The innovation overshoot in electric vehicle transition

Innovation is a back and forth between technology push and market demand. But in business there is the concept of turnaround time. The time it takes to be able to deliver a new innovation, at efficient pricing.

Automakers faced a challenge when quickly surpassed by Tesla in the last decade. The turbo growth of Tesla seemed to proof a definite market for electric.

Manufacturers at that point faced a decision. Move on from combustion engines, immediately to “level 3” (full electric vehicles), or move there with a “hybrid” vehicle in-between?

While there certainly was a demand for hybrids, they are also complicated to make. Electric vehicles are simpler in assembly.

And it looks like most traditional auto makers decided to largely skip the hybrid in between option. They went all in on the development of electric vehicles, and plants to manufacture them.

Couple years later and it turns out the demand for electric cars has dried up. Saturated. There is a number of reasons for this.

But the concept I want to point out here is the concept of innovation overshooting. With the benefit of hindsight it can now be argued that the traditional manufacturers should not have gone by the “hybrid” station so quickly. There seems to be a definite demand for hybrids vehicles. And for traditional manufacturers, this is also the market where they can still leverage the value of their brand, and century long experience in combustion technology. This is a market the traditional auto makers have a fighting chance of beating.

But it does mean that all the fancy electric vehicle manufacturing plants now have to be retrofitted with equipment for cars they were never designed for. At huge expense, huge technical complexity, and huge delay in getting vehicles to market.