You are on page 1of 48

History Of the automobile industry

The automotive industry began in the 1890s with hundreds of manufacturers that pioneered the horseless carriage. For many decades, the United States led the world in total automobile production. In 1929 before the Great Depression, the world had 32,028,500 automobiles in use, and the U.S. automobile industry produced over 90% of them. At that time the U.S. had one car per 4.87 persons. After World War II, the U.S. produced about 75 percent of world's auto production. In 1980, the U.S. was overtaken by Japan and became world's leader again in 1994.

In 2006, Japan narrowly passed the U.S. in production and held this rank until 2009, when China took the top spot with 13.8 million units. With 19.3 million units manufactured in 2012, China almost doubled the U.S. production, with 10.3 million units, while Japan was in third place with 9.9 million units.

Economy

Around the world, there were about 806 million cars and light trucks on the road in 2007, consuming over 260 billion US gallons (980,000,000 m3) of gasoline and diesel fuel yearly. The automobile is a primary mode of transportation for many developed economies. The Detroit branch of Boston Consulting Group predicts that, by 2014, one-third of world demand will be in the four BRIC markets (Brazil, Russia, India and China). Other potentially powerful automotive markets are Iran and Indonesia. Emerging auto markets already buy more cars than established markets. According to a J.D. Power study, emerging markets accounted for 51 percent of the global light-vehicle sales in 2010. The study expects this trend to accelerate

World Motor Vehicle Production

For many decades, the United States led the world in total automobile production. In 1929 before the Great Depression, the world had 32,028,500 automobiles in use, and the US automobile industry produced over 90% of them. At that time the U.S. had one car per 4.87 persons. After WWII the U.S. issued 3/4 of world's auto production. In 1980 the U.S. was overtaken by Japan and became the world's leader again in 1994. In 2006, Japan narrowly passed the U.S. in production and held this rank until 2009, when China took the top spot with 13.8 million units. By producing 18.4 million units in 2011, China produced more than twice the number of automobiles made by the U.S. in second place with 8.7 million units, while Japan was in third place with 8.4 million units.

Global Production of Motor Vehicles by Year

Country wise Distribution of the automobile market .

Escape. Silverado . Accord Ford. Highlander Hybrid Honda. Civic.Saturn Vue Green Line. the Saturn Aura Greenline and the Mailbu Hybrid. Camry Hybrid.Insight. Avalon Hybrid. Fusion Hybrid Chevrolet.Hybrid and electric vehicle cars by big Brands     Toyota – Prius.

A company based in united states BYD. now owned by Mahindra and Mahindra.Zap has numerous retail locations in the United States. . a company based in China Reva. and sells cars made by other manufacturers. this company already makes and sells two low-speed electric vehicles which are manufactured in China Zap! Electric Cars.A company based in India.Believe your dreams.Produced in China distributed in the United States. Tesla.Founded in 2004. Global Electric Motorcars (GEM) — GEM is a division of Chrysler and has the look and feel of a start-up       Fly Bo.Standalone Players in the EV segment  Miles Electric Vehicles .

PEST ANALYSIS .

784) would be given for purchasers of pure electric vehicles and plug-‐in hybrids. the local government of Shenzhen announced that the city will have 24. Chinese government will grant 100bn R MB to support new energy cars . the government announced the Green Car Subsidy Trials in five pilot cities. Also the in the same year.750 charging stations by 2012   The government also committed that in the next 10 years.000 electric vehicles and 12.Political: China  In June 2010.000 RMB ($8. Subsidies of up to 60.

6 billion in wind. solar.Economical: China  Year 2009: 13.7 million motor vehicles manufactured in China. and other green energy products    . surpassing Japan as the largest automobile manufacturer in th e world Year2010: Chinas share of the global electric vehicle market will grow from 2.7 percent this year to 35 percent by 2020 China has 19% world population but less than 1% of world oil reserves In2010 China invested $34.

S.Social: China  According to a recent survey. a mong which 69% are willing to change their living habits . and Europe   Electric mileage and reliability of new energy are erns for buyers of EVs main conc    98% of urban Chinese are concerned with climate change. 60% of Chinese respondents sh ow a strong interest for electric vehicles The average age of Chinese car buyers is 35 compared with 50 in the U.

