So to take advantage of electric powertrain technology to create a new growth engine, automakers should start by listening to nonconsumers.
Nonconsumers are those who can't "consume" a product or service, such as a vehicle, because of constraints such as money or skill. Automakers in tune with nonconsumers' needs will prioritize simplicity, affordability and accessibility, preparing themselves to cater to a larger population of potential customers who don't expect the bells and whistles of sustaining innovations.
Some entrants in China are pursuing this strategy, offering low-speed EVs primarily targeted at nonconsumers in rural communities. As I describe in a newly published paper, "Driving Disruption: Catching the Next Wave of Growth in Electric Vehicles," low-speed EVs can't travel far or fast. Yet the customers are willing to accept a relatively inferior vehicle because it is infinitely better than their alternatives: bicycles, motorcycles or farm vehicles.
During the decade that low-speed EVs have been available in China, sales have soared. According to the International Energy Agency's Global EV Outlook 2017 report, between 1.2 million and 1.5 million units were sold in China in 2016. In fact, in 2016, low-speed EV sales in China overshadowed the approximately 750,000 battery and plug-in hybrid electric cars sold globally.
While disruptive innovations are key for capturing new growth, sustaining innovations help automakers meet near-term growth and profit targets and fund their operations. To that end, automakers must strike a balance between listening to their best customers to strengthen their core business and ignoring them as they unleash disruptive innovations.
It's counterintuitive, but in the world of disruptive innovation, sometimes doing the right thing is actually the wrong thing. It all depends on the circumstance.