How to Successfully Manage the Transition into the Battery Electric Vehicle Market. A Comparison of Pricing Strategies in Developed and Emerging Markets

Bachelor Thesis , 2023 , 103 Pages , Grade: 1,0

Business economics - Business Management, Corporate Governance

In the present years, many established automakers find themselves in the transition from internal combustion engine vehicles to electric vehicles. Climate change is a growing concern in society, so car manufacturers try to do their part to combat it. As of today, the most promising environmentally friendly option is the battery electric vehicle, so many expect it to dominate the markets in a few years. However, this transition brings many fundamental questions, one of them being the pricing strategy. Elevated production costs, government intervention, and very dynamic competition make the companies face a situation they have not faced before, so, this investigation tries to guide them by comparing the three most used strategies: penetration pricing, price skimming, and a cost-plus strategy.

I used a survey in combination with information from the literature to assess the effectiveness of each of the pricing strategies. The results have been analyzed for both emerging and developing markets using the examples of Germany and Mexico, but only small systematical differences could be identified. As the results show, neither penetration nor a skimming strategy is promising. In the case of the penetration strategy, companies would have to sell cars significantly below production costs, and once they increase the prices to recover financial losses, clients would flee to other brands due to a high demand elasticity and low brand loyalty. For the price skimming strategy, it was found that it is very hard to generate a solid initial sales volume. Thus, companies sticking with the simple cost-plus strategy are most likely to succeed.

Inhaltsverzeichnis (Table of Contents)

• Abstract
• 1 Introduction
• 1.1 Problem statement
• 1.1.1 The need for electrification in the passenger vehicle business
• 1.1.2 Different types of electric vehicles (EVs)
• 1.1.2.1 The battery electric vehicle (BEV)
• 1.1.2.2 The hybrid electric vehicle (HEV)
• 1.1.2.3 The plug-in hybrid electric vehicle (PHEV)
• 1.1.2.4 The fuel cell electric vehicles (FCEV)
• 1.1.3 The alternative: E-fuels
• 1.1.4 The transition in the automotive sector
• 1.2 General objective
• 1.3 Specific objectives
• 1.4 Justification
• 1.5 Scope and limitations of this work
• 1.6 Overview of the structure
• 2 Literature review
• 2.1 Factors influencing the pricing strategies
• 2.1.1 Government intervention
• 2.1.1.1 Purchase subsidies
• 2.1.1.2 Tax reduction for BEVs and tax increase for ICEVS
• 2.1.1.3 ICE prohibition and emission standards
• 2.1.1.4 Other government policies and incentives
• 2.1.2 Production cost
• 2.1.2.1 Battery pack cost
• 2.1.2.2 Other cost factors
• 2.1.3 Competition
• 2.1.3.1 Competition from ICEVs
• 2.1.3.2 Competition from FCEVs
• 2.1.3.3 Competition from HEVs
• 2.1.3.4 Competition within the BEV sector
• 2.1.4 Consumer characteristics and attitudes
• 2.1.4.1 BEV consumer profil
• 2.1.4.2 Environmental concern
• 2.1.4.3 Consumer attitudes
• 2.1.4.4 Consumer education and primary demand
• 2.1.5 Marketing activities
• 2.1.5.1 Product design and features
• 2.1.5.2 Distribution
• 2.1.5.3 Promotion
• 2.2 Pricing strategies used in the BEV sector
• 2.2.1 BEV price premium
• 2.2.2 Tesla's pricing strategy
• 2.2.3 Other start-up's pricing strategies
• 2.2.4 Established brand's pricing strategies
• 2.2.5 Price forecasts
• 2.3 Influences of pricing strategies on the businesses
• 2.3.1 Pricing influences on the demand and offer
• 2.3.2 Pricing influences on the profitability
• 2.4 Conclusion of the literature review
• 2.5 Hypotheses for the investigation
• 3 Methodology
• 3.1 Objective of the research
• 3.2 Decision to investigate the consumer perspective
• 3.3 Decision to use a quantitative approach
• 3.4 Differentiation between emerging and developed economies
• 3.5 Size of the target group in Mexico and Germany
• 3.6 Sample size and characteristics
• 3.7 Method of data collection
• 3.8 Statistical method for the data analysis
• 4 Results
• 4.1 Results per question
• 4.1.1 Results question two
• 4.1.2 Results question three
• 4.1.3 Results question four
• 4.1.4 Results question five
• 4.1.5 Results question six
• 4.1.6 Results question seven
• 4.1.7 Results question eight
• 4.1.8 Results question nine
• 4.2 Statistical Analysis in IBM SPSS Statistics
• 4.2.1 Results question two
• 4.2.2 Results question three
• 4.2.3 Results question four
• 4.2.4 Results question five
• 4.2.5 Results question six
• 4.2.6 Results question seven
• 4.2.7 Results question eight
• 4.2.8 Results question nine

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This work aims to analyze the pricing strategies used by companies in the battery electric vehicle (BEV) market, comparing their approaches in developed and emerging economies. It specifically investigates the impact of government intervention, production costs, competition, consumer characteristics and attitudes, and marketing activities on BEV pricing.

• The need for electrification in the passenger vehicle business
• Pricing strategies for BEVs in developed and emerging markets
• The role of government intervention in shaping BEV pricing
• The impact of consumer attitudes and preferences on BEV pricing
• The influence of competition on BEV pricing strategies

Zusammenfassung der Kapitel (Chapter Summaries)

The introduction lays out the problem statement, highlighting the need for electrification in the passenger vehicle business. It defines different types of electric vehicles, including the BEV, HEV, PHEV, and FCEV, and explores the transition in the automotive sector. The chapter outlines the general and specific objectives of the study, justifying its significance and defining its scope and limitations. Finally, it provides an overview of the work's structure.

The literature review delves into the factors influencing BEV pricing strategies. It examines government intervention, including purchase subsidies, tax reductions for BEVs, and ICE prohibition, as well as production costs, particularly the battery pack cost. Competition from ICEVs, FCEVs, HEVs, and other BEVs is also discussed. The chapter explores consumer characteristics and attitudes, including BEV consumer profiles, environmental concerns, and consumer education. Finally, it explores marketing activities such as product design, distribution, and promotion, and analyzes various pricing strategies used by BEV manufacturers.

The methodology chapter outlines the research objectives, justifying the decision to focus on consumer perspectives and employing a quantitative approach. It differentiates between emerging and developed economies, focusing on Mexico and Germany, and explains the sample size and characteristics. The chapter details the method of data collection and the statistical methods used for data analysis.

The results chapter presents findings from the data analysis. It includes results per question, covering different aspects related to consumer perceptions, attitudes, and willingness to purchase BEVs. The chapter also presents statistical analysis in IBM SPSS Statistics, providing further insights into the data.

Schlüsselwörter (Keywords)

The primary keywords and focus topics of this work include: battery electric vehicle (BEV), pricing strategies, developed markets, emerging markets, government intervention, consumer behavior, competition, environmental concerns, and marketing activities.

• College: University of the Americas Puebla
• Grade: 1,0
• Author: Tim Tegtmeyer (Author)
• Publication Year: 2023
• Pages: 103
• Catalog Number: V1387633
• ISBN (PDF): 9783346936035
• ISBN (Book): 9783346937728
• Language: English
• Tags: Electric vehicles, electromobility, automotive industry, pricing strategy, corporate strategy