FeyNN Labs: Project 2

Link: GitHub

Market Segmentation Analysis of

Electric Vehicles Market in India

Contributors
Shubham Navghare, Rohit Rannavre, Rohan Suresh, K. Subhaashini, Chandra Sekhar Pusarla

Date: 29th November, 2022

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Problem Statement

Task is to analyze the Electric Vehicles Market in India using Segmentation analysis and come
up with a feasible strategy to enter the market, targeting the segments most likely to use their
product in terms of Geographic, Demographic, Psychographic, and Behavioral.
In this report we analyze the Electric Vehicles Market in India using segments such as region,
price, charging facility, type of vehicles (e.g., 2 wheelers, 3 wheelers, 4 wheelers etc.), retail
outlets, manufacturers, body type (e.g., Hatchback, Sedan, SUV, Autorickshaw etc.), safety, plug
types and much more.

Fermi Estimation

Wild Guess: Around 8-10% people will have electric vehicles by the end of 2023 in India.
Educated Guess:

Employment rate = it is the ratio of number of available labor force to the population of People in
the working age.

We think there are about 1.5 billion Indians in the world. Let's assume the only people over18 and
under 60 works, assuming that they account for around 60% of the population then that would
make 0.9 billion Indians in the working class. Out of the 0.9 billion people not all are employed,
assuming only 2023 had 45%employment rate that would bring the number around 405 million.
Since, not everyone can afford an electric vehicle, let’s assume only people above middle class can
afford an electric vehicle, that would be 40 million. Not everyone buysan electric vehicle. Let’s
assume out of these 40 million only 10 million are willing to buy an electric vehicle.

Variables and Formulas:

Let E(x) be the employment rate of the year x (in %).Let P(x) be the population of the year x.

Let A(x) be the number of available Labor in the year x.

Let r be the ratio of Indians between the age of 18 and 60 to the total population of India.

E(x) = (A(x)*100)/(P(x)*r)

This formula will formulate the Employment ratio for the year x.

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Gathering More Information:
Estimation for the population of the year 2022 can be obtained by the increase inpopulation each
year
P (2019) = 1.3676 billion
P (2020) = 1.3786 billion
P (2021) = 1.39199 billion

P (2020)-P (2019) = 11million

P (2021)-P (2020) = 13.39 million
the mean would be 12.195 million

thus P (2022) = 1.44185 billion

assuming A(x) is constant every year= 471,688,990r=0.6C=0.75
E (2022) = (471,688,990/(1,441,850,000*0.6))*0.75E (2022) = 42%

Conclusion: By this analysis, we conclude that by the end of the year 2024 there would a
Employment rate of 42%. That would make 42% of 405 million i.e., 170 million. Out of these 170
million only 10% afford EV'S. So around 17 million people will have EV's by the end of 2024"

Data Collection

Data was extracted from the various websites mentioned below for EV market segmentation.

Link for data extraction:

 https://pib.gov.in/PressReleasePage.aspx?PRID=1842704 https://www.ibef.org/blogs/electric-
vehicles-market-in-india https://evreporter.com/indias-region-wise-ev-market-jan-may-2022/
 https://www.india-briefing.com/news/indias-ev-manufacturing-capacity-and-market-
preferences- progress-25840.html/
 https://github.com/Marisha18/Market-Segmentation-for-Electric-Vehicles-in-
India/blob/main/Market_Segmentation.ipynb https://github.com/Ashwini3535/EV-MARKET-
IN-INDIA

Data from those links are extracted by Google play scraper available on libraries package. There
are multiple datasets get extracted from those websites in CSV and Excel formats. There are some
pdfs also which contains valuable information regarding the EV market. We have extracted data
from those pdfs as well.

Raw data generated:

 https://github.com/ShubhamNavghare/FeyNN_Labs_Project_2-
EV_Market_Segmentation/tree/main/Dataset
 https://github.com/ShubhamNavghare/FeyNN_Labs_Project_2-
EV_Market_Segmentation/tree/main/PDF

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Columns explanations:

1. ‘Brand’ and tells the manufacturers of electric vehicles.

