the Toyota Lexus and BEV examples is
the remarkable overlap in the prominent indicators that define the
challenger’s attack strategy: a better car, superior engineering, luxurious
interiors, fast acceleration, etc. The similarities in the two launches
convey the impression that correct business strategy for a new BEV is
quite like traditional business strategy for a new gasoline-powered vehicle.
That is, make a better car. In the case of the Lexus LS 400, Toyota’s
strategy was a big winner. Within a decade, Lexus had established
itself as a formidable competitor in the luxury market, matching or
beating the long-time leaders in brand recognition, market perception,
and sales.
Will any of the widely heralded new BEVs—such as the Audi e-Tron,
an outstanding car combined with Audi’s brand, reputation, manufac-
turing capabilities, and historical strength—emulate Lexus’s success in
the previous era and dislodge Tesla from its complete dominance of the
BEV market? Which weapon in Tesla’s armor will be most decisive in
fending off the challengers? Will Tesla’s lead in current sales, market
share, and brand image help it sustain its leadership position? Or will
Tesla’s dominance in supply of charging stations—dedicated to serving
Tesla cars—be the vital strategic defense, making future buyers more
inclined to buy a Tesla BEV than an alternative BEV that offers a
better car for the money?
Despite similarities in the two launch stories, we posit that the
phenomenon and corresponding strategies are not identical. The phrase,
“It’s not about the Gizmo,” is an apt summary of the conceptual flaw
in the thought process and business strategy around the e-Tron and
other BEV launches. The primary reason is that an electric vehicle is
not merely an automobile that is powered by an electric battery rather
than gasoline.
6
https://www.caranddriver.com/reviews/a25412202/2019-audi-e-tron-suv-
driven/.
2.2. A BEV is a Platform Good 213
2.2 A BEV is a Platform Good
We claim that a BEV is more than just an electric vehicle market. It is a

platform good. The vehicle itself is only one side of a two-sided market in
which the second side is a widespread multi-stall rapid-charging network
for recharging the battery. Rapid-charging so that the time to recharge
is competitive with traditional vehicles. Widespread to assure owners
of proximity. And multi-stall to increase chance of availability. Ergo,
a BEV product must be managed as a two-sided platform good, with
strategically coordinated decisions and investments on both sides of the
platform. The platform operator’s role is to provide infrastructure and
rules to manage connections between the two sides, and to ensure that
both sides develop in a balanced manner.
We will argue later that the second side, the charging network, is a
vital (rather than merely peripheral) aspect of this platform good. We
also will argue that this second side has not received suitable strategic
attention by BEV makers other than Tesla, and that this is illustrated
by the vast gap in investments on the two sides. In other words, the
“platform operator” role is not being sufficiently performed.
To preview the vital role of a two-sided platform strategy, we draw
a parallel with proliferation of smartphones and the development of
high-speed data networks in the mobile telephone industry. Today’s
smartphones are powerful handheld computers, capable of running a
plethora of data-intensive applications. The potential to build such
powerful handheld computers existed for a few years, however they
became a reality and prominent only with the availability of high-speed
mobile data networks (Evans et al., 2019). For multiple decades since
their invention, cellular telephones were a niche product (with limited
penetration up until around 2000) when 2G networks dominated and
provided data speeds that were sufficient for little else beyond voice
calls and text messaging. It was the diffusion of 3G (and 4G) networks,
with data speeds that were suitable for web browsing, email, maps,
shopping, transportation, and other data applications, which allowed
the development and adoption of the modern smartphone with an
ecosystem of third-party apps. As network speeds grew even more
(with LTE, 4G, and 5G) smartphones became usable for data-heavy
entertainment applications, such as video streaming, gaming, and social

media.
To push the analogy further, we note another parallel between
wifi networks and BEV charging. While smartphones can draw data
from static networks (home, office, hotels, etc.), their adoption and
popularity are primarily due to high-speed mobile data networks. If
high-speed data were limited to the home or other static locations, a
laptop would be better for most needs. Similarly, EVs can be charged
either in static settings (home or office) where users spend long hours,
or on the road at high-voltage public charging stations. But given the
role of the automobile in American life, most potential buyers of EVs
would be ill-served in the absence of widespread availability of powerful
on-the-go BEV charging facilities.
2.2.1 Then, Aren’t Gasoline Cars Network Goods Too?

Yes, gasoline cars are network goods to the extent that a gasoline car
owner gets utility from a network of refueling stations and, conversely,
the profitability of a refueling station depends on having a high number
of gasoline cars. However, the effect of a gasoline fueling network on the
market for gasoline vehicles is starkly distinct from a battery charging
network’s influence on BEV sales. There are three crucial, interrelated,
reasons: namely, range, network density, and interoperability.
(1) Range: The majority of available EVs have a relatively low range
(70–220 miles for models such as a Nissan LEAF and 250–350 miles
for Tesla models) compared with over 550 miles in comparable
gasoline automobiles, such as a Honda Accord (see Figure 2.1).
This range limitation matters because American families routinely
drive 300+ mile round-trips for leisure, vacation, and other needs
(e.g., a trip from San Francisco to Lake Tahoe), and even longer
for inter-city travel (e.g., San Francisco to Los Angeles). Lack of
range would be less consequential if BEV owners had reliable and
robust access to a dense network of rapid-charging stations which
could recharge BEV batteries as quickly as one fills up a gasoline
tank. This is, however, far from reality.
Figure 2.1: Driving range on full charge (EVs) or tank (Honda Accord).
(2) Network density: Unlike the widespread network of refueling sta-

tions, the network of charging stations is extremely sparse. There
are between 1,500 and 3,000 rapid charging stations in the U.S.7
(defined as capable of supplying 120+ kW power and delivering
about 200 miles of range in one hour of charging), including about
1,500 facilities with Tesla’s V2 and V3 superchargers (usually
with 10–15 stalls each) and about 200 newer CCS and CHAdeMO
DC fast charging stations from EVgo and Electrify America8 (of
which several have only a handful of stalls). This number pales
in comparison to over 168,000 public fueling stations for gasoline
vehicles.9
(3) Interoperability: Even the relatively small number of BEV rapid

charging stations is further fragmented due to lack of interoperabil-
ity caused by multiple technical specifications and non-cooperative
ownership and access across systems. In particular, Tesla alone
has over 1,500 supercharging locations in the U.S., accessible only
to Tesla models. In contrast, owners of other EVs have access to
7
The wide range 1,500–3,000 is quoted because some number of CCS and
CHAdeMO chargers operate at 50 kW (not rapid-charging). Based on https://afdc.
energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC. Also
https://www.theverge.com/2018/10/3/17933134/ev-charging-station-network-
infrastrcuture-tesla. There are about 10 times as many Level 2 chargers operating at
around 50 kW, however these deliver only about 50 miles range per hour, hence are
not suitable for long distance or inter-city travel.
8
As of June 2019, according to https://www.techspot.com/news/80410-
electrify-america-has-deployed-ev-charging-stations-across.html.
9
https://www.fueleconomy.gov/.
only a few hundred stations (presently with lower performance)

operated by Electrify America and EVgo.
To summarize, at this point in the BEV product cycle, the decisions

of whether to buy an EV, which one, and how and where to use it,
are dependent heavily on the availability and nature of the charging
network (Egbue and Long, 2012; Gnann et al., 2018; Haddadian et al.,
2015; Linke, 2017), and that this decision process is starkly different
from that for buying a traditional gasoline vehicle.
2.2.2 Do Auto Makers’ BEV Strategies Reflect

BEV as a Platform?
The traditional business strategies developed and honed for the gasoline
vehicle market are insufficient for BEVs because of the platform effects in
the BEV market. A recent article in Forbes vividly lays out the charging
dilemma faced by BEV owners today.10 Given the specifications and
trade-offs inherent in rapid charging technology (Scrosati et al., 2015)
and the density of such facilities, BEV owners often must either depend
primarily on slow charging at home or typically drive 20–50 miles to
reach a rapid-charging facility, and then spend an hour for re-charging
the battery, unlike owners of gasoline automobiles, most of whom can
quickly reach a station and fill a tank within 5 minutes. Moreover,
while owners of gasoline vehicles face a favorable supply-demand gap of
refueling stations leading to quick search and discovery and minimal wait
times, the shortfall in supply of BEV charging facilities is highlighted in
reports by the International Council on Clean Transportation (Nicholas
et al., 2019) and the Center for American Progress11 indicating that
closing the present supply-demand gap will require an investment of
over $2.2 billion.
In contrast to this interpretation of a BEV as a two-sided platform
good, we believe that, with the notable exception of the newcomer Tesla,
10
https://www.forbes.com/sites/brookecrothers/2019/10/13/in-the-us-electric-
vehicle-charging-prospects-are-bleak-out-there-for-the-rest-of-us-who-dont-drive-
a-tesla-model-3/#33073c5633d1.
11
https://www.americanprogress.org/issues/green/reports/2018/07/30/
454084/.
platform thinking has not been widely adopted in business actions in

the BEV industry. These firms are reported to collectively invest over
$200 billion in building BEVs but barely over $2 billion on laying out
a rapid charging network. Only Tesla both builds cars and operates
a network of supercharging stations spread throughout the country.
These stations (analogous to gasoline stations) provide Tesla vehicles
the ability to replenish batteries with approximately 200 miles of driving
range in an hour of charging. Depending on timing and conditions of
purchase, Tesla owners pay either zero or low fees for using this network
of stations. Other BEV makers, however, have not actively built or
invested heavily in a first-party charging network.
The similarities between launches of Lexus LS 400 and Audi e-Tron
provide another clue that industry has largely viewed BEV strategy
as “make a better vehicle with a bigger battery.” While Tesla spent 10
years investing in a supercharging network and, consequently, sacrificing
operating profits from building and selling EVs, other auto makers
invested billions of dollars in building fancy vehicles but have failed to
take deliberate action towards creating a charging infrastructure. As a
result, Tesla’s dominance on the second side of the platform good—a
proprietary supercharging network that is far greater than that of all
of its competitors combined—endows it with enormous advantage in
competing for future BEV buyers.
Like automobile manufacturers, the lack of platform thinking also is
apparent in policy making for EVs. Success of EVs requires that a robust
rapid-charging network be developed and nurtured in a very deliberate
and strategic way. The absence of coordination between auto makers—
who are, in fact, competitors in the traditional market—underscores
the role of policy in driving the growth of this new technology. Instead,
policy makers in the U.S. have relied largely on the market to provide the
supercharging network, focusing instead on providing subsidies for either
BEV development or BEV purchase. Only recently there have been some
efforts to coordinate actions and investments. For instance, Volkswagen
was driven to invest $2 billion into a new subsidiary, Electrify America,
toward building a network of charging stations, as part remedy for its
emissions scandal;12 similarly, Ford and Volkswagen recently announced

a partnership with Amazon to build a supercharging network.13
2.3 The Charging Station Dilemma
Based on our anecdotal observations, many people are unaware that

charging a BEV at these supercharging stations takes about one hour,
or that Tesla’s supercharging stations are unavailable to non-Tesla EVs.
In general, potential buyers of EVs are frustrated both by the limited
availability of charging stations and the lack of interoperability across
stations and vehicles.
Why are there so few rapid-charging facilities, and why are they
further fragmented between non-compatible systems? The reason is
that most BEV makers, except Tesla, have not implemented a business
strategy based on a two-sided platform perspective. Thus, development
of charging stations is left to independent third-party firms who face
an investment dilemma. They have little incentive to build a dense
network in the absence of a large installed base of users; the latter,
of course, is thwarted by the absence of a dense network of charging
facilities. Lack of coordination with BEV makers makes developers
of charging facilities less willing to take a leap of faith and build out
the network based only on hope that BEV buyers will follow. Tesla
solves this coordination problem by building both EVs and chargers.
Consequently, having invested heavily in building rapid-charging stations
even at the expense of operating profits, Tesla has no incentive to
share its facilities with competing BEV makers. Meanwhile, among the
non-Tesla charging facilities that are developed by third-party firms,
occasionally in some kind of loose alliance with a subset of BEV makers,
the further division follows the usual script in two-sided platforms where
different solutions are initially incompatible either due to engineering
or business considerations. Therefore, while people are used to refueling
their gasoline at any petrol pump, the same does not hold for their EV.
In some cases, plugging ports are incompatible. In others, a user must
12
https://www.autonews.com/article/20181028/OEM06/181029805/vw-s-
charge-electrify-america.
13
https://www.reuters.com/article/us-ford-motor-electric-idUSKBN1WW24K.
2.4. The Buyer’s Dilemma: Gasoline or Electric Vehicles 219
first become a “member” before being able to access a charging port.

This, in turn, drives the adoption dilemma for potential BEV buyers.
2.4 The Buyer’s Dilemma: Gasoline or Electric Vehicles
Consider a representative consumer’s demand and adoption of a gasoline

automobile vs. a BEV. Suppose there is a set 1, . . . , J of gasoline vehicles
and a corresponding set 0, 1, . . . , J of BEVs, with Tesla (as a BEV-only
player) representing brand 0. For both gasoline vehicles and BEVs,
a potential buyer gets utility from purchasing the vehicle and from
driving it, with the latter creating a need for refueling or recharging.
As in Section 1, let us think of the representative consumer’s utility for
brand j as comprising a standalone value plus a network benefit, the
latter being a function of the network of refueling or charging stations
available to users of that brand, and possibly an expectation regarding
upcoming stations.
Consider the case of electric vehicles first. Writing njt to denote the
number of brand-j-compatible charging stations installed during time
period t, and assuming no attrition in stations, the number of stations
available at time t is Njt = t njt dt . For Tesla (j = 0), this implies that
R
for a buyer looking to purchase at time t, utility is
U0t = u(q0 ) + f (N0t , E[N0t ])
Where E[N0t ] represents an expectation regarding upcoming stations

after time t. Limiting our attention to Level 4–5 rapid-charging stations,
it is notable that E[N1t ] is about 15,000 (1,500 stations times about
10 stalls per station), that Tesla is quite forthcoming and transparent
about plans for additional stations (i.e., users can form their expecta-
tions E[N0t ]) and further that Tesla has been successful in fulfilling
expectations in recent years. Crucially, Tesla-compatible stations are
predominantly developed and owned by Tesla itself. In addition, as we
see below, a small number of non-Tesla stations are also available to
Tesla users, then enhancing the utility function beyond what is stated
above.
The picture for non-Tesla BEVs (j ≥ 1) is rather different. First,

charging stations are not predominantly supplied by the OEM BEV-
makers. Second, there are multiple technologies and payment models
involved, creating some lack of interoperability across stations and
brands. If we were to relax this concern and assume full interoperability,
then the total number of stations available to brand j at time is simply
Nt (i.e., we can drop the index j, and aggregate the supply of stations
for all j ≥ 1 brands). Even with this relaxation, Nt is substantially
lower than N0t . Moreover, given the myriad firms involved in developing
charging stations, and lack of economic and technological coordination
between station providers and BEV makers—and also lack of trans-
parency and a track record of success in fulfilling promises—consumers
are unable to assign high values to E[Nt ]. Therefore, comparing the
utility functions for Tesla vs. non-Tesla BEVs, it becomes clear that even
a high-quality BEV will face a competitive disadvantage against Tesla
because of the additional utility created by N0t (and E[N0t ]) vs. Nt
(and E[Nt ]). This perspective also makes it clear that a well-developed
and executed strategy regarding charging stations is a vital element of
competitive strategy in the BEV market.
Now, consider how a buyer’s decision model plays out for gasoline
vehicles. Following similar notation, let Mjt and E[Mjt ] represent cu-
mulative number of refueling stations available to brand j users at
time t. In this case, however, it is well-known that there is nearly perfect
interoperability across charging stations and brands. Thus, we can again
drop the subscript j, aggregate the supply of refueling stations, and
simply denote the available number as Mt and future expectation as
E[Mt ]. A representative buyer’s utility for brand j then is of the form
Wjt = v(qj ) + g(Mt , E[Mt ])
Here it is notable that Mt is about 160,000 and thus much greater than
N0t or Nt . This implies (a) a comparative disadvantage for BEVs over
gasoline vehicles, and (b) that E[Mt ] is less relevant to the decision
process due to the high value for Mt , and because users are confident
that the huge installed base of gasoline vehicles will ensure a future build-
up of refueling stations. More crucially, we note that for a buyer who is
comparing multiple gasoline vehicle brands j1 and j2 , the network of
2.5. Needed: A Platform-Aware Strategy and Policy for BEVs 221
refueling stations is irrelevant to that comparison! Therefore, competitive

strategy within the segment of gasoline vehicles can ignore the second
side of the market (refueling stations) and entirely focus on the first
side, the vehicle itself. Thus, competitive strategy for BEVs is quite
different from that for gasoline vehicles even though in both cases one
could frame the utility as a combination of standalone product value
and a network benefit.
Indeed, this discussion is reminiscent of the advent of gasoline
vehicles when cars began to displace horse-driven carriages and when
Ford introduced Model T as a mass product. Although there were few
gasoline stations in the early years of gasoline cars, customers could
arrange for refueling by picking up gasoline cans at a pharmacy or
blacksmith shop.14 There is no analogous service for batteries for BEVs,
making the role of charging stations more severe and decisive.
2.5 Needed: A Platform-Aware Strategy and Policy for BEVs
The understanding that BEVs are not a “product,” i.e., a car that is
electric, but rather one side of a two-sided market enables a change in
perspectives. The action space that is available to decision makers of
all kinds increases significantly. A substantial economic and business
research stream on two-sided market platforms has developed a ro-
bust theory of how these markets are fundamentally different, and how
these differences must lead to distinctive business tactics and strategies.
Recognizing that a business or product follows the laws of two-sided
markets is a necessary condition, but not sufficient. Additional im-
pediments exist, ranging from general organizational inertia, a lack of
necessary skills and personnel, and the innovator’s dilemma. On one
side, since the beginning, electric cars have been a threat to the prof-
itability of conventional gas-powered automakers, hence the business
logic prevents investments. Further, a product-focused organization
perfects the product; a platform organization perfects the platform.
“The cost of developing the Tesla Roadster and Model S were around
14
https://www.smithsonianmag.com/smart-news/short-picture-history-gas-
stations-180967337. https://aoghs.org/transportation/first-gas-pump-and-service-
stations/.
$140 million and $650 million whereas General Motors spent $1 billion
developing its first electric, the EV1, and $1.2 billion developing the
Chevy Volt, and Nissan has spent $5.6 billion developing its relatively
low-performance electric cars” (Stringham et al., 2015, p. 91), while
Tesla split its investments on both sides of the market and in parallel
developed the charging infrastructure. Moreover, more challenges exist
that are specific to products with a multi-sided market architecture.
The lone exception to the lack of platform thinking in designing
business strategy for BEVs is Tesla, the new entrant into the automobile
market. The result is that even though several established automotive
OEMs, such as Nissan, BMW, and Chevrolet, invested early and heavily
in R&D and new engineering platforms for BEVs, and developed new
designs to position themselves as the frontrunner in the race for future
mobility, Tesla emerged as the most successful and celebrated electric car
manufacturer despite being a newcomer operating in an old Toyota/GM
plant. Today Tesla accounts for between 75% and 85% of the BEVs sold
in the U.S. Tesla’s supercharging network not only is the most domi-
nant and widespread, Tesla also chose to make it a closed proprietary
system (which gives Tesla a huge advantage when competing for new
customers) and to subsidize its usage by having a joint coordinated
price for the car and access to the network. Moreover, Tesla has built
an integrated information structure which provides real-time visual
information regarding location and availability of charging stations, and
its route planning software factors in knowledge of charging locations
in space and their availability in time. All of these factors reflect a
platform-aware perspective that is missing from makers of competing
BEVs. Indeed, Tesla has gone well beyond a basic platform strategy by
also investing in the idea of battery electric cars as a vital component
for future decentralized renewable energy systems.
2.6 Organization and Summary
The rest of this monograph reviews relevant platform theory and then
applies it to the BEV industry to illustrate and explain successes and
mistakes by the players. We critically examine important past decisions
and events, and then provide guideposts for the future evolution of
2.6. Organization and Summary 223
the industry. For instance, this discussion provides insights into the
likelihood of interoperability between charging stations. It also provides
a framework to examine Tesla’s incentives to continue operating on both
sides of a closed two-sided platform, versus licensing the charging infras-
tructure to competing carmakers. By telling this story, we introduce the
importance of platform literature to the operations management com-
munity and conclude with fruitful research opportunities that lie at the
intersection.
3
BEV Industry to Date: Decisions and Challenges
This section lays the necessary foundation to later examine the strategic
decisions taken by actors in the BEV industry, such as established
automakers and new challengers, charging site operators, and munici-
palities, governments and industry associations.
3.1 Toward Sustainable Mobility with