Technological: China  Main technologies: hybrid.g.   . Toyota‘s Prius). now a core seg ment of the automotive‘s future The future of electric vehicles depends primarily on cost and availability of batteries with high energy densities. electric. power dens ity. and long life. fuel-‐cell Worldwide increases in the price of petroleum caused automa kers to release hybrids (e.

have played an equally important role in bringing the Indian Automotive industry to great heights. The government is likely to grant 30% subsidy to the Electrical Vehicle producers. On an average about Rs 2. till 2020. growth oriented economic policies and right environment to attract investments. and refining the banking policies. relaxation of the foreign exchange and equity regulations.000 crore over the next seven years. The liberalization steps. which is a big sum.Political: India  Indian Government has changed its role from controller to facilitator with prime focus on providing better infrastructure. This has made giant auto manufacturers enter into India and affect the competitive environment. reduction of tariffs on imports.000 crore will be provided as incentive. such as. The level of incentives which the government is thinking is to the tune of Rs 12.     . Also the auto manufacturers are seeking zero percent import duty.

Economical: India    Rising GDP consecutively for the last 5 years has led to increased purchasing power and hence the automobiles Per capita Income is rising . which is affecting the segments of automobiles being ventured into Increasing urbanization of rural India also has given rise to increase in sales .

    .Social: India  Social Environment: The demand of cars has been fueled by following factors : Indian families are becoming increasingly nuclear Increasing Propensity to spend Increasing distances between work-place and residence The number of Indians who are concerned about the environment are increasing day by day. Charging stations are a major concern in the minds of the Indian people.

electric vehicles etc instead of conventional fuel. .Technological: India Rising costs of petrol and diesel has given rise to increasing use of vehicles which use alternate fuels like CNG. LPG.

SWOT ANALYSIS OF INDIA. CHINA and UNITED STATES .

Strength  Consumers buy EVs for two main reasons. they‘re considered safer for the environment. with the cost of ―filling up‖ mentally associated with the utility bill. with buyers feeling as though an EV is a once time purchase. There‘s a psychological component as well. much of our electrical grid is powered by fossil-fuels like coal. EVs not only eliminate the gas pump. it‘s an economic choice. There‘s even an advantage to those who like to get going in a hurry – electric motors don‘t have to rev up like an internal combustion motor. Second. with the motivation being reduced fuel bills  Since EVs don‘t have any emissions. As for the economic side of the equation. First. Unfortunately. since EVs don‘t have as many moving parts as a traditional vehicle. but also make for reduced transportation costs as electricity is far cheaper than gas. they‘re usually cheaper to maintain. The torque is instantly available from the moment you touch the throttle. As an added bonus. while EVs don‘t have harmful greenhouse gas emissions. it‘s an ideological choice. They‘re responsive. based on reducing emissions and persevering the environment.   . peppy and some would even say fun.

range on EVs is quite limiting and public charging stations are not nearly as abundant as gas stations. Pair that with the long recharge times and it‘s easy to see why an EV isn‘t the perfect car the majority of drivers. if you live in a condo or apartment. Longer trips may exhaust an EVs range and have you searching for public charging stations along your route. However. having your own dedicated outlet for charging your vehicle or even a level 2 charging station might not be possible  .Weakness  However. This means that EVs are typically ideal for those who dwell mainly in cities where there are shorter commutes and more local charging stations.

Future Outlook .OEMs Perspective. Government Initiatives Future market . Hybrid Cars Forecast. . Based on OEM‘s Sales Target. Increase in demand for green cars in overseas markets. Based on Government Target. Future Outlook . Low maintenance and operational costs. Electric Cars Forecast.Cumulative Future EV Potential by 2020.Opportunity  Demand Drivers .Increasing Crude Oil Prices. Manufacturers providing incentives to attract consumers. Import Dependency & Sustainability.Government‘s Perspective.

National Mission for Hybrid and EV. Government target. CP Model and other regulation in different countries is also threat for electric cars Market . Installed Base. Budget 2012-13. Charging Time.Purchase Price. Global Market Share Model (GMS). estimated investments.MNRE Scheme.Threats  Key challenges . Delay in Government action on plans. Battery Technology & Battery Pricing. Lack of availability of spare parts  Government Regulations & Initiatives . Charging Infrastructure. State Subsidies. NEMMP 2020. Driving Range.

