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Electric Vehicle Industry:A Market AnalysisApril 21, 2012Group Members:Don Picciano, Jr.Christopher JohnsonKevin BryantTABLE OF CONTENTSIntroduction to Electric Cars…………………………………………………………………………………………….4Customer Segments………………………………………………………………………………………………………...5Buying Motives…………………………………………………………………………………………………………………7Unmet Needs…………………………………………………………………………………………………………………...8Competitor Analysis……………………………………………………………………………………………………..9Direct Competitors…………………………………………………………………………………………….10Indirect Competitors………………………………………………………………………………………….17Substitute Products…………………………………………………………………………………………...18Strengths and Weaknesses………………………………………………………………………………..19Strategic Perspective & Market Shares……………………………………………………………..20Industry Perspectives……………………………………………………………………………………………………21Distinguishing Characteristics of Industry…………………………………………………………..21Industry Size and Growth…………………………………………………………..……………………….22Historical Information……………………………………………………………………………22Future Projections………………………………………………………………………..……….22Industry Structure……………………………………………………………………………….………………23Barriers to Entry……………………………………………………………..………………..…..23Potential Entrants and Threats from Substitute Products………….………….23Bargaining Power of Suppliers and Customers………………………………………24Cost Structure……………………………………………………………………………………………………..24Life Cycle Position………………………………………………..……………………………...……………..25Key Success Factors…………………………….……………..………………………………………………..25Environmental Analysis………………………………………………..……………………….…………………..….26Trends and Potential Events……………………………..……………………..……………………..…..26Description of Trends…………………………………………….……………………………….26Strategic Implications……………………….……………..…………………………………..…26Time Frame…………………………………………………………………………………………….26.Importance for the Industry…………………………………………………………….……..27Future Scenarios…………………………………………………………………………………………..………27Marketing Perspectives…………………………………………………………………………………………………..27Product Differentiation…………………………………………….……………………………..27Branding………………………………………………………….……………………………………….33Technological Changes……………………………………………………………………………..36Services Required………………………………………………………………………..……………37Price……………………………………………………………………………………………….……………………...38Trends……………………………………………………………………………………………………...38Margins…………………………………………………………………………………………..………..39Discounts…………………………………………………………………………………..……………..40Distribution………………………………………………………………………………………..…………………..41Major Channels…………………………………………………………………………………………42Sales and Dealerships………………………………………………………………………………..42 Channel Conflicts…………………………………………………………………………………..….43Promotion……………………………………………………………………………………………………..….…….43Expeditures: Historical Information and Future Projections………..…….………43Positioning of Major Brands……………………………………………………….…….………..44Promotion Trends…………………………………………………………………….…….………….44Issues Affecting Strategy Choice……………………………………………………………………..…….…………..45Works Cited………………………………………………………………………………………………………….……………46Introduction to Electric CarsAn electric vehicle (or EV), uses an electric motor for propulsion rather than being powered by a gasoline-powered motor. While it is uncertain who invented the EV, several inventors have been given credit as early as 1828 by ?nyos Jedlik who invented a small-scale model car powered by an electric motor that he designed. Others credited with their inventions include Robert Anderson, Professor Stratingh, and Thomas Davenport. It was not until the late 1800s that Americans began to devote attention to these innovations and interest in motor vehicles increased greatly. William Morrison built a six passenger wagon in 1891 and his design with a capacity for passenger is often considered the first practical EV. Then, in 1897, the first commercial EV was used as a fleet of New York City taxis built by the Electric Carriage and Wagon Company of Philadelphia (Bellis, n.d). Once the electric starter became common in the 1930’s, the electric car became almost obsolete and gas-fueled vehicles became the conventional vehicle of choice. As America's (and the world's) love affair with the automobile grew and decades passed, the dependency on oil slowly increased and gas prices rose. In the last 15 years, gas prices have increased so much that the demand for alternative fueled vehicles became not only a public cry, but also governmental policy. As Americans, we send more than $1 billion for oil overseas every day, mostly to fuel our vehicles. In 2000, the world consumed 77 million barrels of oil per day and by 2010, the consumption jumped to 87 billion barrels (Coplon-Newfield, 2012). Due to this significant oil consumption, the Environmental Protection Agency revealed the plan to reduce this dependency with the requirement that vehicle fleets achieve a 35.5 mpg average by 2012-2016 and a 54.5 mpg average by 2017-2025 (Coplon-Newfield, 2012). President Obama has proposed new programs to dramatically boost the market for electric vehicles in order to break free from this dependency and reduce emissions. These proposals will make electric vehicles more affordable, accessible, and convenient. President Obama recently said in a speech at a Daimler manufacturing plant that he plans to promote an "EV Everywhere" experiment to make EVs "as affordable and convenient as gasoline-powered vehicles for the average American family within a decade" (Coplon-Newfield, 2012, para. 2) . Grant programs will aid American scientists, engineers, and businesses to conduct research and development that will lower the cost of EV batteries, increase driving distance range, and advance the technology for EV fast-charging. These significant improvements will allow EVs to become mainstream (Longley, 2012). In addition, the president’s proposed programs will help cities become EV ready (i.e., have charging stations, become prepared for increased electricity usage, and educate its residents about the benefits of electric vehicles). President Obama also proposes to make electric vehicles more affordable by raising the tax credit on purchasing an EV, allowing the tax credit to be available at the dealership, and removing the cap on the number of vehicles per manufacturer eligible for the credit (Berman, 2012; Coplon-Newfield,2012).Customer AnalysisSegments It appears that with any product, there are a number of customer segments developing in this new market. There are four distinct segments that have been identified, including the eco-friendly “green innovators,” the budget conscious “cost shoppers,” the risk adverse “laggards,” and the high end “2.0 Premium Customers” (Steinhubl & Leis, 2012). These four groups have four distinctly different desires in the market and in some cases it can be difficult to make a product that fits a combination of these needs. The green innovator is the group of people that are environmentally motivated and are looking to use their electric vehicle to better the planet. Green innovators will look at the efficiency of the vehicle and be less cost adverse than other groups. This group is familiar with alternative fuel products and will not be afraid to go all in on the plug in electric vehicle (Steinhubl & Leis, 2012). The cost shopper is the group not currently being well-served by the existing selection of vehicles. The cost shopper will look at the benefits of owning an electric car. This group will likely consist of city drivers that hope to save money with a combination of government rebates on the front end and savings at the pump on the back end. This group will fall into what is sometimes considered the “city driver” and will thrive on advertisements like Myers Motors claim that its vehicle will run for 1,000 miles on $20 worth of electric fuel (Steinhubl & Leis, 2012). The laggards are a group that is going to wait and see what happens in the market. This group of people is generally risk adverse and they are going to wait to see the “proof” that electric vehicles are going to be a viable transportation alternative. This group will often look for what the catch is and be quick to bring an objection (Steinhubl & Leis, 2012). Bain & Company believe that it will be the 2.0 Premium Customers that initially begin to push this technology into the open market. This is generally a market group that will endure the glitches and challenges of new technology to be the first people to drive the car. Bain & Company predict that there are about 350,000 consumers worldwide that will fit into this unique segment and about half of them are believed to be in the US (Steinhubl & Leis, 2012). Although it is believed to cost an average $12,000 higher than a similar “conventional” vehicle, this is the only group that is willing to take on the extra cost. This group will not only have a large impact on how these vehicles are marketed, but also, in how these vehicles are designed (Steinhubl & Leis, 2012).Buying Motives There are numerous reasons why people buy electric vehicles, similar to any other product that hits the market. Four buying motives seem to have emerged for the electric vehicles: economic, personal, psychological and social. These four motives tend to encompass and represent the four segments that we have discovered for buyers (Beach, n.d.).Economic buying motives are likely to be considered towards the end of the process and have a tendency to not to be as much of a motivator to buy. Rarely do people buy things just because they can afford them, nor does this proposition guarantee that someone will buy the least expensive product available. The price conscious shopper is not a segment that we have seen truly emerge in the electric vehicle market as there are very few “reasonably priced” alternative to choose from (Beach, n.d.).Personal buying motives are generally related to individual and demographic information. An example of this is that in northeast Ohio, we value four wheel drive vehicles due to the weather. In Texas, four-wheel drive is often viewed as an unnecessary luxury because they are more interested in the size of the vehicle than its capability in inclimate weather. Products are often