The Rise of the Electric Car

This activity is important because over time marketers will discover that there will be changes in customer demand and expectations. Companies need to modify their product and service offerings to match these changes. The consumer is the centerpiece of the marketing environment. Consumers may be influenced directly by the immediate environment, and the company is influenced by the macroenvironment, which indirectly impacts the consumer.

The goal of this activity is to demonstrate your understanding of the marketing environmental analysis framework.

Read the case about the history and growth of the electric car market and then answer the questions that follow.

One of the most notable social trends affecting consumer behavior is the idea of going green. As climate change and environmental concerns increase in their seriousness and impact, consumers seek to buy green products that might help mitigate or combat the problem. In response, many companies are developing new green productsincluding electric cars. The first electric car actually was built in 1891, but it lost popularity when Henry Ford introduced the gas-powered Model T. Electric cars regained consumers' interest as Toyota developed its Prius in the late 1990s. The original Prius actually was a hybrid, powered by both gas and electricity; its success prompted other companies such as Honda, General Motors (GM), Ford, and Chevrolet to innovate their own hybrid models, as well as some all-electric versions. By the early 2000s, though, all the major automakers had terminated their all-electric programs. It was not until 2006, when Tesla Motors revealed its Roadster, that a modern version of the all-electric car became a distinct and appealing possibility.¹

Tesla remains the gold standard for electric cars. The Model S all-electric sedan is the top-ranked ultra-luxury vehicle. Yet its high price has kept the brand from being a very widely purchased car. For example, a new Tesla Model S 75D starts at $75,700, and models with longer ranges without recharging start at $98,700.²Even if more customers might want to purchase an all-electric car, few of them can afford a Tesla. In response, Tesla innovated a less expensive entry model, the Model 3, that starts around $35,000.³In parallel, other companies have released their more economical all-electric options: the Chevrolet Bolt starts around $37,000 and offers a battery life comparable to that of the Tesla Model S.⁴

General Motors also recently decided to compete with Tesla directly. One of Tesla's greatest advantages has been its over-the-air software, which automatically and regularly updates the cars' software when they are plugged in overnight. Recognizing that it already installs OnStar as a safety service standard on any GM vehicle, GM has found a large fleet of connected cars at its disposal already. Therefore, it plans to use OnStar as a means to compete directly with Tesla's software.⁵

Furthermore, GM's latest all-electric car seeks to do more than address just the problem of climate change; it wants to help drivers overcome the problem of congestion in cities. Its all-electric E100 will cost only $14,000 before incentives; with the incentives, the paid price drops to close to $5,000.⁶But it is being launched only in China, under the company's Baojun brand. The Chinese car market is the largest in the world, and the electric car segment is the largest growing segment in China, due in part to the subsidies and incentives offered by the national and local governments.⁷Accordingly, China already makes up 40 percent of the worldwide electric car market.⁸The E100 has been designed specifically to meet the needs of consumers living in Chinese cities, in that it is compact, seating only two adults, and easy to maneuver in the heavily populated streets. Furthermore, its top speed is 62 miles per hour, and its battery can last for about 96 miles, and then takes only about 7.5 hours to charge. It might not be an ideal option for someone living in a rural area who needs to travel long distances, but it is perfect for a city dweller.⁹Finally, although the car does not cost much to own, the E100 still provides some key luxuries: the interior features a digital dashboard, a seven-inch touchscreen center console, and Wi-Fi capabilities.¹⁰

Within the week of its announcement, more than 5,000 people had registered to buy the first 200 models of the E100, spurring the company to make another 500 cars available quickly. Although the E100 will be available only in the Guangxi region of China in the immediate term, GM plans to expand its availability throughout the country as soon as possible.¹¹

Sources:

1.PBS, "Timeline: History of the Electric Car," PBS.org, October 30, 2009, www.pbs.org/now/shows/223/electric-car-timeline. html.

2. Kristen Korosec, "How a Chevy Bolt Just Beat a Tesla Model S,"Fortune, August 3, 2017,http://fortune.com/2017/08/03/ chevy-bolt-tesla-model-s/.

3.www.tesla.com.

4. Korosec, "How a Chevy Bolt Just Beat a Tesla Model S."

5. Matthew DeBord, "GM Is Targeting Tesla in an Area Where Tesla Dominates All Other Automakers,"Business Insider, July 25, 2017,www.businessinsider.com/gm-new-tech-framework-for-over-the-air-updates-challenge-tesla-2017-7.

6. Peter Valdes-Dapena, "GM Is Selling a $5,000 Electric Car in China,"CNNMoney, August 8, 2017,http://money.cnn.com/2017/08/07/autos/gm-china-electric-car/index.html.

7. Tycho De Feijter, "5 Stunning Facts about the Chinese Car Market You Need to Know," Forbes, May 16, 2016,www.forbes.com/sites/tychodefeijter/2016/05/16/five-things-you-need-to-know-about-the-chinese-car-market/#107fcf763025.

8. Valdes-Dapena, "GM Is Selling a $5,000 Electric Car in China."

9. Ibid.; Thomas Tamblyn, "GM Just Unveiled a $5,000 Electric Car for China,"Huffington Post(UK), August 11, 2017,www.huffingtonpost.co.uk/entry/gm-just-unveiled-a-5000-electric-car-for-china_uk_598c7421e4b0449ed5085f9a.

10. Tamblyn, "GM Just Unveiled a $5,000 Electric Car for China."

11. Ibid.; Michael Holder, "GM Unveils Low-Cost Electric Car,"Business Green, August 11, 2017,www.businessgreen.com/bg/ news/3015508/gm-unveils-low-cost-electric-car-in-china.

Since 2006, when Tesla Motors revealed its Roadster and began the market for the modern version of the all-electric car, consumers have more and more choices. Which variable of the immediate environment is primarily affected by this issue?

Multiple Choice

• competition
• technology
• culture
• company
• corporate partners

^ Its one of these