This section continues the discussion of the issues that the company must face. The paper aims to cover some issues faced by the company such as being accepted by the market of the switch from gas to electric, adopting new technical expertise to make this change, coping with additional costs due to labor, additional workstations, development, and competing with the global brands like Honda and Toyota’s hybrid cars.
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Acceptance by the market of the switch from gas to electric
“There are a lot of theories about why large auto manufacturers killed off their electric cars in the ’90s. GM came out with one. Ford did as well” [i]. A major reason for this failure was low car sales, compared to production costs. Obviously, one of the main concerns of Tata motors, with respect to switching the gas car to electric, is the acceptance by the consumer, since the marketplace has witnessed the failure of electric cars in the past. The “Reva Electric” is manufactured by REVA Electric Car Company Private Ltd.[ii], failed due to the various faults and technical imperfections which made it unsuccessful in the market. However, with soaring oil prices, Honda has plans of producing a new electric car that has a large approval rating by the market, and GM is determined at initiating the production of the Chevy Volt, after its closure in 1996, so that it hits the market as early as 2010.
The shift from gas to electric cars is due to the fact that, although fuel cell cars are environmentally friendly, EVs are cleaner since they recharge from solar and hydro sources. Accordingly, Tata Motors has decided to switch the Nano from gas to electric version. Tata Motors will conduct surveys to recognize the expectations of people from a new electric car and try to center on them, to satisfy people’s needs. The primary goal in manufacturing the Nano electric would be to include all the necessary and exciting features which other companies have in their electric versions while overcoming their faults and maintaining the lowest cost possible.
Does the company have the technical expertise to make this change?
The Tata group is an expert and experienced player in many kinds of technology including energy and materials[iii]. The Tata Group also plays an important role in power generation and has a strong presence in the oil and gas sector.
Being one of the global leaders, the Tata group also operates in steel and composites. Moreover, it has tremendous experience in engineering, such as operations in automobiles, auto components, and a selection of other engineering products and services. Tata Motors has recently purchased the Jaguar and Land Rover brands which are world-renowned companies in car production. The Tata Group guarantees all these factors would be able to provide them the technological capability of manufacturing a successful version of the battery-operated car.
Additional costs to the company: Labor, additional workstations, development
By changing the Nano from a gas version to an electric car, Tata Motors needs to consider additional costs to the company, such as labor, equipment, development, and marketing. Tatas would be required to hire new employees, purchase new technologies, and construct additional workstations to account for design iterations and the cost of attaining new customers. The Reva has experience in developing an electric car and by purchasing their technologies the Tatas will be able to shorten their development time which would help the company to maintain low costs for the electric version. Furthermore, the Tata group has its own battery manufacturing which would enable them to design batteries that can last longer, can be charged at a faster rate thereby reducing the costs of the batteries and subsequently the car costs as well. With optimal quality batteries, the Tatas would be in a better position to provide car batteries with an efficient performance which would, in turn, affect the overall performance of their battery-operated car in all possible climatic conditions, even at lower temperatures.
Potential to Compete with Honda and Toyota’s hybrid cars
Today there are multiple manufacturers such as Toyota and Honda that produce hybrid cars. A hybrid car as the name implies uses a combination of technologies[iv]. It uses a gas engine powered by gasoline and an electric motor powered by batteries. Currently, the Automobile industry faces two main problems[v] including the increasing prices of gasoline and the pollution associated with gas-powered cars. To overcome these problems, scientists and car manufacturing companies have been experimenting with new sources of fuel. One of those technologies includes electric cars powered by batteries.
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There are different types of electric cars. Hybrid cars wisely use the combination of electric power powered by batteries and the internal combustion engine so that they can get more mileage with less fuel. In India, the dense population of those driving automobiles accounts for the high pollution rates. Therefore, hybrid cars have the potential of offering an inexpensive alternative to the low and middle-class sections of society to purchase an electric car. Since the Tatas operate a company that produces batteries[vi], they can effectively integrate the battery operation technology with the Nano Electric and produce an efficient, cost-effective, and eco-friendly car to suit the needs of the people.