भारतीय प्रबन्धन संस्थान, रोहतक भारतीय प्रबन्धन संस्थान, लखनऊ

INDIAN INSTITUTE OF MANAGEMENT ROHTAK INDIAN INSTITUTE OF MANAGEMENT LUCKNOW

WAZIR
THE STRATEGY AND CONSULTING CLUB
CSC
CONSULTING AND STRATEGY CLUB

OFFICIAL KNOWLEDGE PARTNER

B R I N G T O Y O U

THE STRATEGY ENIGMA

EVolution: Charting the Future of Electric Vehicles

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INTRODUCTION
Sipping his tea, Sidharth, CEO of Stellar Motors, perused news detailing new government policies favoring
the electric vehicle (EV) segment. This resonated with his contemplation about venturing into the
burgeoning EV market over the past six months. While the company currently thrives in the four-wheeler
and two-wheeler segments, Siddharth's recent visit to Norway underscored the country's remarkable
innovation and infrastructure in the EV sector. Motivated, he collected his thoughts and made his way to the
office. Following an initial meeting, Siddharth convened with Mehul, the company's Chief Strategy officer,
sharing his vision of entering the EV market.

ABOUT THE COMPANY

Stellar Motors, a distinguished luxury automobile company that stands at the forefront of crafting
unparalleled two-wheelers and four-wheelers. The product line epitomizes a perfect blend of innovative
technology and exquisite design, offering an opulent driving experience. Stellar Motors operates through
distinct business segments, including Automotive, Motorcycles, Financial Services, and Other Entities. In the
Automotive sector, the company meticulously develops, manufactures, and sells high-end cars and off-road
vehicles under iconic brands such as Stellar, offering spare parts and accessories.

The Motorcycles division is dedicated to delivering premium two-wheelers that redefine the standards of
elegance and performance. The Financial Services arm provides credit financing, leasing, and other
customer-centric financial solutions. The Other Entities segment encompasses strategic holding and group
financing activities. The current revenue model encompasses product sales, licensing cutting-edge
technologies, and strategic partnerships. Stellar Motors anticipates a steady 3-5% annual revenue growth,
reaching $110-115 billion by 2024 and aiming for a long-term projection of $150-180 billion by 2030.

© Wazir- The Strategy & Consulting Club, IIM Rohtak

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Fig 1: Share of EV in vehicle sales (%)
40
EV MARKET IN INDIA
30
A decade ago electric vehicles were seen as a fanciful scheme that did not stand a
chance against the traditional petrol and diesel vehicles, howe,ver they are now
20
among the fastest growing segments in the automotive market in 2023. While EVs
bring certain benefits and have evolved into desired machines today, the public
10
perception towards electric vehicles and awareness against pollution from ICE
vehicles also has a major role behind the sudden rise in EV adoption across the
0
country India has seen a constant rise in EV adoption since 2021 and the upward

y
na

a
S
ce
K
trajectory has continued through 2023 as well. Yet we are much behind some

an

di
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U

an
hi

In
m
C

Fr
er
countries for example share of EVs in vehicle sales has touched ~30% in China and

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~12% in Germany.
Fig 2: India 2W sales (number of units)
120%
The 2W and 3W segments will be the vanguards for EV adoption, achieving 40%–
45% penetration by 2030. This is driven by several factors, including highly 100%
competitive TCOs, favorable government policies, limited need for public charging
infrastructure given the adequacy of home charging for daily use, investments in 80% 55%-60%

building compelling product offerings with comparable performance to ICE vehicles, 80%-85%
60%
and early adoption by delivery and logistics fleets (see Figures a, b). 98%
40%
By 2030, per a Bain & Co. report, electric two-wheelers could make up about 40 to 45 40%-45%
20%
percent of all EVs sold in India, and electric passenger vehicles could make up about 2%
15%-20%
15 to 20 percent. 0%
2022 2026 2030