marketed differently to different types of people, such as young versus old or men versus women. This buying motive can often be mistaken as a company attempting to market its product; thus, a great amount of market research is required to make sure you are on point. For example, until now, the electric car market has often focused on performance (0 to 60 time and top speeds) and therefore, the general target for these products has been men. Recently, products have moved more towards an economical sense and have discussed cost savings and efficiency, which in car marketing is a target towards women (Beach, n.d.).Psychological consumer motivations fall into the area of a need or a perceived need of a person or group of people. Psychological motives generally include things like safety, self-esteem, love and belonging. This buying motivation also tends to prey on psychological characteristics like compulsiveness, ambition, or competitiveness. This group absolutely captures a large portion of our buying segments. Whether the consumer is the premium 2.0 buyer who is concerned about his image or the go green buyer who is concerned about making the world a safe place to live, these motivations are an important part of making a decision to buy (Beach, n.d.).Social motivations are generally influenced by a person’s peer group or an overall societal requirement. The greater social requirement may fall into a cultural group an individual believes that they belong to or their opinions of leaders or celebrities. Through the advertising, we can see that this is a buying motive that the high end electric vehicles, specifically, have attempted to target. Most sites proudly list a celebrity who is one of the proud owners of their product and virtually all of them invite you to join in on the prestigious ranks of their ownership (Beach, n.d.).Unmet NeedsThe electric vehicle (EV) industry appears to have a number of unmet needs that must be addressed before the industry can truly take off. Cost is a huge problem in this market, as the availability of cost effective, good value vehicles is significantly lacking (Hodson & Newman, 2009). Other unmet needs include consumer confidence and education, which is somewhat difficult to quantify, and long range vehicles, as well as family-friendly, multiple seat vehicles.The value proposition is one that is being addressed; however, it is an unmet need to date. The average electric car costs about $12,000 more than a similar conventional vehicle (Hodson & Newman, 2009). The most popular all electric vehicles include the Nissan Leaf (MSRP $35,200 before tax credit) and the Volt (MSRP $39,145 before tax credit). This is a substantial investment for a budget conscious consumer and has a very direct impact on the market share that this product has the ability to capture. Consumer confidence is an issue that takes many shapes. Questions about where the vehicles can be plugged in, the availability of charging stations, and the length of the buyers’ commutes are very real concerns for many. Another major issue is the actual life of the battery in the vehicles. It is reported that the batteries have a useful life of between five and eight years depending on use. The problems associated with them are unlike a normal car battery. The cost to replace the batteries ranges from $10,000 to $40,000, meaning that there is little or no residual value to these vehicles. (Stanton, 2012) This has a huge impact on the financing of these vehicles as well as the overall cost of ownership.The desire for cars to be family friendly and have a long range has been attacked recently by both Tesla and Chevy. The upcoming Tesla S sedan boasts seating for 7 (5 adults and 2 children) with an approximate range of 100 miles. The Chevy Volt navigates the mileage restriction by having an onboard gas-powered generator that pushes the 35 mile range of the Volt into a normal 400 mile range (Stanton, 2012).Charge times and locations are other concerns. Most plug-in vehicles require six to eight hours to fully recharge; therefore, consumers may have to plan their days around being able to be without their vehicle for a period of time. Most true plug in vehicles have a range of somewhere between 50 and 100 miles. The “down time” for these vehicles to charge can take away the convenience of traditional gas-powered cars (Stanton, 2012). Competitor AnalysisCompetitor Identification/Major CompetitorsAs with any emerging market, numerous direct and indirect competitors exist. While there are a substantial number of manufacturers entering the market, many less are actually in the market. With vehicles being held to much higher standards in gas efficiency, as well as a long trend of other alternative fuel vehicles, this is a much more competitive market than people realize. Currently the projections are that plug-in electric vehicles (PLEV’s) will take over about 5% of the total market for vehicles worldwide by 2017 (, 2011).Direct CompetitionAptera Electric CarsAudi Electric CarsBW Electric CarsBYD (Build Your Dream) Electric CarsChevroletCommuter Cars Electric CarsFisker AutomotiveFordHondaInfinityMazdaMercedes-BenzMyers Motors Electric CarsMini ElectricMitsubishi ElectricNissanSmart Electric CarsTeslaTh!nk North AmericaToyotaWheegoZAP Electric VehiclesAlthough there are a high number of vehicles on the list of automobiles offered as electric vehicles, very few of them have actually been brought to market (Eziquiel-Shriro, 2012). While our list is very inclusive, we will keep our analysis of the competitors to vehicles that have actually hit the market at this time.BYD Electric Cars is a Chinese based company that has seen over a half of a million vehicles delivered to date in Asia. The majority of BYD’s market share in this region is based on their gas platform; however, it is a company that has substantial resources to bring to the development and marketing of their vehicle. According to Wang Chuanfu, the company’s president, the manufacturer will only focus on electric cars in North America (Shirouzu, 2011). BYD has launched the E6 in China where the vehicle is used primarily for taxi service. BYD will have its first shipment of vehicles in the US by the end of 2012, with some of the vehicles already promised to the Los Angeles Metro Government. Although the vehicle is rumored to be relatively sluggish and generic, BYD states that the vehicles driven were only prototypes and the vehicles that are actually delivered will be of higher quality (Shirouzu, 2011).Chevrolet has become one of the most recent entrants into the electric vehicle market with the release of the Volt. The Volt is largely aimed at making the electric car a more user-friendly vehicle and taking market share away from vehicles like the Toyota Prius. The Volt is not, however, a true plug-in electric vehicle. The Volt has a plug-in range of about 35 miles (, n.d.), but with its onboard gasoline generator, the range stretches to a much more reasonable 400 miles. The Volt arrived at the 2011 Auto Show as the most technologically advanced vehicle brought to market this year and ended up taking home the 2011 North America Car of the Year Award. (Eziquiel-Shriro, 2012).The Volt has not lived up to its initial expectation. With only about 10,000 vehicles sold thus far, GM is far below its projected figures. The Volt boasts a sticker price of a little under $40,000 and dealerships have had a limited availability. GM has largely designed this shortage as they shut down production of the Volt from March into April due to lack of consumer demand. GM has restarted production after posting a better than expected March, with 2,289 Volts delivered. (Conway, 2012)Commuter Cars Electric Cars was one of the first publicly available electric vehicles. The Tango T600 was introduced in 2006 and is built on a tandem seat platform. The vehicle was designed, somewhat, for the rich and famous who commute through the streets of Los Angeles. Boasting a prestigious group of owners, including George Clooney, the Tango T600 achieves a 0 to 60 time of about 4 seconds and also has a top speed of 130 mph. (Eziquiel-Shriro, 2012) The Tango T600 is offered with an option of a lead acid battery with a range of 40 to 60 miles or a lithium ion battery with a range of 200 miles. The vehicle is somewhat price restrictive, with the base model being priced at $108,000. Safety is a Tango hallmark, featuring a roll cage built to race car standards, a 4-point safety harness, and more protective steel in each door than a typical SUV (, n.d).The Tango 100/200 is scheduled to hit markets in the near future and is more in line with other affordable mass-produced cars. Commuter Cars began taking orders and is listing the base price for the T100 at $19,000 and the T200 at $40,000. Some are not sure if these vehicles will ever actually see the light of day (Eziquiel-Shriro, 2012).Fisker Automotive was founded when designers Henrick Fisker and Bernhard Koehler decided to join forces and design an automobile that pushed the limits. The first thing that the new partners did was survey the automotive landscape and they realized that it was based on a history defined by limitations (, n.d.). The new partners brought a combined 51 years of automotive design experience, and in 2007 they literally started with a blank piece of paper. Five years later, Fisker has established itself as a player in the electric car market and possess what Car and Driver calls the most attractive looking electric vehicle on the road. Born out of their combined vision, the Fisker Karma was born (Robinson, 2012).The Fisker Karma is a four door sport-based platform that has been in development since 2007. The Karma features exciting stats of achieving 0 to 60 MPH in just 6.3 seconds and also has a top speed of 125 MPH. The Karma does borrow a bit of technology from Chevrolet it features a GM-designed onboard gas generator that stretches the range of the Karma to an adequate 300 miles. The Karma can run on a plug-in capability with a range of 50 miles. The