NLUJ DEAL

MEDIATION
COMPETITION 3.0

March 4 - 6, 2022

Quarter-Finals
Proposition
 The EV Dream

The Republic of Sonder is a secular, democratic, republic nation. Sonder is a developing nation
heavily reliant on a fossil fuels for its energy requirements. In 2015, an independent research
organization, Gusto Climate Impact Research Organization, published a report titled ‘Fossil Fuels and
its human cost’ which stated that 63% of the air pollution in the major metropolitan cities of Sonder
has been the result of the emissions from fossil fuels. The report highlighted that continuous exposure
to low-quality air has reduced 7 years from average life span in people residing in those areas making it
deadlier than several other diseases.

There were multiple studies published after this that highlighted the catastrophic impacts of fossil
fuels on the health of the planet. Pursuant to this, Government of Sonder in 2016 launched an
ambitious mission to replace all the vehicles run on gasoline and diesel with electric vehicles in 5 major
cities of Adele by 2030.Truffle Corp (T.C.), looking at this market opportunity, decided to start a
division for electric scooters and cars named Truffle Electric.
Truffle Corp is the largest manufacturer of two-wheelers in Sonder. Its majority stake is owned by
Donia family group. The company was established in 1980 and has captured 45% of the two-wheeler
market in Sonder.

In 2000s, apart from manufacturing two-wheelers, Truffle had several other business verticals from
footwear, electronics, to bicycles and four-wheelers. In order to take the company to new heights, the
CEO, Mr. Ricky Donia, decided to adopt a strategy of divestment by selling different verticals of the
Company and retaining only the two-wheeler and four-wheeler divisions. This led to unprecedented
success of the Company with Fulsar Classic becoming their star model and the company almost
doubled their sales every year between the years 2004-15. Unfortunately, 2014 onwards, the sales of
Fulsar Classic started falling due to the growing awareness of the public at large of the harms of the
fossil fuel used by these vehicles.

Mr. Ricky Donia was quick to realise this and took the opportunity to devise a plan for the
manufacture of electric vehicles. They introduced 4 variants of Electric Scooter namely, Xeno, Xeno
Plus, Xeno Light and Xeno Turbo along with 2 variants of electric cars, Model X and Model S. As
part of their plan, they decided to manufacture and roll out the electric vehicles in four phases.

This problem is drafted by Ms. Mayuri Manwani. This problem is drafted purely for academic purposes and for use as a mock problem in the Deal
Mediation Competition. The narrative adopted by the author of the problem is purely personal and is not attributable to the organization.
Resemblance to any person or organization is purely coincidental.
The first phase aimed to roll out 1 million electric scooters and 85,000 electric cars by June 2018. The
second phase included a batch of another 1 million Electric Scooters and 100,000 electric cars to be
rolled out by January 2020. The third phase aimed at manufacturing of 2 million scooters and 135,000
electric cars to be supplied by July 2021 and the fourth phase included a projected 2 million electric
scooters and 135,000 electric cars to be released by December 2022.

Pursuant to this, Truffle Electric. entered into a deal with Anemoia Semiconductor Manufacturing
Company (ASMC) located in Saiwan to supply semiconductors for the electric scooters in a deal
amounting to 360 million Sonder Dollars. ASMC is one of the largest semiconductor chip
manufacturers in the world. They are involved in the dedicated manufacture of these silicon wafers
that are used for the programming of almost all the electronic devices on the planet. This makes them
one of the biggest companies that are operational in Saiwan and catering to a global market.
The company was the first dedicated semiconductor manufacturing foundry in the world, founded by
a very ambitious businessman Morris Chang (M.C.) and managed by Mark Lieu and C.C. Wei, that
was established in the year 1987 and they have continued to retain the dominant position in the
market since then.

ASMC is the only company that has a capacity to manufacture 10 million plus units in a year and
hence they manage to dwarf their competitors. The founders have a passion for the development of
technology in the motor vehicles segment and so they have a dedicated manufacturing unit that deals
with the manufacture of chips to be used in the two-wheeler and the four-wheeler segment.
According to the deal Truffle Electric would receive the chips in four tranches which would
correspond to the quantity of vehicles being rolled out in each phase. It would take six months for AE
to roll out the vehicles from the date of delivery of the chips.

In late 2019, the automobile industry in Sonder faced a slowdown due to several policy reasons and
there was a major slump in demand. Nevertheless, the second phase of the roll out was a success since
most of these vehicles were pre-booked. However, in March 2020, Covid-19 pandemic led to
economies shutting down in major parts of the world and forced people to their homes. It brought
various industries to their knees and automobile industry, already hit by slowdown, was severely
impacted. Due to this, the third phase of the manufacturing and roll out by Truffle Electrics had to be
postponed by several months. In March 2020, Truffle Electric asked ASMC to postpone their
shipment of 2 million semiconductors for the electric scooter and 1,35,000 for the electric cars by 6

This problem is drafted by Ms. Mayuri Manwani. This problem is drafted purely for academic purposes and for use as a mock problem in the Deal
Mediation Competition. The narrative adopted by the author of the problem is purely personal and is not attributable to the organization.
Resemblance to any person or organization is purely coincidental.
months. In September 2020, Truffle Electric and ASMC agreed that the supply of the semiconductors
for phase 3 manufacturing will be deferred until Truffle Electric decides to restart the manufacturing
of the vehicles.

In the meantime, it was seen that even though the impact of the pandemic slowed down several
sectors, it gave an impetus to the others. It also exposed faults in the global supply chain thereby
managing to disrupt several industries. One of the major victims of this was the semiconductor
industry. There was a rapid rise in the demand for electronic equipment which was needed to set up
work from home stations. Therefore, supply of the semiconductors quickly shifted to cater the
exponential demand in smartphone, electronics, and computers. Apart from this, there was a shortage
of medical equipment which caused spike in demand from an unconventional avenue.
Accordingly, ASMC also channelised their stock of semiconductors to several companies
manufacturing ventilators and other medical devices. ASMC realized that healthcare industry has the
potential of significant growth and decided to invest 500 million Saiwanese Dollars in R&D to
produce semiconductors for sophisticated medical devices other than ventilators.
In the meantime, the pandemic struck economy started showing signs of recovery and the demand for
automobile surged. Accordingly, Truffle Electric decided to ramp up the production. It intended to
revise its timelines for phase 3 and phase 4 with phase 3 roll out now scheduled for January 2023 and
phase 4 for December 2023.

In February 2022, Truffle Electric approached ASMC to discuss the supply of the semiconductors for
phase 3 manufacturing and requested that the same be delivered by June 2022. However, due to
excessive global demand, ASMC’s manufacturing capabilities had maxed out, thereby creating a global
supply crunch. Further, the manufacturing facilities of ASMC faced recurring shutdowns for
extended periods in times of excessive rise in infections caused by Covid-19 variants. ASMC therefore
requested asked for an extension to deliver the demanded products. Additionally, since there was a
unilateral deferral of demand by Truffle Electric and now ASMC’s facilities were at capacity, ASMC
requested to renegotiate a higher price than previously agreed at which they would deliver the chips.

As a result, the CEO of Truffle Corp, Mr. Ricky Donia and Chairperson of ASMC Corporation, Mr.
Morris Chang agreed to schedule a mediation session to renegotiate the terms of the agreement in
presence of two neutral mediators.

This problem is drafted by Ms. Mayuri Manwani. This problem is drafted purely for academic purposes and for use as a mock problem in the Deal
Mediation Competition. The narrative adopted by the author of the problem is purely personal and is not attributable to the organization.
Resemblance to any person or organization is purely coincidental.