Electric Cars: Potential For Success And Barriers To Adoption

Potential Success of Electric Cars

Question:

Discuss about the Current Situation in Context with Electric Cars.

A complete idea about the current situation for potential success of electric cars has precursors to the sustainable offerings of the organization. The group has earlier attempted to make a sustainable offering for substituting air contaminating vehicles by introducing the idea of electric vehicle. This is in response to the particulate matter being released by all types of cars including sports, economy, luxury, saloons, off-roaders and commercial taxies operating for long around the globe.   

Presently, there are already over 2 million vehicles existing globally that run either partially or completely on electrical energy. This is as per the report designed by IEA or the International Energy. The previously proposed idea of ride sharing can be witnessed in China in the form of car-sharing service provider GoFun which has attracted massive investments (Geuss, 2017). There has been an increase of over 2 lakhs in global sale of Electric Vehicle within the year 2015-16. But as per the growing vehicular density, it can be argued that the increase in use of electric cars has slowed down as compared to the year 2015. Confined range of mid-sized electric cars, limited infrastructure to support electric charging and conventional preference to gas and diesel-fuel cars have been the major barriers to successful adoption of electric cars (Linke, 2017).

As per secondary source of research provided by TMR (2015), it was forecasted that electric cars on-road include the hybrid models, plug-in cars and battery-operated cars will observe a CAGR of 19.2% within a span of 6 years starting from the year 2013 i.e. a fair growth in the demand among modern drivers. As per EuroMonitor International (2017), the total sale is going to touch the value of 1 million in this year. However, the total market of electric units as compared to their conventional fuel alternatives is small. Brand like Mercedes-Benz and Volkswagen have come up as recognised electric car manufacturer (Liuima, 2017). Renault-Nissan has witnessed the highest sale of electric car units in 2016 and a considerable increase in sale from the existing score has been forecasted for the present year. As it might be assumed that the price factor in electric cars is a barrier to attract more buyers but contrastingly the purchasing behaviour of consumers has started changing in developed countries like US and some European nations because of increased rate of electric model manufacturing and advanced & upgraded battery technology that utilizes efficient way to save maximum power. Also, at present, the price has been insignificant because the average cost of an electric car is at par with a new car in US, ranging somewhere between 30,000 US $ to 40,000 US $. The Chinese electric models cost the least with a value of below 25,000 US $. Last, but not the least, SUV’s has gained the highest market share followed by low medium and small cars in the present year. The market share of electric car is too small and stands just next to sports car segment.

Barriers to Adoption

Specific Goals

The goal is to increase the global market share of electric cars more than the average share for achieving visible reduction in air pollution and climate change phenomena.

Measurable Goals

The marketing promotion for electric cars should be able to achieve at least 40% share of global car market within 5 years.

Goals that are Attainable

Using H₂ as an alternative to HEVs and BEVs is vague because the molecule is small and it can cause fuel leakage despite heavy metal boundaries of tank and also because of high-end customization of H₂ tank, it significantly raises the cost of car unlike in case of liquid fuel tanks (Turner & Brace, 2016). In contrast to that, driver-expected speed and power is attainable in case of BEVs if large batteries, which are resource-intensive, can be incorporated within a car’s body.

Realistic Goals for Success of Electric Cars

The driving range of electric powered cars should be at least 70% of the ideal claim of different brands. Presently, range anxiety has been one of the main causes of buying hesitation among customers and prospects (Graham et al, 2011).

Time-bounded Goals

The market share of electric cars should cross 60% by the end of year 2035.

Demographic Segmentation of the Targeted Market

Millennial have seemed to be more interested in purchasing electric cars because of the technological advancements. Under-priced electric models like Chevrolet Bolt have far outweighed other counterparts like Tesla by shear difference in price levels. Males are more attracted to hybrid and advanced models while still considering the expensiveness because electric-cars has offered high value only in case of reduced prices only (Pearre, 2011). Thus, the clincher is electric powered sports car at economical price ranges.

