You work for a management consulting firm that has recently landed a new client an electric vehicle (EV) manufacture that has been selling passenger vehicles for the past two years. This EV firm is still much smaller than Tesla, but it has enjoyed 40% annual sales growth since 2021. Over the past two years, they have faced the usual problems that has challenged all manufactures, including labor shortages and supply-chain issues. At this time, the firm is operating smoothly, but they are concerned about potential changes in the coming year. In particular, your chief economist has already reported to the client that interest rates are likely to increase by at least one percentage point in the summer, inflation is expected to continue at 3.5% to 4% for the remainder of the year, and there is a 60% chance of a mild recession during the coming fall and winter.

Your firm has placed you in charge of the EV firms account. Your first task is to explain to the firm how the expected changes (higher input cost, higher interest rates, and temporarily lower consumer income) will affect the expected price and sales volume in the EV market. Please use one or more supply-demand diagrams to illustrate the market impacts. Second, you should provide at least three practical actions they can take to protect against these risk during the coming year. Your responses to both parts of the assignment should be based on the broad range of concepts and theories covered in managerial economics.

The final product is to be a two-page report submitted as a word or PDF document, with all sources references. The two-page limit does not include a cover page or references and any diagrams can be put in an appendix. The format is mostly up to you, with the qualifier that it serve the interest of your prospective client.