Supply and Demand in Electric Vehicle Industry

This report discusses the concept of demand & supply in the electric vehicle market and analyzes the change in the demand and supply of electric vehicles. It also discusses the law of demand, movement along with the demand curve and change in the demand curve with the help of appropriate diagrams. The report also compares and contrasts certain theories & models in 21st century contemporary economics with those of the 20th century and relates both to modern practices of business. The subject is economics and the college/university is not mentioned.

Supply and Demand
in Electric Vehicle
Industry

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK...............................................................................................................................................3
1.1 Discuss the law of demand, movement along with the demand curve and change in the
demand curve with the help of appropriate diagram...................................................................3
1.2 Explain the law of supply, movement with with the supply curve and also discuss change
in supply curve with suitable figures..........................................................................................6
TASK 2............................................................................................................................................9
Compare & contrast certain theories & models in 21st century contemporary economics with
those of the 20th century and relate both of to modern practices of business..........................9
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Economics is the branch of study which focuses on specific production, distribution and
transfer of wealth in the organisation. It is basically emphasis on the behaviour and interactions
of the economist and the surroundings(Narins, 2017). Demand and supply are the two wheels
which takes the company to the higher heights and also maintain the flow in the economy. Tesla
is the chosen organisation for their report, It is the an American electric vehicle & clean energy
which is based in Palo Alto, California, U.S. This is the leading auto mobile company which is
founded in July 1, 2003. this report will cover the concept of demand & supply in the particular
market and also analyse the change in the demand and the supply of the electric vehicle.
Moreover, It will analyse the theories & the concept which are present in 21st century
contemporary economics.
TASK
1.1 Discuss the law of demand, movement along with demand curve and change in the demand
curve with the help of appropriate diagram.
Demand is defined as the economic aspects which is referring to a consumer's desire for
the particular goods & services and also having capacity to pay for the given goods.
Law of demand:
As per this law, there is inverse relationship in the amount to be paid and the quantity of
the given goods & other factors remain constant(Priessner, Sposato and Hampl, 2018). It can be
said that there is change in the demand of the consumer with the change in the amount to be of
the commodity.

When the price of the goods increases from P3 to P2 then the demand for the commodity
tends to fall from OQ2 to OQ1 and when the price falls from P1 to P2 then the demand for such
goods tends to rise and the quantity demand for the goods tends to rise from Q1 to Q2. The price
of the commodity is inversely relate to the demand of the given goods as per the law of demand.
In term of Tesla, they are offering premium cars on larger segments and they are serving to loyal
customer on which there is no such impact with the change in the prices of the electric cars.
Thus, law of demand fails here as premium goods comes under the exceptions of law of demand.
Factors that are demand of the specific products are as follows:
 Price of the product: In the consideration of demand, when the prices of the commodity
increases then the demand for such goods falls and vice-versa(Moghaddam and et.al.,
2019). In context to Tesla, electric cars are the premium products in which there is so
such impact of change in prices as customer will buy the product as the higher prices also
due to their high capacity to pay for the cars.
 Price of substitutes goods: These are the commodity which can be replaced by the other
goods and accessing same level of satisfaction as due to increase in the demand of the
goods leads to have impact on the overall profits of the company. In case to Tesla, there is
no substitute for the electric cars so there is no impact of change in the amount to be paid
of related goods and so on.

 Income of the consumer: When the income of the buyer increases then the demand for
such goods also increases as there are two types of goods normal an inferior goods(Luo
and et.al., 2018). Increasing income of the consumer tends to move them towards normal
goods but in case of Tesla, electric cars are only afforded by the high class people who is
having sufficient purchasing power to buy them.
 Taste & preferences of the consumer: When the individual is having taste and
preferences of the consumer are in favour of the goods then the demand for the such
commodity tends to rise. whereas, when the taste & preferences of the buyer are not in
favour for the commodity then the demand for such goods decreases. In consideration to
Tesla, electronic cars are majorly liked by the people that can leads to increase the
demand for the cars.
 Change in future availability: It is majorly related to the supply of the goods expecting
in the future of the consumers, when there is rise in the expectations of the buyer then
there is increase in the demand of the given goods and vice-versa. In context to Tesla,
electronic car is expecting the rise in the future expectation then there will rise in the
supply of the product.
Change in demand curve:
It is defined as the change in the whole demand curve that can caused by the different
factors like change in income, taste & preferences of the consumer, change in the prices of
substitute and complementary goods. In such aspects, the demand curve for the goods will shift
to right or left.

