My Motors

Executive Summary

The Motors Company designs, manufactures and sell self-driving vehicles. The Motor X is the first production-ready self-driven car to integrate zero petroleum consumption, high energy efficiency, and great driving efficiency. The company is situated at Palo Alto, California. The entry of Motor Company into the automobile market has demonstrated the viability of its technology with early adopters being able to test the first models.

The Motor X car is targeted at the general public with its advanced technology making it one of the safest models to drive. Early tests have indicated it can be used by people suffering from disabilities and partial paralysis. All the same it is being marketed as a general purpose, high-performance autonomous vehicle. Motor Company is currently designing and building new models to move into mass market as soon as possible, chief along these lines is the Motor X-GT slated for a Q3 2016 release. Along with these, Motor Company is building the software responsible for self-driving, while investment in a power train factory and our advanced software technology puts us in a position to mass produce Motor X.

 The flagship model Motor X, the company’s first product, has been hailed as the successor to Tesla’s Model S. With an acceleration 0-60MPH in 4.5 seconds and an equivalent of over 320 miles (327MPG) on a single gallon, Motor X is the first Federally Certified self-driving car. Advanced monitoring software makes it a safe option to ferry passengers. Motor X has received great acclaim in the media and press reports such as Car and Driver, AutoWeek, and Road and Trend. As a result of Motor X successes, other industry players like Google, Apple and Tesla are branching into making self-driving cars.

Motor Company is managed by John Smith, a co-founder and CEO and Will Black, the CTO and head of the software division. In making the model, Motor X, and all its future siblings, Motor Company aims at improving the road safety by introducing safe, self-driven and commercially viable cars for everyday use.

Motor Company’s vision is to build a high performance and energy efficient electric car that will be safe and can self-drive. The goal is to make a car that offers considerable energy savings and the ability to drive autonomously to and from destinations without compromising safety or energy efficiency. Motor Company’s stated vision is to offer an exciting user experience by building an energy efficient car that is affordable as well.

The project seeks to fund the expansion of the manufacturing facility to enable us to improve on our current average of 2140 units shipped per month to the more viable average of 12000 units. The initial investment was through a Department of Energy grant as well as private equity. Through the project, Motor Company aims at further commercialization of company technology. The project will be divided into two divisions. The first will be responsible for developing and improving the software interface to make our cars better and safer to drive while the second will be responsible for making the power train for the different models. Initially, the Model X will be powered by a hybrid that has both a conventional engine and electric motor for power. Research is currently underway to integrate a purely electric engine into the design that is projected to increase the mileage by 43% while utilizing clean energy.

Project Description

Motor Company is most well-known for Motor X, which it currently develops and markets. However, the mission of Motor Company is the design, improvement, development and distribution of all-electric, safe and self-driven automobiles. Currently, Motor X, our premier offering is the lowest cost and most efficient alternative propulsion automobile in the market. That it is self-driven and is production ready, three-year ahead of our nearest competitors (Callaway, 2015), testifies to its viability.

Based on current market figures and given the industry growth outlook, the new factory aims at increasing the manufacturing from the current 2140 units per month to just over 12000. With such numbers, the Motor X will become the first mass-produced and mass-marketed self-driven car in the market. The software project in turn is meant to foster research into how to further improve the perception software that drives the models, making it even safer, more efficient and user-friendly. Further, the software division aims at attuning the software to be more responsive to driver handicaps and make it more intelligent in its handling of traffic obstacles.

Prior Knowledge

This proposal assumes prior knowledge of the current state of the electric automobile industry by the reader. It also assumes the reader has some general information on the major industry players in the automotive industry.

Statement of Need and Importance

Motor Company provides an efficient and cost-effective way to prevent and reduce the number of road accidents on the road. Driving errors account for 90 percent of the accidents on the road (). The delegation of the driving experience to a computer system would eliminate a large percentage of accidents relating to human errors. Computers can employ advanced algorithms to compute and determine the presence of obstacles, safe stopping distance, and distance from other vehicles (Narla, 2013).

The computer system is also able to monitor simultaneously a large number of independent variables and adjust the course of action appropriately. The data collected from the various sensors would decrease the chances of car accidents dramatically. The Motor X aims at alleviating the effects of human error as a cause of road crashes. Through available sensors, advanced algorithms and tracking systems, the cases of road accidents caused by human errors can be eliminated.