Karma’s base model is priced at a steep $102,000. The Karma does have a “stealth mode” allowing the vehicle to run virtually silently; however, during the other times, the vehicle actually has an exterior sound system that pumps out the growls and purrs that car enthusiast love about sport cars (Robinson, 2012).Ford has become one of the newest and, quietly, one of the most highly anticipated entrant to the electric vehicle market. Ford launched the 2011 Ford Focus-E to lead its charge into the consumer electric vehicle market. Ford has had the Transit Connect EV available for a number of years; however, this vehicle is mainly used as a fleet vehicle for transporting goods (, n.d.).The Ford Focus-E comes to market directed at taking market share from the Nissan Leaf. Unlike the Volt or Prius, the Focus-E boasts a 100% electric operated vehicle. Part of Ford’s marketing pitch for the Focus-E is “Never use a drop of gas again.” The Focus-E comes equipped with onboard navigation on all models pre-programmed to help the driver find the closest charging station. The Focus-E also has an all-electric range of between 90 and 100 miles and comes with a cell phone app to help monitor the vehicle at a distance. The Focus-E is a relatively new competitor in the market, but it is priced at $39,200, still making it a bit expensive for your average consumer (, n.d.).Myers Motors is an Ohio based manufacturer that claims it is one of the only all-American made electric vehicles on the road. Myers Motors is the first company to produce an unsubsidized, sub-$30,000, lithium battery powered, all-electric, highway speed vehicle. In addition, it aims to be the first to break the $20,000 price hurdle (, n.d.)Myers produces the Myers Motors NmG, which is a single passenger 3 wheel vehicle. The target market for this vehicle is the short commuter. The NmG has seating for one and is described as having a spherical body design (like a motorcycle helmet). The driver of the vehicle is fully enclosed and the vehicle will travel at speeds up to 70 MPH with a range of 60 miles. Myers’ advertising pitch is their claim that you can drive 1000 miles on $20 of electric fuel (, n.d.). While producing a more affordable version of the vehicle, the only design offered is a single seat vehicle, which can be a concern for many consumers. Myers is scheduled to launch the new two seat Duo in the near future, but specifications are not yet released (, n.d.).Mitsubishi has entered the US electric vehicle market with their 2012 of the MiEV. Mitsubishi prides itself in having over 40 years of electric vehicle experience, mostly in Asia. Positioned strongly based on the infrastructure and in the fact that they have been selling all electric vehicles globally since mid 2009, Mitsubishi brings a very strong offering to the market. The MiEV is set up to be a very strong competitor for the Leaf (Roy, 2011).Mitsubishi beefed up the MiEV a bit before bringing it to US markets, adding 4.3 inches to the width and reducing its weight to about 2500 pounds for its curb weight. The MiEV is still about 2 inches narrower than the compact Fiat 500. About 9 inches of length is added, but none of this impacts the interior as it is all crash safety additions. The MiEV is priced from $29,125 and features a realistic range of about 80 miles between charges. Much like the Leaf, the MiEV is an all-electric plug in and Mitsubishi claims that this vehicle can travel 15,000 miles for only $495 (excluding the price of the vehicle) (Roy, 2011).Nissan became on a major player in the electric vehicle market with the introduction of the Nissan Leaf in 2010. The Leaf quickly became the first mass available consumer electric vehicle and actually managed to outsell the more anticipated Chevrolet Volt in 2011, the first year that the vehicle competed in the market (Harper, 2011). Nissan has taken a bit of a gamble, but at the same time, is looking at a large rewarding pay off with the launching of the consumer electric car market. According to Bloomberg, this could result in distribution of several hundred thousand Nissan Leafs worldwide (Harper, 2011).The Nissan Leaf was released in late 2010 (the 2011 model year) to decidedly positive reviews. The winner of the 2011 World Car of the Year award, the vehicle is poised to continue to capture market share. The Leaf boasts a 100% electric drive train and a range of 100 miles per charge. Nissan claims that the vehicle is rated to 99 gasoline miles per gallon, which is a bit misleading because there is no onboard gas engine (Harper, 2011). With a base price of $35,200, the vehicle is more affordable then its high priced competitors. Nissan claims that with the government rebates, the buyer could see a realized value of $27,700 if he or she actually qualified for all the rebates (, n.d.). Even in the wake of the Japanese Tsunami that halted production, Nissan delivered 11,000 Leafs in 2011 (Eziquiel-Shriro, 2012).Tesla was launched in Silicon Valley in 2003, with the mission to accelerate the world’s transition to electric mobility with a full range of increasingly affordable electric cars. Tesla founds its first success in 2008 with the release of the all-electric Roadster. Since its inception less than 10 years ago Tesla has grown to employ over 1,400 employees and have 21 retail locations worldwide (, n.d.).The Tesla Roadster has become one of the most recognized all-electric sport vehicles currently on the road. To date, Tesla has put 2,100 Roadsters into the hands of enthusiasts who now occupy the road in 32 countries (, n.d.). Tesla ended production of the Roadster in late 2011 with eyes on creating a more consumer friendly vehicle that would have mass market appeal. With a price tag of $109,000 and performance rivaling that of race cars, the Tesla roadster was never going to position the company to be a player in the mass market. For that reason Tesla, has begun production of the Tesla S, which is the first all-electric vehicle to feature seating for 7 people (5 adults and 2 children). The Tesla S will see a price tag of $49,900 and have a range of 160 miles. Those who wish to increase their range can get an all-electric Tesla S with a 300 mile range for about $20,000 more (, n.d.).Recent news in the electric vehicle market has involved the Tesla, specifically raising questions about the life of the vehicles. These reports state that the life of the “permanent” lithium ion batteries being used in the electric vehicle platform likely has a more limited life than initially anticipated. This study goes on to warn that there may be trouble on the horizon for Tesla as the life of their onboard battery is being reported to be as short as 5 years and carries a replacement cost of $20,000 to $40,000 (Stanton, 2012). There is fear that once this information becomes publicly known that it will shake the already unstable consumer confidence in these vehicles.After years of leading the hybrid market with the Prius, Toyota is the next manufacturer prepared to have a huge launch when they introduce the Rav4 EV. Toyota has already seen success in Asia with the all-electric Rav4 EV and is poised to launch the vehicle in US markets in late 2012. Interestingly, Toyota has maintained a small fleet of Rav4 EV’s since 1997 to test the feasibility of bringing this vehicle to market (Eziquiel-Shriro, 2012).There is high initial consumer expectation of the Rav4 EV that it will be noted to be the first “high seat” crossover vehicle offered as an all-electric option. It is believed that the battery will be located near the middle of the frame which will cause the Rav4 EV to “sit heavier” on the road and will actually improve the ride quality over the gas conventional model (Eziquiel-Shriro, 2012). The Rav4 EV boasts a range of 100 miles and it is assumed that the initial move into the market for this vehicle will be as a fleet vehicle.Indirect Competition The alternative fuel market has been a “hot button issue” for the last 30 years. In that time, there have been a variety of alternative fuels developed along with the electric vehicle platform and all of them compete with that platform (, 2012).Biodiesel is a fuel that can be mass produced using waste products from other processes that actually require little to no modification of existing diesel engines. Fuel sources for this include soybeans and used restaurant fryer grease. These products can be used independently or combined with petroleum. This is actually the only alternative fuel source that has completed the health effects testing under the Clean Air Act (, 2012).Compressed natural gas is another attractive alternative and is produced both nationally and worldwide. It is a fuel that has been used for a long time, especially in fleet areas. Compressed natural gas is a fossil fuel; however, it shows an 80% reduction in ozone forming emissions over gasoline based engines (J. Larson, personal communication, April 8, 2012).Gas to Liquid Fuels (GTL Fuels) are made from coal, natural gas, or biomass using a Fishcer-Tropsch chemical reaction. This fuel tends to operate very efficiently and similarly to compressed natural gas, it reduces dependence on petroleum based fuels. This gas does show a minor positive environmental impact, but it is less than other alternatives (, 2012).Hydrogen & Fuel Cell Vehicles are the most realistic competition to electric based vehicles in the market. Hydrogen is the simplest, lightest, and most plentiful element in the universe and is compressed into a usable fuel source with a process call reforming. The vehicle is in the test phase, but there are currently 95 pilot vehicles on the road in California. Tests have shown a reduction in emissions and increase in efficiency. Ford has developed an internal combustion engine made to run on pure hydrogen (, 2012).Liquefied Natural Gas is, to a certain degree, a byproduct of learning how to more safely transport natural gas. By cooling the gas to a liquid state, the fuel more stable to transport. This fuel source is currently in use; however, it