Change in the demand demand curve is defines the overall demand of the buyer and the
curve will shift to right. On other hand, there is increase in the demand curve will shift to left,
when there is fall in the demand of the particular commodity. As per the diagram, the demand
curve D0 shift to either D1 or D2. It can be due to change in the taste & preferences, price of
substitute or complement goods, income of the consumer and future expectations.
1.2 Discuss the law of supply, movement with with the supply curve and also discuss change in
supply curve with figures.
Supply is defined as the fundamental aspects that explains the total available amount for
the particular product to their buyers. It is the amount available of the products at the given
prices so that they can sale their products in the large market.
Law of supply:
The Law of supply says that there is positive relationship among the price and the
quantity supply of the given goods. As all the factors remains constant, increase in the prices of
goods and services tends to increase the supply of the commodity (Liu and et.al., 2018). On other
hand, low prices of the commodity tends to slow down the supply of the given goods in the large
market. In context to Tesla, when the prices of the cars become more high then company will
supply more cars in order to generates higher profits. Whereas, downfall in the prices of the
electronic cars tends to have the low production of cars within the organisation.

The above figure shows that supply curve is sloping to upward as the price and the
quantity supply is having positive relationship as the prices increases their supply of the given
goods also increases. In this diagram, when the price of the commodity increases to p3 to p3 then
the supply of the goods rises to q3 to q2 as per the demand of the large market which shows the
sudden increase in the prices of the Tesla cars.
Factors that are supply of the specific products are as follows:
 Costs of production: As the organisation can supply any quantity which is giving any
level production but when the company is not having sufficient raw material or giving
lower wages to the employees by which overall supply of the commodity. In context to
Tesla, when company is not having sufficient raw material then the supply of the given
goods whereas when company is having sufficient raw material then it will increases the
overall supply of the product in the large market and they can tends to have higher
profits.
 Government Subsidies:It is the benefits or the relaxation which is being given by the
government as it helps in reducing the overall cost of commodity. With this, as the price
of the subsidies tends to reduce then the overall coast of the products also reduces. Where
as prices of subsidies increase then the supply of the goods also increases due to high
demand in the market. In context to Tesla, when the company is having low subsidies
then they increases their overall production so that they can generate higher profits.

 Technology: It is defined as the advancement and the innovation in the technology by
which company can rightly minimise their operating cost. It is the main aspects of the
business to have the updated technology so that they can meet the huge competition in
the large market. When an organisation is using new technology or making the benefits in
the market so that the supply of the cars tends to rise as more as they are meeting the
needs and wants of the potential candidates(Karmaker and et.al., 2018).
 Weather: This is the factor which can not controlled by the company it self as there is
huge impact of change in the whether conditions by which overall supply of the company
tends to fall. In context to Tesla, when favourable weather occurs then it helps in
increasing the overall supply of the electric cars in the market.
 More firms: when there are more competitors in the market who are offering same type
of products so the supply of the products tends to downfall in comparison to their rivals.
This also helps in having the major impact on the overall profitability of the business.
When there is deceases in the demand of the product then the overall supply also reduces
in the large market.
 Objectives of firms: there are companies which profit oriented or non-profits
organisation. When the firm is aiming to increase the overall profitability of the business
ten they reduces the overall supply in the target market(Choi, Shin and Woo, 2018).
When the company is having motive of increasing their market segment then they
increases product or the supply of the car in the market. Tesla is profit oriented
organisation which is emphasizing on increasing the overall profitably so when the prices
of goods fall then the supply of the electric cars also reduces and vice-versa.
Change in Supply Curve:
It is defined as the chnage in the supply curve due to change in the certain factors like
tax rate, technology or the production cost of the company. When the supply of the goods rises
then supply curve shift to S0 to S1. On other side, when the supply of the goods decreases then
the curve shift from S0 to s2.

