5 Business Acumen Take-Aways from Slowing Electronic Vehicles Sales

    

Advantexe delivers many business acumen training programs for our clients in the automobile industry including clients who manufacture cars, clients who manufacture tires, and clients whoEV-market supply the paint to new and refurbished cars.

Overall, the automotive industry has been volatile as it is still recovering from the pandemic and all the issues surrounding it. One of the more interesting aspects of where the market is right now is the deliberate and intentional choice of manufacturers to scale back on the production and forecasts for electronic vehicles.

For the last decade automakers such as Tesla, General Motors, Ford, and Toyota have been spending billions of dollars in the race to develop electric vehicles and build factories to produce them, with expectations that consumers would flock to these cars.

However, during the past 12 months, the growth rate of electric vehicle sales has slowed sharply as some car buyers have hesitated at the high prices of electric cars and trucks and the hassles of charging them, especially on long trips.

This shift in consumer demand is now forcing many automakers to pull back on aggressive investment plans and pivot, at least partly, back to the internal combustion engine vehicles that still account for most new car sales and a large share of corporate profits.

As an example, last month Ford Motors said it would retool a plant in Canada to produce large pickup trucks rather than the electric sport-utility vehicles it had previously planned to make there.

So, what happens when all the experts are wrong? What happens when everyone thought that by 2026 more than 10% of all new car sales would be electronic? It’s an interesting and profound question which I think makes for an interesting blog in addition to becoming some nice micro-lessons for our business simulation workshops.

Here are 5 business acumen takeaways from the sudden slowing of the EV market:

Lesson One: Product Differentiation and Clear Value Proposition are More Important Than Ever

  • Observation: As the EV market becomes more crowded and growth slows, competition intensifies. Consumers have more choices, and brand loyalty becomes less assured.
  • Business Acumen Takeaway: Companies must differentiate their products through unique features, superior technology, exceptional customer service, or brand experience. Communicating a clear value proposition helps attract and retain customers. Innovation in areas like battery life, charging speed, and vehicle performance can set a brand apart in a saturated market.

Lesson Two: Transitioning from Early Adopters to the Mass Market Requires Strategic Adaptation

  • Observation: The initial surge in EV sales was largely driven by early adopters, consumers who were enthusiastic about new technology and environmental impact. As sales begin to slow, it indicates that the market is shifting toward the broader, more price-sensitive mainstream consumer base.
  • Business Acumen Takeaway: Businesses must adjust their strategies to appeal to this new segment. This could involve offering more affordable models, flexible financing options, or enhancing features that address the practical needs of everyday consumers. Understanding and segmenting the market effectively becomes crucial for sustained growth.

Lesson Three: Investment in Supporting Infrastructure is Crucial for Consumer Adoption

  • Observation: A significant barrier to EV adoption is the lack of adequate charging infrastructure. Slowing sales may reflect consumer hesitation due to range anxiety and inconvenience related to charging.
  • Business Acumen Takeaway: Companies should consider investing in or partnering to expand charging networks. By improving infrastructure, businesses can alleviate consumer concerns, making EVs a more viable option and stimulating demand.

Lesson Four: Supply Chain Agility and Resilience is Critical to Mitigate Production and Delivery Risks

  • Observation: Supply chain disruptions, particularly in battery production and critical components, can hinder the availability of EVs, leading to slower sales.
  • Business Acumen Takeaway: Building a robust and flexible supply chain is key. Companies need to diversify suppliers, invest in local production facilities, and possibly secure long-term contracts for essential materials. This resilience ensures that production can meet demand and prevents potential sales losses due to stock shortages.

Lesson Five: Over-Reliance on Government Incentives Can Be Risky

  • Insight: Government subsidies and incentives have played a significant role in promoting EV sales. A reduction or elimination of these incentives can lead to a sharp decline in sales, as seen in some markets.
  • Takeaway: Businesses should not base their long-term strategies solely on government support. Instead, they should focus on making their EV offerings competitive through innovation, cost reductions, and value-added services. This approach creates a more sustainable business model that is less vulnerable to policy changes.

In summary, the current EV market is a microcosm of the global business world right now. In mass unpredictability can come great lessons so we don’t keep repeating the same mistakes.

Note: If you are interested in tons of statistics about the EV market, I found this great website: https://explodingtopics.com/blog/electric-vehicles-stats

Why Business Acumen Matters

Robert Brodo

About The Author

Robert Brodo is co-founder of Advantexe. He has more than 20 years of training and business simulation experience.