Green Car Manufacturing and Stock Market Performance
Keywords:
Electric car sales; stock market price; large economies; green economyAbstract
The quest for sustainable economic development alternatives is revolutionising the automobile industry toward a more economic and sustainable products. Objective: This paper examines the relationship between green (electric) vehicle products and stock market performance. Prior work: the paper inclines on the innovation and diffusion theory to examine green innovation in auto industry. Method: the paper adopts a fusion of review and quantitative approach. Data were from the International Energy Agency and Investing databases. A fixed effect panel analysis examine how the stock market reacts to two main types of electric vehicles – the Battery Electric Vehicle (BEV) and Plug-in Hybrid Electric Vehicle (PHEV). Result. The result adds to new knowledge namely, the BEV product relates to the stock market significantly at P=0.00002 but negatively. However, the PHEV has a positive and significant relationship with the stock market at a P=0.00001. Implication: Manufacturers introduction of more PHEV products into the consumer market has a high propensity to improve the stock market performance; this finding provides a useful information for stock markets analyst and auto industry strategic planning. It also offers a good innovation case material in business schools. Value: this paper provides the first modelling of two main types of green car on stock market performance.
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Wilberforce, T. et al. (2017) ‘Developments of electric cars and fuel cell hydrogen electric cars’, International Journal of Hydrogen Energy, 42(40), pp. 25695–25734. doi: 10.1016/j.ijhydene.2017.07.054.
Younis, H., Sundarakani, B. and O’Mahony, B. (2020) ‘Investigating the relationship between green supply chain management and corporate performance using a mixed method approach: Developing a roadmap for future research’, IIMB Management Review, 32(3), pp. 305–324.
Baik, Y. et al. (2019) ‘Making electric vehicles profitable McKinsey Center for Future Mobility ® Making electric vehicles profitable’, McKinsey & Company, (March). Available at: Available at: https://www.mckinsey.com/~/media/McKinsey/Industries/Automotive and Assembly/Our Insights/Making electric vehicles profitable/Making-electric-vehicles-profitable.pdf. (Accessed: 12 July 2021).
Baki L, Shioi J, Wen P, Shao Z, Schwarzman A, Gama-Sosa M, Neve R, Robakis NK. (2004) PS1 activates PI3K thus inhibiting GSK-3 activity and tau overphosphorylation: effects of FAD mutations. EMBO Journal, 23:2586–2596.
Bass, Frank (1969). "A new product growth for model consumer durables". Management Science. 15 (5): 215–227. doi:10.1287/mnsc.15.5.215.
Beltramello, A. (2012), “Market Development for Green Cars”, OECD Green Growth Papers, No. 2012-03, OECD Publishing, Paris. doi: 10.1787/5k95xtcmxltc-en
Boudette, N.E. (2021) Tesla reports a big jump in profit, The New York Times July 26, 2021, Accessed 28 July 2021. Available at: https://www.nytimes.com/by/neal-e-boudette (Accessed: 12 July 2021).
British Broadcasting Corporation (2020) Tesla has overtaken the Japanese rival Toyota to become the world’s most valuable automotive company, BBC News, https://www.bbc.com/news/business-53257933 (Accessed: 12 July 2021).
Chang, H. C. (2010) ‘A new perspective on Twitter hashtag use: Diffusion of innovation theory’, Proceedings of the ASIST Annual Meeting, 47. doi: 10.1002/meet.14504701295.
Cision, 2020. The Hottest Electric Car Companies For 2021. Available at: https://www.prnewswire.com/news-releases/the-hottest-electric-car-companies-for-2021-301186765.html (Accessed: 12 July 2021).
Dindaroglu, B. and Takim, Y. (2013) ‘R and D, Innovation and stock market performance: a study on manufacturing firms traded in Borsa Istanbul’, Ekonomik Yaklasim, 24(89), p. 25. doi: 10.5455/ey.35301.
Dosi, G., (1982) ‘Technological paradigms and technological trajectories’. Research
Policy 11, 147–162.
Environmental Protection Agency, (2018) ‘Greenhouse Gas Emissions from a Typical Passenger Vehicle’, March 2018. Available at: https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100U8YT.pdf (Accessed:29 July 2021)
Environmental Protection Agency, 2020. Fast Fast Facts Facts U.S.Transportation Sector Greenhouse Gas Emissions 1990 –2018. Available at:
https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100ZK4P.pdf (Accessed: 12 July 2021).
European Union, 2021. Reducing CO2 emissions from passenger cars - before 2020, https://ec.europa.eu/clima/policies/transport/vehicles/cars_en Accessed 4 April 2021
Ford (2021), Ford Europe goes all-in on EVs on road to sustainable profitability; cologne site begins $1 billion transformation. Available at:
https://media.ford.com/content/fordmedia/feu/en/news/2021/02/17/ford-europe-goes-all-in-on-evs-on-road-to-sustainable-profitabil.html (Accessed: 12 July 2021).