Electric Driving (1830–2000)
It may appear that electric vehicles are a new phenomenon enabled by

new technologies (such as the lithium-ion battery technology). On the
contrary, electric vehicles date back to experimental products that were
already on the scene by the 1830s as their development was closely linked
with the invention of (lead-acid) batteries (McFadden, 2018). Indeed,
the electric vehicle transportation system was directly competing with
other modes of transportation, such as gasoline and steam, at the end
of the 19th century to become the dominant automotive technology
(Kirsch, 2000). For a brief period, the electric vehicle even appeared to
be getting ahead. At the end of the 1890s, the Electric Vehicle Company
(EVC) was the largest vehicle manufacturer in the United States (Kirsch,
2000). The company offered a range of different transportation services
224
3.1. Toward Sustainable Mobility with Electric Driving 225
that are familiar today: private ownership, unlimited recharging for

$5 per month, and “electric hansom cab service, omnibus service for a
select number of hotels, and limited public transport service” (Kirsch,
2000, p. 67).
In many ways, history seems to repeat. The 19th century BEV
industry faced similar challenges as the ones faced by today’s BEV
firms. Already in the 19th century, the Electric Vehicle Association of
America tried to standardize the eight existing plugs to one standard,
battery voltages to standardize controllers, motors and other subsystems
(Kirsch, 2000), as well as the mutual complaint by central station owners
(today’s charging stations) and car manufacturers that their respective
business practices prevent the expansion of the electric vehicle market
(Kirsch, 2000). At the same time, the success of the technology was
interdependent on other actors’ decisions, such as the expansion of
the electrical grid to enable out-of-city transportation. In the end, the
success of gasoline cars over electric vehicles cannot be explained only
by a direct technology-to-technology comparison, but by a comparison
of choices of transportation system to transportation system (Kirsch,
2000).
Following this period, the internal combustion engine became domi-
nant for over a century, but EVs re-emerged as a concept in the 1960s
and 1970s with soaring oil prices and gasoline shortages (Kirsch, 2000;
Matulka, 2014), and prototypes produced by big car manufacturers
(e.g., GM converted an Opel Kadett using a zinc-air battery with a
claimed range of more than 200 km). However, real attention started at
the end of the 1980s and the beginning of the 1990s because of increased
attention to air pollution and concern over the predicted end of the
fossil fuel era (e.g., “Peak Oil”). In 1990, California introduced its first
zero-emission regulations, which were instrumental in sparking new
initiatives in developing electric vehicles during the 1990s.
With the introduction of Toyota’s Prius and Honda’s Insight and
their impressive sales numbers, the industry demonstrated that electrifi-
cation in transport is not a matter of backyard production. Both models
are hybrid electric cars, where the electric systems (the batteries and
the electric motor) still fulfil crucial functions, but only in combination
with an internal combustion engine, either driven by gasoline (petrol)
226 BEV Industry to Date: Decisions and Challenges
or diesel fuel (Høyer, 2008). Since then, a multitude of new hybrid

electric vehicles have been introduced. The possible combinations of
internal combustion engines with some form of electric systems are
almost endless. However, lately the so-called plug-in hybrids gained
significant market traction because they are not so dependent upon an
extensive electric recharging network but, instead, can depend upon the
existing fossil fuel infrastructure.
The pressure to fully decarbonize individual transport has continued
and appears to be gaining momentum (Hertzke et al., 2019). As a result,
fully battery electric vehicles have been introduced and an accompanying
charging network was established. The current success in network growth
is largely because of Tesla’s efforts to produce desirable battery electric
cars. The following sections give an overview of the timeline of BEVs.
3.2 Early Experimentation (2000–2010)
In 2003, Tesla Motors started with the development of its first fully
electric car, the Tesla Roadster. The Roadster, which is based on the
Lotus Elise, was introduced in 2008, promised a range of 200 miles
per charge, and was sold for $98,950. The model sold approximately
2,500 units (limited through a pre-agreed sourcing contract with Lotus)
and Tesla stopped production in 2012 (Woody, 2012).
In 2009, the U.S. Congress passed the American Recovery and
Reinvestment Act of 2009 (ARRA), which included $2 billion for the
development of electric vehicle batteries and related technologies. The
U.S. Department of Energy added another $400 million to fund building
the infrastructure necessary. Further, the Department of Energy awarded
$8 billion in loans to Ford, Nissan, and Tesla Motors to support the
development of fuel-efficient vehicles under the Energy Independence
and Security Act of 2007 (U.S. Department of Energy, 2020).
Also in 2009, Nissan unveiled its new electric car, called the LEAF
(“Leading, Environmentally Friendly, Affordable, Family Car”). The
LEAF is capable of a maximum speed of more than 90 mph, can travel
100 miles on a full charge, and has a battery that can be recharged to
80% of its capacity in 30 minutes. Nissan planned to work with the
Japanese government and private companies to set up charging station
3.3. Conquering Mass Markets (2010–2018) 227
networks across several countries (Squatriglia, 2009b). With its range

and size, the LEAF design concept could cover 80% of the trips of a
typical commuter, only leaving out long distance travel (Neil, 2010). In
2010, Nissan priced the LEAF at roundabout $32,000 in the U.S. and
started to take reservations (Linebaugh, 2010; Ramsey, 2010).
Additionally, with the introduction of low-range and ultra-small
vehicles, e.g., Mitsubishi i-MiEV, Peugeot iON, and Citroen C-Zero, the
range of BEV products available to the customer increased substantially.
All of these latter cars are similarly constructed and offer about 62 miles
(100 km) of driving range per full charge, and had an initial selling price
in the U.S. of $27,990. They were clearly aimed at an urban population
with a short commute.
Also in 2009, Tesla presented the first prototype of the Tesla S,
a sedan which was heralded as being practical and sexy, and pressed
Tesla head to head with the likes of BMW, Mercedes, Audi, and Jaguar
(Squatriglia, 2009a).
During the 2000–2010 timeframe, new concepts and technology stan-
dards for charging were developed. In 2007, Better Place, which focused
on battery swapping, was founded. In 2009, the charging standard
type 1 (SAE J1772) was completely overhauled, and the charging stan-
dard type 2 was developed in Germany (Mennekes, 2012). Nonetheless,
there were considerable challenges surrounding battery technology, peak
charging rates, longevity, and the development of charging standards.
There also were questions about the appropriate markets for electric
vehicles and how long they could occupy a premium price point in
the market. As the technologies matured, there were signs that wider
adoption might be possible.
3.3 Conquering Mass Markets (2010–2018)
Starting in 2010, three new models became available to customers in

various markets: (1) the sub-compact Renault Z.E. (Zero Emission) Zoe
(depending on the model, 200–240 km range, available fast charging,
and over 90,000 models sold to date), (2) the sedan Chevrolet Volt,
and (3) the Nissan LEAF in serial production. Three industrial entities,
Schneider Electric, Legrand, and Scame, announced the formation of
the “EV Plug Alliance” “to promote the use of a high safety plug and
socket solution for Electric Vehicle charging infrastructure” (Legrand,
2010).
In 2011, the standard specifications for the CCS (Combined Charging
Standard, a combination of AC and DC charging) were published (BMW,
2011; Daimler, 2011). The standard was co-developed by Audi, BMW,
Porsche, Volkswagen, Ford, and General Motors, which promoted its
use as the new de facto standard (BMW, 2011; Daimler, 2011). Further,
in March 2011, the number of charger manufacturers that developed
and offered the initially Japan-based CHAdeMO DC quick charging
standard increased from five to over 20 worldwide (CHAdeMO, 2019).
As a result, the number of installed chargers reached 582 in Japan and
41 in other countries. In 2011, BMW launched the sub-brand, BMWi,
under which it made plans to market its future line of electric cars. It
announced two models: The i3, a four-seat city car expected to be priced
at a slight premium from $30,000 to $40,000, and a higher-end plug-in
hybrid sports car called the i8 (Fuhrmanns, 2011). Nissan reported
monthly sales of the LEAF of more than 4,000 in June and raised the
price of the car by about 7% (Ramsey, 2011). Nissan sold almost 10,000
LEAFs in 2011 (Terlep, 2012).
Reports claimed that the charging infrastructure was quickly in-
creasing because of many companies investing, but the cars were still
lacking (Hagerty and Ramsey, 2011). At the same time, OEMs con-
tinued to claim the lack of charging infrastructure as a challenge to
BEV adoption (Murphy, 2014). This illustrates the challenges and a
paradox of EVs as multi-sided platforms: If you would ask either side
of the markets (OEMs or operators of charging infrastructure), they
would simultaneously claim that there are not enough participants on
the other side of the market (see Subsections 2.5 and 5.1). OEMs see
a lack of charging infrastructure for customers to widely adopt BEVs,
and charging site operators report the lack of cars as an impediment to
a viable charging infrastructure and greater investment.
In January 2012, the CHAdeMO protocol version 1.0 was published.
From March 2010 to March 2012, member companies grew in number
from 158 to 429 with the international regular member segment showing
the highest growth rate, confirming the global appeal of the CHAdeMO
protocol (CHAdeMO, 2019). Also in March 2012, German and U.S.

carmakers declared the CCS as their de facto future standard (General
Motors, 2012). In June 2012, Tesla delivered the first Tesla Model S
to its customers (Boudreau, 2012a). The Tesla Model S addressed the
luxury care segment with its specifications (rapid acceleration, large-
scale touch panel, range of over 300 miles), and list prices (after a $7,500
Federal tax credit) of $97,900 for the “Signature Performance” model
(Hirsch, 2012; White, 2012). Also in 2012, Tesla announced the Tesla
Model X (Bloomberg, 2020; Garrett, 2012).
In 2013, BMW joined the mass market electric vehicle club (White,
2013a). BMW launched the i3, which was positioned in the same segment
as the mid-segment BMW series 3. It offers roughly a range of 200 km
and the possibility of quick charging. The design of the model clearly
departed from BMW design standards which makes the car easily
recognizable as BMW’s electric car. Also in 2013, Tesla established its
first superchargers on the U.S. West and East coasts (see Figure 3.1)
and offered free charging to its customers (Hirsch, 2012). Further, Tesla
announced that it would offer battery swap stations (Green, 2013).
Meanwhile, the competing fast charging standard CHAdeMO offered
nearly 900 fast charging units in Europe and more than 300 units in
the U.S. (CHAdeMO, 2013; see Figure 3.2).
In the meantime, product rollout delays were a regular occurrence
and Tesla pushed back the release of the Model X crossover SUV by
one year to late 2014 (White, 2013b). After the excitement and the
launch of new models in the previous years, in 2013, some disillusioned
observers questioned the euphoria amid disappointing car sales (Lane,
2013).
In 2014, the charging network for the different charging standards
was advanced. Tesla was able to open a coast-to-coast supercharger
connection in January 2014 (Figure 3.3); they filed a patent for allowing
a charging station to prioritize charging based on need and arrival time
and, by the end of 2014, the firm offered 884 individual charging points
spread across 141 supercharger stations in the U.S. (see Figure 3.4).
Comparably, CHAdeMO increased its charging network to 776 charging
stations in 2014. Tesla signaled their ambition to significantly extend
the charging network in 2015 (see Figure 3.5). Tesla also announced
Figure 3.1: Tesla supercharger U.S. locations in 2013.

Source: Tesla/Twitter.
its third model (Model 3) with a plan to go on sale in 2017 for about
$40,000 (Hirsch, 2014).
Additionally, in 2014, the European Union defined the CCS charging
standard as the standard for fast charging in the European Union and
released specifications for public charging infrastructure (EU, 2014).
Figure 3.2: CHAdeMO’s available fast charging network in 2013.

Source: CHAdeMO (2013).
Figure 3.3: Tesla’s planned supercharging stations, January 2014.

Source: Tesla/Cleantechnica (2019).
Figure 3.4: Tesla’s supercharger network, end of 2014.

Figure 3.5: Tesla’s supercharger extension plans for 2015.

Also in 2014, Tesla offered open licenses to its patents to any company
that wanted to build electric vehicles and suggested that BMW was
already interested in sharing patents (Ramsey, 2014). Further, Tesla
communicated that it would install the first battery swap station in
2015 (Stoll, 2014). Nissan pushed back its plans to sell a combined
1.5 million BEVs worldwide by four years to 2020 amid consumer
complaints about a shorter range than combustion-engine cars, lack of
recharging infrastructure, and comparatively high prices (Nam, 2014).
In January 2015, Elon Musk, Tesla’s CEO, signaled that the Model 3
could sell for approximately $30,000 (Woodyard, 2015a). Tesla launched
its new SUV Model X at a base price of about $81,000 (Ramsey,
2015b). Tesla also further expanded its supercharger network to almost
500 locations in the U.S. by the end of 2015 and 200 locations in
Europe; Tesla was opening a new supercharger location almost every
day. CHAdeMO released a new protocol for its charging standard (the
version 1.1) and offered about 10,000 charging locations across the
globe, with a strong focus on Asia. Tesla announced the Model 3 to be
unveiled in 2016 (Bloomberg, 2020) and claimed a new starting price of
$35,000 (Randall, 2019). BMW and Volkswagen jointly agreed to work
Figure 3.6: Level 3 charging locations as of September 2015.

Source: Li (2016).
Notes: Visual inspection of the map of existing Level 3 charging stations as of September
2015 hides the fact that Chademo outnumber the other two standards with more than
1000 stations; Combo standard has 380 stations and Tesla 251 stations. Tesla stations span
the U.S. interstatic highway system. Chademo and Combo stations cluster near urban areas.
Alternative Fuels Data Center of the Department of Energy.
with ChargePoint to invest $2 million to install 100 chargers along the

East and West Coasts of the U.S. (VW sold 357 of its e-Golf model and
BMW roughly 6,000 EVs in 2014 in the U.S.) (Bennett and Ramsey,
2015).
Customer complaints arose because superchargers often were crowded
by local users instead of their intended use of making long-distance
travel possible, leading to long waiting times (Ramsey and Proper,
2015). Figure 3.6 shows the locations of Level 3 charging stations in the
U.S. as of September 2015.
Chevrolet unveiled the Bolt, an all-electric car to be available in
2017 with a range of 200 miles and an estimated price of $30,000 (Neil,
2015).
In 2016, Tesla introduced a fleet-wide idle fee that aimed to increase
supercharger availability and announced that the end of free charging
would be coming (and, in fact, already applies to the new Model 3
(Ramsey, 2015c). Early in 2016, Tesla began to take reservations for

the Model 3, which would be ready in late 2017 (Bomey, 2016); Tesla
received 373,000 deposits of $1,000 each in the first weeks (Bloomberg,
2020).
Elon Musk, CEO of Tesla, laid out a “Master Plan.” Highlights
included an electric cargo truck, a new-style electric bus, a smaller set
of vehicles than current models, autonomous features making vehicles
capable of operating without a human driver, a pickup truck, a small
SUV, and an all-in-one renewable energy package to combine rooftop
solar power with a Tesla battery pack (Mitchell, 2016).
In 2017, Tesla launched the Model 3 as a mid-class model to cus-
tomers (Bloomberg, 2020). Also in 2017, Tesla added a live availability
feature for its charging stalls, changed the charging model from “free” to
“free for the first 400 kW per year,” and extended the charging network
to more than 10,000 superchargers and 15,000 destination charging
connectors around the world (Higgins, 2017a). By the end of 2017,
IONITY, a consortium created by BMW, Daimler, Ford, VW, Audi,
and Porsche, announced plans to build 400 CCS fast charging stations
along European highways with subsidies from the European Union of
€39 million. Tesla announced that it would triple the size of its super-
charger network between mid-2017 and the end of 2018 (Bloomberg,
2020) and introduced the Model Y for 2019 (Bloomberg, 2020). It is
worthwhile for the later analysis to note that Tesla’s announcements
included both cars and chargers, while the charging aspect is mostly
absent in the announcements of other carmakers.
Daimler became the lead investor (with $82 million) in ChargePoint
and their European expansion plans (Boston, 2017).
Pan-European electricity utility, E.ON, announced plans to install
10,000 individual charging points over the next several years in Europe
(Mitchell, 2017).
Tesla announced that the new SUV Model Y would be on the roads
in 2019 and expected that the demand would probably exceed the
demand for the Model 3 (Higgins, 2017b).
The Volkswagen-funded Electrify America planned to spend $2 bil-
lion over the next 10 years to build charging infrastructure (Roberts,
2017).
Nissan introduced a new version of the Nissan LEAF with an in-

creased range of 151 miles per charge and an entry price of under $30,000
(McLain, 2017; Neil, 2018); and the Chevrolet Bolt with a range of
238 miles became available for a price under $30,000 (Neil, 2017).
In 2018, another consortium, called MEGA-E, received subsidies
(€29 million) from the European Union to establish fast charging stations
as charging hubs where all different kinds of electric vehicles (including
Tesla) could charge. In August 2018, Tesla claimed that 99% of the
U.S. population lives within 150 miles of a supercharger. Tesla and
EVgo have the largest shares of fast charging stations in the U.S. (see
Figure 3.7), while in other parts of the world the operators of charging
networks differ (see Figure 3.8).
Volkswagen announced plans to build at least 16 electric-vehicle
plants by 2025, of which nine would be in operation by 2020 (Boston
and Bernhard, 2018).
ChargePoint announced plans to develop 2.5 million BEV “charging
spots” (it is unclear on which charging speed level) by 2025, up from
its current 54,000, in response to the growth in BEV adoption (Walton,
2018).
EVgo and Tesla have the largest

share of fast charging stations in U.S.
Figure 3.7: Ownership of fast charging stations in the U.S., 2018.

