A Case Study on Automotive Battery System Design - Title Page - MIT

untested, unknown technology like hybrid vehicles, uncertainty is extremely high due totechnology performance uncertainty and consumer hesitation.The Chevy Volt is a good example for illustrating the demand forecasting challenge. MultipleDeleted: to illustratecompanies are developing the product innovation of a plug-in hybrid vehicle (PHEV), and theVolt was the first to market from a major company. As a product innovation, the Volt runs onpure electric power for up to 35-miles before requiring a supplemental gasoline engine torecharge the batteries while driving(Chevrolet). Unfortunately, uncertainty in consumer demandis high due to the novelty of the car, and sales have been substantially lower than what GeneralMotors (GM) had forecasted (Clayton, 2012). Furthermore, the core technology within thebattery pack has been plagued with questions due to crash testing by the National HighwayTraffic Safety Administration (NHTSA)(Tran, 2012). Although NHTSA has found no fault orproblem with the Volt, the negative press is affecting public perception and further dampeningmarket demand. The Volt has had production shut down due to lack of demand, not long afterrelatively high public sales forecasts (Clayton, 2012). The Volt shows the challenges of productinnovation and novel technology. Long term demand forecasting for product innovations ishighly uncertain, and a company can seriously suffer from placing the wrong bet.This thesis focuses on developing a real-time decision support for engineering flexibility indesign to help mitigate the impact of uncertainty in product innovation with novel coretechnology. In particular, the challenges associated with flexibility in hardware development areaddressed. Real options in engineering design is a method developed by de Neufville, and hasbeen successfully applied to large infrastructure projects (Guma, Pearson, Wittels, de Neufville,& Geltner, 2009).In the realm of product design, the existing case studies only take a rear-viewmirror, after the fact analysis. Therefore, the research question that this thesis intends to answeris:9