Psychographic Segmentation of the Targeted Market

Majority of electric car purchases around the world have been made by customers who haven’t owned an electric car previously. The homogeneity among early adopters of electric variant is a misconception. There are high-end adopters and low-end adopters who are segmented primarily based on degree of affordability. From a research conducted by Hardman, et al (2016), it has been revealed that high-end buyers hesitate less to buy costly electric models as compared to low-end buyers. This is only a verified decision and others are still assumptions. So, it is apparent that the electric cars should be psychographic segmented favoured to high-income group which does not hesitate to invest in future technological experiences. In addition to this, the low-end adopters of electric vehicles are more attractive due to environmental friendly reasons and; therefore, the promotional moves should be designed to highlight environmental solutions when it comes to attract buyers from low-income groups (Bo?karjova, et al 2014).           

Recommendations for Increasing Global Market Share

Needs of the Target Market

The target market for electric cars has been identified by the group prioritized by the need of bigger infrastructure for charging stations at the top of their needs followed by fuel efficiency. Expanded options for recharging electric cars have been the major setback for the time being giving rise to range anxiety i.e. the perceived fear of a driver to run out of electric power in the middle of a long journey. The majority of consumers are demanding electric cars of plug-in types than a mere battery-operated cars.  Also majority defined by 62 in every 100 driver want to charge their cars through plug-in support and avoid battery replacements despite the fact that the latter can save more time. It has been observed that 55 % of the electric owners want to charge their vehicles only just before the empty point and they do not consider charging when car is at rest in parking spaces. Lastly, PEV buyers are more interested in buying electric models that have a diesel or gasoline backup than completely electric PEVs. This is because nobody wants to rely solely on electric power during a time when the infrastructure for charging stations is still under-developed (Accenture, 2011).

Positioning of Car

The proposed future electric variants of car should be intended relatively higher towards the high-income group. The recommended market for the positioning of electric cars is sports segment. Under no circumstances, the aesthetics should be compromised to deliver high fuel efficiency because both the high and income groups are more concerned about exteriors and environmental friendliness (Marquis et al, 2013).

Featured Products and Offerings

The electric cars should complement the aesthetics of sports car models in addition to providing diesel back-up and plug-in features cum replaceable batteries. The products should be comparatively spacious as in the case with SUVs to receive higher sales apart from delivering average or more in terms of mileage (Mak et al, 2013).

Service-Oriented Offerings

It is recommendable to provide a one-month electric recharge for free of cost and door-step battery replacement service.

Marketing Mix – People

The people involved in car service should be defined by explicit class of technical expertise in the field of electronics to provide faster resolution to electrical breakdown of the products.

Marketing Mix – Process

The process of refuelling should be flexible and convenient for the drivers so that they experience and highly interrupted journey wherever they go.

Demographic and Psychographic Segmentation of the Targeted Market

Marketing Mix – Physical Evidence

For physical evidence of efficiency associated with electric cars, the actors and race drivers can be approached for endorsing the electric cars in different outdoor setting. It shall strongly influence the consumers’ perception and decrease their range anxiety.

Pricing

Price differentiation would be applied in the product offering as the electric cars will be popular by the higher sections of the society. The pricing is determined due to its appeal to the higher section of the society or the status-quo of the customers. It is estimated that the demand and profit of the product will be increased with the time as the customers are becoming aware of the environmental sustainability. The status quo pricing strategy will be adopted for the product as the affluent customers will be attracted towards the product of the organization. The base price of the car will be fine-tuned with the help of market research and survey conducted with the industry leaders and customers.

Placement of Electric Cars

The electric cars can be placed at high positions by showcasing them on official websites and galleries contributed by big brands. The channel structure of the car distribution will be designed such that the cars will be sold directly. It is done as the market for the electric cars is very small. The distribution intensity of the cars will be selective. A large number of value-added services will be added so that the customers can easily operate the electric cars.

