Market Analysis

From 1996 to 1999 General Motors produced and leased its first electric car, the legendary EV-1. It was a car destined to mark the beginning of a new technological era in Detroit. But then it suddenly disappeared from the market (possibly due to pressure from the oil industry) and General Motors decided to pursue the opposite strategy, making insatiable fuel hogs like the four-wheel drive Hummer. This was a fatal error because its customers wanted smaller, more efficient cars, not gas guzzling monsters — and it led General Motors to bankruptcy in June 2009. The market is strategically crucial. Any company that fails to produce what its market wants is sentenced to suffer a terrible and irremediable punishment: the market’s indifference toward what that company is offering it. After a certain amount of time with the company persisting in its error, this punishment will ultimately result in the company going under, as General Motors discovered so traumatically, in common with another Detroit giant, Chrysler, which collapsed in April 2009.