makes more sense for large class 8 or large vehicles. It is not expected to be a true competitor in the consumer market (, 2012).Liquefied Propane Gas is one of the oldest forms of alternative fuel in use. This fuel was adopted long ago for use in smaller equipment like forklifts ad farm equipment. There is little research available for modified use into consumer automobiles, yet, it is widely available (, 2012).Substitute ProductsThe most real competition to the all-electric vehicles of today and tomorrow likely come from hybrid style vehicles. Many manufactures possess a model that has been road tested and many have been on the road for a number of years. Some of the vehicles that are being marketed today as electric vehicles more closely resemble hybrids.Honda has a hybrid vehicle that is not that talked about but may be a very real player in the future of the market. The Honda FCX Clarity is an electric/hydrogen hybrid that has been available since 2008. The model uses a hydrogen fueled generator, which is the same concept as the gasoline fueled generator of the Volt. The Clarity boasts a range of 240 miles per tank of hydrogen and the vehicle is offered for lease at $600/month for 36 months. Honda is expected to announce the future of its electric division by the end of 2012 (, n.d.).Possibly the most recognizable go green vehicle today is the Toyota Prius. The Prius has been available since 2000 (the 2001 model year) when Toyota began taking orders online for the vehicle. Toyota sold a total of 1,800 in the first year of sales with an MSRP of $19,995. Since then, Toyota has seen significant growth and tremendous success with the Prius, especially with the second generation model launched in 2004. There were 12,000 orders placed for the second generation Prius before it even hit markets and has won 4 cars of the year awards in 2004 alone (, n.d.). Strategic GroupsStrengths and Weaknesses of Competitors in Each GroupOverall, the strengths and weakness of each perspective brand is currently difficult to identify. The major reason for this is that the electric car industry stands to be a much different market than the conventional car industry. Mr. Wang, the CEO of BYD has said “It’s almost hopeless for a latecomer like us to compete with GM and other established auto makers with a century of experience in gasoline engines,” said Mr. Wang. “With electric vehicles, we’re all at the same starting line” (Shirouzu, 2009, para. 6 ). With so many people coming to the new market it actually turns strengths into weaknesses.In his book Killing Giants, Stephen Denny touches on the idea of a small start-up brand competing with the major players in the industry. Two of the components that Mr. Denny talks about include placing your competition on “Thin Ice” and also the “Speed” of products. These two concepts are important issues for late comers joining the market and also for major manufactures and their difficulty in competing in certain circles (Denny, 2011).The “Thin Ice” Mr. Denny is referring to is taking the competition into a place that they are uncomfortable and unwilling to compete. This is a concept employed by the start-up companies Fisker and Tesla Motors. Both have leveraged the “luxury” brand hybrid to gather small chunks of market share, while at the same time developing technology so they are competitive on a larger market (Denny, 2011). Later this year, Tesla is poised to place the more affordable Tesla S into market. Commuter Cars is set to transition from the performance oriented Tango 600 to the release of the Tango 100 & Tango 200 which will also enter the more affordable consumer market (, n.d.; , n.d.).Using this same concept, weaknesses of some of the larger players in the market are shown. While companies like Chevrolet, Ford, and Nissan possess a large number of resources, they need to take a substantial portion of the market share in any given product for it to be worth their time. For companies like these who are already producing vehicles, completely changing direction requires new expertise, new or retooled factories, and a large commitment to see the project through (Denny, 2011; Shirouzu, 2009).Strategic Perspective & Market SharesThe overall market share of current competition is difficult to quantify at this time and is frankly, too new, to have reasonably developed. Currently, the market share of the electric vehicle industry is about 2% of the total automobile market, or about 260,000 units (Arbeje, 2012). Nissan sold around 11,000 Nissan Leaf vehicles and Chevrolet sold about 10,000 Volts in 2011. While these numbers are slightly behind projections, it is expected that this market share will grow to about 5% of total vehicle sales in the next 5 years (Arbeje, 2012).Strategically, it is expected that the international market for Electric Vehicles will grow faster than the domestic market. With companies like BYD and Mitsubishi already having a footprint in Asia, these markets are expected to grow more quickly. BYD has already sold around 500,000 vehicles in China which suggests that they already have a very strong infrastructure in these areas (Shirouzu, 2011). BYD has already placed a large number of all electric vehicles in major Chinese cities to use primarily as taxi cabs. This is a market that is still very much in its development phase and has yet to find itself. Industry PerspectivesDistinguishing Characteristics of Industry Electric and Hybrid vehicles bring distinguishing characteristics to the automobile industry. In 2010, the first mass produced electric vehicles hit showrooms and dealerships. This new electric option offers buyers new and interesting options in comparison to the traditional gas powered combustion engine offerings to date. Electric cars offer performance, safety, and versatility, and can be charged from the electric grid, providing convenient, low- cost, at-home charging. At the U.S. national average price of 11.5 cents per kilowatt-hour, buying electricity is approximately equivalent to buying gasoline at $1 per gallon. Displacing gasoline with electricity also lowers emissions and decreases petroleum use (Electric Power Research Institute, 2011). The electric automobile industry has three main types of offerings in the electric market. These three offerings (Hybrid, Plug-in Hybrid Electric, and Electric) offer buyers unique differences. Hybrid vehicles: Hybrid vehicles are powered by a gasoline engine and one or more electric motors. The battery is charged as the vehicle drives, so the vehicle is powered ultimately by gasoline. Hybrid vehicles cannot be recharged from the grid. Hybrids operate like conventional vehicles and are fueled with gasoline. Generally they are more efficient than conventional vehicles since they use technologies that turn off the gasoline engine at a stop and capture braking energy for battery power instead of turning it into heat (Electric Power Research Institute, 2011). Examples are the Toyota Prius and Ford Fusion Hybrid.Plug-in Hybrid Electric Vehicles: Plug-in Hybrid Electric Vehicles are powered by a gasoline engine and electric motor, but they have a larger battery pack than a hybrid vehicle which can be recharged from the grid. This combination allows the vehicle to use electricity, and enables the vehicle to continue driving indefinitely after the battery is discharged. Plug-in hybrids operate like hybrid vehicles but can be charged from the grid. Grid energy is consumed first, using up to 70% less gasoline than a hybrid vehicle if it is plugged in each night. Plug-in hybrid electric vehicles do not have to be plugged in, but if they are not they will not save additional gasoline compared to a hybrid vehicle (Electric Power Research Institute, 2011). The Chevrolet Volt is an example of a plug-in hybrid electric vehicle and the typical charge time for 35 miles of range is 8-10 hours with a conventional wall outlet. Electric Vehicles: Electric vehicles are powered by an electric motor and battery alone. Electric vehicles can travel farther on electricity than plug-in hybrids, but their range is more limited. Electric vehicles never use gasoline and most models are designed to travel up to 100 miles between charges. This is greater than the distance driven by average Americans on over 90% of driving days, but it could be a limitation for some drivers who frequently drive long distances (Electric Power Research Institute, 2011). The Nissan LEAF is an example of an electric vehicle. Industry size and growthCurrent -There are approximately 13 million cars and small trucks are sold in the United States each year. Of that 13 million, only 2% are EV or Hybrids (260,000). The Leaf, with more than 27,000 units sold worldwide through March 2012, and the i-MiEV, with global sales of more than 17,000 units through October 2011, is the world's top-selling highway-capable electric cars (Arbeje, 2012). Future Projections- Menahem Anderman, arguably the country’s leading lithium-ion battery analyst, projects that the global EV market in 2015 will be modest. Anderman estimates that 250,000 in sales will be predominantly generated by German and Japanese automakers. The game changer could be if batteries decrease in cost, and get 50% more, or higher, in energy capacity; if this happens, then EVs will be on an even playing field with gas vehicles. As a point of reference, over the past 4 years, batteries have improved by 40% (Arbeje, 2012).Industry StructureBarriers to EntryThe traditional gas powered combustion engine producing giants like GM, Ford, and Toyota have enormous barriers to enter their market; however, electric vehicles have changed that. Few products are as complex to develop and produce as gasoline powered automobiles, which are assembled with thousands of precisely engineered parts. But electric cars use only basic motors and gearboxes, and have relatively few parts. Aside from perfecting the battery itself, they are far easier and cheaper to build and that makes for a level playing field. Potential Entrants/Threats from Substitute