Electrical Utilities Company

I: Client is an Indian company that focused on the electrical utility segment and moved into the manufacture of batteries specifically for electric vehicles as well. The company is looking to moving into the electric vehicles industry. Analyze the market and industry to see whether they should move into the new segment

C: Can I get some inputs regarding the industry and what would differentiate the company from its competitors if there are any? 

I: Sure. The electric vehicles industry although quite niche is a growing market with one established competitor and another one who had recently entered the market. While the company has not manufactured electric vehicles directly, they have been manufacturing batteries for the same which have been proven to provide 15% higher mileage than any of its competitors.

C: That’s great. Since the client does not have a production plant for electric vehicles, I would like to know what the timeline that they are targeting for entering the market.

I: The company wishes to enter the market as soon as possible. Preferably in under 2 years.

C: Normally for a company to enter a market, R&D on the final product would have to be conducted, followed by extensive testing and then manufacturing of the same. Since the timeline is relatively small, to save on R&D and testing, the most optimum route would be  through a joint venture or acquisition of a company which already has invested in R&D and development of EVs. Would these be options that could be considered?

I: Yes, which of these two options would you suggest as most optimum? 

C: The overall market for electric vehicles even though it is growing, is rather niche. Due to this, it would be in the clients’ best interest to go for a joint venture.

I: Good insight. Once the joint venture is complete, how should the client go about with entering the market.  

C: I would like to go about describing the same using a multi-stage process for the product launch.

Stage 1: Integration of technologies between clients’ battery systems and joint companies’ technology to come up with a final product.

Stage 2: During the integration period, to try and introduce the company name, with a history in electrical utilities, the client can try to set up EV charging stations in popular and frequently visited locations.

Stage 3: Launch of vehicles in Tier 1 cities along with partnerships formed between the company and popular hotel chains in and around the city to set up charging stations that will allow for intercity travel.

Stage 4: Launch of vehicles in Tier 2 cities along with setting up charging stations in the same.

I: Great. Can you provide some input on how the client should go ahead with pricing? 

C: Sure, I would start by considering the total population of India,

There are 3 pricing strategies that can be followed. The first one is competitive pricing. Since the market is presently led by a single leader, our client can match the prices being charged by the market leader to grab a share of the market. The second is cost-plus margin pricing. Since the product manufactured by our client offers a 15% higher range and the company and competitor technologies are similar, it can be assumed that the per-unit cost of manufacturing the product is similar. In such a case the client should charge a price that is equal to cost plus a margin benchmarked to the competition. The third pricing strategy is value-based pricing. Here price will be based on the product attributes and the perceived sense of value by the consumer.

I: Those were some great strategies provided.  We can end the case here