When a supply shock hits a product for which there¡¯s no alternative ¡ª toilet paper during COVID-19, for instance ¡ª there¡¯s not much people can do except deal with it. If a ready substitute is waiting in the wings, the outcome can be mass defection.
Think of how American drivers switched to smaller, fuel-efficient Japanese vehicles in the wake of the 1970s oil embargoes. Detroit¡¯s big three produced almost half the world¡¯s cars in 1973. They account for well under 10% today.
With a fresh Middle Eastern oil crisis building, Asian electric-vehicle manufacturers are poised to seize a new market. That will do to conventional gasoline cars and bikes what Toyota Motor, Honda Motor and their peers did to the U.S. auto industry in the 1980s. The same companies may be the losers this time around.
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