Electric Vehicles- A Boon or a Bane for the Manufacturer? How can the Supply & Demand Challenges be Dealt with?

Environmental awareness programs are filling up the explore section of every social media platform nowadays. The demand and awareness for reducing greenhouse gas emissions have become the priority for every automotive industry. An Indian automotive company acquainted electric vehicles in 2020 observing the escalation in the demand and craze for newly designed electric vehicles. Soon, the company encountered a shortage of electric vehicles which as a result disrupted the demand and supply chain of the company. The company leadership sought the services of Research Nester Private Ltd to integrate efficient supply and demand equilibrium strategies through technical and marketing innovation.

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An overview:

1

An automotive company in India ventures into the production of electric vehicles in 2018. The undying craze and demand for specialized models of electric vehicles brainstormed the company for the production of EVs.

2

The Company was not able to identify potential risks such as supply chain disruptions, and regulatory changes. This led to a stagnancy in the growth of the company.

3

By March 2022, after several failed attempts the Company’s leadership realized that it would need professional help, to devise a plan of action for estimating the future market scenario related to demand and supply. It then sought out Research Nester’s services.

4

Research Nester analysts helped the company to incorporate a strategy that enabled it to manage market dynamics and build up sales.

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The Story

The Indian company came to the forefront in 1992. The company produced automobiles since 1992 in accordance with consumer demand. The company shifted to electric vehicle production in 2018. The company experienced steady growth. However, the lack of production of microchips boiled down the supply of EVs. Moreover, the extravagant prices of lithium including other raw materials, and their limited availability impacted the company’s ability to secure a consistent and cost-effective supply of materials. This resulted in supply constraints for finished products. The preferences of the clients and the specific demands of EVs were not properly forecasted. This led to finished products of EVs and restrained the supply of the company. This major setback in the very 2nd year of the company’s new venture, made the authorities turn to Research Nester to navigate and find constructive solutions.

Our Solution:

The foremost drawback of the company was limited research on the supply chain analytics of EVs. Research Nester assisted the company with market logistics and mitigated the issues of demand and supply with their business strategy and analysis. Following were the suggestions from Research Nester analysts after a thorough supply and demand analysis:

  • Analyzing the external business environment.
  • Designing an app for purchasing and selling second-hand EVs which is affordable for new buyers.
  • Right intelligence and information on the stock of trusty suppliers.
  • Manufacturing own chips and architecture so that the company will stay connected to the supply.
  • Brainstorming the forces that affect the supply and demand patterns in the market.

By utilizing these analytical tools, the company could optimize its inventory, manage its suppliers, and figure out the current market trends to strategize its production.

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Results

A significant supply-demand variation and a very poor return on investment were faced by the company. The company grew at the rate of 35% in 2020 which eventually drained to 20% in 2021. After the end of the first quarter of 2021, Research Nester was brought into the picture to help the business stay afloat and manage sustainable growth. The analysts created a comprehensive maneuver for the company’s supply and demand business model considering its offer to suppliers, the market price of its products, the margins, and the supply chain mechanism. The prevailing demand in the market, the end-use industries with high product requirements, and the current competitive landscape were also analyzed. The top sources for supplying superior quality raw materials such as lithium can be vindicated with the partnership of other suppliers. The percentage growth reached 30% by the end of 2022 and is expected to reach 45% by the end of 2023. With a better understanding of the market mechanisms and crucial analysis of the current and future trends, the company was able to build a better market position and subsequently, profitable growth.

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Swara Keni

Head- Global Business Development

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