Promotional of Electric Cars and Related Market Communications

The company will adopt an  integrated marketing communication (IMC) plan for the promotion of the electric cars. The target audience of the organization is the affluent society in Australia. These people are willing to pay high price for the sustainable product. The communication goal is to persuade the customers to use the sustainable electric cars to fight pollution. The message will be clearly designed so that it posits the importance of electric cars and sustainable cars in the Australian car market. In the car promotion, several strategies such as advertising, personal selling, sales promotion and digital marketing will be used for selling the cars to the customers. Online reviews and content marketing will play a great role in smooth and progressive promotion of the proposed electric cars. Viral marketing and public relations are good options whereas personal selling and direct approach is to be avoided. A primary research will be carried out to examine the needs and the likes or the dislikes of the customers.

Positioning, Featured Products, and Service-Oriented Offerings

The designed marketing plan for electric cars can be implemented smoothly within three years while the infrastructure for electric grid improves a bit. The proposed budget for launching cars will be 50 million USD in the year 2017, 70 million in the year 2018 and 80 million in the year 2018.

The number of units sold in case of electric cars is almost same as that in case of sports car; the proposed budget is to be in premium price segments lying between 35,000 USD to 40,000 USD. Brands like BMW and Nissan have similar price offerings and have been known to be performing well. The model approaching 40,000 can account for the switchable diesel-electric power sources (Zehner, 2013).

So far, the negative factors can arise primarily out of increasing financial needs for setting up wider and pervasive infrastructure for electric grids and charging stations. Post-implementation of the market plan, the negative outcomes can be regulated clear insights are gained in psychographic changes and demographic trends biannually.

References

Accenture, 2011. Majority of Consumers Ready to Consider Buying Plug-in Electric Vehicles, But Challenge Utilities with their Car Charging Demands, Accenture Study Finds. Retrieved 24 September 2017 from https://newsroom.accenture.com/news/majority-consumers-ready-to-consider-buying-plug-in-electric-vehicles-but-challenge-utilities-with-their-car-charging-demands-accenture-study-finds.htm

Bo?karjova, M., Rietveld, P., Knockaert, J. and Steg, L., 2014. Dynamic consumer heterogeneity in electric vehicle adoption. innovation, 3, p.4.

Geuss, M., 2017. There are more than 2 million electric vehicles on the road around the world. Retrieved 24 September 2017 from https://arstechnica.com/cars/2017/06/there-are-more-than-2-million-electric-vehicles-on-the-road-around-the-world/

Graham, J.D., Messer, N.M., Hartmann, D., Lane, B.W., Carley, S. and Crookham, C., 2011. Plug-in electric vehicles: a practical plan for progress. School of Public and Environmental Affairs at Indiana University, Bloomington, Indiana.

International Energy Agency, 2017. Global EV Outlook 2017. Retrieved 24 September 2017 from https://www.iea.org/publications/freepublications/publication/GlobalEVOutlook2017.pdf

James, T. & Brace, C., 2016. Are electric vehicles really best option for greener driving?. Retrieved 24 September 2017 from https://phys.org/news/2016-01-electric-vehicles-option-greener.html

Linke, R., 2017. THE REAL BARRIERS TO ELECTRIC VEHICLE ADOPTION. Retrieved 24 September 2017 from https://mitsloan.mit.edu/newsroom/articles/the-real-barriers-to-electric-vehicle-adoption/

Liuima, J., 2017. Charging Infrastructure Needs to be Improved for Faster Electric Car Adoption. Retrieved 24 September 2017 from https://blog.euromonitor.com/2017/05/charging-infrastructure-electric-car-adoption.html

Mak, H.Y., Rong, Y. and Shen, Z.J.M., 2013. Infrastructure planning for electric vehicles with battery swapping. Management Science, 59(7), pp.1557-1575.

Marquis, C., Zhang, H. and Zhou, L., 2013. China's quest to adopt electric vehicles.

Pearre, N.S., Kempton, W., Guensler, R.L. and Elango, V.V., 2011. Electric vehicles: How much range is required for a day’s driving?. Transportation Research Part C: Emerging Technologies, 19(6), pp.1171-1184.

Transparency Market Research, 2015. Electric Vehicles Market to Rise at 19.2% CAGR from 2013 to 2019. Retrieved 24 September 2017 from https://www.transparencymarketresearch.com/pressrelease/electric-vehicles-market.htm

Zehner, O., 2013. Unclean at any speed. IEEE Spectrum, 50(7), pp.40-45.