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ZAP and the Electric Vehicle Industry Case Analysis MGMT 480 Andrea Calvert Danielle Mikolai Marta Kotonova Peter Kariuki ZAP and the Electric Vehicle Industry Introduction “ZAP stands for Zero Air Pollution” (www.lahiji.com). ZAP focuses on production of vehicles that run on electric power, keeping the environment in mind. This case is evidence that just a few ideas and love for the environment can give the way to a great product, and many manufacturers followed. Although the economy is not too friendly to manufacturers and retailers now, ZAP can achieve success with proper management of its strengths and opportunities in the market. The following analysis covers the overall industry of EV (electric vehicles), Zap and its position in it, and recommendations for its future strategies. Analysis of Industry • The electric vehicles industry is very broad in scope (from military equipment to toys for children), which means that any new idea can find its place with fairly low competition overall. In ZAP’s case, the idea was good because until 1994, not many people knew about this opportunity in the market and it was a great way to succeed for Starr and his new company. The barriers for entry were low. The barriers now are much higher due to higher interest for the products from customers and an increased number of companies in this industry. • Unfortunately for ZAP, the EV industry has many substitutes, especially in the focus that this company has. To name a few: regular bicycles, inline skates and skateboards. The presence of substitutes in the industry is a threat for the company (Strickland, Thomson 87, 88). Right now, “the largest segment of the individual transportation industry belongs to the bicycle industry” (Strickland, Thomson C-107). The main reason for this is the cost, especially if manufactured overseas. • Competition in the EV industry is growing now as well as the number of acquisitions. To acquire a company means to buy off another company and that way gain know-how, increase the number of customers, and lessen competition. ZAP took advantage of this and conducted several acquisitions itself (ZAP acquired EV Systems, CA; Aquatic Propulsion Technology, Inc. and many more). With this move, the company decreased its cost and this money was then used on further research and development. • Differentiation in the EV industry started to grow with the growth of the interest in it from the customer side. Right now, ZAP is in the top ten of the industry (next to EV Rider, Bikit, Schwinn, etc.), but in order to keep its post, a lot of research is needed. In 2000, compared to the sales of electric bicycles in the United States, the sales elsewhere in the world were much higher. This presents a great opportunity for ZAP, but also means a high competition possibility. (Tables C-111) • Many manufacturers in the EV industry sell their products through the Internet, of which many are publicly traded.
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