8-1 Project Four Submission Assignment
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Cole_Staats_BUS-225_7-1_ProjectThree_Submission.pptxBUS-225 7-1 Project Three Submission
Cole Staats
Southern New Hampshire University
December 9th, 2022
Auto Manufacturing industry standing
As internal combustion engine motor manufacturers in the auto industry, we have made profits from providing quality motors to various car companies in the US. The auto industry is stable, with high net worth and steady sales. This equals revenue in the trillions. While the industry is safe, it is stagnant, having dealt with a dip in sales and revenue in the past year due to the Covid-19 virus and a recent increase in fuel prices across the US. I believe this is an opportunity for us to diversify into a similar yet profitable industry. Based on the above graph, it is evident hybrid, plug-in hybrid and the all-electric car industry is the new sales trend in our industry. Venturing into it would be a viable and reasonable diversification option for our company (Borgstede & Scholz, 2021).
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Auto Manufacturing Industry Projected sales trends
In the auto manufacturing industry, sales are highly influenced by market trends. Due to changes in environmental concerns and upgrades in technology, many current trends are focused on improving manufacturing plants for the climate and automation in these plants. The power of the consumer also affects sales. Consumers are demanding much more fuel-efficient vehicle types and other options for engines, including hybrid and electric. These demands weigh heavily on us and our ability to create these motors, to supply the vehicles (Madichetty et al., 2021).
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Current Consumer Information
The consumers favor fuel efficiency, safety, low prices, suitability for everyday use, high quality, driving comfort design, and good customer service when buying cars. All these factors are pushing for environmentally friendly and more technologically improved cars. For several years, consumers have demanded more model types, with new customizable features and sleek styling. Thus, positioning our company to offer such consumer demands in our cars will benefit both the internal and external stakeholders. Diversifying into hybrid, plug-in hybrid, and all-electric car manufacturing industries will give a competitive advantage in the changing auto manufacturing industry (Madichetty et al., 2021).
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New Trends in the Auto Manufacturing Industry and expected growth
From the figure above, it is clear that the electrification of cars is one of the key trends in the auto manufacturing industry. Changes in consumer purchase preferences such as wanting more environmentally friendly cars as well as the uncertainty and high prices in the oil industry are pushing consumers to adopt electric or semi-electric cars. Thus, it is important for our company to lean towards electric or hybrid car manufacturing to meet the needs of customer demands in the auto manufacturing industry (Madichetty et al., 2021).
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The fuel to Electric transition car story
The transition from fossil fuel to electric vehicles is a key element in the US’s path to net zero emissions by 2050. Unlike domestic, this transition is already well underway. Alternatively-fuelled vehicles made up more than a fifth of new car sales and around 3 percent of all cars in 2020. Hybrid cars were still only 1.1 percent of new car sales in 2010 but had risen rapidly to reach 14 percent of total sales last year. Pure electric vehicle sales grew very slowly at first, just reaching 1 percent of new car sales in 2019, but leaped to 6 percent of sales last year. Because the average car stays on the road for 14 years, the share of electric cars in the total stock of cars is much lower. By 2025-26, our latest forecast assumes that hybrids will make up 31 percent of sales and 9 percent of all cars, with the corresponding figures for fully electric vehicles being 16 and 4 percent (MarketLine, 2021).
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Likelihood of Success of Electric Cars
The likelihood of success for the business is medium to high. There are a few factors driving electric vehicle adoption: increasing use of tax breaks and other supportive government policies; rapidly declining costs of batteries (the most expensive component compared with normal internal combustion engine cars); and the declining lifetime cost of ownership of EVs compared with normal cars. The last one is where the cost of fuel comes in; the rising prices of fuels will most likely push consumers to abandon fuel cars and adopt electric cars. Also, as technology improves and more cars are sold, the cost of batteries will come down dramatically. Thus, the overall cost of electric vehicles (including their lifetime fuel consumption) will drop. Ultimately, EVs could become less expensive than internal-combustion vehicles between 2020 and 2030. China is likely to be the biggest EV customer (Pantalon & Matt, 2022).
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Impact of Diversification to the organization
Diversifying our company and moving to the production of hybrid and electric cars will position us to secure a market share in the future of the auto manufacturing industry. Diversifying will help the company to adopt a new source of revenue. New revenue sources will increase our company’s market share in the auto manufacturing industry and increase our investor’s dividends. Based on the data about the current state of the fuel auto industry, electric cars will dominate the biggest share of the auto industry, and diversifying now will boost our competitive advantage. The company will also take a direction towards adopting “clean energy”, one of the core principles in fighting climate change or global warming (MarketLine, 2018.
