Market entry strategy, distribution strategy and brand building to capture Indian EV market

Assignment Taken

Prepare a market entry, distribution strategy and brand building plan

Case Understanding

The objective of the assignment is to develop the market entry, distribution strategy and brand building plan for Electric Vehicles in India. With the current energy crisis in mind, we aim to create a successful transferable business model for electric vehicles without much experience in the capital-intensive automotive industry. Given the scope of EV in India and the government's assistance to encourage the usage of EV in the country, a group of engineers and management graduates decide to launch an EV start-up based in Bangalore. The team has put together a fund of 46 lakhs through personal investment and is in the process of obtaining a loan of 60 lakhs to help run the firm. Given the lack of cash, we need to come up with efficient and cost-effective market entry, distribution strategy and brand building plan for the company in the initial phase, especially since each of the team member expects a return of 50,000 per month from the business in order to satisfy their needs.

BCS Solution Summary

Proposed an efficient and cost-effective market entry, distribution strategy and brand building plan for the company. Initially analyzed the markets, the opportunities, challenges and the favorable government policies. Then looked upon different charging modes for EV in detail which would have a vital impact on our business. Finally, based on the research and analysis, discussed upon the market entry strategy, distribution strategy and the branding for our product.

Solution

The Indian EV market is at a very nascent stage and is poised to grow big in the coming years. There's certainly a first-mover advantage for any international player to enter at this stage. Also, the component industry for electric mobility is growing and it gives a great advantage for companies to consider India as their manufacturing hub for global operations. 

Electric two-wheelers: (e-2W) includes electric-scooters (two-wheeled vehicle with a step-through frame) and electric motorcycles. Two-wheeled vehicles with a maximum speed of less than 25km/h do not currently require a licence or a registration plate. 

Electric three-wheelers (e-3W):  Categorised based on their top speed; e-rickshaws have a top speed of 25km/h whereas e-autos have a maximum speed allowance of 60km/h, wheeled vehicles are also used for short-haul goods deliveries.

Electric four-wheelers (e-4W):  The electric four-wheeler category includes passenger vehicles and light commercial vehicles. Available models from Indian and foreign manufacturers vary on top speed and battery size. Electric pick-up trucks are also entering the market.

In a realistic scenario, the Indian market will likely be worth around £4.8 bn (INR 475 bn) by 2025 – driven mainly by the two- and three-wheeler segments. With the right government policies, a local supply chain, lower battery prices and widespread charging infrastructure, the market maybe even larger. Specifically, as per Avendus Capital, an optimistic scenario would mean:

1. Existing government EV policy expands to include mandated adoption targets
2. Battery prices (a key cost factor in cost structure of EVs) fall below the 'tipping point' of US$120-130 per kWh
3. Access to fast charging improves significantly
4. More than 80% of EV supply chain becomes localised

 

Charging infrastructure in India is currently quite under-developed with as many as 26 EVs per charger available in the country, compared to only 8 in China and 17 in the US (Avendus Capital, 2020). The public charging infrastructure market will grow at a fast pace over the next few years from £40 million in 2020 to £140 million by 2026. In 2019, sales of DC and Type 2 AC chargers overtook the sales of AC 001 chargers, indicating that faster charging is preferred by consumers. Battery swapping is gaining increased market traction especially in the two- and three-wheeler segments that need smaller, light weight battery packs. Estimates suggest the EV battery swapping market in India will grow to $6.1 million by 2030, registering 31% growth during 2020-2030.

