02 - Porter's Five Forces

Question 1

threat of new entrants (moderate-high)

Answer 1

Entry + exit barriers are high

Difficult to get suppliers + distribution channels (exclusive contracts)

More competitive - increased w/ globalization

Emergence of EVs - potential new entrants due to less complexity
- niche players have already entered the EV market

Question 2

threat of substitutes (moderate-high)

Answer 2

Personal vehicles provide comfort + mobility + freedom

Consumers are more environmentally conscious + changing preferences
- transportation alternatives (ridesharing, autonomous…etc)

Low switching costs for the consumer

No significant ICE innovations

Question 3

buyer bargaining power (moderate)

Answer 3

Access to information and transparency - easily compare

Low switching costs

Moderate differentiation between OEMs (standardization + regulations) = moderate buyer power

B2C - low threat (majority of customers only buy 1 car)
B2B - fleet purchasers (high bargaining power)

Question 4

supplier bargaining power (low)

Answer 4

Large automakers have strong relationships w/ multiple suppliers (GM), allowing them to negotiate favorable terms

GM’s purchase quantities represent a significant part of suppliers’ sales - can dictate the price

GM + large automakers are more attractive for suppliers due to stability

Long-term - decreasing demand for suppliers - OEM hardware components will make up a lower % of EVs

Question 5

competitive rivalry (very high)

Answer 5

Highly competitive + growing (globally + locally)

High investments in R&D, efficiency + innovation

EV race is forcing large automakers to adapt their business models

Majority of current value propositions for ICE will be obsolete