2. ‘model’ tells the various of electric vehicles.
3. ‘AccelSec’, ‘Top Speed’, ’Power Train’ tells specification about the vehicles.
4. ‘Range_km’, ‘Fast_Charge’, ‘Plug_type’ and ‘ Bodyst yle ’ tells us about rangeof vehicle per
full charge,fast charging is provided or not, type of charging plug and body style of vehicle
respectively.
5. ‘Seats’ and ‘Price’ tells about the number of seats available on vehicle and theirprice.
6. ‘Region’ and ‘State/UT’ tells about the states of India.
7. ‘EV Charging Facility’ and ‘Chargers’ tells about the facility of charging in the respectivestates.
8. ‘2V’, ‘3V’, ‘4V’, ‘Bus’ tells about the type of vehicles in the market.

Data Preprocessing

Steps taken to preprocess the scraped raw data:

1. Ordinal encoded 'PowerTrain'
2. Label encoded 'RapidCharge’
3. Used Label Encoder and Standard Scaler package for preprocessing of the dataset.

Exploratory Data Analysis

An Exploratory Data Analysis or EDA is a thorough examination meant to uncover the underlying
structure of a data set and is important for a company because it exposes trends, patterns, and
relationships that are not readily apparent.
We analyzed our dataset using univariate (analyze data over a single variable/column from a
dataset), bivariate (analyze data by taking two variables/columns into consideration from a
dataset) and multivariate (analyze data by taking more than two variables/columns into
consideration from a dataset) analysis.
The bar graph below shows the diversity of the data geographically. We can see that we have
the maximum amount of data of states Karnataka and Maharashtra; and minimum amount of data
for Sikkim, Meghalaya, Lakshadweep, Ladakh, and Dadra and Nagar Haveli and Daman and Diu.
There are a total of 1536 rows of data distributed amongthe cities shown in the graph.

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This Bar Chart shows the type of vehicles used in various states from the dataset after removing
meaningless outliers. It also shows the Number of Charging Stations sanctioned in India state wise.
Quick look at the graphs tells us that Maharashtra, Karnataka, Andhra Pradesh, Tamilnadu and
Gujrat have the most number of electric vehicles and least number of electric vehicles are from
Sikkim, Meghalaya, Lakshadweep, Ladakh, and Assam states.

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This point plot shows the number of retail outlets for charging EVs in various states from the dataset.
Graphs shows us that Maharashtra, Karnataka, Andhra Pradesh, Tamilnadu and Gujrat have the
most number of retail outlets for charging EVs and least number of retail outlets for charging EVs
are from Sikkim, Meghalaya, Lakshadweep, Ladakh, and Assam states.

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This bar graphs shows the manufacturers of Electric Vehicles.

This pie chart shows the different types of Electric Vehicles.

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 This bar graph shows the number of seats available in Electric Vehicles.

This bar graph shows the number of seats available in Electric Vehicles available in India.

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This bar graph shows the available plug types in Electric Vehicles.

This line graph shows the price comparisons in Electric Vehicles.

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Correlation matrix for the features in one of the dataset used.

Segment Extraction

K-Means Clustering is one of the most popular Unsupervised Machine Learning Algorithms Used
for Solving Classification Problems. K Means segregates the unlabeled data into various groups,
called clusters, based on having similar features, common patterns.
Suppose we have N number of Unlabeled Multivariate Datasets of various features like water-
availability, price, city etc. from our dataset. The technique to segregate Datasets into various
groups, on the basis of having similar features and characteristics, is called Clustering. The groups
being Formed are known as Clusters. Clustering is being used in Unsupervised Learning
Algorithms in Machine Learning as it can segregate multivariate data into various groups, without
any supervisor, on the basis of a common pattern hidden inside the datasets.
In the Elbow method, we are actually varying the number of clusters (K) from 1 – 10. For
each value of K, we are calculating WCSS (Within-Cluster Sum of Square). WCSS is the sum of
squared distance between each point and the centroid in a cluster. When we plot the WCSS with the
K value, the plot looks like an Elbow.

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 As the number of clusters increases, the WCSS value will start to decrease. WCSS value is
largest when K = 1. When we analyze the graph, we can see that the graph will rapidly change at a
point and thus creating an elbow shape. From this point, the graph starts to move almost parallel to
the X-axis. The K value corresponding to this point is the optimal K value or an optimal number of
clusters.

Profiling Potential Segments

Behavioral Segmentation: Segmenting the market based on customer behavior aspects suchas what
price range customers usually buy in, what kind of specifications customers look for in their cars,
etc.

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Psychographic Segmentation: Segmenting the market based on psychological parameters,such as
the likes and dislikes of customers, whether they prefer comfort over speed of a vehicle, etc.

