From a consumer’s perspective, we rarely experience the effect of competition within a niche market. Aside from price changes, little that goes on behind the scenes is evident once a product reaches the consumer market.

However, those working within a niche market experience the effects of competition first-hand. Take the sustainable aviation industry, for example. Despite the amount of money flowing through companies, we’d still consider it relatively niche. So, is competition a good thing?

Opportunities and challenges that the competition creates 

We can divide the impact of competition into broadly positive and negative impacts. On the positive side, competition between airlines and aircraft manufacturers can drive innovation and the development of more efficient and sustainable technologies.

For example, EVTOL Company A develops a battery and drive train, resulting in a more extended range for its aircraft. This would put it at a significant advantage over EVTOL Company B, as aircraft range is a potential hindrance in terms of a product’s suitability.

Short of patented technology, which of course, is popular in disruptive tech, this kind of development should have an overall positive impact on the industry. If one company develops a superior battery, other companies will need to follow suit to keep their aircraft competitive.

On the other hand, competition can have a significant impact on available funds and what companies do with this money. The pressure to cut costs and offer consumers competitive prices can discourage investment in sustainable practices and technologies.

A good example is the recent discussion of the windfall tax on British energy producers. Critics of the taxes argue they would discourage energy producers from using their profits to invest in sustainable and green energy technology. The same is true for other industries: if a company makes less profit, it has less money to invest in R&D.

What Effect Does This Have on the Market?

Although competition can affect a company’s available funds, it makes prices more attractive for consumers. This should theoretically mean a net increase, as more people buying at lower prices should lead to market growth.

In turn, a growing market attracts more companies, which can further drive down prices and increase consumers. Unsurprisingly, this is how a niche market becomes mainstream.

Hopefully, market growth would lead to companies driving innovation and investing in new technologies and designs. The main goal is to create a competitive advantage, which often requires products to be differentiated. While we could argue we haven’t yet reached this point in the EVTOL industry, there are certainly plenty of niche products that serve different purposes. Whether this level of differentiation can persist as the industry becomes commercially viable remains to be seen.

The bottom line is that competition should increase EVTOL vehicles' availability, making them more accessible to consumers. While there are some potential downsides to competition in a market, it’s generally a positive thing. After all, it drives innovation; without this, a niche market would stagnate.

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