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SONAR|HES-SO

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Bachelor thesis

Given the rise of Electric Vehicles (EVs), to what extent is vertical integration a Critical Success Factor (CSF) for carmakers to be successful in the new automotive industry ?

    2020

119 p.

Mémoire de bachelor: Haute école de gestion de Genève, 2020

English The automotive industry generated a revenue of USD 5.135 trillion in 2017 and is expected to produce one of USD 8.931 trillion by 2030. However, despite an increase of roughly 174% of the market value (Krings et al., 2018), traditional and iconic automotive OEMs (original equipment manufacturers) may in the same period see their share of value-added margin decrease from 50-55% to 35-40% (Ernst & Young, 2019). The current EASCY trends (electric, autonomous, shared, connected, and yearly updated) are massively disturbing the automotive industry. Therefore, long- established carmakers must adapt their business models if they desire to retain a considerable value-added margin (Kuhnert, Stürmer and Koster, 2017). A significant part of the global automotive value-shift is due to the automobile electrification and more precisely, the electrification of the powertrain. Therefore, it is essential to assess whether long-established carmakers have means to prevent a loss of 15% of their value-added margin (Ernst & Young, 2019). The existing literature has already suggested that in the era of electric vehicles, automakers may have to consider integrating the production of the battery which powers the powertrain, if they wish to retain a considerable share of the value-added margin (Proff, 2011), (Huth et al., 2013, 2015). The recent literature also highlights the existence of various risks related to automakers’ dependency on battery components. However, a gap remains regarding the importance that vertical integration will have in helping long-established automakers to be successful in the era of electric vehicles. Hence, by addressing some unanswered questions related vertical integration, and more precisely that of the battery and its key components, this research brings a value-added to the existing literature. This paper concludes by arguing that to retain a considerable share of the value- added margin and simultaneously decrease potential supply risks, long-established automakers should seriously consider increasing their degree of integration in the upcoming years.
Language
  • English
Classification
Economics
Notes
  • Haute école de gestion Genève
  • International Business Management
  • hesso:hegge
License
License undefined
Identifiers
  • RERO DOC 329861
Persistent URL
https://sonar.ch/hesso/documents/314975
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