Products The shift from combustion engines to electric engine technology has not only lowered the barrier to entry, it has also encouraged many small company start-ups to threaten the dominance of the large automakers. This opportunity has opened the door for small companies like Tesla Motors to capitalize.Bargaining Power of Suppliers and CustomersThe bargaining power of the suppliers is greatly diminished due to the cost of new battery technology in comparison to what people are willing to spend on a typical new car. “J.D. Power and Associates claims that about 50 percent of U.S. car buyers are not willing to spend more than $5,000 on a green vehicle above the price of a petrol car despite their concern about the environment (J.D. Power and Associates, 2010).This position has caused the industry to sell their cars at or below cost causing little bargaining power for suppliers. Pike Research Firm believes that $23,750 is the optimal price range to inspire more mainstream adoption, but most of the EV models that consumers will consider in 2012 will all be priced at more than $30,000 (Clancy, 2011).These high prices have also left the average car buyer very little bargaining power; however, the one exception to this is the high price buyer. If you are in the market for a car and willing to spend $50,000-$100,000, there are electric car options that may appeal to you. This market position is ideal for high end luxury buyers and sellers, but has not taken off on main street USA.Cost StructureThe current cost structure is dominated by the cost of the electric vehicles batteries. As battery technology improves their prices will drop and have an impact on the overall cost of purchasing an EV. A study published in 2011 by the Belfer Center, Harvard University, found that the gasoline costs savings of plug-in electric cars over the vehicles’ lifetimes do not offset their higher purchase prices. This finding was estimated comparing their lifetime net present value at 2010 purchase and operating costs for the U.S. market, and assuming no government subsidies. According to the study estimates, a PHEV-40 is $5,377 more expensive than a conventional internal combustion engine, while a battery electric vehicle is $4,819 more expensive. The study also examined how this balance will change over the next 10 to 20 years, assuming that battery costs will decrease while gasoline prices increase (Lee & Grant, 2011).Life CycleElectric vehicles had popularity during the early 1900’s. This popularity put electric transportation on par with the combustion engine until the invention of the electric starter. Once the electric starter became common in the 1930’s the electric car was removed from most markets. The resurgence of electric cars has been accelerated and welcomed due to the high cost of petroleum. This, in combination with the last decade’s progress in lithium based batteries, has reintroduced the EV into the introduction stage of the product’s life cycle. It is widely estimated that in the next 5-10 years the EV will enter the growth stage if improvements continue at their present rates (Alger , 2011).Key Success FactorsThe rise and or fall of electric car market will most likely coincide with the development of their battery technology. According to Craig Shields, “I predict 10% penetration by 2020 – a $250 billion market, but batteries are critically important”. Shields continued, “As we achieve scale here, as we experience ongoing technology innovation, establish design standards, and remove cost from the supply chain, we’ll have battery costs at $300/kWh, which will enable EVs to be offered at terrifically attractive prices” (Alger, 2011, para. 6). These are not the only hurdles for EV growth, but if the battery improves as expected EV’s could penetrate the market.Environmental AnalysisTrends and Potential Events/Industry TrendsDescription of TrendsFleet sales will dominate the early market. Major companies looking to burnish their green reputations are likely to be less reluctant to jump into the market. General Electric’s Jeffrey Immelt has committed the company to buying 25,000 EVs, including at least 12,000 Chevrolet Volts. Hertz and Enterprise are making major commitments to EVs in their rental and car-sharing fleets (Clancy, 2011).Strategic ImplicationsEV buyers will have far more choices. Pike Research predicts that unit sales of plug-in electric vehicles will reach 257,000 units globally next year. The pioneering technologies found in the Chevrolet Volt and Nissan Leaf will be joined by models from BMW, Ford, Honda, Toyota, and Volvo, as well as the newcomers Coda and Fisker. North America will account for about 66,000 of those unit sales (Clancy, 2011).Time FramePrices will remain high for electric vehicles. Pike Research notes that even though the Chevrolet Volt will have a price tag that is $1,000 less in 2012, its stripped-down feature set will turn off many potential electric vehicle buyers. In fact, prices for the Nissan Leaf will be higher for 2012 than they were for 2011 (Clancy, 2011).Importance for the Industry Businesses will install chargers. A number of high-profile companies (Adobe, GM, SAP, Google) have started installing chargers in office parking lots and this trend will continue. Additionally, one of the nation’s largest parking-lot operators announced plans to invest in technologies that will bring charging to local city parking garages (Clancy, 2011). Safety Issues EV’s have risks associated with electricity. This has caused widespread concerns for the public and triggered the National Highway and Transportation Safety Administration (NHTSA) to do extensive testing on potential fire hazards during impact. This testing along with public perception have prompted the manufacturers to issue extensive instruction on safe handling techniques of EV’s during maintenance and in emergency situations. Extensive training to public emergency personnel such as fire, EMS, and police will prepare them for EV in the mass market (Clancy, 2011). Future scenariosThese environmental, social, and political trends tend to point a society that is rapidly beginning to prepare for and embrace the growth of the electric vehicle in the near future. This market shift is expected to happen slowly and only if car prices become more affordable and gas prices remain high.Marketing PerspectivesProductElectric Car Product DifferentiationElectric car product differentiation is the process of distinguishing each company’s electric cars from competitors’ products, as well as from each company’s own product offerings in order to make them more attractive to a particular target market (Wikipedia, 2012). Electric cars have numerous benefits compared to conventional internal combustion automobiles, including significant reduction of air pollution, harmful tailpipe pollutants, and greenhouse gas emissions. In addition, it requires less dependence on foreign oil, and the driving efficiency of an electric car is much higher. The efficiency for a Tesla Roadster, for example, is 88% compared to 20-25% for traditional gas-powered cars (, n.d.).It is the generous size and comfort of the BYD e6 that sets it apart from other electric vehicles. In addition, it boasts a powerful drive-train, adopting BYD's revolutionary new EV battery, the Iron-Phosphate or "Fe" battery. The 75kW motor and Fe battery help it to power to a range of 187 miles on a single charge in the city. This makes it one of the longest-range, pure EVs in the world. The projected top speed is 87 mph. BYD's internally developed Fe battery is resistant to high temperatures, high pressures, and severe impacts and has excellent reliability and a 10-year warranty. In addition, charging the e6 is convenient and fast and it only takes 40 minutes to fully charge the e6 using the 100kW fast charging cabinet, while it takes 6-8 hours with a standard 10kW standard charging pole (, n.d.).The Chevrolet Volt is unique among electric vehicles because you have two sources of energy. You have an electric source, a battery, which allows you to drive gas–free for an EPA–estimated 35 miles and an onboard gas generator that produces electricity so you can go up to a total of 400 miles on a full tank of gas (, n.d.). In addition, the Volt is programmed to respond with a choice of three driving modes. Normal mode enables Volt to drive like a conventional car, only more efficiently. Sport mode gives drivers more aggressive feedback and heightened response. Mountain mode maintains a power reserve for climbing long, steep grades (, n.d.).Commuter Cars Tango is differentiated from other electric vehicles by speed, agility, safety, size, and charge time. The Tango accelerates from 0-60 mph in under 4 seconds and reaches a maximum speed of 130 mph. It has four time more side protection bars than the largest SUV, has a race car roll cage, a 4-point harness, low center of gravity, and with 2,000 pounds under the floor, it achieves the rollover threshold of a sports car (, 2012). Another significant difference is that the Tango is also 5 inches narrower than many motorcycles, therefore can get through traffic easily and be parked easily. The Tango can be charged to 80% in about 10 minute with a 200-amp off-board charger, is charged overnight with a 110-volt outlet, and a dryer outlet will give most of a charge in an hour or a full charge in less than 3 hours (, n.d.). The Fisker Automotive Karma is the world's first premium hybrid electric vehicle. It differentiates itself from others due to the creation of the world’s largest and most powerful solar panel (, n.d.). That contribution translates to the power equivalent of up to 200 miles of driving, at no cost and with zero emissions, over the course of an average year (, n.d.). In addition, despite the challenges of a solar-power installation, the Karma is the only electric car with a sunroof. While the Karma has both gasoline engine and electric motors, it is a “series hybrid” with the wheels always driven by the electric motors. When fully charged, the Karma will cover