Avoiding too much of a demand shock

There was an intriguing piece in the Wall Street Journal a couple of weeks ago flagging the prospect that US electricity suppliers may place large bulk orders for plug-in electric cars (in the tens of thousands).

The motivations appear twofold and are relevant examples of firms trying to take their destiny into their own hands (or to influence their industry environment in a strategic management sense).

Firstly, the utilities firms are seeking to drive (ouch, nasty pun!) producers towards this option by subsidising them (partially) through the difficult embryonic loss-making development stage. Clearly the electricity suppliers see these vehicles, and the firms that produce them, as complementors, with substantial scope to increase the demand for their product (presumably at the expense of the oil companies).

Secondly, the electricity suppliers are seeking to better handle any subsequent demand shock (oh, it’s pun central!) that will surface if such vehicles become commonplace. The article notes the significant dramas caused by the adoption of air-conditioners (which shifted demand spikes from winter to summer). The utilities firms are being suitably forward-thinking in exploring the impact of overnight recharging. Perhaps it will also allow them to have some collective impact on the technology developments themselves.

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4 Responses to “Avoiding too much of a demand shock”

  1. Ami Says:

    Has anyone seen the documentary called “Who Killed the Electric Car?”.
    Very eye opening and so frustrating!!! If you haven’t you should and then perhaps you can answer this question – Where would GM be now if they had actually marketed the EV they produced decades ago?
    I wonder if this plan that the Utility companies have put together will actually take off or will it be blocked again by very powerful companies who have a vested interest in the oil industry.
    In my opinion the likes of GM and Ford deserve to go down!

  2. Andre Sammartino Says:

    Ami (and others), you may like this satirical post from The Onion on how the US auto industry got to this point:

    http://www.theonion.com/content/infograph/auto_industry_crisis 🙂

  3. Ami Says:

    Thanks Andre – I passed it on to the Motoresearch guys at work who I’m sure will also get a laugh out of it.
    Cheers,

  4. Steve Sammartino Says:

    A of things: Who killed the electric car can be watched for free on youtube. Worth the effort.

    Next: Interesting that electric cars dominated at one point and gas / petrol one the day due to the oil Industry building ‘re-fueling’ infrastructure – petrol stations to force supply to oil driven vehicles.

    The beauty of electricity is this: it has the most numerous ways of generation vs a primary fossil fuel. Once the cars are electric then natural market forces will evolve to supply various forms of electricity to fulfill the demand excess cars will generate. Then we’ll all breathe a little easier – pun intended too!

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