Current Target Market

Target
Targeting then involves specifically marketing to a certain segment (Armstrong, 2011). The current target market for the Motor X is persons earning $120000 a year. The target customers are the tech-savvy business executive that are environment conscious and want to save up on gas costs. The car is targeted at the wealthy and the upper middle-class segment.

Segment

Segmentation reflects diversity in consumer demand (Smith, 1956). The segment that the Motor X targets are majorly the export segment which accounts for 58.2% of the market, with 90% of these headed to the USA. A large cross-section of the cars will be destined for car dealerships across the country (18.2%) while a considerable portion (14.2%) will land in the hands of wholesalers. Since our marketing strategy does not provide for the inclusion of dealers, the market segment usually reserved for dealers and wholesalers will be offloaded through our direct stores. Demand for self-driven vehicles is high in the export market owing to the potential for decreasing road carnage.

Positioning

The Motor X is positioned as an entry-level luxury sedan with the benefit of being self-driving. The car is targeted at the executive who wants to commute from point to point with minimal effort, and the self-driving capabilities presents just that reality. High fuel costs predict a shift towards more energy efficient vehicles and Motor Company strategy is to position itself to take advantage of this.

Market Size and Growth Rate

            Current automotive industry figures point to an annual growth rate of 1.9% over the next five years to 2020, a rate that will account for the increase in revenue to 38.4%. The high costs of fuel is expected to increase demand for smaller and fuel-efficient vehicles. Consequently, Motor X is working towards the creation of electronic vehicles. Market figures for the hybrid segment are expected to intensify, with an expected growth rate of 1.7% annually.

The current market size for Motor X in the electric vehicle segment holds steady at 13%. With the introduction of a more models to cater to the low-income demographic, the market size is set to increase. Current market size is determined by the total sales as a percentage of all electronic vehicles sold.

Figure 1. Sales by brand

Figure 2. Sales by Educational level

Figure 3. Sales by Income Bracket

Customer Buying Decisions

In the Electric Vehicle segment, most customers rely on information present in the media to make their final decision on what car to buy. The initial buying step involves the identification of the need for a car, in Motor X case, that would be a self-driving car. The customer then searches for information on the particular car he wants. After that, he makes a comparison between the different alternatives and may use automobile magazines and websites to find reviews and ratings for the different models. Next, the customer reaches a decision and opts for one of the alternatives. Finally, the consumer evaluates the purchase decision to see how well it satisfies his need.

Influencers on Purchase Process

Factors that influence buying decisions include situational or environmental factors like how many competitors are present in the market. The greatest influencing factor in buyer decision is the price of oil. Within the market segment where the resources allow the buying of the product, individual factors like educational levels, taste, personality, and age play an important role.

Due to the Motor X position as the first self-driven electric car, it faces tiny competition from the other vehicles. At the moment, consumer reaction can be said to be apprehensive as the small number of produced units are mostly taken up by collectors. As mass production and mass marketing are realized, and other car manufacturers come into the fray, a clear differentiation and marketing strategy will be required.

Value proposition

The Motor X offers safety, unmatched performance, energy savings and self-driving capabilities all in one package. Featuring an acceleration of 0-60MPH in 4.5 seconds, it easily qualifies as a performance vehicle. Not only that, the Motor X is energy efficient, at 327 Miles per charge, it is the most efficient self-driven car in the market. The Motor X offers:

• A high-performance engine 360Bhp, 0-60MPH in 4.5 seconds.
• Energy savings and an efficient engine that offers 327 miles to the gallon.
• 5-star safety rating in all categories of the (NHTSA).
• Self-driving with traffic-aware driving and an integrated host safety features.

Motor X also comes with an extended three year or 150000 Mile warranty.

Industry Characteristics

Motor X operates in the automobile industry, or more specifically in the self-driven vehicle industry. The primary market for Canadian manufactured vehicles is the USA, and demand for vehicles is in step with the requirements in the USA. Investment in the global automotive industry is expected to increase, as demand for vehicles continues to rise. Local operators are expected to experience stronger investment due to their knowledgeable workforce and industry infrastructure gains, as well as a reputation for quality.

