Impact of Electric Vehicles on the Automotive Industry in Europe

This report analyzes the impact of electric vehicles on the automotive industry in Europe, including external forces, organizational changes, and new business opportunities. It discusses the favorable political and environmental factors, as well as the challenges faced by the industry. The report also explores the changes in the value chain and the potential for growth in the market.

Global Business
Environment-1

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
PART 1............................................................................................................................................3
External Forces............................................................................................................................3
PART 2............................................................................................................................................6
New Opportunities.......................................................................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Electric vehicles (EV) came as revolution in automotive industry and became answers to
many problems concerned with automobiles. Automotive industry where internal combustion
engine was dominant industry has started to diversify its product portfolio. Almost every
automobile industry is engaged in developing electric vehicles and while this premium car maker
Volvo has announced electrification of its cars as its core of its future business. The article
“Electric vehicles on Europe: gearing up for a new phase?” is also based on electric vehicles and
contains discussion about electric vehicles in Europe. This report will carry out discussion and
analysis of forces which affect electric vehicles and what organisational changes will the
industry have to involve. Another part of the report will include discussion over new
opportunities which are available to automotive industry in for of electric vehicles and which
business and part of the business will discontinue after adapting electrification of its vehicles.
MAIN BODY
PART 1
External Forces
Pestle Analysis
Political- Political factor for electric vehicles is completely favourable and this is also an
opportunity for the industry that they can get support from the government. In this government
has proposed directive for alternative fuel infrastructure (Liao, Molin and van Wee, 2017).
Support of government for EV is not limited to infrastructure development to its varying degree
government is promoting EV across Europe through subsidies and other benefits.
Economic- Cost of EV is also favourable as cost of battery has dropped this will prove cost
efficient for the EV (Capuder and et.al., 2020). Increase in manufacturing volume has also made
favourable impact on the cost and economic aspect of EV.

Social- This factors is concerned with society and consumers who are going to use EV. In
Europe adaptation of EV started from 2013 and expanded in 2014 (Achinas and et.al., 2019).
Later this remain restricted to some selected customer segments in selected countries. Some of
the reasons are high cost, range anxiety and lack of awareness though there are segments of
customers who are willing to adapt EV instead of these issues.
Technological- Major role played in development and expansion of EV has been played by
Technology. Based on Li-ion technology these vehicles include battery and these are its main
component small and large battery options are available for EV (Chan and et.al., 2020).
Infrastructure are also changing accordingly and in several European countries public sector has
taken lead so that batteries can be charged.
Legal- Some of the issues which can be in this factor are related to safety of intellectual property
rights and copyright issue may also arise (Farhan and Tech, 2016). All the automotive companies
are entering into the business of EV and competition in the companies might lead to such issues.
Environmental- EV has most favourable impact on the in form of reduction in carbon emission
and reduction of NOx is one of the key reasons that EV are being supported and promoted by the
European countries (Ezzatul and et.al., 2019).
Porter’s Five Forces-
Threat of New Entry
Regarding EV in Europe new entries can be of those automotive companies which have
not started its operations in EV. Other than this entry of new firm in EV industry is difficult
because of requirement of capital and investment.
Threat of Substitute Product
This is threat and one of the biggest factors affecting success of EV. Its substitute is
vehicles with internal combustion engine. They are being used by consumers from a long time
and they are also conventional and this is why even after several benefits of EV its success is
limited (Weldon, Morrissey and O’Mahony, 2018). Other than selected segments of customers
Bargaining Power of Buyers

Bargaining power of buyer can be high because of limited buyers but characteristics and
cost of products does not get affected by the bargaining power of buyers. Bargaining power of
buyers is low in relation with EV in Europe.
Bargaining Power of Suppliers
This is concerned with power of suppliers and there are limited suppliers hence their
power is high. High cost of batteries is also a result of high bargaining power of suppliers.
Industry Rivalry
Regarding industrial rivalry EV has become new standard for rivalry among automotive
companies and almost all automotive companies are willing and practicing to bring their model
of EV (Morrison, Stevens and Joseck, 2018). This is why rivalry among existing automotive
companies is very strong. In this automotive companies Volvo can become strong as its new
strategy is electrification as core of its business.
Above analysis of the industry suggests that some of the factors are attractive in the EV
industry whereas some of the factors are not attractive and in this factors position of Volvo is
strong and this can get stronger in future.
Organisational Changes
EV has brought several changes in organisation and its practices. First and foremost
changes are in strategy and objective of the organisations. Changes occurred in supply chain of
the industry and this became reason for changes in operations of the industry. Long term vision
of the automotive industries has also changes. Volvo is most suitable example of this is that in
future EV will be centre and core of its business. This will also affect other organisations
because of increasing popularity of the electric vehicles. EV has also changed area of focus in
automotive industry which is also a part of organisational change because earlier focus of
organisation was providing capacity through its engine and now this focus has shifted to
improving and enhancing performance of batteries in the car.
Reasons of Organisational Changes

