In my work covering the electric car market for InvestorPlace, I have noticed a big hole in the mid-market.
There is no electric equivalent of a Chevy or Ford. All we have are Cadillacs and Lincolns.
There are two reasons for this.
First, American car companies abandoned the mid-market decades ago. They abandoned sedans and functional cars for overloaded SUVs and pick-ups. It’s what they said their customers wanted. It’s where the profits were. The mid-market was left to the Japanese and Koreans. Most of the sedans in my middle income Atlanta neighborhood are Toyotas or Kias.
Second, everyone wants to be Tesla. Tesla made a luxury product, they got top dollar for it, and they got big profits from it. Every other U.S. and European car company is following that path. You can hardly blame them. GM tried small cars with the Volt and Bolt. Both failed.
Yet most of the electric car market will be in that forgotten middle. We know this from the experience of China, where the electric car market is more advanced. Their best-selling car is a mini. It only goes 60 mph and gets just 75 miles on a charge. Fine for getting around town. Lousy on the highway. But it costs less than $5,000. There are also some $20,000 electric cars there, slightly larger, with longer range.
Let me then propose an experiment, based on the technology history I’ve personally witnessed.
Build a car like an old IBM PC.
I spent most of the late 20th century using IBM PCs or close clones. I usually bought them “stripped.” There was a “PC Bus” with extra slots I could fill later with add-in boards offering more memory or supporting new applications as they arrived on the market. Which they did.
As time passed, this died out. It became cheaper to buy a new PC than to upgrade the old one. But it built a huge market, one that a lot of other companies could take advantage of.
The same thing can be true here. Sell a simple car with a modest battery pack and only as much electronics as necessary. Build it as a sedan, at under $20,000. Create the equivalent of a “PC Bus” that will create an after-market, just as IBM (and later Microsoft) did, for compatible batteries, software applications, and add-in cards. Don’t try to copy Tesla. Ignore the luxury market. Sell something you can buy for local trips, then upgrade for longer ones. Create capacity for delivering self-driving capabilities, when they emerge, but don’t sell them. More important, create an open standard, a market many companies can sell into.
There have been efforts to create a standardized system for electrics. GM has one called the Ultium. Volkswagen has the MEB standard.
All I’m really suggesting are two tweaks. First, offer stripped-down, upgradeable versions of these cars, which can be sold at a low, low price. Second, open the standards up to other companies, as IBM and Microsoft did back in the day. We’ll talk about open source later. For now, just try an open standard, designed for mass production, and get the U.S. back into the mid-market.