Electric vehicles are projected to account for 3% of all vehicle sales in the US by 2020 (Navigant Research, 2014). Motor Company is concerned with delivering fully electric vehicles that could perform at the same levels or at greater levels than those cars with internal combustion engines by this time. Motor X accounts for 9% of the market share with only four years in the market. Motor X is even more specialized as it is the only car with self-driving capabilities, a factor that will add to its current market share.

Competitors

Competition in the Canadian automotive industry market is by vehicle price, styling, reliability, fuel economy, and utility. To maintain consumer interest, a periodic redesign is necessary since recently redesigned vehicles have been demonstrated to outperform others in the short term. Reliability helps to assuage consumer concerns, and quality control procedures and superior manufacturing equipment play a key role in this. However, the one factor looked at the most is the price.

The main competitors to Motor X are Toyota, GM, Chrysler, and Honda. These four companies account for 80% of the market share for automobiles. The major direct competitor with regard to market readiness for the introduction of a self-driving automobile is Toyota. The strengths of the Toyota group, which leads the pack, lies in the fact that it years of experience in the automobile market and has developed a great deal of innovation and technological advancement through a process of continuous improvement and advancement in its Research & Development. The $30 billion Brand is known for its innovativeness, use of green technology, and good customer service support making it very well placed to take advantage of these aspects in making self-driven cars. Its weaknesses lie in having had some recalls recently, its lack of strategic partnerships and weak presence in some market segments. Its opportunities lie in developing strategic partnerships and adapting to changing customer needs while still taking advantage of the demand for green vehicles. The company is threatened by increasing fuel prices and changing emission standards as well as intense competition from the American car manufacturers.

PEST Analysis

Motor X has benefited from a government incentives and tax breaks that encourage owning electric vehicles and subsidies to support R&D for alternative cars technologies. Motor X has benefited from the increase in fuel prices. Economic issues like unemployment have, however, caused a reduction in consumer spending. Motor X has benefited from the increased drive to using eco-friendly products as electric cars are energy efficient. Motor X suffers from a high cost of Research & Development that is meant to improve efficiency and quality of vehicles. Big automakers are also coming into the self-driven car industry. A positive though is there is an increase of green consumption and a developing interest in sustainable development.

Marketing Strategy

Motor Company strengths lie in it being the first company to develop a self-driving car (Robinson, 1984. Our weaknesses lie in our dependence on proprietary technology from one of our main competitors for the creation of drive trains, and the lack of differentiation in our product offering. We are in the process of addressing both these concerns. The opportunities lie in having patents on the first self-driven electric car and the rising costs of oil which present a major plus for consumers to move over to more energy efficient vehicles. Threats emerge from the entry of other automakers into the self-driven car industry. Barriers to entry into the self-driven car industry have, however, limited new entrants to only the major manufacturers.

Barriers to entry to the market are centered primarily on the industry’s moderate concentration level, its high level of capital requirements and its rapid technological change. Motor Company, through Motor X, offers contact with customers will be through online sales, company-owned stores and test drives. With the expectation of industry establishments rising at an annualized rate of 1.7% through to 2020, the adoption of a direct sales strategy over the traditional one gives Motor X ultimate control over the marketing strategy (Paczkowski & Kotler, 1991).

Product Offering

The core considerations when buying a car are the fuel economy, overall costs of ownership, technology advancements, safety rating and the size and design (Markoff, 2010; Narla, 2013). Some customers also look for the engine power, while space and upholstery also influence some of their decisions. The Motor X is the only production-ready self-driven vehicle in the market at the moment, and with a fuel economy of 320 miles to the gallon, one of the most efficient cars on the market as well. It has the equivalent of 30Bhp and features an exceptional performance (0-60 in 4.5secs). What sets it apart, and contributes to it being the only vehicle with self-driving capabilities on the road, is having driving assist and a plethora of safety features. The Motor X received the highest safety rating from the National Transport Safety Board and has also earned an overall 5 out of 5 in the safety ratings of NHTSA, the transport safety authority for its primary market USA.

