It may seem like the obvious starting point for any manufacturing business, but more than a few global OEMs have made costly errors in their efforts to get ahead in the EV race – by focusing on what their competitors were doing instead of talking to their own customers.
Many made bold, capital-intensive bets on a fully electric future, convinced that consumers would follow. But their customers didn’t immediately respond – revealing a gap between their stated preference and real behaviour.
Of course, customers love the idea of driving an electric vehicle as part of a more sustainable, aspirational lifestyle but, in reality, they commit to purchasing decisions based on practical constraints. Factors like the available charging infrastructure, range anxiety, reliability, and total cost of ownership still matter.
For many players in the industry, not talking to their customer base was a multi-billion-dollar mistake that triggered a wave of write-downs, delayed targets, and strategic resets.
While much of the industry went all-in on EVs, one player pressed the brakes and took an alternative route. Toyota bet on hybrids.
Taking the actual middle-of-the-road approach to the EV battery versus internal combustion engine debate worked for the Japanese manufacturer because it wasn’t just a forced compromise.
Toyota understood and solved the underlying problem: That consumers embrace incremental change over radical shifts. Like EVs, hybrids offer improved efficiency, cost benefits, and lower emissions but without infrastructure dependency – and all with a familiar user experience.
The market rewarded this realism. While EV growth has slowed or turned negative in key markets, hybrid sales have grown consistently.
Aside from the actual technologies driving the industry disruption, another big shift has occurred in how traditional automakers’ market value is determined. Much like the big tech companies today, market value is no longer tied to how many cars a vehicle manufacturer produces but rather to its positioning and what the market believes the brand will become.
Elon Musk tells investors a compelling story about Tesla’s future – and its valuation has consistently outpaced traditional automakers, despite producing fewer vehicles.
On the other end of the spectrum, the same applies to Ferrari. Here, the high-end Italian car maker focuses not on the future, but rather on its legacy of luxury, delivering low volumes with high margins.
Ferrari is not trying to serve everyone. It knows exactly what it is and who it is for – and that clarity on its value proposition translates directly into market value.
Many traditional OEMs are struggling, not because they chose the wrong technology, but because they are effectively running two businesses at the same time – a cash-generating ICE business and a capital-intensive, loss-making EV business.
For legacy automakers like the Ford Motor Company, which has split itself into multiple divisions, this compresses margins, muddies strategy and creates challenges on where to allocate capital.
By contrast, Chinese brand BYD focuses exclusively on a fully integrated EV ecosystem. Of course, this operating advantage leverages China’s long-term strategic dominance of the EV value chain. Groups like BYD don’t just build cars. They control every aspect from raw materials to logistics, right down to owning their own container ships.
This unprecedented level of vertical integration reduces their dependency on external providers, improves speed and strengthens cost control, which makes it difficult for carmakers outside of China to compete.
A lack of strategic focus has cost European automakers dearly. Many brands like BMW, Mercedes-Benz Group and Porsche AG have attempted to maintain their premium positioning, compete in volume segments, and transition aggressively to EVs – all at once.
This diluted focus has many now facing a difficult reality that includes declining margins, increased competition, an inability to compete on price, and regulatory pressure.
Learning from these global missteps, India’s local players like Mahindra & Mahindra and Tata Motors have taken a more measured approach. By maintaining strong ICE portfolios and introducing EVs without overcommitting, India has created space for both the infrastructure and demand to catch up.
Looking at all the automotive setbacks and successes, one thing is clear: Trying to serve every segment, every technology, and every customer leads to failure.
The brands that are winning are those that have defined a clear identity, aligned their capital investment behind that identity and executed consistently.
Here are 5 steps that every auto maker should be taking:
The path forward is not about predicting the exact future of mobility but about gaining strategic clarity and moving accordingly. This is what it means to “pick a lane”. It does not mean ignoring the future. It means choosing how you will get there.
For more on this topic, watch our latest podcast episode on ‘The New Global Auto Race’ here:
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