This case is about judging the ability of the team to understand a real-life business issue, which is in its early stage, with dynamics changing rapidly. It gets more complex due to different forces working for and against the industry. Add to this the objectives of the company.

The forces working in the industry:

1. Consumer preference: Electric vehicles are a big draw today as the second vehicle in most cases, as the cost of the vehicle is high compared to gasoline vehicles, and the charging infrastructure is also very sketchy. Just 55,000 vehicles in 2022 -23 is not a very large figure.

Currently, the economics of owning a fuel vs hybrid vs EV is not clear to the buyers, but as the market matures, more information will be available. Buyers may thus realise that hybrids are actually least on cost of lifetime ownership, including purchase, fuel and maintenance. The charts below will illustrate. Please note that this does not take into consideration what will happen if the government removes the subsidy on electricity charges for charging stations.

Thus on pure economics, buyers may prefer hybrids if they have perfect information.

Additionally, the problem of taking these car long distances is a major barrier against first-time buyers going for electric cars. Also the high cost of acquisition also prevents first-time buyers from entering with EVs. Finally, the charging infrastructure, which we will deal as a separate point.

2. Environmental Impact: Ultimately, the EVs will get a boost from the buyers and the government based on their environmental impact. In the current situation, the environmental impact of EVs is much lower than gasoline vehicles for their 10-year lifetime. But it is very similar to the hybrids. One of the reasons the hybrids come close to the EVs in their life-time impact is because EVs have a much higher impact in their manufacturing process than other vehicles. Also, because hybrids give almost double the fuel efficiency compared to ICEs.

Finally, most of the power produced in India is still coal-fired. The chart below gives an approximate environmental impact of different types of vehicles.

3.   Charging Infrastructure: This would be a major factor in the penetration and growth of EVs in the cities. In semi-rural areas, the constraint of space for charging stations will be less, and hence may give better charging facilities there. However, in the large cities, even if government and private parties are prepared to set up charging infrastructure, space will be a huge constraint. The case clearly indicates that we will need 1.3 million charging stations by 2030, and we have just over 12,000 chargers today. It is therefore unlikely that electric car volumes will reach 1.4 mn by 2030. However, this constraint gets removed immediately if Hybrids get a boost. Therefore, it is most likely that India may see a boost in the hybrid market, and therefore, the company might do well to work on a combination of EVs and hybrids if they want to enter the EV market.

4.   Government boost for EVs: It’s currently very clear that the government is aggressively pushing the EV sector with subsidies. But as the numbers increase, the cost of subsidies on government for both manufacture as well subsidised charging will start pinching them and the policies will change. The withdrawal of FAME II is a clear signal that as numbers increase, subsidies will get withdrawn and owning the EVs will become expensive, leading to slowing of growth.

The Business Plan

The manufacturing investment is very similar to gasoline vehicle or hybrid vehicle production, given that most manufacturers only assemble and not produce the components. For a 2.5 lakh per annum unit, it will require about ₹12,000 crore investment. Other major investments will be about ₹1,500 crore per annum on promotions. The investment does look feasible, provided the product is state-of-the-art and manages to win the 20 per cent market share.

There is no specific business plan that is correct. What the faculty would need to see is how well the student has considered various aspects and then made the recommendations. Most of these figures that the solution has produced are taken from secondary sources and the student will have to do this research to come up with these interpretations.

In general, this case is a test of dealing with a real-life situation with limited data and changing dynamics. How well a student thinks will be the key rather than a specific solution that matches this guideline.

Author recommendation:

1. Go for the investment in phases

2. Go for a combination of Hybrids and full EVs

3. Let the Hybrids be the route for this company to be unique by promoting the overall pluses of Hybrids

4. As the charging infrastructure matures, produce more Plug-in Hybrids and EVs

5. Do not invest in charging infrastructure, as it will change rapidly, making the current charging facilities obsolete and thus devaluing the investment.

Published on May 29, 2025