Source: U.S. Department of Energy & BloombergNEF.
Note: Data as of August 14, 2018 and based on an anlysis of 2,368 direct current fast charger
stations.
Figure 3.8: Breakdown of charging points by operator type and country/region.

Source: BloombergNEF.
3.4 Challenges
The industry faced a number of challenges during the past two decades,
organized into two sets. The first set includes four challenges related to
product market fit and how to guide product development and customer
education efforts. Central among these is the key design trade-off of price
versus range. Most firms opted to keep product price fixed to a target
range and then maximize range during their product development effort,
subject to an overall budget constraint. The second major challenge that
the industry faced was how to find suitable partners who could offer
a charging infrastructure. This second challenge was directly related
to quelling the third challenge called range anxiety, the term coined to
refer to potential customers’ worries about running out of power before
completing their trips. A fourth challenge the industry faced was the
need to better explain the total cost of ownership (TCO) for battery
electric vehicles (BEV) relative to their petroleum-fueled counterparts.
The economics for BEVs improves over time because of their higher
efficiency and lower operating costs, but this logic appealed mostly to
more affluent customers who could afford to take the long view.
The second set comprises three additional challenges that were
more operational in nature. First, the industry in general, and Tesla in
particular, faced significant problems with production ramp up. This
created marketing issues because of repeated delays in getting product to
market in sufficient quantity to satisfy demand. A related supply chain
issue was the challenge of installing sufficient charging infrastructure to
3.5. New Generations and Consumer Choice 237
make BEVs a viable choice for long distance travel. Finally, firms faced
a large set of choices with respect to how to accomplish the goal of
creating a recharging network. These choices included which standards
to promote, which consortia to join, and how to guide the development
of the regulatory framework to operate under.
Going forward, it is clear that the industry is beginning to achieve
critical mass as incumbent manufacturers announce ambitious new
product plans.
3.5 New Generations and Consumer Choice (2020 and Beyond)
In 2019, the Tesla Model 3 became available in the market and at launch
only a $49,000 premium version was able to be ordered (Bloomberg,
2020). Additionally, in 2019, a wide range of traditional OEMs an-
nounced plans to offer a new generation of BEVs, with car specifications
comparable to Tesla’s offering. Overall announced pipeline of new BEV
models began to grow substantially. Some highlights are listed below:
• Volkswagen communicated a “Roadmap E” strategy to launch

50 new electric models by 2025 with the most affordable version
being less than €20,000 (Manthey, 2018).
• Audi promised to offer three new models by 2020 (Collie, 2018).
• BMW wanted to have 25 electrified models on sale by 2025, with

12 of those to be pure-electric (Collie, 2018).
• General Motors committed to offer 20 electric vehicles by 2023

(Collie, 2018).
• Volvo said it will have an electrified powertrain in every vehicle

released from 2019 onwards; with five fully electric vehicles to hit
the market between 2019 and 2021 (Collie, 2018).
• Mercedes-Benz expected 10 full-electric models in showrooms

by 2022 (Collie, 2018).
• Ford projected 13 electrified models to arrive by 2021 (Collie,

2018).
Figure 3.9: Tesla’s supercharger expansion plans.

• Tesla announced the Model Y as a mass-market SUV (built on

the Tesla 3 foundation) to be launched in 2020 (Isidore, 2019).
With respect to the charging infrastructure side, highlights1 include

Tesla’s plans for further expansion of its U.S. network (see Figure 3.9).
The demand for fast charging ports is estimated to grow to approxi-
mately 100,000 by 2030 (Cooper and Schefter, 2018). Additionally, there
is already secured funding of about $3.4 billion for expanding the fast
charging network in the U.S. (Cooper and Schefter, 2018).
• The European Automobile Manufacturers Association’s ask for set-

ting mandatory targets for charging points and refueling stations
(ACEA, 2020) linked to the EU Green Deal2 and EU recovery
plan.
• The America’s Transportation Infrastructure Act of 2019 (ATIA)

includes a $1 billion funding program to build hydrogen, natural
gas and BEV fueling infrastructure (see Figure 3.10).
1
We do not claim to provide an exhaustive list of vehicle or charger announce-
ments, rather we want to give a feeling for the context.
2
https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-
deal_en.
3.6. General Economics and Operational Aspects of BEVs 239
Figure 3.10: Planned investments in BEV charging infrastructure.

Source: Cooper and Schefter (2018).
3.6 General Economics and Operational Aspects of BEVs
3.6.1 Complementarities: Range, Battery Size, Charging Stations

The deployment of fast/rapid/ultra-fast charging networks and the
development of longer vehicle ranges can be regarded as either comple-
mentary or substitutes. Both directly affect the daily distances possible
with a BEV. However, the effect of longer battery ranges on the de-
mand for fast-charging infrastructure is not straightforward. On the
one hand, long-range BEV may reduce the need for public charging
since home charging might be sufficient for most trips, even longer ones.
On the other hand, long-range BEV could be used more and more for
long-distance trips, thus increasing the demand for public fast-charging
infrastructure (Funke et al., 2019).
Additionally, this poses a critical challenge common to most platform
architecture products in that decisions are interdependent and need
to be coordinated across two or multiple sides. The decision of a car
manufacturer to increase the range of its future models should generally
be accompanied by investments in more fast charging infrastructure,
or vice versa. In this, the management of platform products differs
substantially to classical pipeline products.
3.6.2 Costs of the Complement

It also is critical to understand the importance of the complement for
the diffusion as well as to get an overview of the economics to un-
derstand industry actors’ decisions. BEVs need a public fast charging
infrastructure to fully compete against gasoline cars. Charging infras-
tructure is subdivided into different levels of charging speeds. Levels 1
and 2 use alternating current (AC) and have capacities of up to 22 kW.
The application of these levels of charging are mostly for at-home and
destination charging. Levels 3, 4, and 5 use direct current and are widely
known as fast charging (or also referred to as a Direct Current Fast
Charger (DCFC)). However, there exist significant differences within
this category of fast charging and it likely will evolve considerably in
the future. For the purpose of this monograph we follow Lee and Clark
(2018) and define the variances in fast charging as follows:
• Level 3: delivery of ∼50 kW (fast)
• Level 4: deliver of ∼150 kW (rapid)
• Level 5: delivery of ∼350 kW (ultra-fast)
Most third party DCFCs are operating at about 50 kW, while Tesla’s
superchargers typically operate at ∼120 kW and correspond most closely
with Level 4 (Lee and Clark, 2018).
The cost of building fast charging infrastructure is dependent on
many different factors, such as hardware costs, permissions, complexity
of utility interconnection processes, location, local regulations, etc. In
general, these costs are poorly understood, very difficult to quantify,
and rarely documented in the literature. Two teams of researchers
documented the costs to build Level 3 and above charging infrastructure.
Funke et al. (2019) estimated the costs for fast charging stations as a
function of their size (see Table 3.1) Lee and Clark (2018) estimated
the capital costs per charger for the U.S. (see Table 3.2).
We are taking these estimates to get an understanding of the costs to
build out the complement. Taking these estimates as the basis for Tesla’s
current fast charging network (1,533 stations and 13,344 charge points),
3.6. General Economics and Operational Aspects of BEVs 241
Table 3.1: Estimated costs for fast charging stations as a function of size (base year
2017) [w/o VAT]
Number of Charging Points Per Station
1 2 3 4 5 6 7 8
Level 4 €120,000 €148,500 €227,000 €255,500 €374,000 €402,500 €481,000 €509,500

150 kW
Level 3 €45,000 €73,500 €117,000 €185,500 €229,000 €257,500 €301,000 €329,500
50 kW
Source: Funke et al. (2019).
Table 3.2: Fixed cost estimates for each type of charger in USD
Residential Commercial
Capital Costs Level 1 Level 2 Level 2 Level 3 Level 4 Level 5
Installation $0 $1,354 $3,108 $22,626 $22,626 $22,626
(per charger)
Site preparation $0 $0 $3,000 $12,500 $12,500 $12,500
(per charger)
Utility service $0 $0 $4,000 $17,500 $17,500 $17,500
(per service)
Transformer $0 $0 $5,698 $32,500 $40,000 $40,000
(per station)
Equipment $0 $1,000 $3,842 $35,000 $50,000 $100,000
(per charger)
Source: Lee and Clark (2018).
the capital costs of this network are roughly between $980 million to
$1.9 billion.
4
Introduction to Platform Literature
4.1 What Are Multi-Sided Platforms (MSP)?
We live surrounded by platforms. Facebook, Netflix, Uber, and Airbnb

are only a few examples of these platforms nowadays—and these are
only the obvious ones. Many other not-so-obvious examples of products
or services involve characteristics of platform architectures and we can
profit from understanding them as such. This is the case for EVs.
The literature on platforms first gained prominence in the 1980s
through studies of products for which quality is determined by the
total number of users (Katz and Shapiro, 1985). In the last almost two
decades, research on platforms has increasingly focused on “multi-sided
markets” in which different, clearly distinguishable groups of users (e.g.,
game developers and players, readers and advertisers, shoppers and
vendors) play distinctly different roles, with each group or “side” serving
as a magnet to attract the other side (e.g., Parker and Van Alstyne, 2005;
Rochet and Tirole, 2003). However, defining platforms is not straight
forward, as research has formed in various scholarly disciplines with
many different definitions. The literature uses the terms “platforms,”
“multi-sided platforms,” and “two-sided markets” interchangeably.
242
4.1. What Are Multi-Sided Platforms (MSP)? 243
Some characteristics that form platforms:
• Cross-side network effects: The increased value that accrues

to network participants is contingent on the number of other users
in the network with whom they can interact. The net utility on
one side of the market is dependent on the number of members on
the other side (Katz and Shapiro, 1986; Parker and Van Alstyne,
2005).
• The need for critical masses: The businesses that participate

in these industries have to figure out ways to get both sides on
board (Evans, 2003).
• Coordination of value-creating interactions: Multi-sided

platforms coordinate the demand of distinct groups of customers
who need each other in some way (Baldwin and Clark, 2000; Evans,
2003; Gawer, 2014; Hagiu and Wright, 2011). Platforms exhibit
architectural and governance rules that seek to balance platform
control with the necessary incentives for platform participants to
engage with the platform and generate value for one another (de
Reuver et al., 2018; Ghazawneh and Henfridsson, 2013; Parker
et al., 2016; Tiwana, 2013, 2015).
• Pricing and the potential for cross-subsidies: A market

with network externalities is a two-sided market if platforms can
effectively cross-subsidize between different categories of end users
that are parties to a transaction (Parker and Van Alstyne, 2005;
Rochet and Tirole, 2003; Weyl, 2010).
• Dependencies: A two-sided market is one in which (1) two sets

of agents interact through an intermediary or platform, and (2) the
decisions of each set of agents affect the outcomes of the other set
of agents, typically through an externality (Rysman, 2009).
• Interfaces: The core module of a system to which outsiders can

easily connect and build upon in order to expand the system of
use (Baldwin and Woodward, 2009; Gawer and Cusumano, 2008).
As a core module, a platform not only performs the essential
244 Introduction to Platform Literature
functions of the ecosystem but also establishes interface rules.

This also appears in the business economics definition: A platform
is a nexus of rules and architecture that exhibits network effects
(Parker and Van Alstyne, 2016). It must be open such that third
parties can exchange value and it must have governance such that
participants abide by the rules (Parker et al., 2017).
These characteristics lead to very specific challenges when building

platform architecture services or products and vastly differ from linear
value chain strategies (Van Alstyne et al., 2016). Some traditional
insights do not apply because of the interrelationship between the sides
(Evans and Noel, 2008). In this sense, Evans and Schmalensee (2013)
argue that one-sided tools often do not apply, at least not without
substantial changes, to multi-sided platforms.
4.2 View Electric Vehicles as MSPs
By a recent estimate, carmakers worldwide will spend about $255 billion1

in the five years to 2023 on developing battery-powered cars (Behrmann,
2019). Hence, getting the mechanics of how to make these investments
successful is crucial, beyond the individual car maker.
Electric vehicles share many of the identified characteristics and
thus are platform products rather than standalone products.2 Electric
vehicles are technology platforms, i.e., modular technology architectures
requiring complementary products and services for their operation. Most
obviously EVs rely on a complementary charging network to be useful.
The broad diffusion of electric vehicles relies on a new charging network
that needs to be embedded in the existing electrical power network, the
vehicles need to be compatible with the charging stations and the use
value of the vehicle increases with the range of possibilities to be charged.
Conversely, investments in charging stations are viable only when there
1
Note: This is in stark contrast to estimated investment of Tesla in its supercharger
network or the announcements of governments and charging network providers that
remain in the single-digit billions at maximum.
2
We are not the first to observe this. Several studies point to different aspects of
the platform nature of electric vehicles (Li et al., 2017; Papachristos, 2017; Springel,
2017).
4.3. Platforms Face Specific Challenges 245
is a sufficiently large number of EVs that can deliver high utilization

and revenue from these stations. While the viability of fast-charging
stations depends on many factors, one study finds that on average a
fast-charging station needs eight customers a day to break even; at the
moment many of them struggle to get even half of that (Behrmann,
2019). This structure brings along its very own set of challenges. Hence,
EVs are facing a situation where the decisions of each group of users on
either side of the market affect the outcome of the users on the other
side(s), and the increased value that accrues to network participants
(EVs) is contingent on the number of other groups (charging network)
in the network with whom they can interact and exchange services
(charging). Moreover, this value-creating interaction of charging needs
to be coordinated. Most obviously the charging standard (the plug)
needs to fit, but also the billing systems of both sides need to match or
the coordination of available charging spots and route planning requires
the coordination of the two sides. Compared to gas powered vehicles,
electric cars lack a refueling infrastructure and a distribution and service
network.
In the following, we want to disentangle the different forces that are
at play in the BEV case from a platform perspective, shed light on the
theoretical lenses, and view the challenges of the players through these
lenses.
4.3 Platforms Face Specific Challenges
Platform architecture products face novel challenges and action spaces.

