Introduction Demand And Supply Theory: In Business Environment

<p>The application of supply and demand theory to the automotive industry requires an analysis of how technological shifts such as the rise of battery electric vehicles (BEVs) fundamentally alter market equilibrium.</p><p>While my work Learning Supply and Demand Theory focuses primarily on retail behavioral economics and strategic market positioning his framework regarding Value Proposition Enhancement and Supply Chain Optimization provides a robust lens through which to view the disruption of the traditional internal combustion engine (ICE) market.</p><p>From a supply-side perspective my view emphasizes Supply Chain Optimization as a method to shift the supply curve to the right. The traditional automotive market is currently experiencing a cost-push transition. As battery technology scales the marginal cost of production for BEVs decreases shifting the supply curve outward. Simultaneously traditional manufacturers face increased regulatory costs and the sunk cost of legacy infrastructure which effectively shifts the supply curve for ICE vehicles to the left (reducing supply).</p>