Market Opportunities –

1. Innovative battery technology expertise and IP Data based fleet optimisation software and services.
2. UK innovations and IP in EV components leveraged for JVs in India.
3. UK advanced manufacturing techniques expertise to help localise EV supply chain in India.
4. Software/platforms to facilitate journey planning
5. Software solutions to provide accurate, real-time and context-sensitive information to the user about the vehicle available range and battery health during journeys

In our research, users considered EVs as positive for the environment both in terms of reducing emissions, but also in terms of air and noise pollution. Therefore, owners and users of EVs were seen as eco-conscious front-runners, positively influencing others and subject of much admiration. This point around status is important however – in India, in relation to vehicles, status is largely communicated by the cost and size of your private vehicle. If you can afford a motor bike, you retire your pedal cycle and if you can afford a car, you ditch your motorbike. For EV manufacturers (particularly of two-wheelers), this suggests:

1. There is a need for clear branding on products, communicating a premium eco-friendly positioning Merchandising can support this; giving people the means to  signal their  eco-credentials.
2. Advertising can help build associations with an elite lifestyle; potentially with appropriate celebrity endorsements.
3. The mass market for private owners will be challenging to crack until the up-front cost of EVs reaches price parity with ICE alternatives.

 

Range, Charging & Performance –

The prospective buyers have usability related concerns about EVs as well as apprehension about learning how to use new technology. In addition to providing support to new users through good after-sales service, these concerns can be addressed by wider ecosystem level 'myth busting' and education campaigns (ideally including government agencies). Safety Our research uncovered concerns about public charging infrastructure and equipment safety. Certification and standards supported by user-friendly design and instructions on charging sites can help here.

PRIVATE CHARGING

• Usage: Dedicated charging for personal EV or EV fleet owned by one entity
• Locations: Independent homes, dedicated parking land availability
• Ownership: Individual EV owners, EV fleet owners/operators
• Operation: Self-operated or CPO-managed (for EV fleet charging)

SEMI-PUBLIC CHARGING

• Usage: Shared charging for a restricted set of EV users
• Locations: Apartment complexes, office campuses, gated communities, shopping malls, hospitals, universities, government buildings, etc.
• Ownership: Host properties, Orginal Equipment Manufacturers (OEMs) & Charge Point Operators (CPOs)
• Operation: CPO-managed

PUBLIC CHARGING

• Usage:  Open for all EV users
• Locations:  Public parking lots, on-street parking, charging plazas, petrol pumps, highways, metro stations
• Ownership:  Municipal authorities, PSUs, CPOs, host properties
• Operation:  CPO-managed

Market Entry

Designed in the UK, Manufactured and Sold in India our product can partner with local Indian firm for the development and manufacture of the e-bikes, in the form of seed funding. The e-bikes can be 60% locally manufactured in India. The other 40% consists of components imported from countries such as Taiwan, Spain and the UK. This helps the company take advantage of the lower manufacturing costs in India while avoiding excessive customs duties. Also, We can follow product strategy entering from premium market and moving towards mass market.

Distribution Strategy

1. Modify and streamline the entire process. Build and operate a network of supercharger stations to fully operate its charger network by renewable energy.
2. Targets for public charging infrastructure are generally based on considerations of accessibility or of EV charging  demand.  Access-based targets aim to  ensure minimal  coverage  across  a  city  or  region,  and  are typically  measured  in  terms  of  "number  of  charging points/unit  area."  they are more appropriate in the early stages  of adoption,  due  to  low  EV  charging  demand. Demand-based targets to provide sufficient public charging infrastructure for a growing number of EVs on the road.
3. Install a  centralized  system  management  software for  backend  network  management,  including  user registration  and  permissions  management,  EV charger  classification  (by  location  and  charger type),  and  remote  monitoring.
4. A greater  number  of  distributed  charging points  reduces  the  average  distance  EV users  must  travel  to  access  public  charging.  The visibility  of  charging  facilities,  ease  of  entry  and  egress at  charging  sites,  and  their  proximity  to  major  roads can  also  influence  their  accessibility.
5. Public  charging  infrastructure  should  be  located  in areas with charging demand to ensure high utilization. It  also  depends  on  the availability  of  other  private  or  semi-public  charging facilities  in the  area.
6. We can opt for a  distributed charging  network  of  normal  power  charging  points that  are  less  expensive  and  require  less  space  and electricity  at  any  given  location.

 

Branding

Mission - To provide zero-emission electric-powered vehicles to our customers.

Vision – To offers high performance EV with connected technologies.

