Description of Problem
The U.S. auto industry began in the late 19th century and has gradually grown globally. Every year, American manufacturers produce a vast number of vehicles and vehicle parts. Recently, it has been necessary to continue to move in a green direction, reducing the load on the atmosphere and water bodies from exhaust fumes. A shift to electric and hybrid vehicles is required to develop affordable travel and make them safer and more environmentally friendly. The study should focus on nominal qualitative data with no order of magnitude and quantitative product-related data.
Description of the Current U.S. Automotive Industry
The U.S. auto industry has a large share of the global manufacturing market. According to Ibis World, as of 2022, the market size was $100.9 billion (Car & automobile manufacturing in the US, 2022). In October 2022, sales were 14.9 million passenger cars (Light vehicle retail sales in the United States from 1976 to 2021, 2022). California, Texas, and Florida had the largest registered vehicles in 2020, totaling more than 7.5 million units (Automobile registrations in the United States in 2020, by state, 2022). By 2021, sales of electric vehicles (4.8%) and hybrid models (6.1%) accounted for nearly 11% of total passenger cars (Dwyer, 2022). Such data indicates current trends in the automotive industry – improving electric vehicle sales.
Current Automotive Market Trends
The number of hybrid and all-electric models continues to grow steadily, obliging more and more companies to move away from internal combustion engines. Hybrid models are in the most significant demand, providing charging comfort. According to Forbes, the most demanded features were ventilation, additional parking sensors, mobile interface provision, and heated seats, with no specific styling or color features noted (Gorzelany, 2021). According to Statista, crossover SUVs are the most frequently sold, followed by sedans and trucks (2022). This data helps determine the company’s future path in the automotive industry.
Description of the New Industry
A new industry that needs to be promoted and developed is the production of hybrid and all-electric car models. The attractiveness of the industry is justified by the comfort of driving: quiet driving, many additional functions controlled even remotely, a pleasant interface, and environmental friendliness. The industry continues to grow, so entering it will allow the company to gain new customers (quote 10). Electric vehicles are changing the auto industry, making the entire industry more competitive. High growth potential is coupled with high sales, which makes it essential to move into this new industry. Under the influence of external factors such as supply chain and battery technology, the industry regularly receives new steps for product improvement.
High investment and compliance with government policies should be considered success factors in this industry. In addition, sponsorship of charging technologies and software development allows companies to succeed. According to Globe Newswire, the electric car market in the U.S. was $28 billion in 2021, which will grow many times over the next five years (Fortune Business Insights, 2022b). The industry is most likely to continue to grow in California, Florida, and Texas, where there is the most significant demand for cars. Doll’s (2022) data indicates that growth will come from Washington, D.C., New Jersey, and New York. At the same time, we should not expect sales growth in Alaska, Wyoming, or Vermont. SUVs and sedans comfortable for urban and rural driving in fast-growing and developed states will be the most frequent sales models.
Current Market Trends in the New Industry
Current trends in the industry will not only be an increase in the number of electric vehicles but also in their cost. Vehicle charging infrastructures sponsored by government subsidies are developing in the context of the U.S. president’s agenda (Graham & Brunghard, 2022). In addition, emission standards set by the U.S. government are mandating that electric vehicle manufacturers switch to increasingly safer electricity (Fortune Business Insights, 2022a). Preeminent buyers now want to switch to electric cars, highlighting among the reasons the desire to pay less to get around (Nikolewski, 2022). In addition, electric cars are being chosen because of the availability of subsidies, U.S. tax credits, affordability, and the adequacy of pricing for charging and the vehicle itself (Graham & Brunghard, 2022). Consequently, the electric vehicle industry trends are seen in units’ growth, government support availability, and increased driving comfort.
References
Automobile registrations in the United States in 2020, by state. (2022). Statista. Web.
Car & automobile manufacturing in the US. (2022). IBIS World. Web.
Doll, S. (2022). Current EV registrations in the US: How does your state stack up and who grew the most YOY? Electrek. Web.
Dwyer, M. (2022). Electric vehicles and hybrids surpass 10% of U.S. light-duty vehicle sales. U.S. Energy Information Administration. Web.
Fortune Business Insights. (2022a). The U.S. electric vehicle market is projected to grow from $28.24 billion in 2021 to $137.43 billion in 2028 at a CAGR of 25.4% in forecast period, 2021-2028. Fortune Business Insights. Web.
Fortune Business Insights. (2022b). U.S. electric vehicle market size worth USD 137.43 billion, globally, by 2028 at 25.4% CAGR. Globe Newsire. Web.
Gorzelany, J. (2021). New features car buyers want most—and those they steer clear of. Forbes. Web.
Graham, J. D., & Brunghard, E. (2022). Affordable electric vehicles: Their role in meeting the U.S. contribution to the Paris climate goals. Frontiers in Environmental Science.
Light vehicle retail sales in the United States from 1976 to 2021. (2022). Statista. Web.
Nikolewski, R. (2022). Electric cars: More consumers now want to buy them, survey says. The San Diego Union Tribune. Web.
U.S. light vehicle market in June 2021 and 2022, by segment. (2022). Statista. Web.
Appendix A
Explanation from Porter’s Five Forces Analysis of the New Industry
According to Porter’s five forces analysis, the success of entering a new industry strongly depends on how quickly a manufacturer finds a customer base and establishes a supply chain. Because of limited suppliers, it is necessary to establish an adequate pricing policy to avoid risks from competitors. In addition, it determines how to deal with the volatility of entering and exiting the industry. It is also essential to choose a marketing campaign path and determine the primary audience: premium or regular consumers.
Appendix B
Summary of Findings from Porter’s Five Forces Analysis Comparing Both Industries
Compared to the current industry, the electric vehicle industry has the following indicators:
- Rivalry among existing competitors: electric cars increase competitiveness and develop battery technology
- Bargaining power of suppliers: high risks due to the growing prevalence of electric vehicles and limited supply chain
- Bargaining power of buyers: unstable because the market for the cost of electric cars is not fully formed, and the pricing policy is floating
- Threat of new entrants: high risks due to the relative ease of entry into the industry
- Threat of substitute products: average because electric cars are in the premium class and the middle class