The Automotive Industry Is not Immune to a "Strategic Doppler Effect"

When companies evolve along different trajectories and at very different speeds, the competitive signals they send can be misunderstood or underestimated. This phenomenon can be compared to the “Doppler effect”in physics which explains why the sound of an ambulance appears higher-pitched or lower-pitched depending on wether it is moving toward or away from the observer. A company believes it is competing against a traditional car manufacturer, only to discover that it is actually facing an integrated technology company. It assumes it is competing with a low-cost player, only to realize it is confronting a coherent, fast-moving industrial organization.

The current tensions in the electric vehicle market, illustrated by the closure of Stellantis’s Poissy plant, Renault’s weakened results with a loss of €10.9 billion, Ford’s loss of US$11 billion (more than €9.38 billion) in the fourth quarter of 2025 alone, and Volkswagen’s 44.3% drop in profits to €6.9 billion, go far beyond a mere slowdown in demand.

Against a backdrop of massive investment, shrinking margins, and increases competition from China, the transition to electric vehicles is proving more expensive and less profitable than anticipated.

This situation highlights a recurring pattern: established companies often underestimate new competitors that are transforming their industries.

The Doppler Effect

Not all companies are doomed in the face of change. As I have shown in my research on corporate longevity around the world, some businesses survive for centuries: more than 1,700 companies are over 150 years old, and around 250 have existed for more than four centuries. Their endurance is not a matter of luck but rather of their ability to anticipate change, understand their customers, and correctly assess how competitors are evolving. Most companies disappear because they fail to adapt to the market or misinterpret the arrival of new rivals.

In physics, the Doppler effect refers to the change in the frequency of a wave when the source and the observer are in relative motion. It explains why the sound of an ambulance becomes higher-pitched as it approaches and lower-pitched as it moves away: the waves are compressed in front of the source and stretched behind it. This phenomenon is widely used in meteorology, where comparing emitted and received frequencies makes it possible to measure speeds – or flows – that are invisible to the naked eye and to analyze the internal movements of atmospheric systems.

In strategy, a metaphorically similar phenomenon can be observed. A company’s perception of another becomes more distorted when the two do not develop or transform at the same pace. The greater the differences in trajectory and speed of evolution, the more difficult it becomes to understand the competitive landscape. This mismatch can lead to delayed or inappropriate strategic decisions.

A Gap That Is Difficult to Close

This is precisely what happened with Tesla. Many traditional automakers initially saw a high-performing electric vehicle with an attractive design. They assumed the challenge was to produce an equivalent model offering similar range, acceleration, and styling.

But Tesla was not a car manufacturer in the traditional sense but a technology company that happened to produce cars. Its competitive advantage rests on software, over-the-air updates, and battery integration. Whereas a traditional manufacturer launches a new model every five to seven years, Tesla can remotely upgrade a vehicle that has already been sold. The car itself continues to evolve.

This approach transforms not only the customer relationship but also the business model, with better and broader services, data, and continuous interaction.

This difference in pace creates a gap that is difficult to bridge for organizations historically structured around long industrial cycles, extensive supplier networks, and complex hierarchies.

While a traditional manufacturer renews a model every five to seven years – such as Renault with the Clio or Peugeot with the 208 – Tesla continuously upgrades vehicles already on the road. Customers do not replace the car; the car transforms itself. The signal was visible, but it was perceived too late, through the lens of an outdated industrial mindset.

This gap was only fully recognized after the fact. Jim Farley, CEO of Ford, recalled his teams’ reaction after dismantling a Tesla Model 3: “We were very surprised. When we tore down the Model 3, what we discovered was astonishing.”

Similarly, Herbert Diess, then CEO of Volkswagen, described the Tesla Model Y as a “benchmark vehicle” for the German group.

BYD and China’s “Strategic Doppler Effect”

The “strategic Doppler effect” is also visible in the more recent rise of BYD and other Chinese manufacturers such as Geely, SAIC Motor, NIO, and XPeng. For a long time, these companies were viewed merely as low-cost competitors and were assessed primarily through the lens of pricing.

In 2024, Stellantis CEO Carlos Tavares stated: “There is no way we are going to leave the market for electric cars priced at €20,000 or less to the Chinese.”

This focus on price obscured the bigger picture. Chinese competition is based on shorter development cycles, extensive vertical integration, and deep industrial expertise in battery technology. BYD designs and manufactures its own batteries, motors, and critical components, reducing costs, lead times, and external dependencies. Together, CATL – the Chinese electric vehicle battery giant – and BYD account for more than half of global EV battery production. Since batteries represent roughly 30% to 40% of the cost of an electric vehicle, this level of control constitutes a decisive economic and strategic advantage.

The failure of Europe’s Northvolt project illustrates the difficulty of catching up at a late stage. Although the investment was substantial, it proved insufficient to compensate for the accumulated differences in industrial know-how and supply-chain capabilities. Once again, the threat was visible, but it was poorly assessed from a distance.

This metaphor of the “strategic Doppler effect” complements the work of scholars Clayton Christensen, Rajesh Chandy, and Gerard Tellis on the internal biases that hinder the adoption of disruptive innovations. Unlike in physics, where the signal itself is altered by movement, the analogy here highlights a bias in organizational knowledge and interpretation, arising from analytical frameworks that are poorly suited to competitors evolving at a different pace.

The Curse of Established Leaders

In the case of electric vehicles, established manufacturers did invest in the technology. However, many interpreted the transition as a simple replacement of the internal combustion engine with a battery, when in relaity it represented a systemic transformation. The failure of the Blue Solutions batteries developed by Vincent Bolloré’s group – based on a proprietary technology that proved poorly aligned with emerging industry standards – and the limitations of the first generation of the Renault Zoe, which were designed as product evolutions rather than as part of a broader system redesign, illustrate this partial understanding. In both cases, the challenge was fundamentally systemic rather than purely technological.

Industrial history shows that market leaders can reinvent themselves, as demonstrated by companies such as Michelin, Schneider Electric, and Safran. What these transformations have in common is not the scale of investment but the ability to see competitors for what they truly are within industries undergoing constant change.

In an era of rapid transitions, the analogy of the strategic Doppler effect serves as a simple reminder: misunderstanding the competition can be just as dangerous as noticing it too late.

This article is republished from The Conversation under a Creative Commons license. Read the original article.