about 50 miles on battery power alone, depending on speed and conditions. The gasoline engine never stirs, and the car’s hydrocarbon and greenhouse-gas emissions are zero (, n.d.). In addition, Fisker engineers designed a first for a touch screen in an automobile, called tactile feedback. The screen delivers a gentle flutter to the fingertip along with sounds and color changes to confirm activation of a control (, n.d.). The Ford Focus Electric Car has numerous reasons it differentiates itself from other electric cars. The 2012 Focus Electric is the first vehicle from Ford to be powered by electricity alone from a state-of-the-art battery system and is projected to be the first five-passenger all-electric vehicle with a combined fuel efficiency rating of over 100 MPGe with a combined rating of 105 miles per gallon equivalent (Ford, March 2012). Also, it offers more power, passenger room, and standard features than the Leaf , introduces new features and technologies (a unique version of the MyFord Touch), and is the most maintenance free Ford ever as it eliminates more than two-dozen aspects of the vehicle that require services (Ford, January 7, 2011; Ford, February 9, 2011). In addition, a full recharge is expected to take three to four hours at home, which is half the charge time of the Nissan Leaf (Ford, January 7, 2011; Cooper, 2012). According to Sherif Markakby, director of Ford’s electrification programs and engineering, “It shares many of the same premium components and features as its gasoline-powered counterpart, while delivering distinct efficiencies and a uniquely exciting driving experience” (Ford, Jan. 7, 2011).The Myers Motors NmG is a popular single passenger car and costs somewhere between $0.01 and $0.02 in fuel costs, per mile. Thus, it differentiates itself by the ability to drive 1,000 miles on $20 of electricity. In addition, it is America’s only 75MPH personal vehicle. The NmG conveniently plugs into any 110 volt outlet. Consumer feedback on the single-passenger vehicle led the design process for Myers Motors’ new two-passenger model, which will also cost less than $30,000 and will provide drivers with a standard 60-mile range. The two-passenger model is also designed for easy overnight charging and should only cost about 2-cents per mile to drive. (, n.d.) This year, the Mitsubishi i-MIEV claimed first place on this year’s list of “greenest” vehicles by the American Council for an Energy-Efficient Economy, shortly after being named the EPA's fuel economy leader. It is differentiated from others due to being the most efficient car in production, due to the 112 combined MPGe. The Mistubishi is also the most affordable electric vehicle in the US (MSRP $29,125) and has unique safety features and technology featuring roof-mounted curtain airbags and an impressive battery warranty. In addition, the Mistubishi was engineered to look and perform the part of eco-friendly driving, from the windswept front end to the efficient LED rear tail lamps (i., n.d.).The Nissan Leaf differentiates itself from competitors by being built to go 100 miles on a single charge. In addition, it is known for its versatility, roominess, high tech features, start-up sounds, unique display, and numerous other amenities seen in a luxury car (, n.d.). The Leaf is the best selling US electric car at 11,000 units sold in 2011. In addition, The Insurance Institute for Highway Safety awarded The Nissan Leaf the "Top Safety Pick" in 2011 (Wikipedia, 2012).The Tesla Roadster differentiates itself by offering a significantly higher range than other electric cars. Owners can drive their cars all day long, and then simply return home and plug their cars in. In addition, it uses a single speed gear box, which means no clutch work is needed to achieve instant acceleration and Tesla vehicles cut in half the CO2 emissions of their gas burning rivals. The Tesla Roadster is also currently, the only electric car that qualifies for the full $7,500 tax incentive (, n.d.). The Tesla S model differentiates itself by delivering an “unprecedented range and a thrilling drive experience” and has an all glass panoramic roof, being the only sedan capable of this convertible like driving experience (, n.d.). In addition, the Model S has a 50/50 weight distribution, a low center of gravity, can seat 7 people, boasts more storage, and has a 0-60 speed of 5.6 seconds. With an 85 kWh battery, the estimated range is 300 miles and has a top speed of 125 mph. The Model S suspension system was developed specifically for the architecture of Model S and works with the Tesla platform to provide precision handling and comfort (, n.d.). When the RAV4 EV goes on sale in 2012, it may be the only all-electric SUV on the market; however, some possible plug-in SUV models that may be hitting the market include the Mitsubishi PX-MiEV, Ford Escape Plug-in Hybrid, and Tesla Model X (, 2012). The RAV4 EV was one of the five finalists for the 2011 Green Car Vision Award and has an estimated range of 80 to 120 miles. The RAV4 EV also benefits from having a handful of moving parts compared to a car with a combustion engine and drivetrain, and also lacks emissions equipment, which can add up to saving significant money for the owner over time, with no oil changes or mechanical failures (, n.d.; , 2012).Summary of Vehicle PerformanceCarsMSRPTop SpeedCharging Time at 220 voltsDistance Per Electric ChargeStyleFord Focus EV$39,20084 MPH3-4 hours76 miles5 door hatchbackNissan Leaf$35,20087 MPH8 hours100 milesHatchbackChevy Volt$39,145100 MPH4 hours35 milesSedanTesla RoadsterTesla Model S109,000$49,900125 MPH125 MPH3 ? hours4-5 hours244 miles160 miles or 300 miles for $20,000SUV2 door sports carFisker Karma $102,000125 MPH6 hours50 miles Luxury sports sedanBYD e6$42,00087 MPH8 hours187 miles5 door hatchbackCommuter Cars TangoT600-$108,000T200-$40,000T100-$19,000130 MPH8 hours, but 3 hours with a dryer outlet40-60 miles2 door, 2 seat, ultra narrow sports carMyers Motors NmG$36,00070 MPH3 hours60 milesSingle passenger, 3 wheeled personal electric vehicleMitsubishi i-miev$29,12580 MPH6-8 hours62 miles5 door hatchbackToyota-Rav4$50,000-$55,00078 MPH5 hours80-120 miles4 door SUVElectric Car BrandingThe definition of a brand is “the marketing practice of creating a name, symbol, or design that identifies and differentiates a product from other products” (, 2012). In addition, the brand also is how the company makes you feel. For electric cars, the branding may include the tagline, the logo, name, and colors. The following are some examples of the branding of electric vehicles discussed in this paper.*BYD“Technology Based, Innovation Oriented”*Chevrolet Volt “Electric when you want it, gas when you need it”*Commuter Cars Tango “The World’s Fastest Urban Car”“The revolutionary commuter vehicle that combines the speed and agility of a motorcycle withthe security and comfort of a sports car.”*Fisker Karma “URL-Uncompromised responsible luxury” -The orange and blue in the Fisker logo represent a California sunset over the Pacific Ocean. The vertical bars represent the designer's pen and the creator's tools. (, n.d.)*Ford Focus”Gas free, 100% electric, and ready to be yours” “Never use a drop of gas again.” *Myers Motors-NmG “Transform your driving. Transform your world.”*Mitsubishi i-MIEV “Go on. Express your eco-self”*Nissan Leaf “100% electric, zero gas, zero tailpipe”*Tesla Motors “Take a new road”*Toyota Rav4 “Moving forward” Technological ChangesSome technologies in electric vehicles include batteries, electricity, motors, materials, and charging stations. The improvements in battery technology over the past two decades, in particular the advances in Lithium-ion battery technology and advances made through hybrid vehicles, have allowed it to be possible to design and manufacture electric vehicles with better performance than their gasoline-powered counterparts. One of the most important technologies in any electric vehicle is the battery pack, which must be small and light for efficiency, but hold enough energy to allow for a reasonable range before recharging. Another technology that electric cars need is a stable infrastructure of electrical distribution as some towns may need to allow for additional demand on electricity. Also, while batteries replace a fuel tank, electric motors replace the internal combustion engine and exhaust system. These motors use electromagnetism to turn electricity into mechanical energy that passes through a transmission and turns the vehicle's wheels. In addition, lighter cars require less energy to drive. Cars have been made from plastics for decades, due its low cost and light weight; however, additional materials, such as aluminum alloy, fiberglass, and carbon fiber also provide light, durable materials for car parts and bodies. Another technology is the charging station. For electric cars to be practical, owners need access to fast-charging stations. Charging stations can be installed in the home using high-capacity power lines. Because they store large amounts of electricity and can fill the car's batteries more quickly, recharging throughout the day is simpler (Hartman, n.d.).Services RequiredVery little maintenance is required for these cars, due to the electric motor. The motor has roughly half a dozen moving parts, as compared to the hundreds of working parts in a gas-generated engine. There are not many parts in an electric car motor that can wear out, and when they do, they are relatively simple to replace. Regular maintenance will consist of little more than checking the air pressure in the tires and keeping the windshield wiper reservoir topped up. Long term, the car’s brake pads and shocks may need replacing, along with tires (Ford, February 9, 2011). For example, one manufacturer, Tesla, recommends a standard service and diagnostic inspection once a year or every 12,000 miles (). Estimates suggest that maintaining an electric car will cost much less, about one-third the current cost of maintaining a gas-powered car, until the battery begins to wear