Current Scenario Porters 5 forces Indian EV Industry .

EV Industry In China THREAT OF ENTRY Low Threat of entry •Capital requirement •Government and legal barriers •Economies of scale •Absolute cost advantage •Product differentiation •Access to distribution channel SUPPLIERS Low Relative power INDUSTRY RIVALRY High BYD Geely FAW Chery Nissan Honda Hyundai GM Toyota VW Power battery suppliers Price sensitivity Bargaining power Electric motor suppliers Price sensitivity Bargaining power Chinese market share BUYERS Price Sensitivity and High Bargaining Power 2009 2008 Dealers Price sensitivity Bargaining power Substitutes-short distance High Threat Gasoline cars Electric bicycles Motorcycles public transportation Traditional taxi Substitutes: long distance Train 0% Private customers Price sensitivity Bargaining power 10% .

Since most cars manufacturing cars and trucks and the low are relatively similar. Not both. Customers switching costs for consumers when buying different makes and models further will buy more for the brand than the car. •The supplier firms must contend with substitute products for sale to the industry. Bargaining Power of Suppliers: Low (3) •Many firms rely on one or two automakers to buy a majority of their products. •Great diversity of rivals in terms of •There is a need for strong brand cultures identity and to differentiate from •High fixed costs associated with other car makers. • Buyer power is extremely low due to the Threat of New Entrants/Barriers fact that there are few competitors to Entry: High (8) •There is slight product differentiation in the cars such as hybrid versus fuel. either a hybrid or a sports car. •Main competition seems to be Tesla themselves. Mazda hydrogen vehicles will be competition. it could be detrimental to the previous supplier’s business. transferred. (Electric sports car vs. Substitutes include: Hybrids*Public Transportation*Hydrogen Vehicles• These substitutes are of lower quality Electric vehicles are differentiated when compared to transportation listed above. • If automaker decided to switch suppliers. •The switching cost is high. In Rivalry Among Existing Competitors: High order to switch to another (7) industry almost nothing from the •Rivalry in the US and the global automobile industry can be automotive industry is intense. GM Volt.) .. Threat of Substitutes: LOW (3) • There are few substitutes as well. heighten the rivalry. • Suppliers are susceptible to the demands and requirements of automobile manufacturer = very low power. Nissan Leaf. •Tesla automobiles are very unique in the industry..EV Industry In USA Bargaining Power of Buyers = LOW (1)•Tesla Motors does not sell products in bulk• Do not have standard products.

Origin Of Electric Cars .

is an Indian company based in Bangalore The Reva Electric Car Company (RECC) was founded in 1994 by Chetan Maini A joint venture between the Maini group and AEV LLC Reva was acquired by Indian conglomerate Mahindra & Mahindra in May 2010 Mahindra Reva currently produces two versions of the REVAi.India-REVA  Mahindra Reva Electric Vehicles Private Limited. an urban electric micro-car The REVA went on sale in India in 2001      . formerly known as the Reva Electric Car Company.

BYD Auto began selling its first mass-produced. is a Chinese automobile manufacturer based in Shenzhen.Guangdong Province Founded in 2003. following BYD Company's acquisition of Tsinchuan Automobile Company in 2002   BYD Co Ltd began as a rechargeable-battery factory competing in the Chinese market against Japanese imports In 2008..   . the BYD F3DM BYD Auto may have been created in the absence of a State policy explicitly supporting independently owned automobile manufacturers. full hybrid vehicle.China-BYD  BYD Auto Co. Ltd.

Nissan and Fisker had not. while Ford. the company's first vehicle. Tesla Motors signed a production contract on 11 July 2005 with Group Lotus to produce "gliders― Tesla's strategy was to emulate consumer electronics' products and enter the automotive market with an expensive high-end product targeted at affluent buyers     . Tesla was the first car company to have fully repaid the government. is the first production automobile to use lithium-ion battery cells.TESLA  Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning The Tesla Roadster.USA.

Electric Vehicles : A Global Perspective Paarul .

Electric Vehicles : A Global Perspective Paarul .

Electric Vehicles : A Global Perspective Paarul .

