The R&D Tax Credit Aspects of the Elevator Industry
The development of elevators has allowed
major cities to become the massive and modern locations that
they are presently. The introduction of elevators provided
cities with the opportunity to build the tallest skyscrapers,
hotels and high-rises in order to create a modern compact
environment. Without the development of elevators, cities
would look and function much differently than they currently
Elevators were first introduced in the United States during
the 1800’s. They were primarily built with the intention
of providing a form of luxury for guests to move around in a
hotel. It was soon discovered that elevators would be a great
addition within commercial buildings to enable cities to grow.
Elevators had a significant role in shaping how cities were
formed in the past and continue to allow cities to grow and
The Research &
Development Tax Credit
Enacted in 1981, the Federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent. On December 18, 2015 President Obama
signed the bill making the R&D Tax Credit permanent.
Beginning in 2016, the R&D credit can be used to offset
Alternative Minimum tax and startup businesses can utilize the
credit against $250,000 per year in payroll taxes.
- New or improved products,
processes, or software
- Technological in nature
- Elimination of uncertainty
- Process of experimentation
Elevators have become more advanced
throughout history primarily with the creation of steel frames
and electric powered elevators. With the increasing growth in
construction of high-tech and green buildings, elevator
technology has shifted to keep up with the ever changing
According to the National Elevator Industry, there are
approximately 900,000 elevators that are used within the
United States. Each elevator transports 20,000 people
each year resulting in a total of approximately 18 billion
elevator trips per year. These statistics demonstrate how much
individuals rely on using elevators as a form of
transportation each day.
R&D Per Capita
There are multiple companies involved with
Research and Development for designing and manufacturing
elevators. Below is a table displaying the elevator industry’s
per capita R&D expenses for several companies:
Smart Elevator Market
By 2020, the smart elevator industry is
expected to reach approximately $23 billion in its
market. With the construction of modern
high-rises, companies are looking to develop smart elevators
to accommodate smart building designs. The market should
expect an increase in the production of smart elevators due to
developments of modern buildings, the rising standards of
green infrastructure, and certain building requirements.
Smart elevators offer many benefits to buildings due to their
updated technology. They can provide a greater efficiency,
quicker travel time and better performance especially for
commercial buildings, healthcare facilities and residential
Issues with Elevators
There are several common issues that occur
in elevator systems, but with the implementation of new
technology these problems can easily be prevented. Some of the
most frequent problems are the amount of energy that elevators
consume and the long amount of time that people usually have
to wait for an elevator. Utilizing software and energy
efficient equipment can combat these particular issues.
Mechanical problems with elevators can frequently occur due to
system malfunctions or mechanical defects. In order to prevent
mechanical issues from occurring, it is important for
companies to create a carefully planned design. The American
Society of Mechanical Engineers (ASME) has published a
safety code document for elevator companies to follow. When
designing a new product, companies should utilize certain
design formulas, engineering tests and consider important
aspects including load, stress and buffer supports.
ThyssenKrupp Elevator Corporation (Thyssen) is a company that
is involved with producing innovative elevators and
escalators. Their unique MULTI elevator system was designed
with magnetic technology enabling the operation of multiple
elevators that are cableless allowing elevators to run in
different directions. The technology is specifically
known as magnetic levitation (maglev) which functions by
implementing a magnetized coil along the elevator shaft which
repels magnets located on the outside of the elevator.
Power is transferred along the magnetic coils to guide the
elevator in whichever direction it needs to go. Essentially, a
magnetic field is located in the front of the elevator to pull
it forward and in the back to push it ahead.
This technology allows elevators to move in both vertical and
horizontal pathways resulting in space for several cars to
move around within the building. With the utilization of
multiple elevator cars, individuals would have an average wait
time of only 15-30 seconds. Maglev technology offers many
benefits for large buildings and will change the way that
future elevators are built.
Thyssen has also introduced a new smart monitoring system,
MAX, for their elevators. MAX is a cloud software system aimed
to improve ride efficiency and keep track of any issues that
may occur within the system. The software specifically
utilized by MAX is Microsoft’s Azure cloud system, which
gathers information by implemented sensors and systems.
The data collected is sent to the cloud and used to determine
what preventative maintenance should be conducted to solve any
potential problems. Microsoft Azure’s software system offers
predictive maintenance to the building therefore reducing the
number of issues that occur to maintain an efficient and
updated elevator system.