In the next section, we dissect accompanied decisions and evaluate how
actors in the BEV case have used or not used them.
Many others have done an incredible work to summarize the state
of the literature on platforms and multi-sided platforms (MSPs) and
thus greatly informed this overview (Sanchez-Cartas and Leon, 2019;
Stummer et al., 2018).
4.3.1 How to Attract Two Sides or Solve

“The Chicken-and-Egg Problem”
One of the most fundamental features of platform architecture products
are their two- or multi-sidedness, specifically the dependency of two or
more interdependent sides. One of the most important challenges with
multi-sidedness is the need to attract two or more sides at the same
time.
There are many examples of the need to attract but also potent
powers at play in attracting two sides. For example, the race by JVC
in the 1980s to bring a wide range of hardware manufacturers on their
VHS technology (Cusumano et al., 1992), the growth of IBM’s personal
computer largely fed by the availability of a wide variety of software
(Bresnahan and Greenstein, 1999; Langlois and Robertson, 1992), the
growth of Google’s Android and Apple’s iOS operating systems and the
decline of the Symbian operating system (Basole and Karla, 2011).
Since the basic premise of economic models is that competition
among platform-mediated networks is driven by the adoption of the
platform by both users and complementors, many studies focus on
understanding how to attract multiple sides to the platform (McIntyre
and Srinivasan, 2017). Most economic models have focused on pricing
by platform firms (Evans et al., 2006; Parker and Van Alstyne, 2005;
Rochet and Tirole, 2003, 2006; Rysman, 2009), suggesting that platform
firms may subsidize one side of the platform by using deep discounts
in order to attract the other side to join. Tesla, for example, acted on
that blueprint by making charging free in the beginning. However, other
studies focus on aspects such as entry timing of firms (Eisenmann, 2006b;
Schilling, 2002; Shapiro et al., 1998), incumbent advantages such as
firm size (Schilling, 2002; Sheremata, 2004) and platform features, and
relative quality (McIntyre, 2011; Zhu and Iansiti, 2012). Also, to solve
the “chicken-and-egg problem” and take into account the “winner-takes-
all” characteristics of platform markets, firms have strong incentives
to signal and condition user expectations about their potential for
future dominance or future value (Chintakananda and McIntyre, 2014;
Fuentelsaz et al., 2015a). Again, Tesla does a fairly good job of signaling
the future value of their charging network, yet finds it difficult to credibly
communicate future dominance.
A key feature of two-sided markets is that platforms must be able
to attract two or more different types of users at the same time. A car
without the adequate charging infrastructure has no future, and the
opposite is also true.
The demand on each side tends to vanish if there is no

demand on the other side, regardless of what the price is.
[. . .] The businesses that participate in these industries have
to figure out ways to get both sides on board.
(Evans, 2003, p.195)
This problem is known as “the chicken-and-egg problem” and several

strategies have been demonstrated to provide useful solutions:
Self-coordination: This argument puts forward the idea of overcoming
the chicken-and-egg problem by making assumptions about users’ ex-
pectations. However, it is a risky bet to focus only on consumers’ ability
to coordinate among themselves (White and Weyl, 2016). Ambrus and
Argenziano (2004) state that if there are lots of small consumers on
the market then it is practically impossible for them to get together
and make explicit agreements on network choices. A model by Rochet
and Tirole (2006) shows how coordination arises among heterogeneous
consumer groups, and consumers proportionally value the number of
sellers on the other side. Then, given the prices, every consumer has
a dominant strategy to join one platform. In the monopolist model
proposed by Armstrong (2006), we find something similar. Consumers
have homogeneous valuations for externalities, which allows platforms
to promise utility levels. In both cases, platforms commit to offering
consumers a particular level of utility by adjusting their price in re-
sponse to changes in the number of users on the other side, fully insuring
users against any change in their utility, thus giving them a dominant
strategy (Sanchez-Cartas and Leon, 2019; White and Weyl, 2016).
To address the coordination problem, Weyl (2010) proposes the
“insulating tariffs.” The basic idea to overcome the coordination problem
is to assume that platforms choose user allocations (and not prices) to
maximize some objective function. In that way, prices are an insurance

instrument of utilities. Platforms charge a price on each side fixing a
utility level for users. Therefore, users do not care about the size of the
platform on the other side. However, if we consider a dynamic context,
Cabral (2011) points out that platforms cannot fix a utility level on
one side that is independent of the size of the other side because the
platform does not “insure” agents, rather the platform “subsidizes” early
adopters to compensate the low utility of joining the platform at that
stage (Sanchez-Cartas and Leon, 2019).
Subsidizing: Another way to overcome the coordination problem was
proposed by Caillaud and Jullien (2001) and Evans (2003). One way to
get both sides on board is to obtain a critical mass of users on one side
of the market by giving them the service for free or even paying them to
take it (Evans, 2003). This strategy is known as “Divide and Conquer”
because it requires dividing the market between the profit segment and
the loss segment in order to conquer the market. This strategy solves
the coordination problem because it creates an incentive to join the
platform on the loss side, and given the network effects, that creates an
incentive on the other side to join the platform. Despite the theoretical
discussion about the correct way to discriminate among equilibria, this
is probably one of the easiest, practical solutions to the problem, though
critics argue that the coordination problem is mitigated but, sometimes,
it is difficult or dangerous to subsidize users because it can attract
users without their commitment to using the platform (Jullien, 2005).
This possibility creates the problems of adverse selection and moral
hazard (Armstrong and Wright, 2007; Parker and Van Alstyne, 2005).
In addition, Parker and Van Alstyne (2005) find that sometimes it is not
clear on what side a platform should charge positive prices. Therefore,
the consequences can be critical because we can attract a mass of users
only because there is a subsidy.
Subsidizing can take many different forms, such as price cuts, free
usage, offers of investment incentives (Ackerberg and Gowrisankaran,
2006; Hagiu, 2009; Muzellec et al., 2015), offers of value-added services
(Dou et al., 2016), technical support for development programming
(Schilling, 2003), and even paying users as a means of attracting them
(Evans, 2003). The decision as to which side to charge and how (cal-
culation and charging mechanism) is complex and depends on factors
like the users’ sensitivity to price (Hagiu and Spulber, 2013) or quality
(Eisenmann et al., 2006).
Freemium: Freemium is often geared to have free users to increase the
probability users on the same side or the other side adopting and paying.
Greater numbers of free users on one side can increase the likelihood of
other users of the same side coming to learn and appreciate the value of
a product, through word-of-mouth (Boudreau et al., 2019; Dou et al.,
2016). For example, DropBox gained foothold into business markets
by first appealing to individual employees and buying managers of
organizations. A greater base of free users on one side can analogously
increase demand and adoption on the other side of the market as well as
increase the willingness to pay of actors on different “sides” (Boudreau
and Hagiu, 2009; Parker and Van Alstyne, 2005; Rochet and Tirole,
2006). Additionally, the freemium strategy can break the tension of
growth and profitability that platforms often face (Bhargava, 2014). In
this the freemium strategy has multiple benefits: it segments the market
indirectly, expands sales via the free version, preserves a high margin
for the premium product (Bhargava, 2014). Ultimately, the free version
can also act as a trial device and increase the adoption on one or both
sides of the market, especially when users are a priori uncertain about
its value (Bhargava, 2014; Niculescu and Wu, 2014).
Single target group/Staging: Focusing on one particular target
group or market segment is a well-known strategy and MSPs may start,
for example, with a single city or industry (Eisenmann and Hagiu,
2007). By reducing the total market size and the required critical user
mass, MSPs require fewer resources and less time to reach the critical
inflection point from which the MSP can grow to other market segments.
When initially focusing on a single market segment, MSPs can achieve
higher levels of differentiation and platform performance in this market
segment, which increases expectations among potential platform users
that everyone else will adopt the same platform in the future (Cennamo
and Santaló, 2013). Other authors argue that it is more natural to
observe firms begin with a one-sided model and switch to a two-sided
model as they become more established. Doing so allows potential

platforms to overcome the chicken-and-egg problem (Rysman, 2009).
Additionally, with the platform-staging strategy, an MSP evolves
in two distinct steps from a traditional vendor-based business model
in the first stage to a platform mediation business model in the second
stage after reaching the critical user mass (Hagiu and Eisenmann, 2007;
Hagiu and Wright, 2015). This strategy can help MSPs to focus on one
market side at a time, thereby avoiding negative indirect network effects
in the early development stage. When executing a staging strategy, the
platform design should be geared toward the final MSP architecture
from the outset (Eisenmann, 2008), although a traditional business
model may be applied in the first stage.
On the other hand, some authors have considered that, if the problem
is to attract both sides at the same time, platforms may be interested in
changing the timing. That is the proposal to overcome the coordination
problem developed by Hagiu (2006). He proposes a model in which
software developers arrive before consumers. This asymmetry in timing
mitigates the coordination problem on the consumer side, but it does
not mitigate it on the developer side. He only focuses on two equilibria.
One with “optimistic expectations,” and another one with “pessimistic
expectations.” In the former, he finds it is optimal to commit prices as
soon as possible, but in the later, he finds the opposite.
Envelopment: Platform owners can achieve growth of a new plat-
form by designing an envelopment strategy (Eisenmann et al., 2006,
2011; Suarez and Kirtley, 2012), which is a platform strategy that
builds on an already existing platform business in another market and
wherein platform owners leverage this position by operating in multiple
platform-based markets simultaneously. Platform operators can move
into adjacent platform-based markets by combining their existing plat-
form’s features with that of the target’s platform (Eisenmann et al.,
2011). Many real-life examples show the power of this strategy in various
different forms, such as when Microsoft conquered Real Networks, a once-
dominant media platform, by bundling Windows Media Player with its
complementary Windows platform (Wan et al., 2017). Alibaba increased
the attractiveness of its business-to-consumer platform, Tmall.com, by
building on and leveraging its installed base, the consumer-to-consumer

platform, Taobao.com (Wan et al., 2017). Especially small companies
can profit from this strategy. Small companies that typically lack a
large installed base may piggyback on an existing platform and provide
new services without creating a new demand (Wan et al., 2017). In the
case of the room reservation service, Airbnb launched by integrating
themselves into Craigslist (Choudary, n.d.). PayPal piggybacked on
eBay before it was acquired. And the payment service, Square, launched
on top of the iPhone and Android platforms.
In sum, the platform envelopment strategy aims at leveraging the
shared relationships with (other) established platforms and their net-
works (Eisenmann et al., 2006). This is possible because many industries
(such as the BEV market as we discuss below) with MSPs are neither
exclusive nor do they operate in a “winner takes all” market setting
(Caillaud and Jullien, 2003) which allows multiple MSPs to coexist
(Shankar and Bayus, 2003). Rather than building a platform from
scratch, the platform envelopment strategy aims at partnering with
existing and potentially large platforms with a view to growing with
them (Rochet and Tirole, 2003). In addition to a substantial overlap
in the user base, the platform envelopment strategy also requires low
costs for switching or multihoming users (Armstrong, 2006).
Exclusivity Agreements: Signing exclusivity agreements on one mar-
ket side can attract other users on both market sides (Cennamo and
Santaló, 2013). In the gaming industry, for example, MSP providers
like Sony and Microsoft mediate between game developers and game
consumers. Both contracted Electronic Arts, the dominant sports game
manufacturer at that time, in order to achieve some form of (temporary)
exclusivity for some games that are supposed to attract both gamers
and other game developers to their consoles (Eisenmann et al., 2006;
Parker et al., 2016; Rysman, 2009). Exclusivity agreements have been
proven to enhance the competitiveness of an MSP’s offering (Armstrong
and Wright, 2007; Hagiu, 2009). Moreover, exclusivity agreements with
marquee users potentially increase the overall quality of content on an
MSP, as they diminish the adverse selection problem of attracting lower

quality content (Cennamo and Santaló, 2013).
Side-Switching: The idea behind the side-switching strategy is to
make a two-sided platform one-sided by finding a platform design that
allows users to fill both market sides of the MSP at the same time.
Obviously, this strategy only works if services or products of both sides
do not require high set-up costs or specific knowledge. The concept
of side-switching on MSPs has already been addressed by Gazé and
Vaubourg (2011).
Nonetheless, Evans and Noel (2008) argue that expectations about
the ownership structure are essential. If users believe that a platform is
going to change its strategy toward integration, it sends a message that
market is not going to fail in providing that good/service. It also sends
a message that competition will be more aggressive on one side and,
therefore, profits will be lower. From their point of view, integration
mitigates the coordination problem, but integration alone does not solve
it. In fact, integration is neither necessary nor sufficient to solve the
problem.
In general, all platforms change their strategies towards disintegra-
tion when they are mature. As a summary, there are several proposals
in the literature, but there is no consensus. A question remains whether
there exists a universal solution to overcome this problem? Given the
evolution of the literature, it seems that we will not have an answer to
this question any time soon.
4.3.2 How to Ensure to Become the Dominant Platform

Attracting or Providing Complementors
In platforms—in contrast to product firms—the value that accrues to
network participants is contingent on the number of other users in
the network with whom they can interact (Eisenmann, 2006a; Farrell
and Saloner, 1984; Katz and Shapiro, 1986). In platform markets the
success of a platform is likely a function of which one can attract the
most (and the best) complementors. Complements describe goods and
services built on a platform that enhances the value of a core good
to a network via indirect network effects, such that the value of the
core good to adopters is greater in tandem with the complement than
without it (Brandenburger and Nalebuff, 1995; Gawer, 2009; Yoffie
and Kwak, 2006; Zhu and Iansiti, 2012). A subset of these strategies
focuses on the platform itself providing the first complements. While this
requires larger investments, it gives the option to set quality points and
expectations for both the customers and complementors. For instance,
Microsoft leveraged the knowledge it gained from developing popular
games for its Xbox console in-house to build a development kit worth
$10,000, which it licensed for free to producers willing to develop other
games for the Xbox (Schilling, 2003).
Much of the extant literature hence deals with the question of how to
attract and keep complementors, e.g., through managing expectations,
leveraging the installed base, ensuring profitability for partners, finding
the right mix of product range and level of product quality, as well as
the right level of openness.
In the case of EVs, the value of the car is contingent on the availabil-
ity, access and spread of the charging network. Hence, by the multi-sided
platform perspective, to achieve a strong competitive position is deter-
mined by the combination of car-infrastructure system, and not only
by product features of the car and the operational excellence of the
manufacturer. Without understanding this mechanism, designing a win-
ning strategy for EVs (and any other platform-architecture product) is
almost impossible.
Signaling
It is in the nature of multi-sided platforms that the launch of a new
platform comes with uncertainty about the platform’s ability to attract
users from both or various sides of the market. For example, when
Apple launched its first iPhone in 2007, the market responded with
hesitation. Developers were uncertain about the attractiveness for end-
users of the phone’s touch-screen feature (and hence uncertain about
their decision to develop applications), while end-users were uncertain
about the potential for new applications (and hence hesitant about
buying) (Jullien and Pavan, 2017).
Given the possible dominant outcomes in multi-sided platforms, the

outcome of investments of complementors and user to join the platform
are uncertain and they can be stuck in the “wrong” platform with
stranded investments. Hence, expectations of a platform’s growth poten-
tial can influence users’ product adoption choices (Papachristos, 2017).
Given that, firms have strong incentives to signal and condition user
expectations about their potential for future dominance (Chintakananda
and McIntyre, 2014; Fuentelsaz et al., 2015b).
Different strategies to do so have been evaluated in the literature.
Platforms invest considerable resources in signaling activities, such as
advertising, exhibitions, information disclosures, forums, blogs or own
investments in complements, all aimed at promoting to each side of
the market the platform’s ability to attract users from other sides and
reducing uncertainty (Jullien and Pavan, 2017). For example, platform
owners can create an initial consumer base building on in-house devel-
oped complements. This can signal to third-party complementors to
expect a large future installed user base (Cennamo, 2018; Hagiu and
Spulber, 2013). Also, producing in-house complements can showcase a
platform’s technological potential and attract consumers to switch to it
(Schilling, 2003; Sheremata, 2004).
However, not all forms of signaling are helpful. Signaling only on the
product level can lead to disastrous crowding-out effects by cannibalizing
the current product range, also known as the Osborne Effect (Rao and
Turut, 2019).
Installed Base
As a result of network dynamics, the literature suggests that winner-
take-all outcomes are possible in some platform-mediated networks as
the platform with the largest number of users “tips the market” in its
favor (Eisenmann et al., 2006; Katz and Shapiro, 1994; Shapiro et al.,
1998).
Stronger network effects of the larger installed base typically

win market share. For example, when Microsoft enveloped
Real’s audio streaming technology into Windows, Microsoft
enjoyed more than 90% market share in desktop operating

systems. Each new release of Windows caused RealAudio to
lose streaming market share among content consumers and
content creators because neither would pay the incremental
cost of Real’s now duplicate functionality.
(Parker and Van Alstyne, 2016, p. 6)
Hence, scaling and diffusion strategies in platform markets are differ-

ent from product markets. Conventional wisdom suggests that network
effects drive faster market growth due to the increasing returns as-
sociated with such processes (Nair et al., 2004; Tellis et al., 2009).
Incumbents can build on their installed base which creates multiple
effects of previous adopters on the rate of growth. Previous users are
expected to accelerate growth and, at the same time, the adoption of
previous adopters increases network externalities which overall acceler-
ates adoption. The result being that the presence of these installed-base
effects, known as network externalities, makes it excessively difficult for
firms to enter the market with new products or new technology (Katz
and Shapiro, 1992; Xie and Sirbu, 1995).
However, networks also can create the opposite effect, slowing growth
with what is labeled “excess inertia” (Srinivasan et al., 2004). Taken
together, these results suggest that installed base size alone may be an
insufficient predictor of future network growth. Suarez (2005) supports
this notion, finding that gross network size is a relatively poor proxy
for network value and that other attributes may be contributing to the
benefits of installed base in network industries.
Product Quality and Product Range

Also the aspect of product quality differs in platform markets versus
classical operations research for pipeline businesses. As introduced
above, the number of complements plays a decisive role in many studies
highlighting the importance of attracting complementors. However, some
users may value diversity of complements, not merely their quantity
(Zhu and Iansiti, 2012). Authors also find that a platform with lower
capabilities but a wider product mix might be a winning strategy in
a network with cross-side effects that is content driven and highly

competitive (Anderson et al., 2014). Some have argued that a small lead
in attracting early customers could tip the market in favor of an early
entrant with an inferior product or service (Cowan, 1990; Shapiro et al.,
1998; Sheremata, 2004; Wade, 1995). Hence advocating for lower product
quality but faster market entry. Contrary to that, another stream of
research holds that product quality is an important determinant of
success in platform markets, and that dominant platforms tend to be
those that exhibit the highest quality (Liebowitz and Margolis, 1994,
1995; McIntyre, 2011; Tellis et al., 2009). Indeed, it has been shown
that high-quality complements, generally referred to as “hits” (Corts
and Lederman, 2009) or “superstars” (Binken and Stremersch, 2009),
can critically affect platform adoption (Cennamo, 2018).
Outlining the mixed results on the mechanisms of product quality
in platform markets highlights the uncertainty for actors of making de-
cisions about product quality. Thus, in assessing the value of a platform
to users, one should account for both variety and quality of complements
(Panico and Cennamo, 2015).
4.3.3 Platforms Do Not Optimize Value Chains

