In their classic marketing book from 1985 “Marketing Warfare,” authors Al Ries and Jack Trout argued that only the market leader can afford to keep a complete range of products. This is due to the high cost for companies to build a position for their products and brands in large markets.

Ries and Trout wrote about fast-moving consumer products, like beer and toothpaste and used examples such as the success of Miller Light in the US beer market of the 1980’s.

Beer is a product that is relatively inexpensive to develop, compared to cars. Still, the cost of marketing brands and products in each large market is very high and only the market leader, usually the largest company, has the resources to manufacture and market a complete range of products.

In the case of cars and trucks leading companies employ hundreds of thousands of employees. The Volkswagen Group is the largest employer with 665.000 employees across its brands, of which Volkswagen, Audi, Skoda, and Seat are their largest brands in the car industry. A smaller company like Volvo Cars has 41,000 employees.

These companies offer wide ranges of cars, including petrol, diesel, and now electric. Keeping their positions in these require large teams of development engineers that work with the improvement of three basic types of engines, and each type of engine is available in a several different sizes and models. They also have to develop new engines, based on cutting-edge technology. It is very demanding of resources to do this in three different technology areas.

The cost of developing three different engine technologies with a range of alternatives in each is significant. With the growth of electric cars and the need to build teams with leading-edge competence in areas like battery development, semiconductors, and electric engine technologies, there will be a need to increase the number of engineers that work in these areas.

Tesla seem to have a strategic advantage compared to incumbents. Tesla focuse entirely on electric cars and have a relatively narrow range of models. Instead of having to distribute resources across three different technologies, Tesla can focus the attention of all their more than 100,000 employees on electric cars.

Against this background, It is in the interest of incumbents that the EU and other countries as soon as possible ban the sales of new petrol and diesel cars.

The EU have decided to do this from 2035. Volvo Cars, a small player in the automotive industry have decided to stop producing petrol and diesel cars from 2030. This is a completely understandable decision, but still a very risky one, all things considered. Ford have decided to stop selling petrol and diesel cars in Europe from 2030.

Ford probably realise that it is highly unlikely that the US Government will support the type of rapid conversion of the car industry that the EU have decided to support in Europe. This also means that other car manufacturers that give up the production of petrol and diesel cars will give up their sales in the US market.

From a business perspective it is obvious that companies need to stop producing petrol and diesel cars as soon as possible but changing to electric cars may not be that straight-forward.

There are a number of uncertainties that governments and decision makers in the auto industry will have to discover and discuss. (I have discussed some of these points in previous articles.)

- It is possible that electric cars will no go down enough in price for the demand for electric cars to increase rapidly enough over the coming decade. This could, according to Arnaud Debouef, Chief Manufacturing Officer of Stellantis, result in a collapse for the car industry when petrol and diesel cars are banned by the EU in 2035.

- Power production and electricity grids need to be significantly expanded. Without large-scale expansion programmes it is unlikely that all electric vehicles can be charged in 2030, 2035, and 2040, as fleets of electric vehicles grow. There are many different industries that plan to use the amounts of surplus electricity that are available. According to Elon Musk and the chairman of Toyota, Akio Toyoda, large-scale expansion programmes will be needed.

- There will be a need for large-scale restructuring of the sector of suppliers to the automotive industry. All companies that at present supply parts to petrol and diesel cars will have to find new business opportunities or go out of business. Millions of employees worldwide will be affected by this change.

- Large-scale investment will have to be made in charging infrastructure and it is possible that extensive electric road systems will become necessary for the transformation to be possible. All electric vehicles will have to be charged whenever and wherever they need to be. Many cars are parked along the streets of cities and towns, and it may be difficult to install stationary chargers in all places where they will be needed. In different countries, different approaches are taken to the issue of charging infrastructure.

- Business development will be necessary on a large scale. Services that at present are used on a relatively small scale will have to be expanded and new services will have to be developed to make electric car ownership as unproblematic as it is to own and drive a petrol or diesel car.

- Large numbers of employees will have to be trained to take on roles in the transformation and many will have to be re-trained from present positions in the development of petrol and diesel engines and parts to developing or making electric engines and components for electric cars.

In theory the transformation to electric cars is straight-forward. It is impossible to dispute the logic of transforming vehicle fleets to electric cars, buses, and trucks. It is also impossible to dispute the aspect that the most advantageous alternative will be to drive the transformation forward as quickly as possible.

However, in practice it is likely that the conversion will take more time and require more resources than decision makers expect.

At present different players make divergent statements. Governments, companies, and experts need to arrive at a consensus where they share the same view of the opportunities and possible obstacles. The possible obstacles need to be prepared for and tackled in a systematic way.

The present situation is baffling, considering that all the facts are out there. There is very little proprietary information that can be withheld from analysts. All the uncertainties mentioned above can be addressed and analysed using publicly available data and experiences from previous changes and development processes:

- The rate of reduction of the production cost of electric cars can be calculated by collecting relevant information, interviewing key analysts and decision makers, and developing scenarios for cost reduction.

- Each electric car needs approximately 2,000 kWh of electricity per year and it is possible to calculate the power need of electric trucks and buses based on their use. We can determine where they need to be charged, how often, and at what speed. Based on this information it is possible to calculate power needs and the need to expand different aspects and parts of power grids.

- The need to restructure the automotive industry can be calculated based on publicly available industry data and interviews with key players. Experiences from previous industry re-structuring can be taken into account.

- It is possible to determine the need to expand charging infrastructure and the need, for example, of electric road systems can be foreseen as well.

- The need for business development can be determined by mapping which services that need to be developed in different areas.

- The number of individuals that will have to be trained and re-trained for roles in the transformation can be calculated based on industry data.

The analyses that need to be made are straight-forward. It is easy to identify the challenges and it should be possible to find common ground among different players regarding these. What keeps decision makers from asking these questions? It is better to identify the challenges as soon as possible and be able to develop strategies to tackle them.

My latest book on innovation and the transformation to sustainability is “The Blind Guardians of Ignorance — Covid -19, Sustainability, and Our Vulnerable Future” and the first one of these was “The Transparent Market,” written together with David Lundberg. In “The Transparent Market” we discussed the future of electronic business. The book was published in 1998, when most experts still did not see that most companies soon would do business on the Internet. My first book about the transformation to e-mobility was “Global Energy Transformation” from 2009.

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Top writer in INNOVATION. Swedish business and sustainability consultant, writing about opportunities in the transformation to a sustainable future.