What it is: Chevrolet may stop selling the Volt hybrid.
Many people think that companies suddenly experience bad luck and go out of business through no fault of their own. The truth is that most companies create their own bad luck and fail solely due to their inability to predict the future that’s clearly visible right in front of them.
When Microsoft shifted the world from MS-DOS to Windows, many companies were slow to make the transition, assuming that since the world still used MS-DOS, that the world would always need MS-DOS. That’s why dBASE, WordPerfect, and Lotus 1-2-3 had no rush in releasing Windows versions of their products. This created a vacuum that Microsoft filled with Microsoft Access, Microsoft Word, and Microsoft Excel. Not surprisingly, the world switched to Windows faster than people expected and embraced the new Windows programs at the expense of the old MS-DOS programs.
Lotus 1-2-3 didn’t switch to Windows fast enough because they were making too much money selling to the MS-DOS market. Microsoft, on the other hand, couldn’t sell many spreadsheets to the MS-DOS market so the Windows market looked wide open. That’s why Microsoft jumped at the chance to switch to Windows while Lotus 1-2-3 didn’t. By focusing on the short-term profits at the expense of long-term survivability, Lotus 1-2-3, dBASE, and WordPerfect sacrificed their future.
In the auto industry, it’s clear that cars powered by gas engines alone are not the future. Hybrids are part of the future since they can use both gas and electricity, but the real future is electricity with hybrids playing a crucial role in this transition. However, Chevrolet is now debating whether to stop making the Volt hybrid.
Chevrolet, like most auto makers, face a dilemma. They make most of their profits from trucks and SUVs, so from a short-term perspective, it makes sense to focus on that market. However, the long-term market involves hybrids, so Chevrolet would be foolish to abandon hybrids just to sell more trucks and SUVs in the same way that Kodak was foolish for abandoning digital photography in favor of film.
Even worse, car sales are falling as people avoid owning cars. This trend will only continue, which means that the entire business model of the auto industry is focused on the wrong market. The auto industry makes their money selling trucks and SUVs to people who want to buy them. What happens in the future when people don’t want to buy cars but use ride-sharing services instead? What happens when those few people who still want cars also want hybrid or electric cars instead of gas guzzlers?
That’s when you can expect the auto industry to go into shock again. Just as cheaper, smaller, more reliable Japanese imports shocked the Big Three auto makers who were content selling expensive, unreliable gas guzzlers, so you can expect ride-sharing services and declining car ownership to surprise the auto industry once more. For Chevrolet to abandon the Volt to pursue trucks and SUVs makes no sense, especially when companies like Tesla, Google, and Apple are moving towards electric cars.
The future is clear. Don’t sacrifice the future for short-term profits, yet that’s something everyone does to their detriment. When the auto industry does this again (and again), they always act surprised that they couldn’t see the future coming. Such blindness guarantees they’ll be surprised and shocked the next time the obvious appears once more.