Green, K.W., Zelbst, P.J., Meacham, J. and Bhadauria, V.S. (2012) ‘Green supply chain management practices: Impact on performance’, Supply Chain Management, 17(3), pp. 290–305. doi: 10.1108/13598541211227126.
Grieco, D. (2018) ‘Innovation and stock market performance: A model with
ambiguity-averse agents’, Journal of Evolutionary Economics, 28(2), pp. 287–303.
Hsiao, C. (2007). Panel data analysis—advantages and challenges. Test, 16(1), 1-22.
Hsieh, I. Y. L., Pan, M. S. and Green, W. H. (2020) ‘Transition to electric vehicles in China: Implications for private motorization rate and battery market’, Energy Policy, 144(April), p. 111654. doi: 10.1016/j.enpol.2020.111654.
Irawan, M. Z. et al. (2018) ‘A market share analysis for hybrid cars in Indonesia’, Case Studies on Transport Policy, 6(3), pp. 336–341. doi: 10.1016/j.cstp.2017.09.003.
Isidore, C., ‘(2021) ‘Tesla’s dirty little secret: Its net profit doesn’t come from selling cars’, CNN Business. Available at: https://www.mercurynews.com/2021/02/01/teslas-dirty-little-secret-its-net-profit-doesnt-come-from-selling-cars/ (Accessed: 12 July 2021).
Isidore, C. (no date) Automakers are going green to save money, not just the planet - CNN, CNNBusiness. Available at: https://edition.cnn.com/2021/02/04/business/automakers-ev-cost-savings/index.html (Accessed: 12 March 2021).
Mahajan, V., Muller, E. and Bass, F. M. (1990). New product diffusion models in marketing: A review and directions for research. Journal of Marketing, 54(1), 1–26. https://doi.org/10.2307/1252170
McPeak, C. and Guo., Y. (2014) ‘How the “ Go Green ” Trend Influences The Automotive Industry Financial Performance’, Journal of Sustainability and Green Business, 2, pp. 1–12.
Orsato, R and Wells, P(2007). The automobile industry and sustainability. Journal of cleaner production, 15. 989 -993
Riley, C. (2019) ‘The great electric car race is just beginning, CNN Business, Available at: https://edition.cnn.com/interactive/2019/08/business/electric-cars-audi-volkswagen-tesla/ (Accessed: 29 July 2021).
Rogers, E.M. (1962). Diffusion of innovations (1st ed.). New York: Free Press of Glencoe. OCLC 254636.
Rogers, Everett (2003). Diffusion of Innovations, 5th Edition. Simon and Schuster. ISBN 978-0-7432-5823-4.
Shu, C. et al. (2020) ‘Why firms go green and how green impacts financial and innovation performance differently: An awareness-motivation-capability perspective’, Asia Pacific Journal of Management, 37(3), pp. 795–821. doi: 10.1007/s10490-018-9630-8.
Voelcker, J. (2014) Two billion vehicles projected to be on roads by 2035, The Cristian Science Monitor, GreenCarReports. Available at: https://www.csmonitor.com/Business/In-Gear/2014/0729/Two-billion-vehicles-projected-to-be-on-roads-by-2035 (Accessed: 12 July 2021).
Wayland, M. 2021. Biden wants to build a national EV charging system under $2 trillion infrastructure plan, but it won’t be easy, CNBC. Available at: https://www.cnbc.com/2021/03/31/us-ev-charging-system-a-priority-under-bidens-2-trillion-infrastructure-plan.html (Accessed: 12 July 2021).
Whitmarsh, L and Köhler, J. (2010). 'Climate change and cars in the EU: the roles of auto firms, consumers, and policy in responding to global environmental change,' Cambridge Journal of Regions, Economy and Society, Cambridge Political Economy Society, vol. 3(3), pp.427-441
Wilberforce, T. et al. (2017) ‘Developments of electric cars and fuel cell hydrogen electric cars’, International Journal of Hydrogen Energy, 42(40), pp. 25695–25734. doi: 10.1016/j.ijhydene.2017.07.054.
Younis, H., Sundarakani, B. and O’Mahony, B. (2020) ‘Investigating the relationship between green supply chain management and corporate performance using a mixed method approach: Developing a roadmap for future research’, IIMB Management Review, 32(3), pp. 305–324.
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Published
2022-02-22
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Ngwakwe, C., & Musandiwa, J. (2022). Green Car Manufacturing and Stock Market Performance: Array. Acta Universitatis Danubius. Œconomica, 18(2). Retrieved from https://dj.univ-danubius.ro/index.php/AUDOE/article/view/1592
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Copyright (c) 2022 Collins Ngwakwe, Joseph Musandiwa
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