Analysis Of The U.S. Market For Electric Cars, Research Paper Example

At last, electric cars seem to be starting to have their edge in the current US market. One of the electric cars that are set to hit the market is Chevrolet Volt, an electric car with an ability to achieve 230 pg when driven in cities. The car will cost $40,000 when it hits showrooms next year. Its main competitor will be Toyota Prius, and buyers will have to confront the choice of one between these two electric cars.

The electric car market is still not as large as many people would expect although the market landscape is expected to change especially when similar designs are produced. In Mufson’s observation in “Small Firms Take Big Electric Leap; Innovative Automakers Bet They Can Beat Giants in Energy-Efficient Niche” GM is already trying to cut out a niche with the Volt. The volt enters the market to find a rapidly expanding market of cars that operate through systems rather than internal combustion processes. In terms of market definition, it is important to note here that the terms “hybrid car” and “electric car” are often used interchangeably.

The market is unpredictable for electric carmakers. Of all the main US competitors, Nissan seems to be taking the greatest risk with the complete car that runs solely on electricity. The marketers at Nissan believe that future cars will run on electricity. For GM, the Volt is designed in a manner that minimizes risks.

The consumers want to have issues of fuel consumption clearly defined by federal regulators of the auto industry. There seems to be confusion since all American drivers are used to thinking about fuel economy instead of fuel consumption patterns. It might take some time before the “gallons per mile” way of thinking fades out. For Nissan, this day will come very soon, or else, they are in for huge losses.

The battle lines for market competition seem to have been clearly defined the moment all major automakers seemed to agree that all future cars would run on electricity. What they are divided about is how soon majority of drivers are going to fully gain confidence with cars that fully run on electric motors. According to Valdes-Dapena in “Slow road to electric driving”, it is also not clear what they can do to push forward the agenda for electric cars. The greatest boost for these cars will be continued rise in gasoline prices.

As an electric car buyer, Nissan would be the company to watch out for. The planned release of a purely electric car next year is already causing ripples in this market segment. Competitors are dismissing this maker, saying it is trying to cut a niche to make up for previous complacency on green auto technology. The Nissan’s venture paves way for better market segmentation.

The Issue of Nissan going towards the extreme end of the spectrum as far as electric cars are concerned raises a very important question: that of when, how and why a consumer should buy into this new auto technology. Range anxiety is what Nissan wants to clear from consumers’ mindsets.

The question of how purchases will be made can be best answered through a critical analysis of their driving habits. The prospect of buying into new electric technology does not necessarily come with the promise of change in driving habits. This could be the main reason why Nissan is trying to work together with energy providers and governments in order to provide charging stations and offer flexible battery-charging solutions to skeptical consumers.

It is highly unlikely that other forms of transportation are going to be an important determinant of how competition will turn out to be. For the main competitors, all eyes are on Nissan the biggest risk taker.

In terms of the market strategies that different companies are adopting, two main approaches can be discerned. First, some companies such as GM, which have been unsuccessful in the electric-only cars, only want to play safe only with plug-in hybrids. The second approach is being adopted by the likes of Nissan and Pochiluk. These companies won’t hear anything to do with hybrids. They want to cut out a niche on purely electric cars.

This definition of the US electric car market gives future auto investors a very detailed analysis into the market landscape, the prevailing challenges and strategies that could be used to tackle them and achieve profitability. In order for an investor to make profits, everything about the electric car should be just perfect, or else, everyone will push it aside and move on.  In the 1990s, GM lost huge sums of money through the 800 consumers who leased their cars in four years when the company was trying to revolutionize the electric car market.

According to Woodall’s article published by Reuters, entitled “Electric car sticker shock awaits U.S. consumer,” the lessons that GM learnt at that time are many. Today, the company’s marketing strategists only want to make hybrids that have high mass appeal. In this case, the best bet is the Chevrolet Volt. What GM is trying to provide with an extended gasoline mileage is appeal from consumers and hence, their loyalty.

References

Mufson, S. (2009, August 9). Small Firms Take Big Electric Leap; Innovative Automakers Bet They Can Beat Giants in Energy-Efficient Niche. The Washington Post,p. A.9.

Gorrie, P.  (2009, August 8). Slow road to electric driving. Toronto Star,W.2.  Retrieved August 16, 2009, from ProQuest Newsstand.

Valdes-Dapena, P. (2009). Betting big – and small – on electric cars, viewed at http://money.cnn.com/2010/01/07/autos/electric_cars_strategy

Woodall, B. (2009) Electric car sticker shock awaits U.S. consumer. Retrieved January 7th 2010 from,  http://www.reuters.com/article/latestCrisis/idUSN16336272