1. 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.

2. 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.

3. 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

4. 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