Geographic Segmentation: Segmenting the market based on geography. This mainlyincludes

characteristics of the market based on the location.

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The major use of EVs in India is for daily commute.

Psychographic Factors

Comfort, Visual Appeal and Value for Money are other key psychological aspects that attract
customers.

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Major psychographic factors to consider – Value for Money and Comfort.

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 Behavioral Factors

Inferring from the graphs, most of the EVs belong to the 5-seater category. An average price range
of 20-30 Lakhs and an Efficiency-high vehicle would do well in the market. Accelerationseems to
matter more than the top speed of the vehicle.
Major behavioral factors to consider – Price, Efficiency, Acceleration

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Geographic Factors

The following graph shows the number of sales of EVs in different states.

States like Maharashtra, Karnataka, Tamil Nadu and Rajasthan are good geographic locationsto
consider for an EV market.

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Target Segments

Based on the analysis, the target segment can be narrowed down to EVs having:
 Psychographic factors such as Comfort and Value for Money
 Behavioral factors such as good Acceleration and viable Price range
 Geographic factors such as States which are more market friendly

In conclusion, the target segment should comprise of EVs having Acceleration of 7.5-10 sec,High
in Comfort and Value for Money ratings, have a Price range of 20-30 Lakhs, and be focused
mainly on States such as Maharashtra, Karnataka, Tamil Nadu and Rajasthan.

Customizing the market mix

The marketing mix helps enable the growth of the business in the automotive industry. A company’s
marketing mix or 4Ps (Product, Place, Promotion, and Price) specify the approaches and strategies
that address the target market, based on the details of the marketing plan. The company’s aim is to
maximize sales and improve market presence. With astrong position in the market, However,
strategic decision-makers must allow for flexibility in relevant strategies.
The automotive market has various opportunities for the growth, such as opportunities for products
that integrate advanced computing technologies. However, the company faces threatsin its business
environment. Managers can use the SWOT Analysis to determine appropriate adjustments in the
marketing mix or 4Ps to deal with these threats and opportunities.

Product Mix

This aspect of the marketing mix pertains to the outputs of the business. Each product line
represents a group of outputs or products. The set of all the product lines is called the product mix.
the product mix shows limited business diversification. Nonetheless, the company offers awide
variety of products, such as different brands, types, and models of automobiles.

1. Automobiles
2. Automobile parts
3. Commercial vehicles
4. Financial services

Prices and Pricing Strategies

The setting of price points and price ranges for the company’s products is the main concern inthis
aspect of the marketing mix. Pricing affects the perceived value of brands and products, and
influences sales in price-sensitive markets. the pricing strategies for its automotive products are as
follows:
1. Market-oriented pricing strategy
2. Premium pricing strategy

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Promotional Mix

Promotional activities are considered in this aspect of marketing mix of 4Ps. These activities are
also known as marketing communications tactics. The combination of these tactics is called a
promotional mix or marketing communications mix the following promotional activitiesare used,
arranged according to significance in the automotive business:

1. Advertising (primary)
2. Direct marketing
3. Personal selling
4. Sales promotion
5. Public relations

Place/Distribution

In this aspect of marketing mix or 4Ps, the virtual or physical locations of transactions are
considered. Such locations are significant because they enable the company to reach targetcustomers
in specific markets, while also allowing customers to access information and products available
from the automotive business. The following places are used in the distribution of products and
services:

1. Official websites
2. Dealerships
3. Automotive shows and exhibits

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Potential Sales in Early Market

Purchasing a vehicle is one of those life accomplishments that top nearly everyone’s bucket list. The
majority of the customers have a family. For such folks there are a variety of reasons, including
market and schooling. Whether you prefer a modernized urban loft or a sprawling suburban home
with a white picket fence, most of us hope to find a vehicle that feels like it was made specifically
for our family. Here is where our insights come in to assist such people to find a best vehicle at
the best-fixed price according to the area and several other factors.