While some engineers regard certain materials, for instance
carbon fiber, essential for building taller towers, others
believe that scrapping elevator cables altogether would serve
as a better solution. In 2012, a company called MagneMotion
unveiled a cableless elevator powered by a linear synchronous
motor (LSM), akin to the maglev motors on some trains.
MagneMotion’s elevator, developed for the U.S. Navy, is
designed to move ammunition around a ship, but the company
says it could easily adapt it for passengers.
Unlike roped elevator designs, LSM technology is more
efficient at higher speeds. More importantly, when commercial
elevators are limited by length, capacity or environment, LSM
elevators can have multiple cars in a shaft, reducing the
number of shafts in a building and creating more rentable
space. Without ropes, the hoistway can extend to any height,
because there is no rope weight with which to contend.
Additional benefits include lower maintenance costs, as LSM
cableless elevators have fewer moving parts, as well as safety
features that are designed to provide vehicle feedback
control, anti-collision logic and redundant brakes.
future alternative that is being considered would provide
horizontal motion of cabs between adjacent hoistways which
would significantly increase the capacity of each hoistway
with minimal added cost.
Mitsubishi Elevator Corporation
Mitsubishi built a test tower, SOLAE, which is used by the
company to test high speed elevators. The tower is 567 feet
tall and was built to flex in the wind just like high-rise
buildings are built currently. The main testing elements
that are tested by Mitsubishi’s R&D department are the
drive performance, safety and riding comfort. This test tower
allows the company to experiment with innovating and producing
The Kone Corporation has been involved with the innovation of
several forms of technology within the elevator industry. The
company has invented elevators with modern technology, such as
carbon fiber ropes and energy efficient motors. Kone’s
UltraRope consists of carbon fiber that provides reliability
while improving elevator performance. The UltraRope is
created of light material and will allow elevators to move up
a building of greater heights as skyscrapers are becoming
One of Kone’s products is an EcoDisc device which removes the
need for a machine room resulting in the availability of more
space in a building. The main elements of this
technology are its green hoisting system, regenerative drive,
eco-efficient car lighting and sleep mode. The green hoisting
system features the combination of a magnetic motor, vector
controlled drive system and other regenerative elements. The
EcoDisc motor creates energy efficient buildings by
implementing modern technology to reduce the amount of energy
that would normally be consumed.
Schindler Elevator Corporation
Schindler Elevator Corporation has invested a large amount of
their time and effort in producing a solar powered
elevator. The net-zero solar elevator functions by
ultimately utilizing solar panels and a battery bank.
The elevator is powered from a 220 Volt, 6.2 kilowatt gearless
electric motor and regenerative braking all of which provide a
greater energy efficiency compared to a standard elevator.
The elevator’s power can rely on solar power alone or can be
connected to the grid. As an increasing amount of buildings
are becoming energy efficient and following LEED standards,
Schindler’s solar powered elevator provides a great option to
implement within a building.
Otis Elevator Company
The Otis Elevator Company is one of the largest companies
involved in producing elevators, escalators and moving
walkways. Otis Elevator became the company who was known for
inventing the safety brake system for elevators ultimately
changing the entire industry. The company was aware of the
current issues with cable failures which caused numerous
deaths when riding in an elevator. Otis wanted to create a
solution to ensure individuals that elevators were a safe form
of transportation. If cables were to fail, rather than
an elevator falling all the way down the shaft it would drop a
little and then be stopped by the safety brake.
The invention of the safety brake ultimately changed the
elevator industry leading to an increase in elevator use.
Since inventing the safety brake, the Otis Elevator Company
has kept busy working on new developments within the elevator
industry. The company offers various products including
observation, double-deck, sky lobby, freight and residential
elevators, gearless traction electric elevators, geared
traction elevators, hydraulic and machine room-less elevators.
Otis’ Gen2 elevator incorporates three different technology
devices, eCall, OneCall and eView, which provides a greater
form of connectivity for individuals. eCall is a mobile
application that allows people to retrieve an elevator in
advance right from their smart device, which can reduce the
amount of waiting time for an elevator. OneCall is a program
located outside the entrance of an elevator where an
individual types which floor they are headed to on a keyboard.
eView is a display screen within the elevator that shows real
time information including building updates, traffic
information and weather.
The development of smart elevators are
increasing and will continue to do so within the future as
companies keep up with our ever changing and modernized
cities. The innovation of future elevators is likely to
include taller, faster, energy efficient, cableless and
multi-directional elevators. R&D tax credits are available
for companies who are involved with the innovation of
technology and software for the elevator industry.