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Summarize findings of the research performed.
While the electric car has a checkered past, there is a consensus in the auto industry that a tipping point is approaching where mass adoption will become unavoidable because of falling battery costs, pressure from regulators and generous government subsidies. These factors have come together to force the traditional industry to take electrification seriously — faster than we had previously expected. A dramatic decline in the price of batteries will allow leading automakers to sell fully electric vehicles for less than cars powered by gasoline and diesel as soon as 2025. Electric cars are already gaining traction: As recently as 2010, annual sales were close to zero. Today, an incredible amount of money is being poured into electric cars and its success and dominance in the auto manufacturing industry are unstoppable now. Thus, it is critical to start diversifying and adjusting our organization to lean in the direction of electric cars (Borgstede, & Scholz, 2021). .
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Demand for fuel-efficiency cars will push consumers towards electric cars
Government regulations and market forces will demand for use of electric cars in future
Ban of internal combustion engines in the UK and EU will promote electric car use
Diversifying to electric car production will benefit the organization
Conclusions and Reasoning
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I believe it is justifiable to diversify our company towards the production of electric cars. We should seek to increase electric car production rapidly in the next decade.
The laws in major markets including the EU and UK seek to ban new internal combustion engines as part of the effort to curb carbon pollution from transport. The US and China are also looking to cut down greenhouse emissions towards zero by 2050.
Thus, the demand for electric cars will increase, and placing ourselves strategically for the production of such cars will increase our market share, competitive advantage, revenue, and adoption of clean energy.
An increase in demand for cars with fuel efficiency in the midst of increasing gas prices will also push many consumers towards electric or hybrid cars.
Rationale behind recommendation
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Atlassian. (n.d.). 5 Decision-Making Models to Try if You’re Stuck | The Workstream. https://www.atlassian.com/work-management/team-management-and-leadership/decision-making/models
Automotive Motor Market Size & Share Report, 2019-2025. (n.d.). https://www.grandviewresearch.com/industry-analysis/automotive-motor-market
Bari, Shahool Al. (2022, June). Hybrid & Electric Vehicle Manufacturing.https://my-ibisworld-com.ezproxy.snhu.edu/us/en/industry-specialized/od4516/industry-outlook
Borgstede, M., & Scholz, M. (2021). Quantitative and Qualitative Approaches to Generalization and Replication–A Representationalist View. Frontiers in Psychology, 12. https://doi.org/10.3389/fpsyg.2021.605191
FOTW #1200, August 23, 2021: Sales of New Electric Vehicles in the U.S. Were Up for 2020 While Conventional New Light-Duty Vehicle Sales Were Down. (n.d.). Energy.gov. https://www.energy.gov/eere/vehicles/articles/fotw-1200-august-23-2021-sales-new-electric-vehicles-us-were-2020-while
Highlights of the Automotive Trends Report. (2022, November 15). US EPA. https://www.epa.gov/automotive-trends/highlights-automotive-trends-report
Madichetty, S., Mishra, S., & Basu, M. (2021). New trends in electric motors and selection for electric vehicle propulsion systems. IET Electrical Systems in Transportation, 11(3), 186–199. https://doi.org/10.1049/els2.12018
MarketLine. (2021, April 28). Hybrid & Electric Cars in North America. North America - Hybrid & Electric Cars. https://advantage-marketlinecom.ezproxy.snhu.edu/Analysis/ViewasPDF/north-america-hybrid-electric-cars-58394.
MarketLine. (2018, April 5). Electric Vehicles: A deep dive into the technology that is the future of the Auto industry. https://advantage-marketlinecom.ezproxy.snhu.edu/Analysis/ViewasPDF/electric-vehicles-a-deep-dive-into-the-technologythat-is-the-future-of-the-auto-industry.
MarketLine. (2021, April 28). Global - Hybrid & Electric Cars. https://advantage-marketlinecom.ezproxy.snhu.edu/Analysis/ViewasPDF/global-hybrid-electric-cars-130182.
Pantalon, Matt. (2022, August). Automobile Engine & Parts Manufacturing in the US. https://my-ibisworld-com.ezproxy.snhu.edu/us/en/industry/33631/industry-performance
Roth, R. (2021, January). Hybrid & Electric Vehicle Manufacturing. US SPECIALIZED INDUSTRY REPORT OD4516: Hybrid & Electric Vehicle Manufacturing. https://my-ibisworldcom.ezproxy.snhu.edu/us/en/industry-specialized/od4516/about#major-players.
References
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