Some of the key points required to focus for the development of EV in India are:
1. Retrofitting conversion of Public Transport (Bus), Taxi and Three-Wheeler (Auto) to PHEV:
This is one of the key requirements to move towards sustainable transportation. It will notonly
balance emissions but also reduce the load on infrastructure requirement.
2. Government Incentives: Another key factor for XEV market to lift up will be identification of
strategic incentives for electric vehicles. This will increase adoption rate and decrease main
element barrier of the price of electric vehicles to customers. The incentive can be subsidy
scheme for electric vehicles bridging gap price between the conventional and electric vehicle in
similar performance range. e.g., if the cost of internal combustion engine car is INR 5 lakh and
that of the electric vehicle is INR 6.5 lakh, the government can intend to offer discount or
subsidy of the differential cost. In addition, benefit of Discount on VAT//Discount on
Registration/Discount on Toll Plaza to motivate sell of EV can be planned.
3. Charging Infrastructure: Charging infrastructure development will occur with the development of
XEV market. However, motivation can be provided by developing grid-connected charging
station withthe moderate tariff, promotion to standalone renewable (solar/wind) charging station,
add onfacility at petrol pump and bus stops for charging and state transport charging stations and
permitting the development of private renewable charging stations.
4. Electrical Propulsion System (EPS): Currently no Indian manufacturer provide electrical
propulsion system (EPS) manufactured in India, even REVA has a tie-up with Italy for EPS.
Hence support and positive atmosphere build-up in manufacturers in one of the critical tasks.
Development of clear policies for supporting the growth of supply, manufacturing, and recycling
of propulsion system. Power electronics converter and motor technology development are
feasible as technology base is available in India, however currently used cost-effective Li-ion
technology of battery development is challenging task as the majority of lithium stock are
available in China and USA. In addition, battery replacement/swapping can be one of the
promising and viable options in India.
5. Development of Skilled Manpower: Consideration of safety and advanced technology involved,
development of certified skilled technician and professionals is one of the requirements.
6. Awareness: Awareness on benefits of XEV and promotions of the government can play a
significant rolein development. It can be done with the help of extensive advertisement at
airport/bus station/cinema halls/government offices/public places using banners/hoardings, use of
print media-newspaper/magazines/periodicals, digital media/radio/e media-internet, TV shows,
expert talks, providing micro-funding for projects/conferences in schools, colleges and industry,
supplying R & D grants to research scholar/institute/industry. The promotional highlights for the
consumer can be:
a. Good for the environment/Lowers Emission: Electric vehicles emit lower levels of a

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 range of air pollutants, e.g. nitrogen oxides, particulate matter and greenhouse gases(e.g.
carbon dioxide-CO2) than vehicles using conventional petrol and diesel engines.
b. Cheaper to run/Improve Fuel Economy: As electricity is cheaper than petrol or diesel,the
running costs of EVs are less than conventional vehicles.
c. Less Life Cycle Cost.
d. Perfect for urban use: Reduced levels of pollution and noise make EVs ideal for innercity
and urban use.
e. Smooth acceleration and deceleration: EVs benefit from smooth gearless acceleration
and deceleration, as a result of the characteristics of the electric motor.
f. Quieter than conventional vehicles: EVs are also quieter than conventional vehicles.
Battery operated cars operate in almost complete silence except noise from the tires.
g. Proved Technology (a sharp rise in the market of XEV all over the world).

Most Optimal Market Segment

There are many EV manufacturing companies in the country like Hero Electric, Tata Motors, Ather
Energy, Ashok Leyland, Hyundai Kona Electric, etc. Tesla has also arrived; the demand will get
higher & higher since it is automotive so the investments and policies and all that would be bigger
but it will take some time to perfectly settle in India. The following are the key insights of the
project:
 The electric vehicle industry has not done that much good due to the devastating hit of
the Covid outbreak but it will take a huge jump in upcoming years.
 The use of EVs will be game-changing in terms of environment, air, noise pollution-free, post-
electric, and much more.
 The company should plan to establish local operations in India either by partnering with a local
company or by setting up its own manufacturing/ development unit, potentially combined
with imports of specific components.
 The company would expect to further grow in India, underpinned by a growing commercial
fleet market for two-wheelers and three-wheelers especially for last km delivery/urban
freight services. The company must see opportunities across the supply chain in the battery,
EV component and charging infrastructure segments including the machinery and equipment
needed for establishing manufacturing plants, training and provision of skilled workforce etc.
 The company should start their business from Metro Cities in India and then after considerable
business expand to other cities of the same state of the Metro Cities. This will help the
company to expand easily as they will be having a prior knowledge of business from Metro
Cities and Network of Supply chain will be easy for the company as the time goes in business.

In the conclusion, electric vehicles are the future hence - “Go Green Go Electric”.

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