The use of connected devices delivers lots of valuable data that can be used to improve the vehicle and create a joyful experience.

An efficient production of the current product with a high flexibility. The models can be offered in various variants leading to a cost reduction, lower R&D cost and shorten time to market.

Localization is a must for India's electric vehicle transition, since it will be impossible to achieve the net positive benefits of reduced oil imports, increased industrial growth, and job creation without local EV manufacture. Locally built electric vehicles offer the same ‘Made in India' branding opportunities as high-quality EVs. Given Prime Minister Narendra Modi's promise for a self-sufficient India, the young Indian EV industry now has a similar chance to the IT industry in the 1990s. Due to a strong 'emotional' customer feeling as well as quality, Made in India EV products have the potential to create a local and worldwide draw with creative branding and marketing. 

We propose a 5-point framework to lay strong foundations for a disruptive yet phased localisation.

1. Localisation beyond hardware: Leverage India's IT prowess in the EV sector - Indigenous software development for smart, connected, and automated EVs can thus be viewed as an opportunity for India to exploit its IT strength and aim for global leadership rather than merely catching up.
2. Disruptive and bold roadmap for growing technological competence - An ambitious roadmap that can help remove the impediments to localization in a disruptive way is urgently needed. Players in the ecosystem must band together to identify the precise hurdles and solutions needed to achieve maximum localization with the greatest quality in the next two years. Existing and new firms will compete in India's future EV component sector. The localization roadmap must guarantee that existing players are not hindered, particularly in terms of R&D and knowledge transfer. At the same time, newcomers must establish themselves. Significant mergers and acquisitions are predicted in the EV components market. Given the sector's youth and demand, the industry will make significant expenditures in technology and components. As a result, it will be significant for the government to provide the industry with a regulatory environment that promotes Ease of Doing Business by reducing bureaucratic and logistical burdens.
3. Target cost-competitiveness in supply chain - In areas such as electric buses, three and two-wheelers, taxis, and delivery vehicles, supportive policy frameworks in the form of 'carrot and stick' can unlock a major domestic EV market. To bolster the industry's interest and investments, consistency and size are required. If faster localisation is the goal, the scale would have to be in the millions rather than hundreds.
4. Seize the possibility of constructing Indian brands - Branding is the hidden variable that has the potential to transform India's perception of the EV prospect. It inspires a worldwide brand-making storey that can refocus EV ambitions and investments. India will have to ensure that Quality and Performance are the ultimate aims, and that India-made products are credible enough to compete with the ubiquitous Chinese items. Given the purpose and the present geopolitical situation, the chance to establish Indian brands is important and urgent.
5. Gain self assurance of buyers within the Indian EV market - Investors' trust in the Indian EV sector has been shaken by the recent slowdown in the automobile industry and the impact of COVID-19. While there is interest in angel investing, it must be translated into growth capital funding. As the economy grows, VCs and lower financing costs will become increasingly important. 

 

 

Conclusion

Locally built electric vehicles offer the same ‘Made in India' branding opportunities as high-quality EVs. It becomes crucial for new players to obtain clients, as they will have to compete with established players. The EV additives area is probable to witness large mergers and acquisitions. The enterprise will make ambitious investments in era and additives given the nascency of the enterprise and demand. It will consequently be vital for the authorities to help the enterprise with a coverage surroundings that allows Ease of Doing commercial enterprise with lesser bureaucratic and logistics hassles. India is strongly located to embody an expanded transition to EVs. It can be vital that the better penetration of EVs comes at the side of growing tiers of localization that supply the monetary profits of the transition and establishes India as a worldwide chief in EVs. Given the numerous levels at which production of EVs and their additives stands today, localization to foster business enterprise formations may want to occur in exclusive ways—absolutely designed and made in India additives and products, joint ventures of world groups with Indian groups, and overseas groups making in India. It'll be vital that the brand ‘Indian EVs’ captures the worldwide degree with their hardware and software program strengths and their hook up with the environmentally-aware consumers.

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