In traditional industries, bilateral exchanges follow a linear path as firms
purchase inputs, transform them to add value, assemble components and
subsystems into complete products, and then sell the output. In platform
industries, interaction follows a triangular relationship (Eisenmann et al.,
2009) as parties first affiliate with the platform then connect or trade
using platform resources. In general, this networked way of creating
value as been identified as one of three elemental configurations through
which firms generate value (Stabell and Fjeldstad, 1998; Thompson,
1967). Next to this, platform architecture products are very different
from classical pipeline products (i.e., linear value chain thinking) as both
sides can incur costs and accumulate revenue (Parker and Van Alstyne,
2016).
Second, in a platform, actors are much more interdependent than
in pipeline businesses and resources are shared to a large extent. It
is common (or often essential) for platform operators to access and
leverage external resources and capabilities owned by other agents

in a platform system. Platform logics require a switch from owning
resources to the orchestration of resources, from optimizing supply chains
and internal productivity to facilitate external interactions, and from
optimizing product and customer value to ecosystem value (Lavie, 2006;
Van Alstyne et al., 2016). This broader conceptualization implies that
platform owners should pursue aggressive, costly, and ultimately risky
growth strategies aimed at attracting large numbers of complementors
(Boudreau and Jeppesen, 2015; Garud et al., 2009; Gawer and Cusumano,
2002; Schilling, 2002).
This broader view of resources coincides with the fact that platform
owners compete at an ecosystem level, which means that the success
of their platforms depends on an ecosystem’s resources rather than
those of a platform (Wan et al., 2017). Hence, strategy becomes vastly
more complex as firms consider dynamic interactions of a multi-layered
business ecosystem (Parker and Van Alstyne, 2016).
The sheer number and complexity of instruments being used

by platform owners, including investments, technology rules,
information dissemination, contracting choices, and pricing,
is an empirical phenomenon deserving closer attention and
clearer explanation.
(Boudreau and Hagiu, 2009, p. 25)
In addition, it is vital in platform architecture products to under-

stand and assess the value of the whole system (the platform and its
complements, compared to the single product) in relation to other
competing systems (Cennamo, 2018).
Accordingly, to this extension, the levels of competition get extended
as well. Competition in platform markets occurs at three levels of a
platform ecosystem (Parker and Van Alstyne, 2016). It exists from
one platform to another, as in the video game console battles of Sony,
Microsoft and Nintendo (Evans et al., 2006). Competition also can exist
between a platform and its partners, as in the case of Microsoft appropri-
ating such partner innovations as browsers, multi-threading, streaming
media, and instant messaging into its operating system (Jackson, 1999;
Nalebuff, 2004). Finally, competition can exist among partners each

vying for position within a focal platform, as in the case of two games
reaching for the same consumers on the same console (Boudreau and
Hagiu, 2009; Markovich and Moenius, 2009). Managing these multi-
ple levels of competition is a dynamic problem owing to the need to
cooperate as well as to compete (Parker and Van Alstyne, 2016).
Very concretely, from a product strategy perspective, Sun et al.
(2004, p. 244) identify four alternative product strategies available in
markets with network effects:
(1) A single-product-monopoly strategy, under which the innovator

is the exclusive seller of the product based on its technological
standard;
(2) A technology-licensing strategy, under which the innovator creates

compatible products externally by licensing its technology to
competitors;
(3) A product-line-extension strategy, under which the innovator

internally creates compatible products with multiple qualities;
and
(4) A combination strategy, under which the innovator simultaneously

licenses its technology and expands its product line.
All of the product strategies identified by Sun et al. (2004) aim

at the question through which level of openness (Subsection 4.3.4)
the necessary attraction of complementors (Subsection 4.3.1) can be
achieved. Thus, this notion links the product strategy level with the
platform lens and points to the increased importance of product strategy
decisions in platform architecture products. Further, in contrast to
pipeline businesses, in platform business the platform owner not only
must care about its own profits, but also about the profitability of the
ecosystem of complementors. Cennamo and Santaló (2013, 2015) argue
that a platform system that offers only limited profitability for the
participating complementors becomes a “market for lemons” (Akerlof,
1978) in the long run.
4.3.4 Governing Openness

A core feature of platforms or platform architecture products is that
they are not standalone, but interdependent, often building on a whole
ecosystem of partners. Naturally, platform governance, which is generally
defined as who makes what decisions about a platform (Tiwana et al.,
2010), plays a particularly important role for platform owners. Platform
governance makes deliberate choices about platform openness, access,
ownership, and control when appropriately involving and engaging
developers of complementors and in which form.
Platforms are usually proprietary in that the technologies on

which they are based are protected by patents or copyright,
but they can differ in the extent to which other organizations
are allowed to act as complementors. They may be com-
pletely closed to third-party access, which would be typical
for a product platform meant only for in-house use. At the
other extreme they can be open, like Facebook’s open server
standard that was released for use by other firms to stimu-
late complementary activities and lower prices. Many hybrid
models are also used, such as Alphabet’s Android operating
system, which can be used and enveloped by smartphone
firms but modified only by Alphabet. While openness adds
the power of alliances, it often also reduces the opportunity
for value capture through direct means. While Alphabet
makes little or no money directly from the use of Android
by phone makers, it captures significant value from adver-
tisers and, increasingly, from consumers transacting within
Android-based apps.
(Teece, 2017, p. 215f)
Thus, platform openness reflects the trade-off between retaining and

relinquishing control over a platform (Benlian et al., 2015; Boudreau,
2010; Cusumano, 2010; Ondrus et al., 2015; Wareham et al., 2014; Wessel
et al., 2017). Opening a platform can spur growth by harnessing network
effects, reducing end-user fears of lock-in, and stimulating downstream
production. At the same time, opening a platform typically reduces
user switching costs, increases forking and competition, and reduces

the sponsor’s ability to capture rents. Empirical estimates of innovation
based on level of openness exhibit an inverted U-shape (Boudreau, 2010;
Laursen and Salter, 2006), suggesting that firms can optimize their
levels of openness. Further, opening a platform can secure third-party
participation and contribution, thus exploring new market opportunities.
Closing a platform can protect the platform owners’ exploitation of
internal resources. In this way, platform owners face managing the
delicate balance between exploration and exploitation (Wan et al., 2017).
According to Wan et al. (2017, p. 6), Moreover, platform owners can
take a step further and facilitate, or limit, participation in the ecosystem
based on inter-platform compatibility decisions. In other words, platform
owners may determine whether members of its ecosystem are allowed
to interact with participants from other ecosystems (Chen and Liu,
2005; Farrell and Saloner, 1986; Rysman, 2009). Specifically, platform
owners also may determine whether agents “on board” a platform can
enter other platforms (multihoming) or if their participation must be
exclusive (singlehoming). In this sense, compatibility implies rules for
interfaces to ensure that a platform’s features fit well with those of
other platforms, thus making them accessible to more agents (Chen and
Liu, 2005).
Platform openness can be further refined in horizontally and verti-
cally opening as Benlian et al. describe:
. . .[O]pening a platform horizontally means giving up some

control by licensing the platform to additional platform
providers . . . On the other, granting third-party complemen-
tors access to the development platform and sales market of
complementary applications is regarded as vertically opening
a platform (Boudreau, 2010).
(2015, p. 211)
Overall, it is widely accepted that choosing the optimal level of open-

ness is critical for firms that create and maintain platforms (Boudreau,
2010; Chesbrough, 2003; Eisenmann et al., 2009; Gawer and Cusumano,
2002; Gawer and Henderson, 2007; West, 2003). In this respect, it is a
particular challenge for platform providers to determine the appropri-

ate level of platform openness, which is the degree to which platform
providers grant access to outsiders. Platform openness can be shaped
through various platform governance mechanisms, of which deliberate
regulations and rules about access and boundary control are key com-
ponents to appropriately engage other platform stakeholders (Benlian
et al., 2015; Gawer, 2015; Ghazawneh and Henfridsson, 2013). Prior stud-
ies have shown that several aspects of platform openness are important
evaluation criteria for developers when they think about contributing
to and engaging on a platform (Ghazawneh and Henfridsson, 2013; Qiu
et al., 2011). Meanwhile, owners should be prudent enough to reject
low-quality complements and avoid crowding effects that will lead to
negative experiences from end users (Boudreau, 2012b; Zhu and Iansiti,
2012). In this respect, platform owners can exploit the resources of their
platforms by keeping a limited group of members that fit a specific list
of requirements (Gawer, 2014).
However, Benlian et al. (2015) show that openness of platforms
can come with specific challenges. They show that opening a platform
vertically and the resultant loss of control could pose problems for a
platform provider in at least two respects. First, the coordination of
resources becomes more complex, simply because more players and
interests are involved (Almirall and Casadesus-Masanell, 2010). Second,
by delegating the production of complements to external developers,
the platform provider also loses control over the assortment and content
of complementary platform features provided to the platform and,
as a result, over the integrity and strategic roadmap of the platform
(Boudreau, 2012b).
Openness can be more than access, however. Openness also can be
conceptualized as devolving control (Boudreau, 2010) or what Nambisan
and Sawhney (2011) call decisional openness. This involves the degree
to which the innovation decision rights and, by extension, the strate-
gic direction of the platform itself, are distributed among ecosystem
members.
Opening up platforms creates opportunities within ecosys-

tems for entities other than the platform leaders (Bogers
et al., 2017). In particular, the platform can become a venue

for entrepreneurial pursuits as opportunities are identified
and pursued to create complementary products or services
that become part of the platform’s “orchestra” (Zahra and
Nambisan, 2012). Complementary products are ones in
which the value of the two products together is greater
than the sum of the individual values alone (Gawer and
Cusumano, 2014). We know that the existence and expansion
of complementary products can greatly impact the viability
of the overall platform ecosystem. For example, Facebook’s
success relative to MySpace has been partially attributed to
its decision to open the platform to third-party developers,
who built popular games and other valuable features on top
of Facebook, while MySpace kept all development in-house
(Parker and Van Alstyne, 2018).
(Eckhardt et al., 2018, p. 372)
Two strategic decisions have to be made, these are (1) how much of
the core platform to open in order to spur developer innovation, and
(2) how long to grant developers the right to benefit from sales on top
of the platform before the platform absorbs those innovations into the
core (Parker et al., 2017).
5
Understanding Actors’ Decisions
in the BEV Market
In this section, we build on the two previous sections and outline

important decisions faced by the key participants in the industry (e.g.,
manufacturers, industry consortia, policy makers), and then critically
examine the choices made using the lenses provided by the platform
literature. It is useful to separate these decisions along three levels:
(1) those made by individual firms (automobile manufacturers, charging
network providers, etc.), (2) those made by industry bodies (CHAdeMO,
EU, etc.), and (3) those made by regulators and policy makers. We
aim to provide an analysis of the unbalanced investment outcomes of
hundreds of billions of dollars of investment in BEVs and single-digit
billions in charging infrastructure.
(1) Firm-level considerations: We discuss, for instance: (a) automo-

bile design—perfectly engineered car vs. the functioning system,
(b) strategies for solving the chicken-and-egg problem, (c) strate-
gies of specialization vs. integration, (d) the relevance of product
quality and range, (e) signaling and pre-announcements, and
(f) how to establish and leverage advantages and disadvantages of
being an incumbent or entrant.
263
264 Understanding Actors’ Decisions in the BEV Market
(2) Industry-level considerations: We discuss, for instance, the es-

tablishment of standards, how to encourage the formation of
consortia, and the challenges of platform coordination associated
with consortia.
(3) Policy considerations: We discuss, for instance, the deployment

of subsidies, targets and other incentives, the paradox role of
standard setting as simultaneously enabling and constraining. As
products characterized by network effects are highly susceptible
to “tipping” or standardization, actions of policy setters can
have game-changing effects. How will the various actors work to
influence government policy? This flips the policy level analysis
to a company-level decision.
5.1 Platform Launch and the Chicken-and-Egg Problem
The chicken-and-egg problem is one of the most fundamental problems

when launching platform products, covering how to mobilize both the
demand and the supply side and how to coordinate between them.
Platform products always rely on some other side to be valuable, which
makes it essential to mobilize the two sides at the same time.
The need for this active coordination and the prevalence of the
chicken-and-egg problem has been a recurring topics in many industries
before. Amongst them are examples such as video cassettes and video
recorders, video consoles and video games, marketplaces such as eBay
or Craigslist, matchmakers such as Tinder or OpenTable, payment
systems such as Visa or Mastercard, instant messaging such as AOL or
WhatsApp, operating systems and software or applications, ride hailing
platforms such as UBER or Lyft, sharing platforms such as Airbnb,
social networks such as Facebook or LinkedIn, and so on.
Literature and practice alike identified some general strategies for
how to approach this problem. The usefulness of these approaches can
be evaluated against common criteria:
• Profitability: Does the strategy ensure profitability for both sides,

in total and across time?
5.1. Platform Launch and the Chicken-and-Egg Problem 265
• Growth: Does the strategy enable balanced and sufficient growth

(e.g., through interoperability and standards)?
• Capital Intensity: Is the strategy suitable given capital endow-

ments of a single player?
• Innovation: Does the strategy permit ongoing innovation?
• Operational Efficiency: Does the strategy favor operational effi-

ciency (e.g., driven by real time data layer)?
5.1.1 Four Main Platform Launch Strategies for BEVs

In the case of BEVs this means getting people to buy BEVs in the
absence of a charging network, and conversely, catalyzing investments
into creating a charging network in the absence of a large installed
base of EVs. To achieve this, four different basic strategies to tackle
the chicken-and-egg problem can be distinguished that make specific
strategies more or less accessible:
(1) Do it yourself: Organizations trying to build platform products

can invest on both sides themselves, which typically requires
extremely high investments. In this strategy, players can further
decide to begin with launching one side and then add the other
side to stage investments or to launch both sides simultaneously.
However, even with infinite capital, the do it yourself strategy
bears the risk of delay in feedback. Building out a charging network
takes time. For BEVs, Tesla follows this strategy.
(2) Form consortia: Another option is to form multi- or bi-lateral

cooperation agreements with suppliers of the other side. These
agreements typically are aimed at reducing investment risks for
all sides as their own side can build on the other side’s installed
base and vice versa.
(3) Regulators and policy makers: Organizations can try to rely

on governments to invest into the other side of the platform.
(4) Market: Finally, actors on one side of the market can rely on
market mechanisms to supply the other side of the market and
use investment information signals to third parties as coordina-
tion mechanisms. In the U.S., for example, independent charging
infrastructure providers such as Betterplace, Chargepoint, and
EVgo, to name a few, built charging networks in order to profit
from the growing BEV installed base.
These strategies are not mutually exclusive and can change over time.
Consider the smartphone industry. In 2013 Microsoft was fighting hard
to push its mobile operating system and relied on, and subsidized, ex-
ternal hardware makers such as Nokia to build attractive smartphones.
In 2013, Microsoft chose to vertically integrate and it purchased Nokia’s
handset business. Meanwhile, Apple’s phone business has primarily
involved substantial vertical integration and a fairly closed platform:
Apple not only makes the operating system but also is the sole pro-
ducer of Apple smartphones, owns the content store, makes many apps,
and even sells accessories such as earbuds. Apple CEO Steve Jobs was
initially against the idea of an app store, but was convinced by other
Apple executives who feared a repeat of Apple’s losing strategy against
Microsoft in the desktop computing war (Isaacson, 2011). Google, Ap-
ple’s chief competitor in smartphone platforms, has primarily focused
on the operating system (Android) without exhibiting aspirations for
smartphone leadership, relying instead on a consortium and market-
driven strategy or hardware and accessories, with occasional efforts to
produce notable hardware (such as the Pixel phones). In the case of
Chromebooks, Google has similarly focused on the Chrome operating
system, encouraging third-party developers to produce hardware, but
also producing a limited range of its own Chrome tablets and laptops.
In the current case of BEV deployment, we see all these strategies
used or called for. Tesla follows a “do it yourself” approach and builds
the installed base of cars and charging infrastructure. With this strategy,
Tesla was able to make quicker and better decisions on both sides of
the market, which is critical during the early and growth phase of a
company. Also, as building the charging network most likely works best
by optimizing integration with the car, the “do-it-yourself” approach
decreases frictions as compared to the other strategies and, moreover,

subsidizes one side. Tesla, for example, can mix revenues of charging
infrastructure and selling cars, whereas independent providers need
to develop business models based purely on offering the charging in-
frastructure. The integrated model also allows for higher degrees of
freedom in terms of incentivizing one side. The free charging for Tesla
owners is a classic launch strategy in two-sided markets. Moreover,
Tesla can decide on its own which level of openness of the system they
offer (e.g., one-way compatibility in favor of Tesla owners). On the
downside, the “do-it-yourself” approach requires massive investments
(as can be observed by the cash needs of Tesla) (Hull and Recht, 2018),
runs the risk of being outperformed by a joint action of another con-
sortia, and faces the risk that other competitors gang up against you.
Additionally, it runs the risk of settling on an inferior standard. This,
for example, could be observed in the process of setting standards for
digital telecommunication in the 1980s and 1990s. In Europe, standard
setting bodies mandated a single standard for the second generation
of telecommunication. In contrast, in North America the approach has
been to allow the market to determine the best standard (Gandal et al.,
2003). Despite the initial lead of GSM through the broad diffusion in
Europe, CDMA succeeded (Gandal et al., 2003).
On the other hand, many OEMs formed large consortia with other
OEMs to include the car and charging infrastructure side (e.g., CHAde-
Mo). This has the advantage that you can leverage multiple adjacent
installed bases and use this as a signal to attract the charging infrastruc-
ture complementors to join this large supply. Further, consortia have the
advantage of typically joined and, therefore, larger financial resources
to lift the investments. On the flipside, this way of coordinating the
different sides of the market requires consensus and runs the risk of slow
decision making. As already explained, many tactics rely on incentiviz-
ing one side of the market, for example, by giving the service for free.
In a consortium of independent legal entities with different business
models, figuring out the mechanisms of cost and revenue sharing over
time is an impediment to running such consortia. Moreover, consortia
bear the risk of organizations freeriding.
Additionally, one strategy is to rely on government investment in

one side of the market. This has been the case with BEV charging
infrastructure. For example, in California, 38% of charging outlets
are financed by the state (Spulber and Smith, 2018) and a coalition
of U.S. western states invests to establish a network of fast charging
infrastructure along 5,000 miles of highway (Spulber and Smith, 2018).
In the U.K., the industry (BP, National Grid, ABB, BYD, Siemens,
amongst others) called for the U.K. government to take action on fast
charging infrastructure (BP, 2019). The advantage of this strategy is the
ability to define nationwide (or in the reach of the respective governing
body) standards. For example, the EU defined the CCS standard, as well
as China, who defined a single nationwide standard. Governments have
the ability to encourage growth of charging stations through mandates,
targets or subsidies which are similar tactics as used in the integrated
approach. Additionally, the standard setting competence leads to fewer
chances of standard wars and, therefore, higher chances of quicker
adoption. On the other side, the need for consensus and clashes of
authority in federalist systems lead to the risk of slow and inconsistent
decision making.
Finally, relying on the market to supply the other side of the platform
typically is said to have a higher innovation potential but at a higher
risk. For example, we see different business models to be tried and
also different technological standards to be tested (from core functions
such as battery swapping versus charging to billing technologies). The
downside of this strategy is the difficulty in coordinating capacity and
deployment decisions. For example, it is far harder for an independent
provider to decide where to install charging stations and how many,
compared to, for example, the integrated model. The independent
provider has difficulty determining if other providers are planning to
install infrastructure in the same area or how high the demand is. On
the contrary, Tesla (by also knowing the future demand of their cars
through pre-orders) can build out the network according to future
demand and optimize the operations in real-time by using data from
their cars. Moreover, as already introduced, independent providers have
smaller margins to coordinate the pricing of the two sides. To address
these coordination issues, independent providers could cut bilateral or
multilateral deals with OEMs. Such deals have been frequently used
between network carriers (e.g., T-Mobile) and streaming services (e.g.,
Netflix or Spotify) or social networks (e.g., Facebook) where the data
used on these services was not counted toward the data plan. This
is a classic example of differential pricing through bilateral deals of
independent but complementary providers.
Another Launch Strategy