AS per the diagram, It can be said that price of the commodity rises then the supply of the
given goods also increases. When the prices electric cars increase then supply curve shift from
S0 to S1 and vice versa due to change in the ceratin factors that is impacting the overall supply
of the company
TASK 2
Compare & contrast certain theories & models in 21st century contemporary busines with those
of the 20th century & relate both of to modern practices of business.
There are different theories which is being studied during 20th and 21st century and they
are explained as follows:
Marx's Social Economic system
It is the theory which is given by the Karl Marx who is the economist and the author
which explains about the capitalism and communism. This theory is inspired by the classical
political economist like David Richardo who is own land of economics. Marx argues in the
arguments which is composed of two main classes that includes the social & economic system
and also valid in the modern era. Capitalists are the venture that is related to the major part that is
having control over the other aspects so that they can rightly can take the appropriate action for

the given goods in the market. Capitalists are the business owners that are concerning to manage
the process which includes the production and also concern for various means which includes the
tolls and raw that is entitled for all the profits(Choi, 2018).
Neoclassical Growth Theory
This is the economic concept which evaluate the economic growth with the effective
combination of three aspects- labour, capital and new technology. The national bureau of
economic research , there are two individual Robert Solow and Trevor is having the credit of
launching the model or concept for the long run in the economic development in 1956.
According to this theory it states that short term equilibrium can have different amount of
labour & capital in their further production. The theory also discussed about the change has the
major influence or the impact on the economic development without having technology
innovation or advancement. the theory says that flexible equilibrium is different from the log
term equilibrium that does not need such factors. This approach is having direct emphasis on the
capital of the economy and how the people use this capital and workers fix their output from the
company. Moro ever, technology can be decide by the labour efficiency and also enhanced the
better output with the use of innovative technology.
Keynesian Economics theory
There are different assumption on the basis of price & the wages that are sticky and also
having three major components that how the economy will be operated in the market. First is the
aggregated demand which influence the various economic decisions that are present in the
market and also having adverse impact for the macroeconomics results which includes decrease
in consumer spending during high recession. Second is prices & wages that respond slowly to the
change in the supply & demand of the goods. further is change in the aggregated demand that
can be anticipated or not(Ballinger and et.al., 2019).
As this is the modern theory which is having major impact of aggregated demand that is
being influenced by the economic decision-making by the public and private sector in the
company. On other hand, Neoclassical theory is the concept which is based on the three aspects
hat are labour land capital by which final consideration of such theory in order to get the
betterment in the technology and economic growth can be maintained.

CONCLUSION
It can be said that from the above discussion that demand & supply play the major role in
the development and the growth of the market. There are various aspects that is impacting the
overall demand in the market also having major influence of factors which includes price of
substitute goods, change in income, taste & preferences of the customers. There is positive
relationship in the price and the quantity supply of the goods and government, weather, objective
of the firm. More over, neoclassical theory,Marx's social economic system, theory that are
having certain assumption by which economic development can be managed.

REFERENCES
Books and Journals
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Choi, H., 2018. Technology-push and demand-pull factors in emerging sectors: evidence from
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Choi, H., Shin, J. and Woo, J., 2018. Effect of electricity generation mix on battery electric
vehicle adoption and its environmental impact. Energy Policy. 121. pp.13-24.
Karmaker, A.K. and et.al., 2018. Feasibility assessment & design of hybrid renewable energy
based electric vehicle charging station in Bangladesh. Sustainable cities and society. 39.
pp.189-202.
Liu, B. and et.al., 2018. Hybrid electric vehicle downshifting strategy based on stochastic
dynamic programming during regenerative braking process. IEEE Transactions on
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types of charging facilities. Applied energy. 226. pp.1087-1099.
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electric car industry. The Extractive Industries and Society. 4(2). pp.321-328.
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