Exploring innovation in the automotive industry: new technologies for cleaner cars

The concept of innovation has been used in a wide range of contexts and the theoretical development has proven to be extremely valuable to provide important insights into intra-market competition, strategy and regulatory policy. The automotive industry offers a fertile terrain for progress of the uncompleted theory building process of innovation, especially with the introduction of alternative fuels and alternative powertrain technologies.This paper investigates the concept of innovation in the context of the modern automotive industry, by focusing on the notion of regulatory innovation of alternative fuels and alternative powertrain technologies. For the purpose of analysing this issue, special attention is given to the concepts of radical and incremental innovation, which are applied to existing alternative fuels and alternative powertrain technologies, including hybrids, biofuels and hydrogen power. The article explores these three categories looking at representative case studies: the Brazilian ethanol experience with biofuels, the development of the Toyota hybrid vehicle and the technological development of hydrogen fuel cells. These categories have been selected because they represent the most important advances in cleaner production for the automotive industry.