Another launch strategy especially effective when heavily planning on
building both sides at the same time on one’s own is to focus on the least
price sensitive segments to assure high margins to cross-finance the other
side of the market. Tesla started in the upper class market of cars and
moved to mass market cars later on. On the contrary, OEMs focused on
mid-level mass market cars. Taking a platform perspective, this strategy
is reasonable because it aims to build an installed base. However, the
strategy to start at the top with a price insensitive segment contradicts
the plan to build a large installed base early on to create platform
growth and become the dominant platform (see Subsection 5.2.4).
Overall, in the case of the EV, the coordination problems appear to
be so dominant that the pros of an integrated “do it yourself” approach
outweigh the disadvantages. On the other hand, other factors may have
influenced Tesla’s approach from a platform theory perspective. At the
beginning, Tesla had the following choices:
• Build electric vehicles and rely on the market to provide the charg-
ing infrastructure: In this case, Tesla would be faced with the
situation that the only possible source of revenue can be generated
from selling cars, which puts a lot of pressure on operational excel-
lence production in a Californian plant of the 1980s. Additionally,
the supply of the much needed charging infrastructure (and in
reverse the demand for Teslas) would be highly insecure.
• Build electric vehicles and at the same time cut deals with inde-
pendent charging providers or form other consortia: Despite the
general lack of such players in 2012, this strategy would addition-
ally bring the risk of standard clashes, less possible innovation
on the charging on the car side and little to no influence on the

deployment decisions of the charging infrastructure (e.g., infras-
tructure is built and Tesla sales are asymmetric). Also, history
proves Tesla right. In hindsight, the relative ineffectiveness of the
formed consortia to roll-out new charging infrastructure and charg-
ing mode innovations shows the disadvantages of this strategy in
the given platform product market.
• Build electric vehicles and rely on regulators and policy makers

to build the charging infrastructure: As governmental bodies did
not signal that they would do so, it would have been a high risk
strategy.
Taking these counterfactuals, Tesla’s strategy to compete on both sides

of this platform market and simultaneously build cars and charging
infrastructure (to be precise, with a time-lag of about one year) was
the most promising amongst the given alternatives for Tesla. And the
long relative inaction of its competition made this strategy successful.
Underutilized Alternatives to Launch

Overall in the case of BEVs the available action space to solve the
chicken-and-egg problem for platform products is not fully leveraged in
the industry. On the one hand, differential pricing or subsidizing could
be used to a larger extent. For example, the car side could be bundled
with other underutilized charging stations, or real-time differential
pricing for load balancing could be introduced. Conversely, the relevant
players do not seem to fully leverage the existing installed base of other
firms with a physical presence, such as 7elevens.
Additionally, a known strategy to solve the chicken-and-egg problem
is staging. The development of BEVs followed a staging strategy. The
first generation of cars were hybrids with a battery pack as an adjunct
to a traditional gasoline car, and the next was full-electric vehicles
(which were totally dependent on charging stations). Meanwhile, the
first manufacturers of the hybrid cars also introduced plug-in hybrids
whose battery pack was charged at a charging port. Superficially, this
sequence seems reasonable. The first generation had no need for the
second side of the network; and the second generation could then follow
once the network was established.
Imagine instead if the first category were plug-in hybrids. These
would not suffer from the chicken-and-egg problem because people could
buy them even in the absence of a charging network, yet they would
start creating demand for charging. Then, once you got a million cars,
that would attract investments for building a network. That, in turn,
would make space for all-electric vehicles. In fact, under this sequence
it would be most likely that the charging network for plug-in hybrids
evolved as a “public” network (rather than proprietary to one system
as Tesla’s became) and that the transition to all-electric cars would
then maintain a shared public infrastructure for charging (versus the
fragmented and non-interoperable networks that we see today).
However, this sequence did nothing to mitigate the chicken-and-egg
problem. One approach to address the chicken-and-egg problem with
sequencing is (a) first to establish a large installed base on one side
of the market, by ensuring that this side gets sufficient value even in
the absence of the second, and then (b) to employ the installed base
as an incentive to drive investments into the second side. The first
generation hybrid cars seem to fit this. They were desirable as lower-
emission vehicles and could fully utilize the existing gasoline fueling
network (step (a)). But, while quite successful as a car, they actually
did nothing to advance step (b), i.e., the installed base of hybrids did
not create any demand for charging stations because their battery pack
is charged by gasoline in the tank. Indeed, when firms began launching
full-electric EVs (e.g., Nissan LEAF) the absence of charging networks
was a tremendous disincentive for purchasing the car despite its visible
advantage as a green vehicle. This became a serious problem for the
first few EV-makers, further amplified by their lack of deliberate action
to create charging networks.
Moreover, in general we did not see attempts to build an open
architecture platform ecosystem that leverages the power of many ex-
ternal providers. Although many independent charging infrastructure
providers exist, there is a surprising inaction to govern this openness
(see Subsection 4.3.4).
5.2 Aiming for Growth and Potentially the Dominant Platform
Once the BEV industry overcomes the initial platform launch hurdle
and solves for the chicken-and-egg problem, platform players will try
to grow the platform on both sides as this disproportionately increases
the utility of the platform overall. Business jargon tells us that markets
with network effects end in winner-takes-all situations as eventually
users and complementors will concentrate on one platform—the biggest
one. Different strategies can be employed to achieve platform growth,
however, as not all platform markets are WTA, a critical examination
of this characteristic needs to take place first.
5.2.1 Do We Observe a Winner-Take-All-Market?

An interesting phenomenon in two-sided markets is that sometimes
the winner seems to take the entire market, whereas in other markets
multiple networks can co-exist and share the market. In the example
of PC operating systems, VCR formats and typewriter keyboards, etc.,
one network takes all or almost all of the market. In this case, it is
likely that one platform will become the dominant one. On the other
hand, we don’t always end up with one single platform dominating the
respective market. In the two-sided market of credit cards, four major
payment networks have been competing for a long time already (Visa,
MasterCard, American Express, and Discover).
In order to understand if a market is likely to tip toward a winner-
take-all market, various factors play a role (Eisenmann et al., 2006):
• Strength of network externalities: How much does one side

profit from users on the same side (direct network effects) and on
the other side (indirect network effects)? In the case of EVs we
can observe several particular direct network effects in certain cir-
cumstances. Increased data sharing between the EVs about routes
and charge status will drive improvements that optimize the over-
all system for consumers. For example, waiting lines at chargers
could be bypassed. However, more important in this case are the
indirect network effects between charging infrastructure and cars.
These are especially in the beginning quite dominant but heavily
5.2. Aiming for Growth and Potentially the Dominant Platform 273
decrease over the course of building out both sides. Additionally,

consumer preferences regarding the charging infrastructure can
be assumed to be homogenous (e.g., easy and fast). Consequently,
product differentiation considerations cannot trump network ef-
fects and it is unlikely that multiple incompatible differentiated
networks will coexist.
• Switching costs and multihoming: How much does it cost

for an EV customer to get access to another charging network
(switching) or to have access to multiple charging networks (mul-
tihoming)? In general, especially on the fast-charging Level 3
hardware, incompatibility leads to higher switching costs and it is
difficult to multihome. However, we see already today that Tesla
offers hardware adapters to the European CCS system, making it
possible to access other charging networks. On the lower charging
levels, general compatibility can already be assumed today. Both
factors argue against the possibility of a winner-take-all market.
Additionally, especially on the fast-charging Level 3, charging-
infrastructure communication protocols are a soft component to
increase costs of (or even prevent) switching. However, as seen
in other industries such as ride-hailing services, multihoming is
oftentimes hard to prevent.
In summary, we do not assume that in the long run the BEV and charg-
ing infrastructure MSP will yield a winner-take-all market, particularly
because the two-sided market ultimately heavily depends on the car
side. However, there will likely be a dominant network for some time
where this dominant position can be exploited. From this long-term
perspective, the strategic choice of OEMs to only focus on the car side
makes sense if they assume that the dominant network will only be
there for a short time.
5.2.2 Data Can Move the Needle

However, the analysis above can change direction under the assumption
that route planning and charging station optimization become a source
of competitive advantage. This can be the case because of the general
undersupply of charging infrastructure or the lack of otherwise viable

standalone business models for charging infrastructure. The underlying
mechanism is that information about both charging infrastructure and
car utilization (e.g., routes in time) can compensates for either too little
demand for charging or congested charging stations. The more these
data are centralized, the better this optimization can be, which leads to
more winner-takes-all structures in immature markets. Much as in cases
of the sharing economy, the real-time information about demand and
supply decreases the idle time of resources. Therefore, building a data
layer that connects both sides (the car and the infrastructure) could,
for a certain period, offer the best value to customers and generate
positive feedback loops on both sides, favoring winner-takes-all markets.
Building this data layer requires direct real-time data from cars and
infrastructure, as well as IT-alignment between these infrastructures.
History shows that this is best done in an integrated model where both
sides are designed and operated by one party.
5.2.3 Signaling
Another strategy for growth through attracting complementors is to
signal the future dominance of one particular multi-sided market. The
general idea is to signal to one particular side (compared to competitors)
that it makes more sense to join one’s own system than the others.
This is because customers’ expectations (will the platform offer the
best utility in the future) and complementors’ expectations (will the
platform be the most successful) are important in attracting more users
and becoming a dominant platform. Signaling on one side (e.g., to
become the dominant BEV standard) should attract investments of
complementors. When VW presents a BEV roadmap and estimated sales
forecast, investors of charging infrastructure build on this information
by investing in charging infrastructure in order to profit from the future
demand of charging infrastructure. From an economic perspective, that
vehicle manufacturer’s and charging station provider’s decisions cannot
be viewed isolated but depend on each other creates the problem of
multiple possible equilibria. Because of this firms have an incentive to
influence and coordinate the expectations of consumers such as creating

BEV roadmaps and forecasts.
Signaling in multi-sided markets is challenging. For example, signal-
ing only at the product level (as many of the OEMs are doing) does
not make much sense, as the customer is interested in the combined
utility function of car and charging infrastructure. Also, signaling can
cannibalize the current product range and lead to adverse effects, also
known as the Osborne Effect (Rao and Turut, 2019). Among the famous
examples of the Osborne Effect are Sega Corporation’s announcement
of Dreamcast (next-generation game console) in 1998, RIM’s (Research
In Motion) announcement of BlackBerry 10 in 2011, and Nokia’s an-
nouncement of Windows Phones in 2011 (Rao and Turut, 2019).
Tesla very early announced the introduction of the Model 3 as an
affordable BEV in the range of $35 k. While this signal helped to attract
complementors of charging infrastructure who expected a strong rising
future demand for Tesla charging (e.g., the Destination Charging), it
cannibalized the existing high-end products (Tesla Models S and X) and
created a false anchor in consumers’ minds. When the actual product
was introduced it came out in the $55–60 k range. Similarly, these
created expectations also did not materialize for complementors who
built on the prospects of a higher demand for Tesla charging based on the
sales signals. On the other hand, the information Tesla gained through
pre-orders was very beneficial to plan the deployment of the charging
network. Tesla additionally signaled that their platform was destined to
become the dominant platform through opening their patents to offer
an open standard. Industry analysts argued that opening the patents
was a competitive move against the competing technology platform of
fuel-cell vehicles to signal complementors, such as Panasonic, to stay
invested in the more promising Tesla technology (Hu et al., 2016b).
In summary, in platform product markets, the strategy of signaling
becomes extremely delicate. It is a useful strategy to attract consumers
on both sides, increase utility, and tip the market to the “right” equilib-
rium. However, it runs the risk of strong product cannibalization.
5.2.4 Building on an Installed Base and Fixed Cost Assets

For platform products that are characterized by network effects the
decision by consumers regarding which network to join depends not
only on the specific product characteristics and prices, but also on
the expected size of the network. Typically, the current size of the
network, also known as its installed base (IB), is often used as a signal
to consumers of its future size. This is because uncertainty over being
stranded makes consumers reluctant to join new networks with small
IBs. Firms that can build on an installed base on one or both sides of
the MSP have a natural advantage as the MSP already has an initial
value and the IB naturally attracts complementors. Understanding how
players can leverage their or adjacent IBs can be a useful perspective
in understanding competition in platform markets. In the case of EVs,
three obvious classes of actors could leverage their IBs:
• Utilities and electric service providers:1 In general, EVs technically

build on the vast installed base of the electric grid. In theory, every
lamppost or garage-plug functions as a BEV charging spot for
Level 2 charging and each substation can deliver enough power
for Level 3 and above. Utilities, electric service providers and
distribution network service providers could leverage this installed
base.
• Fueling stations: Fueling station providers already own and operate

infrastructure in places that are critical for the mobility system.
• OEMs, dealer network and employers: All the fixed cost assets
such as parking spaces could be repurposed as electrical charging
stations. Employees park their cars idle for about 8 hours a day.
Or car dealerships could build a shared fleet of workshop replace-
ment cars for customers who bring in their cars for maintenance.
Employers could even partner with OEMs like Tesla to create
1
These actors on the other hand find themselves in another MSP structure. The
EVs could function as load balancing for the variation in electricity supply that is
induced in the system through increasing shares of renewable energy.
a business out of providing charging infrastructure instead of

offering it as perks to their employees.2
Although, theoretically, many actors could leverage an installed base in

the case of EVs, most of them find themselves trapped in the chicken-
and-egg problem. Utilities and electric service providers wait for the
demand from cars and until a dominant standard emerges before invest-
ing in a typically low-margin low-volume business (compared to their
traditional business). The same applies for fueling stations. OEMs, the
dealer network and other employers typically do not see charging as
their business. That left the existing IBs that could be leveraged as
an untapped resource and allowed a newcomer without any starting
advantage to build an IB.
Hence, as none of the other players was able to leverage its installed
base thus far, Tesla was able to build the strongest combined (car
and infrastructure) IB. At this point, the rolled-out IB enables Tesla
to profit from this strong position to attract more and more external
complementors. For example, the installed base of cars including a
proprietary charging system attracts hotels and malls to invest in
Tesla’s Destination Charging system. Complementors that plan to make
investment decisions into the charging infrastructure take into account
their expectations about which network now and in the future will be
dominant to avoid stranded assets. The IB is an important parameter to
evaluate this. Additionally, Tesla might be able to leverage the synergy
between the ownership and IBs of solar cell installations (via SolarCity)
and BEV owners IB of its car and infrastructure system to include it
into the electricity storage and renewable energies production system.
5.2.5 Attracting or Providing Complement(ors)

One critical action in platform product markets is the sustaining attrac-
tion of complementors because only with complementors do the products
becomes really valuable. In general, OEMs failed to successfully attract
2
In contrast, charging stations have mostly been set up in shopping malls and
retail locations (Blaesser and Negro, 2019) even though in some sense these are not
as well suited as workplaces as shopping doesn’t take as much time as a day job and
there is a lot less predictability about it.
complementors (the charging network) or take other steps to ensure a

sufficiently robust charging infrastructure. However, fortunately, the
industry did not engage in a lengthy, fierce and costly standard war.
Early on OEMs formed alliances and signaled their preferred standard
making it easier for complementors to decide on their investments. Also,
standard setting bodies early on decided on standards (e.g., with the
CCS in the European Union). However, for complementors to invest
and develop charging infrastructure, much uncertainty remained and
prevented investments and the build-up of a powerful complementor net-
work. Many decisions in this platform context are interrelated making
investments less forgiving or flexible than in platforms such as software
development. Complementors must decide where to place charging sta-
tions, how many, and at which levels of charging. All of these decisions
have interrelations to other complementors (Is a competitor planning
charging infrastructure close by?) and OEMs (What size will batteries
in future cars be? Will EVs be designed for local urban commutes or
for long-distance highway travel?). The failure to coordinate the many
decisions results in a general unattractiveness for complementors to
invest.
Tesla’s strategy is entirely different. Tesla did not set out to attract
complementors. Rather, Tesla built the complementing product on its
own, which allowed Tesla to reduce much of the information asymmetry
and reduce the investment risk. Tesla now can strategically position
the complementary product that best fits its current and future car
features, and can align network and route optimization between car and
infrastructure. Additionally, by leveraging the IB, Tesla also was able
to attract some external complementary charging with its Destination
Charging. The strategic question now facing Tesla is when and to what
extent to open the platform (especially the complementor-side)?
5.2.6 Product Quality, Product Range and Timing

Another important question in platform product markets is product
quality (quality of vehicle as a single component compared to the
platform quality) and the range of products offered (broad versus
narrow). In networked markets, decisions on product quality, product
5.3. Management of Value Chains versus Platforms 279
range, and timing can be very different from standalone products. That
is because a firm’s network size determines the network benefit for an
existing or potential user. Thus, the network becomes a fundamental
asset linked to product quality and customer utility (Bhargava et al.,
2013). Network effects drive up the importance of a large installed
base, and make versioning and product line expansion more attractive.
For goods with network effects, having an expanded product line with
multiple versions can help resolve the conflict between growth and
profitability (Bhargava and Choudhary, 2004). How should the firm
approach product line expansion under the presence of expansion costs
and uncertainty about developer participation?
In the BEV case, very different strategies regarding product quality
and product range are observed. The OEMs are generally focused on
a very high quality of the car component and put comparably lower
emphasis on the combined product quality of charging system and car
together. The assumption here is that OEMs in general plan to make
money on the car side only. The product mix is rather limited. This
limited product mix of incumbent OEMs leaves space for newcomers to
access the market with their own offerings.
On the other hand, Tesla has a comparably lower quality of car but
offers a higher platform quality with the extensive charging network
and all its additional charging features. Also, Tesla has a much broader
product range with more models of cars on their platform. A private
network with an expanded product line creates an entry deterrence
effect, which allows Tesla to achieve scale more quickly (both more EVs
and bigger charging network).
5.3 Management of Value Chains versus Platforms
Platforms pose a major disruption to decades old management wisdom

and necessitate a rethink of management strategies. Five key character-
istics prompt this rethink:
(1) Platform product utility is the combined utility of multiple sides,

stand-alone products have stand-alone value.
(2) In platforms, unlike in products, the supply and demand side can
incur cost or generate revenue.
(3) Products depreciate in value through use, platform products ap-

preciate value through use.
(4) Network effects typically scale better outside of the firm, meaning
value creation happens outside the company by:
◦ Valuing interactions in addition to assets.

