Imagine driving down the road in a fully-electric Ford Maverick truck, sipping on a carton of Oatly oat-milk. Well, forget about it – because Ford has stopped taking Maverick orders until 2023, and Oatly’s oat-milk production efforts have been an udder disaster.
The problem isn’t that no one likes electric trucks and oat-milk – it’s that people like them too much and neither company can keep up with demand. And to make matters even worse, Ford is running out of blue oval Ford badges to stick on the front of their cars.
For business leaders and managers, projecting customer demand can be extremely challenging, particularly in a new market. In PriSim’s manufacturing and vehicle-dealership simulation classes, students grapple with production and demand issues as they try to avoid both stockouts, along with the associated loss of market share, and the expense of holding excess-inventory. Just like in the real world.
But it can be done, and some companies do get it right. Harvard Business School provides a framework for validating a market’s potential before rolling in with a new product. Richard Branson famously tested which way the wind was blowing by leasing a secondhand airplane until he was convinced that Virgin Atlantic was an idea that would fly. Ford, on the other hand, reversed out of a deal to co-develop an electric truck with Rivian in 2021.
And demand isn’t projected to decelerate any time soon, especially in light of oncoming state and federal regulations. Maybe all those electric car companies should move (back) to California: the state has voted to halt all sales of new gas-powered vehicles by 2035.
By the way, one car aficionado doesn’t seem to be lamenting the shortage of electric trucks. In spite of his band’s name, the lead singer of AC/DC says he’s scared of electric cars…