S and Canada •Currently planning to enter China •Has opened a small facility in Tilburg.4% in the Electric Vehicle Industry •Major Player in U. Netherlands for assembling Model S components shipped from California to Europe . to cater to the demand in Europe •The following slide exhibits the Tesla dealers distribution in various parts of the world Paarul .TESLA INTERNATIONAL DISTRIBUTION •Covers a Global Market Share of 8.

.

.

.

the capital city of Bhutan.REVA DISTRIBUTION • The Mahindra Group’s manufacturing expertise and wide global distribution network will help Mahindra Reva scale up production •Mahindra Reva. • 3 •3 • 2 • 6 •4 •5 • 5 •2 Paarul . has signed a memorandum of understanding (MoU) with the government of Bhutan. zeroemission ‗Mahindra e2o‘ in Thimphu. to promote the usage of electric vehicles in their country •They launched their all-electric.

German Company will soon sell a single product under the Denza brand name. Targeting up market Sedan Maximum Sale in China While the majority of sales are domestic. a majority of them planted in China BYD through it‘s joint venture with Daimler AG . The Dominican Republic . Ukraine and Moldova Plans to enter the European and Israeli market. Paarul . some models are exported to other developing countries like Bahrain.BYD – INTERNATIONAL JOURNEY BYD has production bases in 23 countries.

BYD OPERATIONS Paarul .

Diamond Model Paarul .

• US market is growing with 26% share of Global Sales • Top 5 markets in US – Atlanta .S the largest market for Ev. • Major Subsidies and Tax Exemptions Paarul . Looking at a Lithium battery manufacturing plant ( Texas. Washington D. Portland . Netherlands . U.C. Los Angles and San Diego • Growing markets Globally – China ( 30-35% of sales).Diamond Model for Tesla Demand Condition • Based in California . Mexico. Japan Factor Conditions • Production based in Fremont . California • . Norway. Nevada and Arizona are the prospect states ) • Decision Based on climatic conditions and Terrain as the plant will use solar and wind power.

Diamond Model for Tesla Related Supporting Industries • Major ingredient in EV manufacturing is Lithium Batteries – Russia has the largest lithium battery manufacturing plant – Liotech • Panasonic is the sole supplier • Backward integration strategy. Manufactures it’s own Batteries .S – 64 . Plans to start world’s biggest Li-ion battery factory by 2016 • OEM strategy • Own line of Charging stations (U. Europe – 14) . offers High –End EVs’. Focusing on Features and Performance • Lower Price Points –Plans a Cost Leadership Strategy in China • Global competitors are Chevrolet Leaf and Toyota Prius due to their low price Paarul .S and European market • Targeted towards the Elite. Free charging for lifetime • Switching cost of Charging Station is Very High. Customer have to pay very high fee to charge from another player like Chargepoint Firm Strategy and Rivalry • Differentiation strategy in the U.

Hangzhou. Shenzhen. Hefei and Changchun • Potential and Current markets Globally – London( electronic buses) Factor Conditions • Large Population – Cheaper Labor Cost for Assembly Line Production in China • BYD F3 model is assembled in Russia ( Market Expansion) and Ethiopia ( Cheap Real Estate and Labor) Paarul . Practical benefits –Short Commutes and Traffic Lowers Speed • China growing with 16 % share of Global Sales • Top 5 markets in China – Shanghai.Diamond Model for BYD Demand Condition • Increasing Pollution leads to demand for Electronic Vehicles in the Public Transportation Industry. • Intercity travel in China is rare.

brazenness and precision • Rather than waste effort creating new models for the sake of variety.2351 stations by 2015 • Subsidies paid directly to the car makers – Overall Lower Prices Firm Strategy and Rivalry • Cost Leadership strategy in China • BYD strategy's is based on focus. a limited number of resources are spent on developing key products. Ford and GM Paarul . Forward Integration to Electric Vehicles • Supporting Infrastructure Industries – Joint Stock Company with People’s Republic of China ( PRC). • Charging stations infrastructure is developing . • BYD is known for picking up the best-selling products and blatantly copying them • Competition from Tesla .Diamond Model for BYD Related Supporting Industries • Started as a Lithium Battery Maker for Cell Phones . That's the company's focus.