◦ Shifting emphasis from employees to external contractors,
from internal experts to external crowds.
(5) Competition can occur at multiple layers: between platforms,

between complementors and between the platform itself and its
complementors.
◦ Competitive advantage is generated by seamless access more

often than classical entry barriers.
First, platform products must not maximize the utility of a product

but the utility of a platform. For example, Tesla’s platform perspective
optimizes the utility for electric mobility through its offering. The
product “car” is combined with the product “charging” to form the
platform product of electric mobility. In contrast, OEMs optimized for
the standalone “car” product produce a beautifully engineered car at
minimized production costs but leave the user mostly alone to figure
out the charging aspect of the product. However, from the perspective of
the OEMs this can be a viable strategy. As outlined, in the long run in
the specific case of EVs, the platform aspect will decrease in importance.
Once the charging infrastructure is built out to a sufficient degree, the
characteristics of the car will dominate (as we see today with petrol
stations and internal combustion engine cars). As OEMs historically
optimized the production of cars and their design, they could employ a
waiting strategy until these capabilities become dominant also in the
BEV market again. However, given the relative advantage of OEMs
in producing cars, for Tesla it made a lot of sense to act as platform
provider to deliver both the cars and the charging.
5.3. Management of Value Chains versus Platforms 281
Second, another major shift between standalone products are their

basic economics. For standalone and pipeline-like products, the product
itself incurs costs and realizes profits. Ultimately, the production costs
of the product need to be lower than the realized revenues. In platform
products, both sides can incur costs and accumulate revenue. Google’s
GSuite incurs cost but does not realize any revenue with most private
customers because it is largely offered for free. In a standalone offering
this would not be a successful product, however with platform products
this strategy is viable as all sides can incur costs and accumulate revenue.
Tesla’s strategy to include “free” charging into their platform product is
a viable option in platform markets, however it is not a viable option in
a linear value chain business. The same is true for standalone charging
infrastructure providers. Try as they might to optimize their product
and its delivery, it will never be a viable standalone option to offer
only charging for free. Also note, that although platform products have
a higher degree of freedom in generating revenue, in the end revenue
needs to come from somewhere. If Tesla does not monetize the charging
network (charging is largely offered for free), they have to make money
on the car. And in this space, they will in the long run face the core
competencies of the OEMs.
Third, standalone products depreciate in value through use, while
platform products appreciate value through use. This characteristic is
most pertinent for digital products, as their use is nonrival (a good is
nonrival when its use by one does not decrease its usefulness to any
other agent). Given their physical nature, cars and charging stations are
not nonrival but to a certain extent the characteristic still applies. The
more Tesla cars are used on the road, the better the charging network
will become as the incentives to deploy Tesla charging increases. And,
because the data from cars in use can be used to optimize charging
network performance, there is a network effect at work.
That leads to the fourth major shift: Typically, network effects scale
better outside of the firm. This means that essentially value creation
happens outside the company (compared to internal value creation
with product firms). Hence, platform organizations need to open up
and curate the external ecosystem of partners instead of their internal
value chain. EV manufacturers would engage the players mentioned
in the section on installed base to contribute to the platform. Tesla,

for example, as a currently low-margin and loss-occurring hardware
manufacturer could franchise or outsource the “car-side” and focus on
offering the software component that is the charging network. However,
none of the players is actively pursuing that strategy. The OEMs are still
managing their pipeline businesses while Tesla builds out the platform
product with an integrated model playing on both sides. The relative
inaction of the competition has not pressed Tesla into fully acting as
an open platform.
Finally, platform products and value chain products also differ in
the ways in which competition plays out. In pipeline business, actors
mainly compete with other standalone products and the partners in
the supply chain compete with similar firms in other supply chains.
In platform business, competition can occur between platforms. The
Tesla system competes with the systems of other OEMs.3 Further,
complementors compete between each other on the same platform.
A charging infrastructure provider in an open platform would compete
for customers of the same platform. Today, this competition barely
exists due to the relative lack of charging stations. Additionally, the
platform itself can compete with its complementors. If Tesla were to
open its platform to other charging providers, Tesla’s own supercharger
network would compete with the other provider’s offerings.
5.4 Governing Openness
Platforms or multi-sided markets are defined by the interplay of vari-

ous sides (the owner, the complementors, the users). It is essential to
“establish governance mechanisms that appropriately bound participant
behavior without excessively constraining the desired level of gener-
ativity” (Wareham et al., 2014, pp. 1195–1196). Governing openness
promotes success, but how much do we want to rely on external con-
tributors? What is needed to provide the incentives and structures to
attract these?
3
At the current stage of the market it is even questionable if OEMs have a
platform system to compete with Tesla as they typically only cover the “car-side” of
the platform.
5.4. Governing Openness 283
In platform markets there are frequently strong arguments to choose

openness. In these markets, firms essentially rely on the generativity of
the outside network (Henfridsson and Bygstad, 2013). In plain language,
individual apps are not essential, but millions of individual apps are
critical. To generate such a variety of offerings, firms need to rely on an
open network of partners to supply this. Additionally, the advantage
of an open strategy is that the firm holds the options for success but
outsources the risk of failure. If a developer decides to develop an
application for the firm’s platform, it has options toward the success (if
it will be a successful application, it makes the platform more attractive),
while in the case of failure, the developer bears the vast majority of the
costs.
The power of openness has been impressively shown by the build-out
of the Android ecosystem, the MySpace versus Facebook case, and the
opening of Apple. The radical openness of Android allowed Google to
overcome a late start when first Microsoft’s and then Apple’s ecosystem
had threatened to dominate the smartphone market (Pon et al., 2014;
West and Gallagher, 2006). Facebook’s dominance over MySpace only
started when Facebook opened to an external ecosystem of partners in
2007 (e.g., Zynga’s Farmville attracted many users). Also, Apple got
really successful after opening up compared to their rigorous closeness
in the 1980s and 1990s:
Steve Jobs failed miserably at managing openness at Apple

in the 1980s. He charged developers for toolkits – inhibiting
the very software producers he should have wanted on Ap-
ple’s platform. The result was that Apple struggled to create
a robust platform connecting Apple customers and software
producers. For years Apple’s market penetration hung in
the single digits. Apple has since figured out this balance,
of course, by opening the iOS platforms to app developers.
By contrast, Bill Gates opened Windows to both software
and hardware developers, making Windows the dominant
desktop platform by virtue of its superior ability to connect
software and hardware producers with consumers.
(Van Alstyne et al., 2016)
However, the story can also be told in terms of the potential negative
effects of openness:
Opening up one’s technology is not without costs—a lesson

taught vividly by the case of IBM PC. In the late 1970s,
the major personal computer manufacturers such as Apple
and Atari used proprietary (closed) architectures, meaning
that components produced for different systems were not
compatible. When IBM entered the market with the PC,
it utilized an open architecture, such that anyone could
make “IBM-compatible” computers—effectively opening its
architecture technology. This strategy greatly stimulated
component suppliers to develop products for the PC (and
PC-compatible computers), and IBM quickly became the
market leader. However, once the PC proved successful,
competitors soon flooded the market with PC-compatible
computers, and IBM’s market share dwindled to 5% before
it sold the whole PC business to Lenovo in 2005. In fact,
IBM made unsuccessful attempts to regain control of the
architecture, but could not turn the tide.
(Hu et al., 2016a, p. 133)
Yet, there are also examples of too much openness:
Google learned this lesson when Amazon and Samsung frag-

mented (“forked” in tech lingo) the open Android platform
to create their own open-source versions. Google Android
quickly lost market share to the new versions. Reacting
quickly, Google regained control of the Android system by
restricting access to difficult-to-replicate services such as
mapping and by shifting important application program-
ming interfaces (APIs) to the proprietary Google Play Store.
Android’s story demonstrates that platform openness is one
of the key managerial decisions that can determine platform
success or failure.
(Van Alstyne et al., 2016, p. 3)
These examples of openness decisions illustrate vividly the delicate

management decisions that need to be addressed. Openness needs to
be managed and controlled to avoid negative effects. For example,
the quality of the platform offerings need to be managed. AirBnB
has an interest to provide good quality listings, hosts, and guests.
Uber has an interest to offer clean cars, punctual rides, and friendly
drivers. And EV-producers have an interest that the offered charging
stations are functional, users have adequate payment options, and don’t
have to wait in lines for charging. Moreover, the adequate reward of
the complementors needs to be managed and poses another delicate
management task. For example,
Back in 2000, several automakers including Daimler-Chrysler,

Ford, GM, Nissan and others invested in Covisint, an online
marketplace intended to match buyers and suppliers of auto
parts. Unfortunately, Covisint’s ownership structure and
auction format heavily favored auto companies (the con-
sumers on the platform) while forcing suppliers into fierce
price competition, leaving them with little or no residual
value. As a result, parts suppliers left the platform and the
market never became sustainably profitable. In 2004, the
residual assets were sold off for a mere $7 million, a tiny
fraction of the $500 million auto manufacturers had invested.
(Van Alstyne et al., 2016, p. 4)
In the case of EVs, the question of openness is of central importance

mainly because of the high investment costs and the benefits of local
information that is needed to build the charging network. In an open
system, the investment costs (and risks) could be shared among many
players and local knowledge could be harnessed decentrally.
Again, the players in the market employed varying strategies of
empowering openness in their strategies to deploy EVs. The incumbent
OEMs followed a rather open approach to agree upon and set open
standards for the complement and invited other players to invest into
the charging infrastructure. Both around the CHAdeMO and the Type 2
standard potent industry consortia formed. In contrast, Tesla followed
a closed approach by developing non-compatible charging infrastructure

(especially on the software side) and decided to build out the com-
plementing almost completely on its own (with the exception of the
Destination Charging program for Level 1 charging). However, Tesla did
not follow a strictly closed approach. Tesla also opened up patents to
invite complementors to build on this (as already previously discussed
in the section on signaling). Despite the use of some forms of openness
strategies, neither the incumbent OEMs nor Tesla were able to fully
leverage the advantages of an open strategy.
Although Tesla showed impressive progress in deploying fast charging
infrastructure in many countries and through their closed approach can
ensure comparably extremely high levels of quality for their complement,
Tesla lacks the generativity of a bigger ecosystem. As a result, scaling
becomes difficult. In 2017, with the announcement of the Model 3 and
400,000 pre-orders for this vehicle, an analysis by UBS found that in
order to ensure similar coverage as the existing network, it would need
to add around 7,500 superchargers to match the increased demand of
the Model 3. To achieve a similar coverage to existing gas stations,
an additional 30,000 superchargers would need to be added to their
network (DeBord, 2017). Tesla needs to make money on one side at
least, the car or the charging infrastructure. This dilemma comes with
critical questions:
• On which side to make money in the long-run? Thinking of this

as a finite-horizon game (eventually the network will become
competitive), do you make high margins on side 1 (EV), in which
case (like Apple) you keep it closed? Or do you make money on
side 2 (charging), in which case you open the system? Should
Tesla keep losing money making cars, or should they change their
business model?
• How long do you keep the network proprietary (as a function of

anticipating entry by new competitors)?
• How rapidly do you deploy the supercharger network (which goes

hand in hand with how many cars you make and which kind of
cars)?
A possible way forward could be counterintuitive to classical strategy

point of view: Become more open on the car side by opening patents (and
thus become a partially open platform architecture). This could help to
scale and decrease costs in the entire supply chain and consequently build
the installed base of cars. As Tesla owns the proprietary complement (the
charging infrastructure), they could retain sufficient control. Moreover,
Tesla could use the lead in charging network to delay or deter entry
of competitors. Tesla could continue to control very critical aspects
of the system, such as route planning, and become a complement in
adjacent platform markets such as energy, stationary trade, or introduce
reservation systems.
The OEMs played a different game. As they are typically profitable
in producing cars, their strategy was to push very open and standard-
ized systems (one defined plug). In other words, OEMs chose to invite
as many players as possible to build out the complementing charging
infrastructure to leverage the generativity of a broader ecosystem. How-
ever, as this open system was not actively managed, it ran into several
strategic and operational problems:
• The lack of coordination between the two sides of the platform (car
sales and deployment of charging infrastructure at the right place
at the right time) exacerbated the complexity and fragmentation
of the system.4 This is further complicated with delayed feedback
(building charging infrastructure takes time from the initial intent
and planning to opening).
• The extremely open architecture led to extremely high variety in

charging systems (access, billing, software protocols, etc.) and a
fragmented market.
• The quality of the complements is not sufficient. This includes

software features such as live availability data which is the basis for
route planning, decreasing range anxiety or a reservation system.
4
This lack of coordination between the sides resulted in what an industry analyst
describes as state of the industry “. . .uncoordinated development with no reference
to existing facilities, and accessed by proprietary means of access and payment,
creating yet another layer of complexity and fragmentation on what is already a
deeply fragmented system” (Miles, 2019).
• The option space for platform architecture products was not fully
exploited. For instance participants did not employ the following
coordination strategies
◦ Subsidizing
◦ Signaling
◦ Leverage of common installed based
◦ Exclusivity agreements
◦ Bundling
◦ Product quality and range.
6
Outlining Future Strategic Directions
In this section, we aim to give an overview of strategic decisions actors

are currently faced with and to apply the platforms literature to frame
the trade-offs underlying these decisions.
6.1 Finding an Answer for Both Sides of the Market
One of the fundamental premises of platform markets is that both

sides of the market must grow in parallel. Investments in one side
of the market will prove to be wasted under a lack of robust growth
in the second side. The BEV industry has not demonstrated success
in effectively and efficiently coordinating both sides of the market.
On the one hand, both automobile makers and independent charging
infrastructure providers have primarily focused on their respective sides
of the market. On the other hand, while Tesla has managed both sides
until now, its limitations in perfecting manufacturing efficiency and
supply chains may cause challenges and capital constraints in the long
run. For participants to be successful in this platform market, they
must effectively harness the strategic options multi-sided markets offer.
What are some things they could do better?
289
290 Outlining Future Strategic Directions
Coordinate through pricing: First, the players in the market

can make use of coordinated pricing between OEMs and inde-
pendent charging infrastructure providers (EVgo, Charge Now,
Electrify America, utilities). Without coordination, the charging
infrastructure side tries to run a profitable stand-alone network
and suffers from low utilization rates, leading to slower expansion
of the network and, in turn, to slower adoption of BEVs due
to the lack of charging infrastructure availability for customers.
This deadlock could be overcome if, for example, OEMs factor an
amount of “charging credit” into the selling price of the car to
provide a certain subsidy to the charging side.
Coordinate the software level: Second, the market coordina-

tion also needs to happen on the software level. Based on consumer
preferences, the machines (car and charging infrastructure) should
be able to communicate to optimize the overall system. This
starts with simple real-time information about availability, future
availability (how long will the currently charging cars still take),
pricing for preferential access or charging speed, and could go into
route optimization based on charging needs. For that to happen,
either a technological standard will emerge, or it will be likely
that this market-coordination service will be offered by a platform
that tries to aggregate data from both sides and coordinate the
two sides.
6.2 How OEMs Will Deal with Tesla’s Lead in

