Abstract for: A System Dynamics Approach on Green Car Diffusion Strategy and the Korean case

The research is to identify important diffusion factors and their effects on green car diffusion process using system dynamics perspectives and a causal-loop analysis. First, we briefly investigate Korean government’s effort to promote green car diffusion and the increase of green car in the country. And then, through a deep review on previous research, we have found the important factors of green car diffusion process. Price, driving range, network effect, recharge system, fuel cost had important facilitation on consumer attraction and green car diffusion. Based on the review, we have constructed a causal loop diagram explaining hybrid car diffusion process. We have found 3 important reinforcing loops in the causal loop diagram. Loop for learning & economies of scale(supply side), loop for network effect(consumer side), and loop for battery development(technology side) had most significant roles in the whole diffusion process. Through a deliberate analysis on the 3 causal loops, we have found meaningful results. First, there seems to exist a critical mass in the diffusion. Second, of the 3 loops, the battery technology had most significant role. Third, sales, not consumer installed base, must be a standard to decide whether the critical mass is achieved or not. Based on these findings, several meaningful implications are suggested for the government and corporations related to the green car industries.