Archive for July 25th, 2022

Marketing 101: “Reasonable reach”

July 25, 2022

It’s only possible to incentivize buyers to buy something that they can reasonably afford.
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Last week, Transportation Secretary Pete Buttigieg spoke a Climate Control truth out loud:

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Recognizing the uh-oh of his comment, he tried to soften it by saying:  “We could have no pain at all by making EVs cheaper for everyone.” Source

Wrong, Mayor Pete.

Making an EV cheaper?

Right now, for example, Ford’s base model Lightning F-150 pickup costs $39,974, a mere $10,000 more than its gas-powered version. Source

Of course, government can make that $10,000 go away with the stroke of a pen.

How?

Simple: subsidies to car buyers and manufacturers.

But, Mayor Pete, there are two pieces to the puzzle … the $10,000 price differential is one problem … the $39,974 (or, $29,974 after possible government subsidies) is a bigger one given that

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Source

You see, Mayor Pete, about half the country doesn’t have the scratch to buy more than a week’s food and gas.

A shiny new car isn’t on their radar, whether it’s $39,974 or $29,974 … or $65,000 for crowd-swooning Tesla.

Why?

It’s out of their “reasonable reach”.

And, by the way, the “reach” is getting more difficult these days …

As the headline teased:

Last November, 32% of Americans said they were ill-equipped to cover a $400 emergency expense.

But this year, that number has risen to 49%, according to a YouGov survey for the Economic Security Project conducted online in May .

It’s clear that more Americans are having trouble covering unplanned expenses than in the past.

It’s easy to see why fewer Americans have cash reserves in the bank now compared to last November.

Living costs have been soaring over the past six months due to inflation, and wages aren’t rising at a steady enough pace to keep up.

That’s forced many people to dip into their savings rather than reserve that money for other purposes. Source

Simply put: An EV isn’t within the reasonable reach for most Americans … and the reach is getting longer as savings erode and inflation shreds buying power.

Or, as the original Grandma Homa used to say more colorfully:

“If you don’t have a pot to piss in, don’t go shopping for Cadillacs.”

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P.S. to Mayor Pete

According to the WSJ:

Most nonrich consumers will likely opt for gasoline-powered cars for decades to come. 

So, the auto industry is gambling on big electric vehicles – loaded with exciting, high-tech gadgets – aimed at the rich.

For example, Nissan is giving up its pioneering electric Leaf in favor of a big electric SUV aimed at affluent shoppers. 

Ford is placing bets on the Mustang Mach-E; GM on the Hummer EV, 

Some $526 billion is currently being invested to create dozens of mostly high-end electric vehicles aimed at the 17% of buyers who constitute the luxury market.

Regulators everywhere are structuring their electric-vehicle industries based on subsidies from less-affluent people who continue to buy gas-powered cars.

 


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