Supercharger Stations
As laid out before, all players in the game need to actively play the
platform architecture of BEVs in order to be successful. Being a second
mover, for OEMs one of the critical questions will be how to handle
the lead of Tesla for the complementary product. Although Tesla has
arguably a lead on both sides of the market, it is comparably easier for
the OEMs to catch up on the hardware (car) side.
Building their own: While building the complementary on their

own offers the advantages of optimizing the interfaces, arguably
6.3. Tesla Switches the Game, But When? 291
faster decisions and less coordination across organizations, it re-

quires higher investments and comes with high uncertainty of
utilization and access for customers. OEMs could very actively
target Tesla’s current white spots both in terms of car sales and
infrastructure deployment. However, given the lead of Tesla’s
superchargers across highways, it mostly means building up re-
dundant infrastructure.
Partner with other OEMs: Partnering up with other OEMs

and trying to jointly challenge Tesla comes with the advantage of
shared investments and a much larger installed base on the car side.
This reduces uncertainty about complement utilization. However,
it requires collaboration between competitors and potentially
lengthy coordination. A Joint Industry Computerized Reservation
System (JICRS) scenario is likely to develop. Additionally, in both
scenarios, OEMs must convince their stakeholders that they are
moving into the business of charging.
Partner with Tesla and pay for the access to the network:
A third option for OEMs would be to pay for the access to
Tesla’s network. This would immediately open a broad installed
base of the complement to their own customers. For Tesla, the
advantage is that it would amplify Tesla’s ability to monetize a
high-cost infrastructure and expand its market reach to customers
of competitors’ products.
6.3 Tesla Switches the Game, But When?
Assuming that Tesla needs to make consistent profits eventually, simply

said there are two strategic options Tesla can play. Currently, Tesla
aims to make profits by selling cars and mostly subsidizing the charging
side of the platform. However, Tesla could turn this around and try
to largely monetize the charging network and subsidize the car-side
of the platform. There are several factors that make such a switch
increasingly likely. First, while moving from a premium manufacturer
with low unit outputs to a mass manufacturer with high unit outputs,
generally margins shrink and competition from existing OEMs increases.
Second, many more OEMs (which are likely have better optimized
productions) seem to move into the market with new BEV models and
increasing competition and accelerating price pressure. Third, Tesla’s
charging network is the most extensive and comprehensive in many
markets and Tesla is in the unique position to control two-sides of the
platform, which likely gives them a know-how advantage. The biggest
question for Tesla is how defensible is their charging network when
opening up?
Local network effects and consumer heterogeneity help to defend the
network in the short run. However, in the long run, these will become
less important as mergers on the side of charging network providers will
happen and charging becomes more and more a commodity making
the network hard to defend. Additionally, the public supercharging
network “competes” with increasing battery capacity and the option
for home-charging, decreasing the likely utilization levels in the long-
run. Customers who have high-quality home charging are likely to
have limited and highly unpredictable need for a public supercharging
network. In light of this, charging station providers might need to rethink
monetization strategies, perhaps switching from the current per-unit
pricing model to a two-part tariff pricing scheme where customers pay
for both membership (or right to access the network when the need
arises) and usage.
New technological developments, such as ever-increasing charging
performance, expose Tesla’s installed base to be overtaken by new tech-
nology generations—on both sides of the market! Also, history teaches
that, in many cases, only for the second owner or after significant write-
offs does infrastructure become profitable. For example, the Eurotunnel
that connects France and Great Britain under the English Channel was
unprofitable for more than a decade and became profitable only after
a significant debt write-off of £3,400 million. The biggest opportunity
to defend the network in the long run would be the failure of competi-
tion to effectively coordinate cars and infrastructure—a scenario that
is not uncommon in platform markets (e.g., in the SABRE case, but
also in the case of CHAdeMO the challenges of coordination become
apparent).
6.5. Create and Make Use of Good Quality and Dense Data 293
6.4 Effectively Work Scarce Capacity and Fragmented Markets
Currently, fast charging infrastructure is a scarce good both in general

availability (density of the network) as well as in specific (comparably
long waiting times once it is blocked). Surprisingly, capacity markets,
which typically emerge in scarce industries, have been left out so far.
Hence, it is likely that this market will still emerge, as long as it remains
a scarce good. In the easiest form, this scarcity can be for example
exploited through a reservation system, for example, that provides the
security of having a charging spot when needed through paying a fee or
premium. Additionally, preferences of slower and faster charging needs
can be taken into account.
Additionally, the currently fragmented market of charging infras-
tructure providers with many different providers and access, pricing
and billing systems is likely to undergo a consolidation comparable to
aviation alliances, which leveraged joint routing, preferential access and
pricing to members, as well as bundling options.
6.5 Create and Make Use of Good Quality and Dense Data
As already outlined above, data on both sides of the market could

substantially help to coordinate the sides of the marketplace. It is
surprising that for the most part, good quality and dense real-time data
about supply and demand for charging have not been utilized (again,
with Tesla being the exception in delivering real-time information about
charger locations and availability to customers). Taking the learnings
from other platform architecture markets, it is likely that in the short-
term mid-level data platforms will emerge that offer services such as
real-time information about charging station availability and reservation
options. These platforms solely work the data layer across providers
of both sides and perform a critical coordinating role. The level of
openness of both the hardware (car) and software (charging) providers
to allow for “generativity” will define the speed and richness of this
solution.
6.6 Investors Need to Accept the “Platform Game”
In order to win in the platform game, investors need to start accepting

the rules. Building and coordinating multiple sides of a market typically
requires high upfront investments over an extended period of time
primarily because demand side economies of scale are slower to achieve
and harder to predict. For many years after its IPO, Amazon reported
quarterly losses as it invested into a multi-sided marketplace. But in
2017—over 14 years after its IPO—they reported a profit that exceeded
the cumulative profits of all 58 previous quarters (Griswold and Karaian,
2018). Much to the surprise of Wall Street, Jeff Bezos was able to invest
over long period of losses and build out a multi-sided platform. Elon
Musk is similarly succeeding in convincing public investors to repeat
quarterly losses in favor of growing and building a platform business
(although that is rarely Tesla’s communicated strategy).
However, many investors are not willing to support such investment
in, or their analytical tools are not designed for, a world of multi-sided
platforms. Surprisingly, the vast majority of comments from Wall Street
analysts covering Tesla do not cover its multi-sided product architecture.
That fact makes it increasingly difficult for public companies to switch
from a pipeline business into a market where a company invests in
two or multiple sides simultaneously. On the contrary, venture capital
investors have been much better in detecting and understanding the
dynamics of multi-sided markets and investments in complementary
products. The relative lack of venture capital into the complementary
product indicates that they do not expect superior profits down the
road.
6.7 Productivity Gains in Building Charging Network
An open question is, if in building out the complementing charging

network, productivity gains can be realized, and economies of scope
and scale are existent? If that is the case, Tesla’s network is more likely
to be defensible, whereas if it is not, the emergence of a mid-market
platform coordinating the fragmented market of many suppliers is more
likely.
6.8. Prepare for a “Joint Industry Wide Supercharging Network” 295
On the one side, it is likely that productivity gains and economies

of scale can be realized from purchasing equipment and energy in bulk
as well as from learning effects in building out the network. On the
other side, there are strong arguments that significant productivity
gains can be realized in building out the network. By definition, it is
a fragmented business, entails significant labor costs, and deals with
a fragmented purchasing market for energy (e.g., often local energy
providers). Site specific differences result in recurring planning costs,
and most importantly, the “easiest” locations are typically built first,
which increases the likelihood that the next charging station will cost
more. However, this argument also favors the early mover and, for Tesla,
increases its chances to create a defensible network. Taken together,
it is unlikely to see significant productivity gains in building out the
charging network, which decreases its defensibility.
6.8 Ultimately: Prepare for a “Joint Industry Wide Supercharging

Network”
Despite likely being defensible in the short run, it is very unlikely that
proprietary charging networks are defensible in the long run and the
likely low profits make this complement rather unattractive to defend.
Hence, sooner rather than later, the industry will move toward a joint
supercharging network. However, this development by no means can
be taken for granted. In the 1970s, driven by technological innovations
and deregulation efforts, the American airline industry started several
attempts to jointly develop a standard passenger reservation system that
would allow travel agents to book airline seats directly with multiple
airlines (reducing the process from about 90 minutes to a few seconds).
The largest attempt was the Joint Industry Computerized Reserva-
tion System (JICRS), that was evaluated as technologically feasible
and economically attractive to all participating airlines (Copeland and
McKenney, 1988). Nonetheless, the partnering airlines could not agree
on the mechanisms of cost sharing and voting rights in the consortium
(Copeland and McKenney, 1988). Ultimately, several airlines devel-
oped their proprietary systems and fought a costly battle for market
dominance (Copeland and McKenney, 1988; Copeland et al., 1995).
A joint network poses continuous coordination challenges on its

network members. It is likely that there will be technological advances
in charging and battery technology for the coming years. In order
to be compatible with the network, industry-wide standards become
significant. Overall, policy interventions are likely.
6.9 What Should Policy Makers Do, If Anything,

to Promote Competition?
The current state of the market sees potentially two parallel platform
markets compete. On the one side Tesla builds its proprietary fast-
charging network and on the other side other players build another
more open charging network that in itself may be fragmented into
many smaller networks. Policy makers can either decide to let the
market’s competitive processes define the winner or decide to take
actively promote competition. In general, a platform market is associated
with market power through its multi-sided nature, economies of scale,
data-driven economies of scope, and the virtuous cycle of network
effects. However, market power that is gained through an efficient
competitive process is generally good news because it implies efficiency
in the production process and high quality products and services. When
a dominant position is associated with maximization of efficiency in
production and value creation, it should be welcomed (see Parker et al.,
2020).
However, letting market participants fight it out can be a capital
intensive, long, inefficient and wasteful process. A recent example is
the standard war between Sony’s Blu-ray and Toshiba’s HD-DVD. The
competition started in the early 2000s and continued until 2008 when
Toshiba announced to cease development of the HD-DVD (den Uijl
and de Vries, 2013). In order to win the market, both players and their
respective consortia spent billions of dollars to subsidize their respective
complement markets to tip the market in their favor (den Uijl and de
Vries, 2013).
Policy makers may elect an altogether different set of actions in
the market for BEVs. If the society wants to prevent a long and costly
competition between various platforms, because the desirable outcome
6.9. What Should Policy Makers Do 297
would be a faster transition to carbon-free transportation, policy makers

should intervene. But instead of looking at traditional antitrust regula-
tion, tools should focus on value creation before focusing on competition.
On the charging network side, it is important to ensure that multihom-
ing is possible between platforms. A first step to achieve this is to reduce
the switching costs (the Open Charge Point Protocol is an important
step for this) and ensure data portability. At the same time, this open
standard should be encouraged where interoperability between different
competing platforms is enforced (between Tesla’s charging network and
other more open networks). Additionally, we already see that traditional
(ex-post) antitrust intervention will be less effective in markets driven
by network effects and policy makers need to combine it with a proper
(ex-ante) regulatory framework (Parker et al., 2020).
7
Research Agenda
At a high level, we would argue that platforms and network effects are
driving a fundamental restructuring of supply chains as firms learn to
incorporate these market characteristics into their strategic and tactical
plans. In this monograph, we laid out the perspective and insights one
might gain from viewing the current state of the electric vehicle market
from the platform lens and how such a view affects firm strategies as
they seek to compete in the BEV market. Many other markets also
share time and/or spatial, and/or product/company, and network effect
characteristics. Further examination of these markets will, undoubtedly,
contribute to the developing understanding of the platform economy.
Electricity: EVs are not just automobiles, but also can serve as media-
tors in electricity production, storage, and reuse (see Weiller and Pollitt,
2016 for an overview). Zooming out and including the EVs and charging
infrastructures’ possible role in the energy systems reveals additional
platform architectures, again with important data layers (Parker et al.,
2019). The deployment of volatile energy resources (typical for many
forms of renewable energy resources) is positively correlated with the
need for energy storage. This issue is currently not as apparent, as
established power plants and flexible demand side energy sources can
298
299
balance the fluctuations. However, in the long run the electricity storage
capacity of EV’s batteries could be an important part of this system.
And the story of the platform architecture repeats—the deployment of
more volatile energy resources will depend on the deployment of storage
systems. Many of the issues, but also opportunities to actively manage
this platform, similarly arise.
Internet of Things (IoT): The vast majority of IoT applications
involve strong same-side and cross-side network effects. Given that it is
beneficial for a user to connect and manage a refrigerator by a mobile
application, it would be increasingly beneficial if the user could connect
with other home appliances or broader smart home applications. At
the same time, it would be even more valuable when these devices
connect to services outside of the home such as automatic refill of the
milk that is about to run out. On the other side, the more appliances
connect to one provider of refilling services the better their services
presumably become. At the same time, connecting many milk bottles to
the platform could improve refilling process. Naturally, we can continue
on this road for quite a way and in the same manner for industrial IoT
applications, but the mechanisms should be obvious.
Smart Cities: Although many of the IoT examples equally apply to
Smart Cities, some additional domains with platform characteristics
emerge. For example, many cities try to establish open data platforms,
where urban data is more or less freely accessible in the hope to spur
entrepreneurial activity in the city and innovative solutions. However,
effective governance mechanisms that balance generativity and control
in this context seem yet to be identified. Additionally, many possible
connections and network effects can be possible, raising the question of
what is the chicken and what is the egg? One example is the problem of
finding parking in cities or matching available parking spaces with cars
searching for parking. This could be solved by many different solutions:
predictive models of smartphone data, sensors in parking lots, virtual
reservation systems, sensors in cars, and many more. However, a solution
300 Research Agenda
is most likely to emerge when all vehicles in a city use the same system
and the question of where to start remains.
Supply Chains: At a high level, all of the industries we have discussed
in this monograph are examples of how supply chains can be recon-
figured using platform resources. The traditional business architecture
that evolved after the early industrial revolutions required firms to
build large and stable production and distribution systems in order
to enjoy economies of scale and achieve lower marginal costs. This
architecture, which dominated businesses in the 20th century, typically
involved supply chains comprising tens of thousands of thoroughly
vetted business partners under long-term bespoke contracts, thereby
achieving predictable supply and production. Yet, demand in most
industries is volatile, fragmented, and not fully predictable, creating
a messy demand-supply matching problem. Platforms take a different
approach to this problem. Rather than have highly negotiated bespoke
contracts, platforms use information technologies to enable lightweight,
automated, and possibly short-lived, contracts, thereby building out
a dynamic ecosystem with thousands or millions of business partners.
Where relationships were once relatively stable, platforms offer the
opportunity to reconfigure technology, assets, and partners more fluidly
than in the past. Supply (or demand) components can be turned on and
off as needed, making the overall system more responsive and optimized
to current realities than a traditional batch optimized system with rigid
long-term allocations.
Consider Toyota City in Japan. The constellation of firms that supply
Toyota clustered near the firm over time and formed an interdependent
system for product design, development, manufacturing, and logistics.
The relationships tended to be fairly stable over time. By contrast,
firms that work with the SAP or Salesforce platforms can be attached
to the system more quickly to provide solutions to a broader set of
end customers using platform technology. A supply chain view provides
a fundamental link to existing operations management practice and
scholarship, and the increasing impact that platforms that harness
network effects are having on firm operations.
7.1. Final Observations 301
7.1 Final Observations
In this monograph, we have analyzed the battery electric vehicle industry

from a platform perspective. We have provided significant historical
context for the BEV industry and have also provided a review of the
platform literature. One of our major goals in undertaking this project is
to call increased operations management research attention to platform
markets. We believe that analyzing markets from a platform and network
effects perspective will yield valuable insights about possible decision
spaces and strategic directions for firms. Thus, we invite scholars to think
about their research and see how they might productively incorporate
a platform view.
Acronyms and Definitions
BEV Battery Electric Vehicle

CCS Combined Charging System
CDMA Family of third generation mobile technology standards
predominantly used in North America.
CHAdeMO CHArge de MOve—is the trade name of a quick
charging method for battery electric vehicles
DCFC Direct Current Fast Charging
EV Electric Vehicle
EVC Electrical Vehicle Company
GSM Global System for Mobile
Communications—a European telecommunications
standard for second generation (2G) cellular networks.
IB Installed Base
JICRS Joint Industry Computerized Reservation System
MSP Multi-sided platform. The literature uses the terms
“platforms,” “multi-sided platforms,” and “two-sided
markets” interchangeably.
OCPP Open Charge Point Protocol
OEM Original Equipment Manufacturer—in this monograph
equivalent to car manufacturers
OM Operations Management
SABRE Semi-automated Business Research
Environment—Sabre aggregates airlines, hotels,
online and offline travel agents and travel buyers
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Foundations and Trends® in Technology,

Information and Operations Management

1 Introduction: Are You Playing a Platform Game? 205

2 Battery Electric Vehicles as a Platform Good 209

3 BEV Industry to Date: Decisions and Challenges 224

5 Understanding Actors’ Decisions

6 Outlining Future Strategic Directions 289

7 Research Agenda 298

the refueling network for gasoline vehicles is already robust,

By now, many managers won’t have trouble spotting and understanding

Moving toward carbon-free societies and economies is a widely pro-

adoption of Battery Electronic Vehicles (BEVs) adoption is lagging well

2.1 Competitive Entry: Challenging a Leader

In 1983, Toyota chairman, Eiji Toyoda, issued a challenge to his company

Toyota’s strategy was a winner. It had no reputation as a maker of

unanimous in heralding the e-Tron as the challenger to Tesla, much like

2.2 A BEV is a Platform Good

We claim that a BEV is more than just an electric vehicle market. It is a

entertainment applications, such as video streaming, gaming, and social

2.2.1 Then, Aren’t Gasoline Cars Network Goods Too?

(2) Network density: Unlike the widespread network of refueling sta-

(3) Interoperability: Even the relatively small number of BEV rapid

only a few hundred stations (presently with lower performance)

To summarize, at this point in the BEV product cycle, the decisions

2.2.2 Do Auto Makers’ BEV Strategies Reflect

platform thinking has not been widely adopted in business actions in

emissions scandal;12 similarly, Ford and Volkswagen recently announced

2.3 The Charging Station Dilemma

Based on our anecdotal observations, many people are unaware that

first become a “member” before being able to access a charging port.

2.4 The Buyer’s Dilemma: Gasoline or Electric Vehicles

Consider a representative consumer’s demand and adoption of a gasoline

for a buyer looking to purchase at time t, utility is

U0t = u(q0 ) + f (N0t , E[N0t ])

Where E[N0t ] represents an expectation regarding upcoming stations

The picture for non-Tesla BEVs (j ≥ 1) is rather different. First,

refueling stations is irrelevant to that comparison! Therefore, competitive

2.5 Needed: A Platform-Aware Strategy and Policy for BEVs

2.6 Organization and Summary

3.1 Toward Sustainable Mobility with

It may appear that electric vehicles are a new phenomenon enabled by

that are familiar today: private ownership, unlimited recharging for

or diesel fuel (Høyer, 2008). Since then, a multitude of new hybrid

3.2 Early Experimentation (2000–2010)

networks across several countries (Squatriglia, 2009b). With its range

3.3 Conquering Mass Markets (2010–2018)

Starting in 2010, three new models became available to customers in

protocol (CHAdeMO, 2019). Also in March 2012, German and U.S.

Figure 3.1: Tesla supercharger U.S. locations in 2013.

Figure 3.2: CHAdeMO’s available fast charging network in 2013.

Figure 3.3: Tesla’s planned supercharging stations, January 2014.

Figure 3.4: Tesla’s supercharger network, end of 2014.

Figure 3.5: Tesla’s supercharger extension plans for 2015.

Figure 3.6: Level 3 charging locations as of September 2015.

with ChargePoint to invest $2 million to install 100 chargers along the

(Ramsey, 2015c). Early in 2016, Tesla began to take reservations for

Nissan introduced a new version of the Nissan LEAF with an in-

EVgo and Tesla have the largest

Figure 3.7: Ownership of fast charging stations in the U.S., 2018.

Figure 3.8: Breakdown of charging points by operator type and country/region.