Upcoming tipping points in automobile industry based on agent-based modeling

Abstract

This paper applies Agent-Based Modeling to the auto industry. The auto industry might be considered as a complicated rather than a complex system, because it is characterized by adaptation and emergence, two of the three major characteristics of complex systems [1]. Yet some characteristics residing in human could lead us to consider the auto industry as a quasi-complex system because individual agents diffuse information and act based on adaptation. The roles of differentiated agents, including dealers, are significant: diverse agents function as autonomous decision makers who rely on localized information, thereby influencing the evolution of the current industry as it looks forward to a new phase of power propulsion development, such as hybrid, electric, and hydrogen fuel cell vehicles. The impact of rising oil prices on potential customers’ decisions, as well as what this paper identifies as the emotion factor between buyers and dealers, are incorporated to determine dynamics in terms of sales volumes. We are also interested in the extent and speed with which the new technology is adopted. Because of the consumer preferences and the long life cycles of cars, the adoption of new technology will be delayed given the current environment and policies in the United States.