out (Lampton, n.d).Even though electric car batteries do not require much day-to-day maintenance, the battery will gradually lose its ability to hold a charge like a laptop or cellphone. The longer the electric car is used, the shorter its driving range will become and this will start happening from as soon as the car is driven. The process will be slow and the battery will not stop working all at once. Most estimates predict that the typical lithium-ion electric car battery will be good for more than 100,000 miles, while still maintaining a decent charge during driving range however, the battery will begin to need to be recharged more often and then may need replaced at the dealership or a battery specialty shop; however, currently, these batteries are very cost-prohibitive and replacement batteries range from $15,000 to $40,000 (Lampton, n.d). The U.S. Department of Energy has set a goal of bringing down the cost of electric car batteries 70 percent by the year 2014; however, according to the Wall Street Journal many experts don't think this will be possible (Lampton, n.d). Consumers may be able to get some trade-in value for your old battery, since the parts can be reused and people with minimal driving needs may be satisfied to buy a secondhand battery with a reduced range (Lampton, n.d).PricePrices for electric cars are significantly higher than their gas-powered counterparts, due to the price of battery packs. Pricing shown includes the MSRP for base-price vehicles. -Mitsubishi-$29,125-Leaf-$35,200-Myers Motors-$36,000-Volt-$39,145-Ford-$39,200-BYD-$42,000 ()-Tesla Roadster-$109,000 and Tesla Model S-49,900 -Toyota Rav4 EV-These will cost approximately $50,000-$55,000. Because this model is not out yet, this is only an approximate price based upon the price of a gas-powered Rav 4, the price of the hybrid models, and the size of the battery pack for the Rav4 EV (, 2012). -Karma-$102,000-Consumer Cars Electric Cars-The first model is the luxury Tango T600, which costs roughly US$108,000. The T200 model is expected to be eventually released at $40,000, while the T100 is expected with a $19,000 price tag. Both of these higher-production models remain to be developed and are awaiting funding (, n.d.).Price Trends Electric vehicles are expensive, mostly due to the cost of the batteries. Although costs will come down due to the drop in cost of the batteries in the future, prices will remain high for electric vehicles. Battery packs are an expense of $10,000 to $40,000 for EVs, and although costs will come down with volume, it will be a slow decrease (Clancy, 2011). Creating cheaper, more efficient batteries is one of the biggest engineering challenges. The White House recently released a report titled "A Blueprint for a Secure Energy Future: Progress Report" that explains how the cost of electric vehicles will go down considerably around 2015, with the main reason being the drop in price of electric vehicle batteries. This will help the U.S. reduce its dependence on foreign oil, dramatically, as a cost of a 10 kilowatt battery that gives a car a 40-mile range will likely drop to $3,600 by 2015 (, 2012). Although $23,750 is the optimal price range to inspire mainstream adoption, most of the models that consumers will consider in 2012 will all be priced at more than $30,000 (Pike Research Firm, 2011). Most of the batteries for the 2012 models were ordered before increased production helped bring down prices. So, battery availability won’t help with pricing until 2013 or 2014 model years, Pike Research predicts (Pike Research Firm, 2011).Public charging will also cost more because companies are starting to see electric car charging as a business and are trying to make a profit. The Car Charging Group (CCGI), for example, which is putting in chargers in Florida, New York and Connecticut, is planning to charge 50 cents a kilowatt hour. This is more than four times the national average of 12 cents per kilowatt hour consumers currently pay at home (Clancy, 2011).Price MarginsTypically, new car margins are very thin. At most, new car sales have a margin of between $750 and $1,000 per car. Used car sales margins can range vastly by how much a dealer or seller has invested in that car and what they can sell it for. Margins can be as low as new cars sales and as high as the perceived value set by the seller and agreed on by the buyer and seller. Kelley Blue Book Value is a good rule of thumb to estimate a vehicle's value (, n.d.). It is still really early in the life cycle of electric cars to access the resale value of these cars. Discounts The government has initiated tax incentives in order to help overcome the cost barrier, to promote the sales of electric cars, to give car companies an added incentive to get zero-emissions vehicles on the market, and to fund further development of electric vehicles and more cost-effective batteries (Boyer, 2011). The U.S. has pledged US$2.4 billion in federal grants, China has announced it will provide the US $15 billion to initiate an electric car industry within its borders, and several national and local governments have established tax credits, subsidies, and other incentives to reduce the cost of electric vehicles. While developing new battery technology is expensive, applying federal funds will help decrease those start-up costs and help car companies to increase production, which will help cars to be more affordable to produce and purchase (Boyer, 2011). To accomplish this, the U.S. is offering a $7,500 federal tax credit toward the purchase of zero-emissions cars and smaller tax breaks on low-emissions vehicles, as well as up to 50 percent of the cost of a home car charger installation. In addition, a bill introduced in Congress earlier this year proposes offering grants of up to $800 million toward the construction of public charging stations. "Tax incentives are an effective tool that helps make the upfront price equation for the consumer more attractive and can help spur early adoption of new technology," says GM spokesman Greg Martin (Boyer, 2011, para. 2). Under Obama's new budget, the rebate could increase to $10,000 for Fiscal Year 2013 (Silke Carty, 2012). Currently, the only electric car that qualifies for the full $7,500 tax incentive is the Tesla Roadster. The incentives can amount to about a 22% discount on the Nissan Leaf and more than $1,000 on the car charger. Local and state governments offer even more incentives. States such as California, Illinois, Utah, Colorado, Tennessee, Pennsylvania, Maryland, and West Virginia, and Hawaii are also offering rebates. (Bird, 2012). Ohio doesn't offer any additional rebate. Many cities across the US are also offering incentives like cash rebates, free charging, lower utility rates during off-peak times, home charging incentives, insurance and parking incentives. In addition, many manufacturers, such as Ford, provide employees and friends and family with employee discounts up to 3%.Free-market economists argue that government tax incentives will not help jump-start the electric car industry and are not beneficial because they create false demand and hurt competition. Others indicate that buyer incentives on electric cars amount to regressive tax subsidies because they take taxpayer money to help buy toys for the wealthy. On the other hand, some people believe that the federal government isn't doing enough to encourage increased production and buying of electric vehicles. Proponents of federal incentives argue that the most effective way to attract more buyers would be to raise the price of gasoline, which would not only help stimulate sales of electric cars, but would also discourage drivers from using gasoline-powered cars more than necessary (Silke Carty, 2012).Distribution and ProjectionPart of Obama’s plan is to put one million electric and hybrid vehicles on the road by 2015; however, manufacturers are not mass producing these vehicles as of yet due to the infancy of demand, so they have a limited release to certain states just beginning to trickle out. For example, Ford only projects to sell about 5,000 in the first couple of years (Silke Carty, 2012). So, it's clear that projections from the manufacturer and the White House do not line up, yet, as the White House’s goals are significantly more ambitious. Currently, as distribution increases, dealerships are only getting about a half dozen depending on their market, and as they sell one, the manufacturer will send another one from the assembly plant.Major Channels The channels for distribution begin at the manufacturing stamping and assembly plants and moves to the automaker's dealerships across the country and globe. The major auto manufacturers like Chevy, Ford, Chrysler, Toyota, Honda, Nissan and have thousands of dealerships combined, whereas smaller manufacturers like Fisker and Tesla have under 50 dealerships each (, n.d.; , n.d.). New vehicles can also be purchased online directly from the manufacturer's website or over the phone. Examples of this include Myers Motors and Commuter Cars. With consumer's confidence increasing with online purchases, the amount of sight unseen purchases will gradually increase over time. Any significant increase in online purchasing straight from the manufacturer will further downsize the need for auto dealerships across the country. The RAV4 EV will be assembled in 2012 at Toyota's facility in Woodstock, Ontario along with the regular gasoline version. Tesla will build the electric powertrain at its plant at Palo Alto, California, and it will ship them to Canada. The U.S. market launch is scheduled for late 2012 and initially will be sold only in California. Production will be limited during the first three years (Wikipedia, 2012). Sales Centers and Dealerships*Ford-3,131 dealerships*Nissan-1,100 dealerships*Chevy-3,084 dealerships*Tesla-17 dealerships in North American dealerships*Fisker-44 dealerships*BYD-Dealerships Coming soon. Opened US headquarters in LA in late 2011 with a showroom for prototype vehicles for prospective dealers to visit. Currently not open to public. Interested customers can make their inquiring via phone.