Business Model Changes in the Automobile Industry - A Single Case Study of Volvo Cars

Abstract: The automotive industry's fast-paced environment, digitalization, and electrification have shed light on the significance of the business model (BM) changes. Responding effectively and promptly to the initiative changes and trends is needed for the firms to have profitability. Although BMs should be fitted with their environment to exploit the opportunities, firms have challenges and problems adjusting to and changing them. The literature is scarce about the different types of BM changes firms experience in the massive transformation toward digitalization and electrification in the automotive industry. To address this research gap, a qualitative approach and a single case study of Volvo Cars (VC) through interviews with nine managers were conducted to investigate the types of BM changes between 2017 and 2027. To simplify the broad range of BM changes, this study selected a category with four different types of changes, including creation, extension, revision, and termination. The findings indicate that VC experienced extension and revision in the last five years and will probably have extension, revision, and termination in its BM shortly. Also, the study enlightens the role of individuals and executives and how they intend to avoid changes. It is suggested to forge communication, fully commit executives to the changes, and get everyone on board. Based on the findings, there are three main characteristics in the BM of VC to stay competitive: customer-focused orientation, innovation and development in the products/services, and utilization of partnerships. Finally, the study highlights that the first step in the BM changes is defining the strategy, and then, BM reflects that strategy.