Pricing

Price is the one element that produces revenue; the others produce costs (Kotler & Keller, 2009). Motor X is a great product that offers customers value for money. Projections point to a consumer recovering initial investments over savings on the price of gas in 2 years. Motor X will be competitively priced at $60000. The pricing reflects the company’s strategy of starting high and working our way down as we introduce other models and begin mass production and mass marketing. The Motor X features great performance through advanced technology. The base model starts at $60000 with additional bundles like climate control, upholstery, and trims being offered at a premium. The pricing reflects the premium quality that the Motor X offers to consumers.

Promotions

Promotion entails raising awareness of your target market on your product offering (Peres, Muller & Mahajan, 2010). Motor Company does not have any promotional or high-low pricing strategies at the moment. Constant prices eliminate week-to-week price uncertainty and can be contrasted to the “high-low” pricing of promotion-oriented competitors (Kotler & Armstrong, 2006). Quality is an important feature, and consumers are offered premium quality at a higher price. The benefit of offering quality to the consumer is it will save them money in the long run, offsetting the need for promotions. All the same, an intensive advertisement strategy is employed that aims to make consumers aware of our product offering. Extensive use of social media platforms has been implemented as well to ensure brand visibility.

Placement

Placement refers to the process of making a product accessible for consumption (Goi, 2009). Motor X will be sold through Motor Company stores and online. Currently, there are 12 stores within the country, and 18 in the USA. Motor X units will be sold directly out of these store locations. Customization of the car is also possible through choosing the desired bundle packages online. At the moment, Motor X has no plans to sell its franchise to already established car dealership and are content to sell our product directly to customers. Customers from states that have made it illegal for car companies to sell their cars directly to consumers will benefit from sales through our interactive and secure website.

Other Factors

The Motor X offers a discount to military personnel of up to 12%. This is in recognition of our service men and women’s contribution to the country. This, together with a preference for employing military personnel, ensures we do our part to appreciate these service men and women. Active duty members get a 12% discount on the Motor X while veterans are entitled to 8% discount. The key to our success is the construction of a manufacturing plant for a hybrid-electric powertrain and lithium ion batteries. This would enable us to cut down battery costs by up to 70%, and this would go a long way towards the reduced cost vehicle entering the market. Further, Motor Company is banking on differentiating itself as an autonomous vehicle, as recent stats by most reviewers class the Motor X as a ‘boutique’ vehicle owing to its having only one model in production. Risks to the production of the Motor X stem from the introduction of similar (autonomous) vehicles by our major competitors in 2018.This presents a risk since low production capacity of Motor X threatens our market share.

Sales Forecast

Motor Company plans to reach sales of 10000 units by 2020, and 16000 units by December 2025. This will be based on sales figures for the Motor X as well as Motor X-GT, a more performance-driven model that is set for introduction in Q3 of 2016. The Motor Company also hopes that the expansion of the company’s powertrain and streamlining of software products, as well as the creation of our cheaper battery plant, will further improve our capacity.

The breakeven point for the Motor X is 3600 units per year while those of the Motor X-GT are projected at 4200 units per year. This forecast carries the assumption that Motor X will be able to reach full production capacity at its new facilities before 2018 when our closest competitor enters the market.

Financial View

The table displays comparative performance figures for the Motor Company in the next five years. These figures are based on combined sales of Motor X and Motor X-GT subject to industry demands.

Fiscal year (Jan -Dec) All values in USD	2016	2017	2018	2019	2020
Sales/Revenue	66M	153.3M	268M	210.28M	680M
Depreciation and Amortization	14M	24M	28M	34M	76.5M
Cost of Goods Sold (excluding Depreciation and Amortization)	18M	31M	65M	76M	84.3M
Cost of Goods Sold (including Depreciation and Amortization)	32M	55M	93M	110M	160.8M
Gross	34M	98.3M	175M	100.28M	519.2M

Implementation, Evaluation, and Control

Implementation is concerned with the outline of how the marketing strategy will be implemented. Strategy implementation will involve building a self-driving car, using the money this provides to expand powertrain and software side of the business, in turn increasing production capacity. The money resulting from increased sales will be used to make the car even more affordable. While doing this, emphasis should be placed on producing a self-driving car that produces zero emissions. Evaluation will take the form of applying quantifiable metrics to gauge the effectiveness and impact of the marketing strategy. This can take the form of questionnaires, surveys and market research. After that, appropriate controls can be instituted to ensure the program remains on track.

References

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