MOVING TOWARDS SUSTAINABILITY WITH THE HELP OF ALTERNATIVE ENERGY RESOURCES FOR EV

Assignment Taken

Proposal for Fund Raising. Provide a detailed overview of the Financial target, Product Mix & Expansion Plan for Next 5 Year.

Case Understanding

India has an increasing energy demand to fulfil the economic development plans that are being implemented. The provision of increasing quanta of energy is a vital pre-requisite for the economic growth of a country According to the World Resource Institute Report 2017, India is responsible for nearly 6.65% of total global carbon emissions, ranked fourth next to China (26.83%), the USA (14.36%), and the EU (9.66%). Climate change might also change the ecological balance in the world. This way, the country will have a rapid and global transition to renewable energy technologies to achieve sustainable growth and avoid catastrophic climate change. Renewable energy sources play a vital role in securing sustainable energy with lower emissions The increase in India's energy consumption will push the country's share of global energy demand to 11% by 2040 from 5% in 2016. Emerging economies such as China, India, or Brazil have experienced a process of rapid industrialisation, have increased their share in the global economy, and are exporting enormous volumes of manufactured products to developed countries. This shift of economic activities among nations has also had consequences concerning the country's energy use In 2020, India was the fifth-largest auto market, with ~3.49 million units sold in passenger and commercial vehicles. It was the seventh-largest manufacturer of commercial vehicles in 2019. Renewable energy has great scope in India. The automobile industry is one of them, the Automobile sector has taken several giant steps recently, but the Indian market is still an infant. As compared to other countries, the market share of electric vehicles is meagre in India. It is already accepted that renewable energy technologies might significantly cover the electricity demand and reduce emissions. In recent years, the country has developed a sustainable path for its energy supply. Awareness of saving energy has been promoted among citizens to increase the use of solar, wind, biomass, waste, and hydropower energies. It is evident that clean energy is less harmful and often cheaper. India is also a prominent auto exporter and has strong export growth expectations for the near future. In addition, several initiatives by the Government of India and significant automobile players in the Indian market are expected to make India a leader in the two-wheeler and four-wheeler markets globally by 2020. According to some estimates, the total number of registered vehicles in India is 230 million, and the market is growing continuously. This also leads to India's dependence on fossil fuels. Taking a reformist measure, India's Government aims to promote electrical vehicle usage in the country

BCS Solution Summary

The idea of our start-up is to manufacture a solar panel that can be fitted over any car roof as an external enhancement. The purpose of this solar panel would be to act as an alternative charging for electric vehicles. This panel would enable to charge the batteries for four-wheelers used for short commutes within a city independently, whereas, for long-distance commutes, this would act as an alternative medium for charging the battery in addition to the conventional charging stations. This feature would be highly beneficial to the users travelling to places with inadequate charging stations. As a company, we target these two specific groups of customers: users going for long trips in remote areas or users who only use their vehicles for short commutes like travelling from workplaces to homes, going to markets, etc. The product of the company has been generated following the 6-step procedure, i.e., the ideation phase, research phase, planning phase, prototyping phase, sourcing phase and costing stage. The ideation of this product has come keeping in mind the major pain point of electric vehicles in our country, i.e., the inadequate charging infrastructure and lack of option of fast charging. Our product would be a solution to this major challenge for users of personal electric vehicles. In addition, our product being in the cost range of INR 45,000 – 1,25,000 would also be cost-effective and can be afforded by the domestic electric vehicle owners. The company's operations would initially start in Bangalore and gradually expand across the other parts of the country. The organisation's financial projections and human resource planning have been executed, keeping this agenda of operation and future expansions. The distribution of our product is conducted in two models: B2B (Business to Business) and B2C (Business 2 Customers). For the B2B model, we are focusing on selling our product to India's top manufacturers of electric vehicles to incorporate our solar panels in their design. The major companies that have been considered for this purpose are TATA, Hyundai, Maruti Suzuki and MG, among several others. The branding of our product has been done with the use of printed media, social media, and digital marketing. In addition, various community marketing strategies have also been proposed like printing merchandise for employees and users, customising the logo according to the company objectives and in line with sustainability. The company also focus on building relations with the clients by providing premium pre-sales and post-sales service.

