Another major impediment in PHEV/EV penetration remains owing to high vehicle cost which is primarily due to the cost of the batten7 which makes up approximately 50% of the production cost of the vehicle. The current shift to the use of lithium-ion batteries has cut down costs significantly, but there is a requirement for further technological developments and improvements in order to reduce costs further and achieve greater economies of scale and reduce the current barrier for higher adoption rates. Presently, the trade-off is benveen the price of the battery and its performance.
The three major safety concerns related to PHEV/EV usage are collision safety, electrical hazards and the absence of engine noise. Despite significant improvements in new car models being manufactured currently, the adverse publicity regarding the effects of a crash test on
PHEV/EVs conducted in the past has severely damaged consumer perceptions about the safety of this vehicle class during a crash or a collision. Although, significant progress has been done on this front, and the industry still needs to work with utmost steadfastness in order to change the perception of the safety standards of PHEV/EVs in the minds of potential consumers in order to enable the process of mass adoption of the vehicles.
Automobile Industry in UAE
UAE, which has been built on the heritage of available oil reserves and the resultant inflow of dollars from petroleum, has resulted in the development of a vibrant automotive industry. The region is home to many foreign automobile brands and known for its affinity towards luxury sedans and sports utility vehicles. An expanding opulent consumer base, high rate of urbanisation, significant investment and growth in infrastructure and the presence of a vibrant tourism industry are the growth drivers for the expanding automobile industry in the region. As per the automobile industry report, although the economy has been sluggish in recent times leading to a marginal slowdown in the growth rate for the industry, the region still provides an immense scope in the areas of automobile manufacturing, aftermarket sales and new technology development. An important point to note here is that only a few local automobile players are engaged in the assembly of new vehicles while the majority operate as dealers and traders engaged in vehicle re-export and import functions.
As per the Alpen Capital automobile industry report, the number of passenger cars in use in UAE is expected to grow at 5% CAGR and touch the figure of 13.2 million by 2020. The number of new passenger cars by 2020 is projected at 1.4 million. Saudi Arabia, UAE and Kuwait collectively shall account for over 75% of the region’s passenger car population by the mentioned year. The figure for new car sales in UAE alone is projected to grow at an annual rate of 4.5% to over 276,000 in the year 2020.
The increasing population base at a CAGR of 2.4% between 2015 and 2020 shall translate into an expanding consumer base with higher demands for new and used vehicles and associated parts in the region. Further, the wealth of the affluent section of the population in the region is expected to grow at a CAGR of 6.7% during 2015-2025. Cost of vehicle ownership in UAE is lower as compared to other countries owing to the favourable tax structure and the availability of easy credit and insurance options, which propels the demand for new and used vehicles in the region. The availability of affordable and cheap fuel owing to the presence of proven oil reserves is one of the main drivers for vehicle sales in the region.
Japanese automobile manufacturers have a collective market share of 57% in the UAE passenger car market. Toyota leads the pack with a market share over 30% of all new passenger vehicles sold at the end of
2016. Its leadership position is unbeaten in spite of the entry of several new manufacturers in the last five years.
The other leading automobile brands is UAE are Nissan, Hyundai and Mitsubishi. Luxury car manufacturer BMB had the fourth largest market share at 6% in the same period.
As far as passenger car model goes, the Toyota Land Cruiser with a market share of 5.8% claimed the leadership spot. Interestingly, owing to lower ownership and maintenance cost, several Chinese automobile brands have entered the automobile market in UAE and are gaining significant prominence in recent years.
Interestingly, growing environmental concerns over global warming are leading to the imposition of stricter regulations regarding vehicular emissions and proving the necessary thrust towards alternative fuel technologies in the region. In this context, the Emirates Authority for Standardisation and Metrology introduced new vehicular regulations in
2017, wherein car manufacturers selling passenger cars with an above average fuel economy standard and vehicles with high emission levels are now penalised and higher registration taxes are imposed on the sale of such vehicles.