Organisational changes have occurred because of changes in the objective and strategy of
the organisation. Organisational activities are strategies are directed and completed according to
its objectives ad strategy and this is why all organisational processes get changed.
Changes in organisation because of EV have changed because of changes in its supply chain
which involves all the important activities of the organisation regarding manufacturing and
supply of the organisation (Masiero and et.al., 2017). External factors which are important
influencer for organisational processes are have also changed from earlier automotive industry to
EV automotive industry and this is also important reason for organisation change.
There are various external factors which affect EV business and according to nature EV
has several factors which are favourable for EV and can contribute to success of the EV in
future. This includes growth potential for the EV in automotive industry.
PART 2
New Opportunities
Porter’s Value Chain
This model involves all the activities that business involves in order to provide output to
its customers and potential customers. These activities mainly are divided in primary and
supportive/secondary activities.
Primary activities are;
Inbound Logistics- This involves acquisition of input by the industry. This means that industry
acquires its input which will be converted into output and final material through operational
activities.
Operational Activities- This is the operation and process through which input is converted into
output (Krommes and Schmidt, 2017). In Volvo and EV industry this means developing vehicle
through the changed process. From various different parts a vehicle is developed and this is the
process where input becomes output.

Outbound Logistics- This means that EV which has become output through operations process.
They are supplied and distributed to different distribution places from where customers can get
the final product.
Marketing and Sales- In this activity EV is marketed which means that product is promoted and
customers are attracted to buy the vehicles. In the sales activity ownership of the car is
transferred from the car company to customer.
Service- This is last primary activity in value chain because this service means after sale service.
This includes activities like ensuring quality of the products after it has been sold and this in
relation with car includes repair and maintenance of the car after it has been sold. This plays
important role in car industry. This is positive factor in EV as this requires less maintenance and
after sale service than ICEs.
Secondary Activities
Firm Infrastructure- This means infrastructure of the firm which facilitate operations of the
activities (Rohr and et.al., 2017). This involves design of the organisations and organisation of its
resources so that activities can be coordinated accordingly. Charging infrastructure are one of the
important requirement for EV business.
Human Resource Management- This means management of activities so that all the activities can
be carried out effectively which is cost efficient and time effective. Related to EV firms require
effective human resources.
Technology Development- This means technology which is used in organisation for the
completion of operation. Technology for production activities supportive activities and also for
supplying the products to the customers.
Procurement- This means effective manners of the procurement. Procurement refers to
acquisition of resources. EV will require effective procurement of batteries.
EV has affected complete value chain of the automotive industry and major changes
which have occurred in this are in operational activities and technology development of the
company.

New Business opportunities
EV has opened several new opportunities for automotive industry. They have increased
option for their customers in form of the selection before they buy cars. There are various
benefits of this car and companies have opportunities that they promote this type of cars so that
they can attract more customers for electric car (Brunet and Ponssard, 2017). This will not only
contribute in the business of the organisations but will also contribute to important objective of
the electric Car which is reduction in carbon emission and providing a environment friendly
solution for the cars.
Electric vehicles are providing opportunities in several forms which are;
Expansion of market- This is one of the opportunities which will be provided by EV. This will
increase market for automotive companies as they are able to cater more customers and their
specific needs. They will enable people who do not own car because of its impact on the
environment. One of the elements in this is that presently market for EV is very limited and this
presents a wide scope for growth for automotive industry in Europe. The growth which increased
in 2013 and 2014 in demand of EV can be penetrated and they can be provided with increased
and enhanced benefits to attract more customers.
Battery Technology- Batteries play most important role in success of the EV and industry can
focus on the battery technology and this will widen the scope of success for the automotive
industry. Innovation and improvement in battery technology which can provide solution for
range anxiety of the people will contribute significantly in growth of EV.
Business to be discontinued
Projected growth and acceptance of EV will definitely affect there are several businesses
which might get discontinued though business can continue but they will require adopting
changes according to the changes in centre business activities (Masiero and et.al., 2017). EV
where suggests growth of battery businesses it will affect the business of fuel. Fuel business is a
significant contributor of the economy and this will get affected and when EV becomes
mainstream vehicles they might get discontinued. This will discontinue existing businesses of
automotive industry. Volvo has strategy to shift its focus on electric vehicles which will

discontinue its existing business. This will not discontinue its business but will discontinue
existing operations of the company. This will also affect sales and service business negatively
because electric vehicles need limited and less maintenance compared to existing internal
combustion engine vehicles.
This suggests that EV has changes in various elements in automotive industry and also
possess various opportunities (Morrison, Stevens and Joseck, 2018). These are in form of
expansion and improvement in battery technology. But this will also lead to discontinuation of
several businesses which are existing ICE vehicles, service and maintenance etc.
CONCLUSION
On the basis of above analysis it can be concluded that EV which has proved to be an
revolution in automotive industry does not have expected growth because of factors like lack of
awareness etc. this report included of various factors affecting EV and analysis suggests that
most of the factors are favourable for EV and can contribute for its growth. Political,
environment factors are most favourable among them. Later on the basis of competitive analysis
it can be said that overall EV industry is attractive for automotive organisations. Later value
chain was discussed and as nature of the products gets changed this impact all the relevant
activities and hence value chain activities has also been affected by the EV industry.

REFERENCES
Books and Journals
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