Abstract: This article reviews capability theory firstly, and summarizes the importance of capability accumulation. It also analyzes how paradigm shifting destroys the old capability, and the new requirement of capability from new paradigm. This article proposes “capability paradox” which means that, less capability accumulation leads to weak innovation basis, but strong capability hinders radical innovation. Capability can be decomposed into general capability and special one. The reconfiguration of special capability needs the general one even during paradigm shifting. It takes the new energy vehicle for example to explain the importance of capability accumulation and reconfiguration. Finally it gives conclusion and policy implication.