The Dubai Green Mobility Initiative of the government proposes to purchase 10% of all new vehicles for certain government bodies as either PHEVs or EVs. Further, UAE ranks third in the world as far as eagerness to use self-driving vehicles, with 70% of consumers willing to take a ride in a completely driverless car and 47% willing to pay a premium for such a ride. The Dubai Autonomous Transportation Strategy was unveiled in 2016 by His Highness Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, with the sole aim of having 25% of transportation trips in Dubai through smart and driverless vehicles by the year 2030.
Thus, keeping all of the above in mind, when considering whether to purchase PHEVs, customers have to weigh the benefits of reduced energy consumption against the premium for the adoption of the cleaner technology. With the gradual decrease in price premiums, PHEVs will become more attractive for usage to the end consumers.
However, questions remain about the ability of the industry to shorten the lead time for higher adoption levels through further technological innovations and investments in the technology and fruitful public-private partnerships shall shorten adoption cycle time gradually going ahead.
The methodology of the research begins with the problem statement followed by the research objective and hypothesis development.
Subsequently, the research design, research plan and the various data analysis techniques are explained. Hence, various qualitative and quantitative research techniques are used for the analysis of the primary data collected through a sample survey of respondents in the selected geographies followed by the analysis and interpretation of the same. The report ends with the research findings, subsequent inferences, conclusion, limitation and recommendations. This work aims to identify the main factors for PHEVs’ adoption by individuals in Dubai and Sydney.
Research Problem Statement
Through this work I intend to address this problem statement: ‘Are the available enablers in the automobile industry of the identified geographies strong enough for higher adoption rates for PHEVs?’
All previous research work put emphasis on only the environmental/ ecological factors and the resultant smaller dependency on fuel (although none on the mentioned geographies of Dubai and Sydney) and on governmental intervention and the support therein to push for higher PHEV adoption rates. No focus on the current barriers in the mentioned geographies were dealt with in such studies.
- • What are the current global trends and product offerings in the PHEV industry?
- • What are the current region and industry specific enablers and barriers which promote or impede mass PHEV adoption rates?
- • What segmentation strategy needs to be followed in order to fine- tune PHEV product offering to fit specific segments in the identified geographies?
- • Study the growth and trends in the PHEV industry
- • Identify the current product offerings in the select geographies by PHEV manufacturers
- • Identify and analyse key drivers for the diffusion of the PHEV technology in select geographies
- • Identify customer segments for Toyota PHEVs in the select geographies (Dubai and Sydney)
- • Brand-specific recommendation for greater penetration for Tovota PHEVs
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HI. Yearly fuel cost savings has a positive effect on adoption likelihood. H2. Driving range is the most important factor influencing adoption. H3. Charging time has a negative effect on vehicle adoption.
H4. Price of PHEVs has a strong negative effect on vehicle adoption. COST INCENTIVE:
HI (Null): p (customers preferring high mileage) > p (customers preferring high yearly fuel cost savings)
If HI rejected: propose for HI (alternative): p (customers preferring high yearly fuel cost savings) > p (customers preferring high mileage)
H2 (Null): p (customers preferring charging infrastructure) = p (customers preferring lower charging time) = p (customers preferring longer driving range)
If H2 rejected: propose for H2 (alternative): p (customers preferring charging infrastructure) * p (customers preferring lower charging time) * p (customers preferring longer driving range)
H3 (Null): p (customers preferring higher charging station infra) > p (customers preferring lower charging time)
If H3 rejected: propose for H3 (alternative): p (customers preferring lower charging time) > p (customers preferring higher charging station infra)
H4 (Null): p (customers preferring tax subsidies) > p (customers preferring lower vehicle price)
If H4 rejected: propose for H4 (alternative): p (customers preferring lower vehicle price) > p (customers preferring tax subsidies) (Figure 10.1)
Descriptive Statistical Analysis and Hypothesis Testing Tools
• Descriptive statistics (pie and bar charts) has been used to describe and analyse the demographic data
Figure 10.1 Hypothesis Framework for PHEV Adoption Likelihood.
- • For hypothesis testing, t-test and ANOVA single factor test has been used
- • For inferential analysis, factor analysis (SPSS) has been employed for variable reduction purpose and to find the relationship among them
- • К-means cluster analysis (SPSS) has been used to segment the sample consumers as per group similarities
- • Perceptual mapping has been used to display the company’s brand relative to competition (Figure 10.2)