to promote the EV manufacturing industry .Diamond Model for REVA Demand Condition • Highly underdeveloped EV market in India . This indicates opportunity for M&M Reva for a stable support in future Indian market Paarul . but With fuel prices soaring – EV is the future • M&M plans long – term benefits • M&M targets to sell 400 to 500 EVs a month • Delhi will be the biggest market (anticipated 150 to 200 unit sales per month) • Plans to launch in the Europe market M&M wanted to enter Europe with an EV Factor Conditions • M&M has invested Rs 100 crore to produce 30.000 units annually of the e20 at its Bangalore facility • Already existing infrastructure of Mahindra makes India a preference for production base • Lack of supplier for Li-ion batteries locally • Society of Manufacturers of Electric Vehicles (SMEV) was formed in 2008 .

5-3 Lac per car • Lackluster attitude of Indian Government towards promoting EV caused Reva to hunt markets in Bhutan Firm Strategy and Rivalry • Differentiation Strategy instead of Cost Leadership • Looking for the first movers advantage in India • Extension of the Mahindra Brand • Focus on innovation – tie up with Vodafone • Plethora of Competitors.2. International – GM with Chevrolet Spark and Chevrolet Beat Electric.Diamond Model for REVA Related Supporting Industries • M&M plans to tie-up with public sector oil companies to incorporate charging points for electric vehicles at petrol pumps across the Delhi • Currently there are 100 charging stations in Delhi • Battery is supplied by Samsung SDI and Bosch – Costs Rs. National Players like Tata Motors with Vista EV Paarul . Toyota –Prius.

Nissan. Hence . by positioning Reva as premium brand . GM M&M must explore markets where Mahindra’s hold is strong.Recommendations for Reva    Reva is a new brand and will face tough competition from international manufacturers like Tesla. on the lines of Tesla Paarul . like South Africa One of the probable market for Reva could be Singapore due to :     Robust Electricity Power Grid Warm Climate that doesn’t drain the battery life as in cold climates No long distance drives required in a country 30 miles wide But issue of Lack of Government Incentives. differentiation strategy could work.

ibtimes.aspx?cid=1206&MainCatID=12&id=20140318000005 http://www.meleszenawi.com/California+Gives+Tesla+Motors+347 +Million+Tax+Break+to+Boost+Vehicle+Production/article339 61.Sources        http://www.htm http://www.com/you-wont-believe-where-electric-cardemand-growing-fastest-us-hint-its-not-california-1557593 http://business.financialpost.com/chinese-automaker-build-yourdreams-auto-opens-a-new-assembly-plant-in-ethiopia/ Paarul . Jonathan Kaiman in Beijing theguardian.com/world/2014/feb/25/china-toxic-airpollution-nuclear-winter-scientists .00 GMT http://www.com.com/news-subclasscnt.wantchinatimes.com/2014/03/14/how-teslamotors-incs-electric-car-batteries-are-adding-to-chinaspollution-woes/?__lsa=8a5e-bc10 http://www.dailytech. Tuesday 25 February 2014 16.theguardian.

ec e#. 1:04 AM National Competitive Advantage of China in Electric Mobility: The Case of BYD .com/What-WeDo/Automotive/Companies/Mahindra-Reva-Electric-Vehicles http://forbesindia.ciam.newindianexpress.rwtaachen. Peter Kelly-Detwiler.Sources        http://www. VINCENT FERNANDO FEB.de/media/Doks/100501_CIAM_BYD.com/sites/peterdetwiler/2014/03/13/building-outthe-electric-vehicle-charging-infrastructure-greenlots-advocates-foropen-standards/ .com/business/news/article1514417.com/here-is-exactly-how-warren-buffettschinese-auto-company-byd-copied-competitor-designs-piece-bypiece-2010-2?IR=T . 3/13/2014 @ 10:20AM http://www.com/samsung-sdi-partner-boschto-supply-lithium-ion-batteries_newsitem_3481 Paarul .forbes.Uyn4LPmSzd0 http://automotivehorizon.sulekha. 2010. http://www.pdf http://www.mahindra.businessinsider. 11.com/blog/business-strategy/why-the-economics-ofmahindra-reva-e20-dont-work/ http://www.