New Era: Electronic Vehicle

Steering GM: an Electric Future

By: Group 6: Bishwa Pandey, Brittoni Famous, Chelsea Grossman, Phil Broussard, Jordan Aquino, Brent Ellis, Karen Xue, Alex Brustowicz

Automotive Industry: History

1901Assembly line production adds higher quality and

decreased costs

1860sFirst gas-fueled

engines developed

1930 1940

Innovation & Consolidation• Great Depression causes industry

to contract• Major innovations introduced

(automated transmissions, hydraulic brakes, A/C

1960 1975

Industry Regulation (US)• Clean Air Act (1963)• Vehicle Air Pollution and Control

Act (1965)• Energy Policy and Conservation

Act (1975)

1920Stop production of

electric cars

1997Toyota Prius – first mass produced hybrid vehicle

2008Tesla Roadster – first

mass produced highway capable hybrid vehicle

IndustryRivalrySuppliers Buyers

Potential Entry

Substitutes

Power of Suppliers (Low)➢Various auto part manufacturers➢Tiered suppliers➢Industry firms ability to integrate backward

Threat of Entry (Low)➢ Upfront large capital investment➢ Government policy➢ Difficulty to reach economy of scale

for new entrants➢ Brand recognition

Extent of Rivalry (High)➢ Lots of competitors➢Many existing brands➢Relatively mature market➢High exit barrier, large pre-production

R&D spending➢Competitors have similar, but yet

differentiated products

Power of Buyers (High)➢Gas price change➢Macroeconomic environment affecting sales➢Volatility in the market➢Relatively low switching cost➢Price sensitivity➢Products with low differentiation

Threat of Substitutes (Medium-High)➢Buyer’s tendency to switch depending on the traveling distance➢Attractive substitutes’ price on short-distance options➢Longer distance traveling not much options➢Used cars

Five Forces: Auto Industry Important

Auto Industry Piston and Segmentation

Electric Vehicles• No fuel needed• Need recharge stations• Usually short distances

Hybrid Vehicles• Combination engines

(gas/electric)• Fuel efficient (high mpg)• Long distances

Gas Vehicles• Higher cost to run• Lower initial cost• Long distances

IndustryRivalrySuppliers Buyers

Potential Entry

Substitutes

Power of Suppliers (High)➢Auto parts are internally designed and outsourced➢Various auto part manufacturers➢Battery companies➢Industry firms able to integrate backward➢Limited skilled workers

Threat of Entry (Low)➢ Upfront large capital investment➢ Government policy➢ Difficulty to reach economy of scale

with current technology➢ Brand recognition

Extent of Rivalry (Low)➢ Relatively new market➢ Not yet concentrated➢ No defined major competitors➢ Various companies have some forms of EVs, but no

distinct positioning

Power of Buyers (Low-Medium)➢ Limit of supply➢Differentiated product, but not necessity➢Industry not able to forward integrate➢Minimally affected by gas price and economyThreat of Substitutes (High)

➢Regular gas cars➢Lower price, similar functionality➢Example: bus, bike, walking, cab, Uber, train

Five Forces: Electric Vehicle IndustryImportant

Trends & Dynamics (examples)

Impact on 5 Forces•Rivalry•Buyer•Substitute

•BTE•Supplier•Power

Total Impact on Industry Π

•Trend #1 – Regulation new laws encourage green environment

• Trend #2 – Technology new battery technology breakthrough

Five Forces: Electric Vehicle Industry (cont.)Trends & changes effect on industry structure and profitability

GM’s Advantage:• Current buyer base• Existing supply chain network• Brand reputation• Large R&D capital

Therefore, GM is likely to outperform industry average.

Competitive Positioning and Differentiation

Cost

High

High Low

Low

Diffe

renti

ation

TeslaGM2

Nissan

ToyotaGM1

Nar

row

B

road

Cost Differentiation

Tesla

GM2

GM1

GM (Currently):• Low-Middle Cost• High-Narrow Market ScopeGM (Goal):• Increase the cost, moderately• Broaden the Market ScopeTesla• Very Expensive, & Few Models• Narrow Market, by cost and regulation

GM (Currently):• Far from Productivity Frontier• Low-Middle costGM (Goal):• Move to Frontier in

Technology/Distribution• Increase costTesla• Very Expensive, Differentiated• Close to Frontier, limited by

Distribution

Steering GM in the Right DirectionGM has many options for building EV cars, our recommendations are designed to:• Empower Change• Build Strategic Advantage• Capitalize on existing strengths• Mitigate weaknesses

The BIG decision is: Hydrogen Car, Electric Car, or Do Nothing

Electric CarGMs

Options Hydrogen Car

Do Nothing

Be an imitator

Be an innovator

Driving to a RecommendationPROBLEM: Current EV technology

–Many commuters drive 100+ miles per day–EVs have half the range of comparable fossil fuel vehicles, at best

–Minimum charging time is 30 min. for 170 miles using Tesla Supercharge system

SOLUTION: GM needs EV car technology that can run LONGER than EV cars now and charge FASTER

Revving up R&D - Show me the $$• Currently GM spends about

$200m over three years, a fraction of its $8bn R&D budget on EV research– Tesla spends approximately

$200m per quarter – Nissan has invested more

than $5bn on EV research.• Increase to $400m per quarter

in Year 1 to catch up and $200m per quarter after to stay competitive

Option One: H2GO

• Hydrogen cars have been heralded as the next step in the green car industry.

• Higher range than industry alternatives

• Cleaner than other fuels• Existing GM-Honda

partnership can be leveraged to be a first mover with this technology

Productivity Frontier representing traditional vehicles (in red) and Hydrogen powered vehicles (in blue)

Option Two: FluidChargeTM

• Introduce GM FluidChargeTM vehicles–Charged fluid is pumped in to replace discharged fluid

–Ranges expected to be 500+ miles–Similar pumping times to gas or diesel–Option to recharge using conventional EV charging systems

–Option for Fuel Stations to recycle waste charging fluid through recharging system.

Directions to Reach our Destination• Create an independent R&D lab to rapidly mature current

research• Establish a test market of Texan cities and the major

Interstates that connect them–Dallas, Austin, Houston

•Complementary FluidChargeTM pumps in existing GM dealerships

–Allows for data collection to feed nation-wide release–Builds customer service through tech interactions–Builds trust of dealerships by showing commitment/investment

•Build good will with consumers through free service period–Use service appointments to gather additional diagnostic info

¿Why Invest in FluidChargeTM?

• FluidChargeTM puts GM at the forefront of EV technology

• FluidChargeTM can be produced without the use of fossil fuels

• FluidChargeTM is reusable and more environmentally friendly

• FluidChargeTM will also have a better impact on CAFE ratings for the GM fleet

VRIO: AnalysisValuable: ✔ Being the only company with this technology would be a huge differentiator and yields a greater competitive advantage instead of working with existing battery tech.

Rare: ✔ Still in early stages of research/development in academia and so far only viable in a lab

Costly to imitate: ✔ Quite difficult for small companies to raise enough for research and resources to mass produce.

Organized to capture value: ✔ Breaking out R&D to a physically separate location, then using existing dealership network to deliver to consumers yields Competitive Advantage.