© Wazir- The Strategy & Consulting Club, IIM Rohtak

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CHALLENGES
As of FY 2023, a total of 9,113 EV charging stations were operational in the country, a number that is set to increase significantly by the end of FY 2028,
with an anticipated 68,956 EV charging stations; reflecting a Compound Annual Growth Rate (CAGR) of ~51.93%. However, this ambitious projection
appears challenging given the current landscape. The existing charging infrastructure poses a barrier to production and sales, discouraging operators
due to uncertainties, high operating costs, and stress on electricity distribution companies. Import dependency for battery metals is evident in the
staggering Rs 18,763 crore worth of lithium and lithium-ion imports between April 2022 and January 2023, elevating procurement costs and hindering
large-scale EV manufacturing. According to Niti Aayog, Battery demand is expected to rise to 230 GWh by 2030. This would require nearly 26 giga
factories with an average advanced battery production capacity of 10 GWh per year & and India has no manufacturing plants at this scale currently.
Furthermore, India's limited R&D capabilities result in over-dependency on foreign know-how and underscore the need for indigenous innovation to
enhance efficiency and competitiveness. Environmental concerns, especially during battery disposal, are substantial, with only a small fraction of
batteries being recycled, leading to nearly 4 tonnes of CO2 released during the production process of a single electric car which is 20% more than an ICE
vehicle. Consumer resistance is evident in the reluctance to adopt EVs due to insufficient charging infrastructure and high battery replacement costs.

OPPORTUNITIES
Business Models
The move towards electric vehicles in the Indian automotive sector has transformed the industry's business landscape. This transition offers lucrative
investment prospects and invites new players. While existing companies will persist, numerous untapped opportunities are set to emerge.

Battery cell manufacturing, packaging, and BMS EV components Software and telematics

New-age OEMs EV charging infrastructure Mobility-as-a-Service

© Wazir- The Strategy & Consulting Club, IIM Rohtak

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Government Subsidies

Buyer Incentives:
The government has introduced a range of incentives and programs to support the buyers and manufacturers of EVs. People might feel that purchasing
an electric vehicle is costlier than buying an internal combustion engine vehicle, but that is only because of the higher upfront cost. The effective cost
over the lifetime of electric vehicles is still less. The government offers different types of financial incentives to make electric vehicles more affordable for
you. The key mechanisms for getting incentives are:

a. Purchase Incentives: Direct discount provided to the user on the cost of the electric vehicle
b. Coupons: Financial incentive where the amount is reimbursed later
c. Interest Subventions: Discount offered on the interest rate while availing loan
d. Road tax exemption: Road tax at the time of purchase is waived off
e. Registration fee exemption: The one-time registration fee applicable on new vehicle purchases is waived off
f. Income tax benefit: Provided as a deduction on the tax amount payable by an individual to the government
g. Scrapping incentives: Provided upon de-registering old Petrol and Diesel Vehicles
h. Others: Incentives such as interest-free loans, top-up subsidies, special incentives on electric three-wheelers, etc. can also be availed

Manufacturer Incentives:
The Indian government is actively supporting electric vehicle (EV) manufacturers with incentives like financial aid, tax benefits, and subsidies. This push
stems from a commitment to environmental sustainability, cleaner air, and reduced reliance on fossil fuels. By making EVs more affordable, the
government encourages innovation in the automotive sector and aligns with global efforts to combat climate change, putting India on the map for
sustainable transportation solutions.

FAME (Faster Adoption and Manufacturing of Electric vehicles) is India's flagship initiative promoting electric mobility. It offers financial incentives to
manufacturers and consumers, making electric vehicles more accessible. The program supports research, development, and infrastructure for
sustainable transportation, aligning with India's goals of reducing pollution and decreasing reliance on traditional fuels. Currently in its 2nd phase.

© Wazir- The Strategy & Consulting Club, IIM Rohtak

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PROBLEM STATEMENT
Siddharth is confused about which segment: two-wheeler or four-wheeler, his company should enter. What should be his Go-To-Market strategy? How
would he enter a market struggling with infrastructural challenges (charging stations), price-sensitive consumers(Indian market), and competition with
a lack of awareness among the consumers? Additionally, Siddharth wondered how it would affect his costs and revenue in the future.

DELIVERABLES
As Mehul, the Chief Strategist Officer, prepare the following:
1. Conduct an opportunity assessment by discussing on parameters like (but not limited to):
a. Estimate the market size for EV – TAM, SAM, and SOM
b. Market growth
c. Potential opportunities
d. Competition Landscape
e. Risks & challenges
2. Propose a Go-to-Market strategy that should be adopted while focusing on (but not limited to):
a. Customer strategy (Target market, Acquisition, Engagement and Retention)
b. Product(two-wheeler/four-wheeler) positioning
c. Channel strategy
3. Identify the opportunities and suggest technology-based innovations (financially and operationally viable) which will help them achieve their
overall objective.
4. Develop a financial model explaining the revenue forecast along with other parameters for the next 5 years

© Wazir- The Strategy & Consulting Club, IIM Rohtak