New markets begin to blossom when they surmount a handful of early obstacles. Specifically, success begins when:
- The new offering appeals to a readily-identifiable market niche, enabling firms to focus product development, marketing communications, and effort by sales channels
- Major technological inter-dependencies are resolved, allowing the product to plug directly into an infrastructure (physical or economic) that supports its use
- The value of the innovation has been demonstrated by customers whom the mass market views as credible endorsers
- The perceived risk of adopting the innovation is low
- The buying decision is made simple
- Incentives exist for near-term adoption of the innovation, vs. continuing to wait-and-see how the market develops
Nissan is investing heavily in its forthcoming Leaf, an all-electric vehicle (not a hybrid) that it projects will sell 500,000 units in 2013. By contrast, some industry watchers predict that total EV sales for all manufacturers will amount to 500,000 by that year. Clearly, Nissan is putting serious money behind its vision.
While technology will improve over the next decade on several fronts, particularly on the capacity and cost of batteries, and while the public charging infrastructure is quite nascent, the market seems to have reached the point where offerings are good enough for a significant segment of customers. Given the social-status and tax-credit advantages of buying an EV sooner rather than later, we can expect this market to begin growing fast. Nissan may be in an excellent position to seize early leadership, much as the Prius made Toyota the leader in hybrid vehicles.
This post was written by Steve Wunker.