Solution

Introduction:

We are planning to introduce a specific new product in the Indian market that will cater to the most severe pain point of the industry: driving range. Currently, in the Indian market, most of the product comes under the range of 90 – 350 KM, which ceases the market reach of the EV product to the city commute only. In India, most of the travel happens for commutes other than routine. The distance that is traveled ranges from 300 – 1000 KM. This makes EV an out of choice option for the users.

This product wherein we shall be installing efficient power solar plates on the roof of the car. This assembly will be chagrining the battery in average daylight. It shall increase the vehicle's driving range from 20 – 50% (depending upon the quality of light, amount of journey, and time taken in the trip).

Further, this product will reduce the carbon footprint and boost the green initiative project of the nation.

 

Fundraising :

For the funding of the business, we have approached two ways:

• We are assuming to raise fund from Angel Investors for 80% of the amount require for initial investment.
• We are assuming to take a debt of 20% of total amount reuqire for initial investment.

Further, the points are discussed in below projections.

• A problem that we are solving.
• TARGET MARKET
• PRODUCT/SERVICE
• MARKET VALIDATION study to be conducted.
• REVENUE MODEL is described.
• MARKET STRATEGY is described in the marketing plan.

Planning:

We have planned to set up a solar panel assembly unit near Bangalore. The operations are to commence from 01 – Jan – 2021. The facility will be serving the Automotive market in the 4-wheeler segment.

There are currently 750 EV cars sold in Bangalore every month, which is our target market. Apart from there are around 40000 already sold cars that are our secondary target.

Source of Revenue:

Our primary source of revenue will be by selling the solar roof for cars and repairing the already sold component.

Assumptions:

1. We have assumed that there are five EV manufacturers players: TATA, Hyundai, Maruti Suzuki, MG, and others. Their data has been taken based on past trends for calculation purposes.
2. Different weightage of sales segment-wise taken as per past data analysis, and cost per segment is assumed in that fashion.
3. We assume that 70% of revenue from new cars will be realized and from old already sold cars and 30% will be realized in the first year.
4. We are assuming that we will sell above qty every year and we are planning to expand it by 20% every year.
5. All the data for labor and other heads is assumed based on actual data and discussions with the current players in the market. The study was a part of market analysis.
6. Staff salary YOY is assumed as an increase of 5%.
7. Indirect expenses are also assumed to increasing YOY by 7%. These are considered on an industry average basis.
8. The HR and Employee salary data is assumed based on the case and the market research data.

 

Business Modal:

• We shall be purchasing semi-finished solar panels and making shades/car roofs as per customer-specific requirements.
• The assembly will be done in-house, and then it will be shipped to respective customers.
• The business is B2B and B2C modal specific. The OEM will be provided with ready to fit assembly at the time of manufacturing. The already sold cars will also be provided with the attachment option, which will be a B2C segment option.
• The company's primary focus is towards the long-term strategic partnership with the OEM and to operate in the B2B segment.

Product Mix:

The company operates in the following product categories:

Product Type (Mix)		Cost of Kit / Unit car
Hatchbacks Mini		45000
Hatchbacks Small		55000
Small Sedans		75000
Mid-Sized Sedans		90000
M Multipurpose Cars MPV's		100000
Sports Utility Vehicles SUV's		125000

 

Note: The cost is decided based on 5% of the total cost of the vehicles since this was closest to the actual data else. It is on a factual basis.

 Break-Even Analysis:

The formula below helps calculate the total sales breakeven point.

Break-even Sales = Total Fixed Costs / (Contribution Margin)

• Contribution Margin = 1 - (Variable Costs / Revenues) 

It will be Achieved in Around 3.5 years.

 

 

Conclusion

Team ' Energiana' achieved its objective of providing a renewable energy source to drive electric vehicles. The electric vehicle is an essential element in the plan to reduce the carbon footprint, but the addition of solar energy to drive the vehicle will further lower the carbon footprint. The product is unique in terms of its application and offers a long-term prospect, with most customers shifting towards electric vehicles. The uniqueness and the value contribution of the product enabled Team Energiana to list it at a higher gross margin of 30 percent. Using the SCAMPER model to develop a new model helped reduce the time associated with product ideas as it is one of the most time-consuming steps in the entire product development stage. Altering the application of an existing product like a solar panel to drive the electric vehicle enhanced the feasibility of the product. The high interest shown by the investors during the fundraising simulation was one of the critical aspects in the product validation stage. The industry outlook looks positive with increased awareness among the customers to purchase products that promote the environmental cause. The expected increase in trend will further bolster the business prospect for the company.

Attached File Details