Marketing Why Has the EV Market Stalled? - Sun and Planets Spirituality AYINRIN

 Marketing

Why Has the EV Market Stalled? - Sun and Planets Spirituality AYINRIN

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Summary.   

Surprisingly, the EV market has stalled in recent years. Why? Because the market has reached a difficult point in the technology-adoption lifecycle. Specifically, automakers and policymakers alike can no longer make plans based on what early adopters of EVs want. Instead, if they want to boost sales and reach a much broader segment of the market, they’re going to have to cater to a different set of interests and concerns — which will probably mean offering consumers more hybrids and plug-ins as a bridge to an all-electric future.

A couple of years ago, we seemed to be hurtling toward an electric-car future. Tesla had reached a trillion-dollar market cap; Hertz had signed a $4 billion deal with Tesla to supply cars for its rental fleet; the Biden Administration had announced plans to make EVs comprise 50% of all new vehicles sold by 2030; and GM had committed itself to achieving 100% EV sales by 2035.

But now, as we move into 2024, something is amiss. Last year, Tesla discounted its cars several times, eventually slashing prices on its volume-driving Model S by nearly 25%, and Hertz announced plans to offload its Teslas. GM, for its part, announced that it would be abandoning its near-term EV goals, delaying the production of its EV pickup, and unwinding a joint EV venture with Honda. News stories ran regularly during the year telling of EVs sitting unsold on dealers’ lots. Taking stock of the situation, Toyota’s chairman, Akio Toyoda, predicted that the vast majority of vehicles sold in coming decades would not be fully electric. Confirming that outlook, the Pew Research Center recently reported that half of American adults say their next car probably won’t be an EV.

So what’s going on?

The answer, I believe, is that in the world of greener vehicles, we have reached a classically difficult point in what’s known as the “technology-adoption life cycle” — specifically, the point where the challenge becomes figuring out how to move from what early adopters want to what a broader segment of the market wants.

And what is that? According to research that my colleagues and I have conducted at GBK Collective, what many potential buyers want — and are willing to pay a premium for — are not fully electric vehicles but hybrids and plug-in hybrids that can serve as a bridge between today and our electric future.

A Chasm to Cross

The idea of a technology-adoption life cycle, in which new products or innovations are adopted in stages by different market segments, entered mainstream thinking in 1962, when the sociologist Everett Rogers popularized it in his influential book Diffusions of Innovations. Drawing on research conducted on the adoption of agricultural innovation, Rogers portrayed the technology-adoption life cycle in the form of a bell curve (see Figure 1) that showed a predictable distribution of adopters over time. He divided these adopters into five very different market segments: Innovators (2.5%), Early Adopters (13.5%), Early Majority (34%), Late Majority (34%), and Laggards (16%).

See more HBR charts in Data & Visuals 

Everett believed that the transition from one stage of this life cycle to the next happened relatively smoothly. But in 1991, in Crossing the Chasm, using examples from the EV market at the time, the business strategist and author Geoffrey Moore made the case that the transition is actually often quite bumpy, because of “cracks” that exist between the needs, attitudes, and behaviors of the different kinds of adopters.

Moore told readers that the largest of these cracks, which he labeled a “chasm,” lay between early adopters (whom he described as change agents seeking out innovation) and members of the early majority (more-pragmatic and mainstream consumers seeking productivity improvements for existing products). He warned that this chasm was “by far the most formidable and unforgiving transition” in the whole technology-adoption life cycle, adding that it was “all the more dangerous because it typically goes unrecognized.”

Rogers’s and Moore’s insights can help us understand what has happened recently in the EV market. During the past few years, as early adopters rapidly embraced EVs, policymakers and automakers alike made assumptions about future sales based on the wants and needs of early adopters, forgetting just how big the chasm is that separates them from the new segment of the market they now need to reach: the early majority.

My colleagues and I have found in our research that the early majority are simply not ready to embrace fully electric vehicles en masse. To get to that point — to travel safely over Moore’s chasm — many consumers will need a bridge.

Bridging the Divide

Consumers have voted and shown that price cuts and government regulations alone won’t drive adoption in the EV market. So how can we build this bridge? By recognizing the differences between what early adopters and the early majority want.

Our research suggests that while early adopters have prioritized performance, brand, and style, the early majority will prioritize environmental concerns, lower maintenance and operating costs, and the ease of charging. Consumers in the early majority don’t care much about the “cool new thing.” Instead, they’re more practical: They want cars that have been tested by others and are certain to make living their lives easier. And for that reason, they see hybrid and plug-in hybrid vehicles as a bridge that will help them eventually get to an all-electric future.

Automakers and policymakers alike need to acknowledge and meet this demand by making more hybrids and hybrid plug-ins available as soon as possible. And it’s also not too soon for them to start thinking about how to meet the needs of those who come after the early majority: the late majority and the laggards.

Lessons Learned

In my career I’ve led innovative businesses at T-Mobile and Microsoft, and now I advise some of the world’s leading brands. Throughout it all, I’ve seen the technology-adoption life cycle play out repeatedly in arenas other than the EV market — in the move from mainframe to desktop to mobile computing; from landlines to flip phones to smartphones; from broadcast TV to cable to streaming; from on-premise to cloud computing; and now in the emerging world of AI.

In every case, I’ve found, the ideas put forward by Rogers and Moore were uncannily prescient. So with that in mind, I have a few recommendations for anybody who has to think about the marketing of new technologies:

• Embrace and understand what makes every consumer different. Demographics are usually a poor proxy for this. Two consumers may look very similar but behave dramatically differently. Market segmentation is the right tool for this job, because it focuses on important factors such as attitudes, beliefs, behaviors, and influencers.
• If you are introducing a new technology, understand that what motivates many early adopters is unlikely to motivate consumers farther along in the adoption life cycle. Leaders should strive to understand how mainstream and later-stage adopters may evaluate their purchases differently, either through formal research or by studying similar or adjacent categories.
• Understand where your product is in the adoption life cycle, and look to Rogers and Moore for practical and prescriptive guidance on how to navigate the stages. They don’t have all the answers, but their framework and ideas have stood the test of time and can provide an excellent sense of orientation.

If you follow these recommendations, you’ll be well on your way to smoothing over all of the cracks — and bridging the chasms — that exist on the path to mainstream adoption.

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