Submission BCS
To date, electric vehicles (EVs) have been niche products, so many OEMs have focused their go-to-market (GTM) strategies on a small, tech-savvy segment of automobile customers. Then, just as electric
Submission Date & Time: 2021-10-19 03:02:04
Event Name: NMO S4 Sprint One
Solution Submitted By: Sakshi Malani
Assignment Taken
Detailed overview of the Financial Target, Product mix and Expansion plan of 5 years for electric vehiclesCase Understanding
The case is about the scope of renewable energy in India. The automobile sector has taken several big moves in this direction around the world recently, but the Indian market is still in its infancy. Every sector is implementing renewable energy into its core functionalities and the automobile sector is also one of them, but it is in its initial stage. The total number of registered vehicles in India is 230 million and the number of vehicles in India is rapidly increasing along with the over-dependence on fossil fuels. Thus, a need arises for efficient transportation using Electric vehicles. The government is taking initiatives to Promote the electrification of vehicles in the country. The government is planning for a 30% adoption of Electric vehicles by the general Public by 2030. The team of Budding Entrepreneurs have decided to foray into this futuristic venture of electric vehicles. You have a corpus fund of Rs 46 Lakh, which is a personal Investment, pooled by all team members & a Rs. 60 Lakh loan can be arranged if the need arises on 16% per annum fixed rate of interest. Start-up acquired a coworking space for 8 people at a monthly rent of 3000/Workstation. The team include mechanical engineers, electrical engineer, 1 computer science graduate. marketing background, management graduates Every member draws a monthly salary of 50,000. The team's engineers have already designed and created a prototype electrical vehicle as a college project during their engineering courses.BCS Solution Summary
FINANCING and Funding THE PROJECT • With the Indian automobile market taking a turn towards a sustainable future, the EV market has taken the center stage in the discussion. Considering the growth in the sector, it would be difficult to get investors on board to fund the project. The consumer mindset has evolved over the past 1.5 years, and this has resulted in a demand surge for EVs. • Thus, it would not be difficult to get the venture capital firms excited about the project. Further, since the start-up is still in the nascent stage, any investment in the form of debt would attract a very high-interest rate. Thus, at this stage, it would only be rational to go for equity investment. • Another reason why VC firms would be interested in making an investment, is the adoption and implementation of phase II of the Faster Adoption and Manufacturing of Electric Vehicles in India (FAME India) Scheme. The scheme is to be put into effect on the following verticals: a) Demand Incentives b) Publicity and marketing c) Support for Infrastructure establishment • To ensure wider adoption of electric and hybrid vehicles, incentives such as reduced upfront purchase price would be made available to the consumers. The OEM would then be reimbursed by the Government of India under the Scheme.Solution
Financial Target is to raise funds using the right combination of debt and equity to tap on the opportunities come across. Funds we have are 46 lakhs which are insufficient to start with as it is a heavy industry and will require lots of funds to not only start the processes but to hire the talent those who can compile the theoretical aspect into future.
Not only this but also mode of raising funds is also of utmost important as there are various options available in the market may be through issue of bonds, common shares, preference shares, debentures. we need to carefully investigate all the terms and conditions before.
There are various incentives given by government to support the start-ups who have technical skills, know-how and manpower. This will further provide the start-up to fetch some funds or relaxations from certain taxes and duties.
Incentives and Policies like Production-linked incentive schemes: Growing Demand and Increasing Supply Policy support for PEVs includes both supply side and demand side incentives. Supply side incentives aid manufacturers and suppliers who wish to enter the PEV market, increase their market share, or conduct research and development in the PEV space. Some of these incentives include ATVM loans and export assistance
Another major aspect is the Cost Factor. As the petrol price shooting sky, we have a golden opportunity to capture wide market as the after-sale maintenance cost is very less for EV’s.
Batteries and Fuel
The relatively higher cost of PEVs has held the market back from fully competing with conventional vehicles. The cost of batteries is the primary factor behind PEVs’ high sticker price. Because of battery deterioration, PEV resale values are also uncertain. However, PEVs have much lower operational costs. The cost of charging electric vehicles is roughly a quarter of what it costs to fuel a conventional vehicle that gets 30 miles per gallon. Even plug-in hybrids that still run-on gas can decrease fuel costs by a substantial margin. The lower operational cost of electric vehicles is a comparative advantage that is further strengthened by volatile gas prices. Moving forward, battery costs and fuel costs will together determine how quickly PEVs become the demonstrably cheaper option for personal transportation and, thus, how rapidly this market expands. The outlook for these costs will be discussed below.
Advanced Technology Vehicles Manufacturing (ATVM) loans:
The Advanced Technology Vehicles Manufacturing Loan Program, which provides loans to help automakers and their suppliers retool, expand, or build new facilities to make fuel-efficient vehicles. The loans can help finance up to 30 per cent of qualified manufacturing expenses (research and development are not eligible). Automakers must meet a rigorous approval process to prove the viability of their projects, especially considering the declining auto industry.
Export Assistance:
The International Trade Administration of the Department of Commerce has a Global Automotive Team that directly assists auto manufacturers with exporting. Due to a high number of inquiries, the team has published an export guide for makers of PEVs and PEV components on exporting to European markets, with hopes to cover other world markets. The report discusses the automotive markets in 21 major European countries, including opportunities and challenges to exporting to each market.
Conclusion
There is a huge market waiting. I order to protect and safeguard nature one must stick to renewable sources of energy as it is high time. The proper combination of funds be it equity, debt etc will help the company to get the first-mover advantage and succeed. Also the company needs to create awareness among the masses about the need and importance to shift to EV's. Also in order to take the full benefit of govt incentives and schemes one must use all the tax savvy techniques to lower costs incurred by the company and make it available to the end consumers.Attached File Details
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Article Type: Business Case Scenario, Case Study Solution Submission
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I am someone who is very inquisitive and might ask a lot of questions but I believe in hard work and possess team spirit. I am associated with a Ngo where we provide free elementary level education. Since childhood, I had a strong inclination towards business cause on being brought up in a business family. My hobbies include Dancing, Reading and Athletics
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