How Market Penetration Will Depend On Battery Pack Costs

The U.S. electric passenger car industry in 2011 was described as being in its infancy, because it is still a new concept to buyers. However there are signs of growth from 2011-2015. Buyers do not consider the car because of price, travel range and vehicle size, along with other secondary concerns.

As for cost structures for this industry, the fixed costs are going to consist of machinery and equipment in order to produce the automobiles. These fixed costs also serve as a barrier of entry into the industry; small firms will not be able to afford the fixed costs. For the variable costs, labor, materials, and advertising are going to be the main costs (Investopedia, 2009). These costs also change according to the output produced; whether the companies cut back on production or increase in production. These costs don’t serve so much as a barrier of entry into the industry, but in order to compete in this industry, an entering firm must come up with them on an extremely large scale.

Electric vehicles began taking the market by storm when Nissan introduced its mass-production Leaf model in 2011. Since then, nearly every manufacturer has brought its own EV to the market. The future appears bright for EVs, especially as engineering improvements make them more efficient and cost-effective. That said, we will examine the good, the bad and the ugly of electric vehicles to help you make an informed decision about this emerging technology.

While car manufacturing is a global industry, automotive companies such as JLR operate in broader regions such as Europe and Asia. Three major trends were identified affecting car production in mature markets, the first was the fragmentation of mature markets, customers were demanding more choice, and this has made it difficult for manufacturers to obtain economies of scale, so cost had to be reduced and with the general

One driving force of change is technology. The automobile industry is constantly focusing on technology in order to make themselves and their cars better. They constantly compete to be the “first” one to have the newest and best idea. One of these ideas is an electric vehicle. GM, Ford, and Toyota all have electric automobiles. GM has the Chevy Volt. Volt One of Ford’s electric cars is the Electric Ranger. Ranger Toyota had the Rav4 EV, but due to discouraging sales it stopped production. “Toyota remains committed to developing an "Eco Vehicle," one that will have a minimal impact on the environment.” Rav4 One purpose of the electric automobiles is to have the ability to drive to work using only electricity. Currently during longer trips you would have to use a combination of electric and gasoline power. Electric Car

The movement to electric vehicles has been a slow process. It has always been dictated by consumer desires, price, and practicality. There are predictions that the electric car market will reach 7% of total car sales by 2020, and there are some who think the market will be much bigger by then. We’ll see!

Firstly, the decline of oil prices in 1996 decreased the price of substitutes to the EVs and increased demand for traditional cars. In addition, the oil lobbyist’s blocking of recharging infrastructure limited important complements for a viable EV market.

Currently, the market for electric vehicles are in its early stages. However, with the growing environmental awareness more people are becoming more accepting and fond of the idea of electric cars. Presently, less than 2% of households have an electric powered vehicle but it is projected that by the year 2045, electric vehicles will account for 35% of the automotive market share.

This was a new and untapped market and Tesla needs to develop a marketing plan that will allow them to stay ahead and be the sought after brand in electric vehicles. They cannot simply rely on word of mouth like they have been doing in the past.

The car market has been ran by companies such as Volkswagen, Toyota, Ford, BMW, and many other companies, but one of the newer, up and coming companies in this market is Tesla Motors Inc. Tesla has been around for a little over 10 years, and have come quite a long way from where they began. Tesla now sells luxury electric vehicles different than any other electric vehicles today, and they have big plans for expansion in the future. Tesla may not be one of the biggest car companies today, but one day they will be considered alongside companies such as Toyota and Ford.

Problem Statement: Disruptors of domestic and international competitors are expanding upon the alternative fuel vehicle market and can offer a wider variety of products ranging from hybrid, plug-in hybrid, and fully electric vehicles due to the access to more resources available to them.

It is important that they meet these standards to avoid major setback while tarnishing their brand reputation. The second variable to consider is the U.S. energy loan programs for research and development of new vehicle technology. Those were a few political factors Tesla has to face in order to remain successful in the market. Tesla has the chance to grow in the alternative energy industry to degree where they can begin to maximize profits. Because of the consistently rising gas prices, the demand for more efficient cars are more pronounced than before. Another factor is the recovery made by countries as a result of the 2008/2009 recession, simply because it plays a pivotal part on a customer’s purchase power. Increased environmental concerns are swaying people towards a more eco-friendly lifestyle. Society is now associating electric vehicles with an improved social status. Having said that, our ageing population is more likely to spend the necessary money for a premium car. Tesla has the advantage of owning the first all-electric car created through the use of innovation and technology. Features stem as significant as a fully electric car, to computerized safety and prevention. This not only improves the safety of these vehicles but also the convenience for present day cars as well as cars in the future. The automotive industry is very competitive and as time goes by, car manufacturers are being forced to use innovation to produce an

Electric cars have to compete directly with the already established traditional vehicles. Traditional vehicles have created a market for themselves and are also now entering into the electric car business, giving tough competition to the electric vehicle manufacturing companies.

One of the main political factors facing Tesla in the US are the incentives offered by different states and cities to Tesla owners. They must co-ordinate with these policy makers and inform the consumer. In China, the key political factor is that “the Chinese government wants to put around 5 million electric or plug-in hybrid vehicles on its roads by 2020, but to date reports have confirmed that there are a mere 70,000 electric vehicles plying on China’s roads. In order to promote EV sales, the government has set a target that 30% of government vehicles purchased by 2016 should be EVs. To reach the target set for 2020, the Chinese government is ready to fund nearly $16 billion to build electric charging stations. To further promote EVs among Chinese car buyers, the government is looking to impose a new tax on gasoline engines and has renewed the private-buyer subsidies for electric-powered vehicles for another three years.” (GuruFocus. 2014.

As the EV and HEV trend strengthens, key industry players are offering models that directly compete with Tesla. Competing models include the Chevy Volt and Spark, Nissan Leaf, Toyota Prius, Ford Focus, Honda Fit, Smart Car, Volkswagen Golf, BMW i3, and Mercedes Benz B-class EV (Grant, 2015). However, Elon Musk does not view these offerings as Tesla’s competition. With only 1% of total vehicle sales going to non-hydrocarbon burning cars, Musk identifies Tesla’s true competition as the gasoline cars with production rates of about 100 million per year (Musk 2014).