How can the start-ups compete with the incumbents in the automotive market?

• Autor(a) principal: Pinto, José Hugo Fernandes Casal Ferreira
• Data de Publicação: 2020
• Tipo de documento: Dissertação
• Idioma: eng
• Título da fonte: Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)
• Texto Completo: http://hdl.handle.net/10400.14/32053
• topic: Electric vehicle; Incumbents; Start-ups; Automotive market; First mover; Laggard; Automóveis elétricos; Incumbentes; Indústria automóvel; Pioneiras; Domínio/Área Científica::Ciências Sociais::Economia e Gestão

This master thesis addresses how start-ups can become competitive in the actual EV-changing automotive market as well as what incumbents should do to adapt themselves. In fact, there are plenty of researches and published articles made towards the changing to EV’s from the automotive industry. A lot of authors have approached the incentives for this change, the consumer’s expectation, the penetration growth rates of EV’s in the market, among other phenomena. Although, no one has ever approached the fact that this industry change can possibly allow start-ups to step in and take a position on the market, as well as what strategies should these companies take in such a competitive environment. In order to study this matter, the author analyzed several strategies from market incumbents taken towards EV adoption, collected business paths of certain companies that were recent start-ups in the market and did an unprecedented empirical analysis of the automotive market through a linear regression that explains the financial success of an automotive company through nine explanatory variables related with EV adoption. The research and the empirical analysis revealed that incumbent companies distinguish themselves between the ones that have adopted a first mover approach and the ones who took a laggard strategy towards the EV’s. The first ones tend to spend more resources in R&D as well as with Capex expenses, but they benefit by being able to produce their own batteries and powertrain equipment which allow them to become independent from other companies, supply them with their assets and knowledge and produce native EV’s who present financial advantages in relation to non-native ones. The second ones have such a market position that allows them to take a laggard approach, not investing resources on R&D and Capex expenses as the first movers did. These companies tend to take advantage of the path left behind by the first movers and only invest in this market after making sure that there is enough demand to fulfill their supplies. Either ones or the others benefit from the formation of partnerships between each other and with with other companies from different complementary industries, as well as from incentives by the governments related to EV’s consumption. For start-ups it was made clear that they needed to find external help either by incentives of the government or other private investors through events like crowdfunding campaigns in order to support the first years of investment. It was also discovered that start-ups, like the incumbent companies, also benefit from partnerships and are almost obligated to do them if initially they don’t have the necessary engineering knowledge or resources to develop own equipment. Dealing with start-ups is a very delicate process and the empirical cases from companies who were recent start-ups and become succeeded as well as the coefficients presented by the linear regression helped a lot drawing the author’s perspective of the “ideal” market strategy approach to them.