The article “Volkswagen Will Invest $193 Billion in Electric Cars and Software” discusses the decision of the German firm to increase its investment in the electric car segment. The company’s executives have created a long-term plan for growing their production of electric vehicles and shifting towards environmentally-friendly solutions for the business (Eddy, 2023). Furthermore, Volkswagen aims to transform its brand into a technology-driven services group that goes beyond the simple production of cars.
The economic idea explored in the selected article is the company’s response to the changing demand. As the vehicle market develops, people become interested in new types of cars based on their current views of the environment, renewable energy, and available technology. Mateer and Coppock (2021) note that “tastes and preferences can change quickly, and this fluctuation alters the demand for a particular good” (p. 83). Therefore, as the people’s demands change, Volkswagen responds to the new trends and focuses its efforts on a particular product.
In my opinion, Volkswagen has made a correct decision, which will help the business restore its image. Following the scandal where the company was accused of cheating in reporting its emissions, its image has suffered, which turned a large group of environmentally-conscious consumers away from Volkswagen (Eddy, 2023). Moreover, as the energy and fuel crisis is becoming more significant, it is vital for the automotive industry to find new solutions for consumers (Eddy, 2023). Overall, the long-term plan is a solid approach to the major change.
The Christian’s response to this situation would be the same as that of one of the firm’s executives. The economists reviewing the current fuel supply problems and the automotive industry’s requirements saw a geopolitical conflict and resolved it with technological advancement. Moreover, this decision positively affects the organization’s image and acts as a better alternative for the environment. Good stewardship requires companies to protect the economy and avoid further crises, which aligns with the company’s decision.
References
Eddy, M. (2023). Volkswagen will invest $193 billion in electric cars and software. The New York Times. Web.
Mateer, D., & Coppock, L. (2021). Principles of Microeconomics (3rd ed.). W. W. Norton and Company.