Lit Motors and A New Power in Personal Transport

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Presentation transcript:

Lit Motors and A New Power in Personal Transport Julia Lee, Rishi Tripathy, Jack Luby By submitting this deck of case slides, the members of our team affirm that we all participated in the analysis of the case and the creation of this document.

Lit Motors Qualitative Quantitative Successes Challenges Did not spend much on prototype creation Patents on the gyroscope’s electronic controls allow it for other companies to not be able to steal their product or ideas Not too expensive to produce so can offer a low retail price Appeals to a very narrow market in the US $6 million annual burn rate Lack of a good, experienced team → need to expand team Large barriers to entry in the automobile market Not enough benefits over a typical car or motorcycle First Year of Production of C1 Cost to produce → $30,000 Retail Price → $24,000 Gross margin of -$6,000 dollars per C1 If all 1,000 units were sold, Lit Motors would incur a $6,000,000 loss in their first year Future Years of Production of C1 (Predicted) Cost to produce → $6,000 Retail Price → $12,000 Gross margin of $6,000 dollars per C1 If all 1,000 units were sold, Lit Motors would incur a $6,000,000 gain in their future years Customer Value Proposition C1 and Cargo Scooter C1- great commuter vehicle, blended car and motorcycle benefits, environmentally friendly, safe Scooter- “pickup truck for developing countries” Go-To-Market Strategy “Rolling iphone” Day in the life video featuring attractive women wearing designer clothing Viral test marketing campaign (lean startup) Undecided distribution channel → dealerships or stores Technology & Operations Management Daniel Kim → Founder, president, CTO, runs all technology operations Extensive prototyping Patents on gyroscopes electronic controls Protect IP by outsourcing production Profit Formula Initially sell 1,000 units through dealerships at $24,000/ vehicle; BOM of $30,000/vehicle Once high level production is reached, retail price will drop to $12,000/vehicle; BOM drops to $6,000 → can be profitable Cargo Scooter - retail price $717; BOM $508 Production of Cargo Scooter* Cost to produce → $508 Retail Price → $717 Gross margin of $209 per Cargo Scooter *Unclear how many scooters were produced or sold These financials show potential issues for Lit Motors. This is simply based on cost of production and retail price and it will take at least 2 years to even come back to net even, without considering all the other costs Lit Motors has. They also might make a small profit on their cargo scooter production, but it unclear through the information provided whether that is true or not. They must adjust their pricing model or it will take longer than anticipated to become profitable. They had a good idea with their internet test, but their other tests were not viable to prove strong demand. It will be tough to convince investors has their is no hard evidence that this company will ever become profitable.

A New Power In Personal Transport Qualitative Quantitative Successes Challenges Not beholden to outside capital Large market, seems to have an environmental and economic edge Seems to be a big international market as well (US spending on EV research) Successful execution of product engineering to reduce drag and make most efficient. Currently only one equity holder- may be personal bias towards his idea Not much of a team No real proof of concept- diving in directly at product launch Very early on Has generated a lot of controversy- shocking to consumers Advantage restricted to urban areas Cost- £300 per vehicle £750,000 sales projected from launch inventory quantities 10,000 unit campaign being run on launch day, £30,000,000 second year sales projected £75,000,000+ spent on EV research in US and UK alone Market size of 17.5 Million vehicles on the roads in Britain £30,000,000 second year sales would indicate ½% market share in terms of total vehicles Cost of production: Not specified Cost of energy/maintenance: Not specified The lack of financial clarity presented in the case and the lack of long-term business specifics thought through by Sinclair are indicative of the long path to success for this company. It seems like there is a lot of work to be done before this company can be successfully launched. Customer Value Proposition Revolution in personal transport Easy urban travel with no taxes, very few restrictions Smart, Safe, Sexy Looking to release a line of multiple types of electric vehicle Go-To-Market Strategy Launch product and start selling at product launch Reinvest money from mail orders back into advertising TV Commercial/Mail order launch simultaneously Technology & Operations Management Plethora of industry experts and knowledge put into design Low drag factors on wind and road Servicing licensed to other dealers- reduces overhead of having to provide support and sales thru dealership Profit Formula £300 per vehicle Sell parts/repair components to third parties, who sell them to consumer Less expensive to maintain, run on off peak power at night when charging

Recommendations C-5 C-1 Do not pursue C-5 No clear target market: is it for bicyclists or motorists? Car owners? Who would want this and is there a demand? No marketing analysis was mentioned in the case details compared to Lit Motors Should have market tested with consumers to see how they felt about the vehicle and its costs. Was £399 reasonable to charge? Unclear safety standards - consulted Department of Transport, but regulation that you do not need a license, insurance, or helmet to operate is off putting Overall, no strong value proposition or market strategy that is convincing to pursue C-5 C-1 Continue pursuing Lit Motors, but not the Cargo Scooter Not enough time and resources for Kim to focus on both, should choose the one he cares most about which is Lit Motors Only benefit of Cargo Scooter would be a monetary benefit to help Lit Motors, but because of legal reasons Kim should keep these two companies separate There is a targeted consumer (Generation Jones and young urban professionals) that Kim has identified and market tested with positive outcomes Passes clear safety concerns consumers and lawmakers might fear No direct competitors on the market: previous ones of similar nature all failed to fully see the idea through Hire someone who is experienced in the manufacturing side that can help Lit Motors get to manufacturing and figure out their supply chain. Kim is inexperienced on this front, but it is an integral step to moving forward for the company. See how/if the C-1 would not have to require a special license, but a normal driver’s license because that may hinder a large population from considering buying the C-1