A little less than a year ago, I wrote a post titled Any Color as Long as it’s White, about the project at Tata Motors (India) to create the cheapest car ever built–cheaper even, in inflation-adjusted terms, than the Ford Model T. Here’s the car. See commentary from India, here and here.
And in China, a company called BYD Auto is launching a plug-in hybrid which is supposed to be available for sale (in China) this summer. Interestingly, the parent company of BYD is a battery manufacturer.
These cars won’t be available in the U.S. anytime soon, and will likely never be available in the U.S. in their present forms. There are issues of regulatory compliance, of consumer expectations, and of the need for a sales and support structure. But any U.S. auto executives who think that these announcements aren’t very relevant to them need to do some remedial reading. In their book The Innovator’s Solution, Clayton Christensen and Michael Raynor point out that disruptive innovations–those destined to change the structure of an industry–tend to attack from below. They usually first appear in a form that is in some ways inferior to the existing dominant technologies, and hence are unlikely to get the attention or respect of industry incumbents. I think it is quite likely that innovations developed by companies such as Tata and BYD–whether product design innovations or manufacturing process innovations–will in the not-to-distant future have a significant impact on the U.S. auto industry.