7 February 2022
The electric car revolution is now — what must legacy brands do to survive?
In 2007 Apple’s iPhone was released. Nokia was the dominant brand in the phone market, with a market share of 49.4%. That means 1 in every 2 people had a Nokia. Remember? The golden days of snake, the world’s most famous ringtone, and getting sore thumbs from speed texting — which was such a phenomenon it briefly changed the English language 2 txt spk.
Nokia’s market share took a hit the following year, down to 43.7%. How did they react to the iPhone? They didn’t. Their market share eroded away quickly, hitting 3% just 6 years later. From 1 in every 2 to 3 in every 100. That’s an astronomical shift, and it basically happened overnight.
Brands can learn a key lesson from this cornichon of history. Adapt. And adapt faster than you think you should.
The interesting thing about the iPhone, was that it radically transformed what a phone is as well as the market — forcing every other phone manufacturer into a scramble to copy it. Today, some of them make better phones, with better screens, better cameras, and on paper better tech. But Apple holds a powerful market share worldwide.
Is part of the reason for Apple’s irresistible brand simply because it got there first?
Tesla has just done a similar thing in the car industry. And according to the Hertz interim CEO, and ex CEO of Ford, Mark Fields, “they are the only company right now that can produce EVs at scale”.
Their explosive growth has spurred on startups. From Amazon backed Rivian, to Lucid, Arrival, Fiskar, Neo, Xpeng and many more in different countries all over the globe. Even Apple is rumoured to be trying to get a piece of the EV pie.
It’s also caused big brands like VW, Ford and Toyota to take notice, with some of them promising to transition quickly to predominantly electric cars.
The naysayers who argue that electric cars aren’t the future have not quite caught on to what is happening here. And should be reminded of the candle loving Americans who said that electricity was dangerous and impractical and would lead to wires going all over the United States — which at the time was laughable. It’s pretty laughable now too.
Some of these brands will likely be able to catch up with Tesla. But they must adapt and adapt faster than they think they need to.
Sure, they already have factories and produce many more cars yearly. But retrofitting those factories will lead to factories that are substantially more inefficient than designing an electric car factory from scratch.
Are they going to straddle two horses, and try and keep combustion alive for as long as they can, slowing their transition?
What about their margins and revenue? How are they going to explain to dealerships that far, far fewer things can go wrong on an electric engine?
And what about batteries? If they choose lithium, have they got easy access to suppliers? Or will they encounter a lithium/nickel shortage of magnitudes greater than the industry’s current chip shortage.
The Biden administration is trying to roll out credits worth up to $12,500 towards EVs, and, importantly — hybrids. Including hybrids is an important caveat that is great for car making America job wise. It was after all the American car and fuel industry that elected Biden in their masses at the promise of securing their futures.
But won’t this watered-down step in the right direction lead to brands not making big enough changes, fast enough?
There are still lots of things we don’t know. But I have little doubt that over the next twenty years we will see some of the great car brands disappear or be absorbed by others.
And take note, the ones who survive will be the ones who adapted faster, and not just their process, their brand, their message, their ethos, their mission.
Written by Alex Hamilton.
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