Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Using ONLY the data and information below, determine which of the industrial structures you have studied best describes the global electric vehicle industry. Support your

image text in transcribed

Using ONLY the data and information below, determine which of the industrial structures you have studied best describes the global electric vehicle industry.

Support your answer with as many of the industry characteristics we have covered as you believe are relevant in this case, and include specific information from the material provided.

Industry Overview

Electric Vehicle Market Overview

Total sales in the global electric vehicle market have exploded from just over 60,000 units in 2012 to about 3 million units in 2020 (IEA, 2021). Growth is being driven primarily by battery-electric vehicles, vs. their earlier counterparts, plug-in hybrids, which also have a combustion engine.

More than ten of the largest OEMs worldwide have declared electrification targets for 2030 and beyond.

Overall, the announcements by the OEMs translate to estimated cumulative sales of electric LDVs of 55-72 million by 2025. (IEA, 2021).

Revenue

Sales growth is driven by a variety of factors including lower prices and longer lives for the batteries used in the vehicles, an increasing presence of charging stations, more brands and models being offered, and government subsidies in some countries. These are offsetting the original issues that slowed the adoption of EVs.

Cost

While revenue growth presents a rosy picture of the industry, there is a problem, according to a recent study by McKinsey. Most OEMs do not make a profit from the sale of EVs. In fact, these vehicles often cost $12,000 more to produce than comparable vehicles powered by internal-combustion engines (ICEs) in the small- to midsize-car segment and the small-utility-vehicle segment. What is more, carmakers often struggle to recoup those costs through pricing alone. The result: apart from a few premium models, OEMs stand to lose money on almost every EV sold, which is clearly unsustainable. (McKinsey, 2019)

They go on to suggest that EV makers will face hard choices in coming years to become profitable, including possibly reducing the features offered, pursuing partnerships in R&D as well as production, aggressive purchasing strategies, and volume maximization. All these bold actions are likely to reshape the EV market over the next 5 years.

The table below provides sales data for the top 10 auto companies selling EVs worldwide:

image text in transcribed

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics

Authors: R. Glenn Hubbard, Anthony Patrick O Brien

7th edition

134738314, 9780134738116 , 978-0134738321

More Books

Students also viewed these Economics questions

Question

What is the meaning and definition of E-Business?

Answered: 1 week ago

Question

3. Im trying to point out what we need to do to make this happen

Answered: 1 week ago

Question

1. I try to create an image of the message

Answered: 1 week ago