Building a sectoral innovation system for new energy vehicles in Hangzhou, China: Insights from evolutionary economics and strategic niche management

Abstract

Combining insights from evolutionary economics and strategic niche management, this study investigates the rapid emergence of an innovation system for new energy vehicles (NEV) in Hangzhou, China. Public policy has facilitated the development of strategic priorities and niches for the NEV industry in Hangzhou, demonstrating the role of public policies in advancing the sectoral innovation system. Indeed, the rapid formation of policy stimulates the co-evolution of market and technical niches. More specifically, market niches—such as, in this case, the renting and sharing markets for NEVs in Hangzhou—drive technical niches because market scale provides benefits to manufacturers, who then conduct research and development to improve their technology and reduce production costs. Our case study further recommends that while the key purpose of the underlying policies—to promote the creation and growth of the emerging market—should remain the same, they also need to be adapted over time. This research suggests that the combination of public policy intended to create markets and the co-evolution of market and technical niches has enabled the rapid emergence of the innovation system for this nascent technology at an early phase.