*Consumer Cars Electric Cars-Most new customers complete their transaction using email, phone, and the order form on the website. It requires a $10,000 deposit*Myers Motors-Most new customers complete their transaction using email, phone, and fax. Once your NmG is built, it is sent directly to your home or office.*Mitsubishi-more than 500 dealerships*Toyota-1,445 dealershipsChannel ConflictsCurrently, for example, Ford is having a supply chain issue with the transmission, which has delayed distribution. The Focus was supposed to arrive at dealerships by March, but as of right now they have not. Chevy had similar delays with the Volt (M. Swinarski, personal communication, April 9, 2012). These channel conflicts with the transmission has left the expected delivery date behind schedule with an undetermined date of delivery to the dealerships.PromotionExpenditures: Historical Information and Future Projections The increase in advertising is a sign of a rebound in the auto industry, which has struggled amid the prolonged recession and weak consumer confidence. Of the top 20 product categories in U.S. advertising spending, the largest growth in the first half of 2010 was seen in automotive as auto sales began to improve. Although information is available regarding advertising money spent in the automobile industry as a whole, the relative newness of the EV category makes it somewhat prohibitive to get accurate and complete advertising money spent. According to Nielsen, in the first six months of the year, more than $42 million was spent in the U.S. advertising the Chevy Volt and Nissan Leaf brands. Nissan Leaf bought a one minute commercial for the 2011 Super Bowl for $6 million. In addition, a commercial spot for the 2010 Winter Olympics cost between $360,000 and $490,000 per commercial. Overall, $3.5 billion was spent on auto advertising in the first half of 2010, up 27% over the previous year. The increased automotive advertising was driven largely by spending by Chevrolet parent company, General Motors, which was up 95% over 2009. (, 2010).Positioning of major brandsIn marketing, positioning is “identifying a market niche for a brand, product or service utilizing traditional marketing placement strategies (i.e. price, promotion, distribution, packaging, and competition)”. Effective positioning depends on communicating a brand's uniqueness, differentiation, and value (Wikipedia, 2012, para. 6). Some examples of effective positioning include Nissan, Ford, and Chevrolet.The Nissan Leaf has firmly positioned their brand as the eco-friendly vehicle. Their commercials titled ‘What if everything ran on gas?’ and ‘Polar Bear’ capture the position of an environmentally conscious vehicle and company. Their website also reinforces this position with the imagery on the site (, 2010).Although the Ford Focus has not begun their TV commercial campaigns yet, Ford is positioning the Focus EV as the all-electric vehicle with features for the tech savvy consumer.Chevrolet has taken an educational approach to the Volt’s positioning. The Chevy Volt’s website, and their commercials ‘Aliens’ and ‘Gas Station’ attempt to educate consumers that EVs are the future and explains how the Volt works on electricity initially before switching over to gas (, 2012). Promotion trendsBecause of the novelty of EVs in the marketplace, it is useful to view promotional trends of alternative fuel vehicles like hybrids, diesel fueled vehicles, and E85 fueled vehicles. As gas costs have steadily risen over the last 10 years, auto manufacturers have promoted their vehicles’ fuel economy and their environmental virtues. As gas prices rose, more consumers have looked to trade-in their gas guzzling SUVs for smaller, more fuel efficient vehicles. Auto manufacturers capitalized on that notion by engaging in a MPG war to gain market share. The recession, paired with rising gas costs, enabled the auto manufacturers to focus on the lowest common denominator of MPG.Issues Affecting Strategy Choice Despite their potential benefits, there are a few good reasons why gas-free vehicles are slow to move off the lot, including cost, lack of recharging stations, range anxiety, and service issues. As of 2011, electric cars are significantly more expensive than gas-powered vehicles and hybrid electric vehicles due to the cost of batteries; however, battery prices are coming down with mass production and expected to continue to fall. In addition, lack of charging stations and range anxiety are hurdles for consumers. Drivers fear that the batteries will run out of energy before reaching their destination due to the limited range of existing electric cars and the uncertainty about where the closest charging station will be. While some charging stations are out in trial phases most charging still needs to be at home, which can take up to ten hours to get a full charge. That means that people who live in shared housing or use street parking will likely have the hardest time charging (Deaton, n.d.). Also, many of these cars are very narrowly distributed and if the car needs serviced, there will be very few places that will be able to fix it. For example, Tesla has just 10-15 service centers and having a Tesla service center nearby when you need them are slim. Even if these cars are under warranty, when the warranty runs out, there are only a limited amount of technicians trained, certified, and have the experience to service the cars, thus leaving a scarcity and cost concern (, n.d.).Works CitedAlger , G. (2011, April). Top Trends in the Adoption of Electric Vehicles. Retrieved from trends-in-the-adoption-of-electric-vehiclesArbeje, J. (2012, March 6). The Risk of a New Machine. Fast Company. Retrieved from , M. (n.d.). History of Electric Vehicles: The Early Years, Electric Cars from 1830 to 1930. Retrieved from , B. (2012, February). President Obama Proposes $10,000 Electric Vehicle Incentive. Retrieved from , C. (2012, March 13). California Sets up $2500 Tax Rebate for 2012: Ford Focus Electric. Retrieved from , M. (2011, December 6). Retrieved from (n.d.). Retrieved from , H. (2011, December 19). 7 trends driving electric vehicles in 2012. Retrieved from Cars (n.d.). Retrieved from Energy Center. (n.d.). Retrieved from: , G. (2012). Retrieved from , D. (2012, March 2). Ford Focus Gets EPA Rating 105 MPGE 76 Mile Range. Retrieved from , G. (2012, March 8). President Obama’s Drive Toward Electric. Retrieved from , J.P. (n.d.). Challenges Facing the Electric Car Industry. Retrieved from , S. (2011). Killing Giants: Ten Strategies to Topple the Goliath in Your Industry. New York, NY: The Penguin Group.eHow. (n.d.). Customer Buying Motives. Retrieved from . (n.d.). What Technological Advances Have Made Electric Cars Possible? Retrieved from Power Research Institute (2011). Plugging In: A Consumer’s Guide. Retrieved from (2012). In . Retrieved from , J. (2012). 2012 Electric Cars in the USA: Here’s the Lineup . Practical Environmentalist. Retrieved from Automotive. (n.d.). Retrieved from (n.d.). Retrieved from . (2011, February 9). All-New Ford Focus Electric: The Most Maintenance-Free Ford Ever. Retrieved from . (2011, February 9). Focus Electric Eliminates More Than Two Dozen Components That Require Regular Servicing Over the Life of a Vehicle. Retrieved from . (2011, January 7). Introducing All-New Focus Electric – Go Fuel-Free with First Zero-Emissions Passenger Car from Ford. Retrieved from . (2012, March 11). Obamas EV Everywhere Plan Sets 2022 Goals for US Made Electric Vehicles. Retrieved from Retail Decisions (2011, December 8). Electric Vehicles to Surpass 5 Percent Market Share in the US by 2017. Retrieved from , J. (2011, April 21). Nissan Leaf Runs 99 MPG on $35,000, Freezes Your Tootsies: Cars. Retrieved from , D. (n.d). Retrieved from , N. and Newman, J. (2009, November). A New Segmentation for Electric Vehicles. Retrieved from . (n.d.). Retrieved from Power and Associates. (2010, October 27). J.D. Power and Associates Reports: Future Global Market Demand for Hybrid and Battery Electric Vehicles May Be Over-Hyped; Wild Card is China. Press release. Web. 15 Apr. 2012. Blue Book. (nd.). Retrieved from : , L. (2009, January 12). Low entry barriers in electric car market. Retrieved from , C. (n.d.). Will Electric Cars Require More Maintenance. Retrieved from , H and Lovellette, G. (2010, July 2010). Will Electric Cars Transform the U.S. Vehicle Market? Retrieved from , R. (2012, March 12). Obama Calls for Electric Cars Everywhere. Retrieved from Cars. (n.d.). Retrieved from Motors. (n.d.). Retrieved from (n.d.) Consumers Show High Interest in Buying Electric Cars, but Reluctant About Price. Retrieved from . (n.d.). Retrieved from Research. (2011, December 16). High Prices Will Limit Sales of Electric Vehicles in 2012. Retrieved from in Cars. (n.d.). Detailed Price Information for Toyota RAV4 EV. Retrieved from , A. (2012, March). Fisker Karma’s Dismal Fuel Economy Ratings Explained Here. Car and Driver. Retrieved from , R. (2011, July). 2012 Mitsubishi i Test Drive. Popular Mechanic. Retrieved from , N. (2011). BYD Scrambles to Redesign Electric Car. Retrieved from Carty, S. (2012, February 15). Electric Car Rebates Would Increase To $10,000 Under Obama Budget. Huffington Post. Retrieved from , R. (2012, March 12). Why Tesla Investors Should Be Worried. Retrieved from , A. & Leis, J. (2012, July 24). Affluent Likely to Lead Charge for Electric Vehicles. Houston Chronicle. Retrieved from Motors. (n.d.). Retrieved from . (n.d.). Retrieved from . (2012, March). The Blueprint for a Secure Energy Future: One Year Progress Report. Retrieved from . (n.d.). Retrieved from . (n.d.). Retrieved from . (2011, February 7). Super bowl commercial 2011 - Nissan Leaf - Polar Bear. Retrieved from . (2012, February 3). Chevy Volt: Aliens- Super Bowl Commercial. Retrieved from . (2007, July 23). Tango EV Electric Sports Car. Retrieved from ................
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