Lit Motors and A New Power in Personal Transport

1. Lit Motors and A New Power in Personal Transport Julia Lee, Rishi Tripathy, Jack Luby By submitting this deck of case slides, the members of our team affirm that we all participated in the analysis of the case and the creation of this document.

2. Qualitative Quantitative Lit Motors • First Year of Production of C1 • Cost to produce → $30,000 • Retail Price → $24,000 Gross margin of -$6,000 dollars per C1 If all 1,000 units were sold, Lit Motors would incur a $6,000,000 loss in their first year • Future Years of Production of C1 (Predicted) • Cost to produce → $6,000 • Retail Price → $12,000 Gross margin of $6,000 dollars per C1 If all 1,000 units were sold, Lit Motors would incur a $6,000,000 gain in their future years • Production of Cargo Scooter* • Cost to produce → $508 • Retail Price → $717 Gross margin of $209 per Cargo Scooter *Unclear how many scooters were produced or sold • These financials show potential issues for Lit Motors. This is simply based on cost of production and retail price and it will take at least 2 years to even come back to net even, without considering all the other costs Lit Motors has. They also might make a small profit on their cargo scooter production, but it unclear through the information provided whether that is true or not. They must adjust their pricing model or it will take longer than anticipated to become profitable. • They had a good idea with their internet test, but their other tests were not viable to prove strong demand. It will be tough to convince investors has their is no hard evidence that this company will ever become profitable.

3. Qualitative Quantitative A New Power In Personal Transport • Cost- £300 per vehicle • £750,000 sales projected from launch inventory quantities • 10,000 unit campaign being run on launch day, • £30,000,000 second year sales projected • £75,000,000+ spent on EV research in US and UK alone • Market size of 17.5 Million vehicles on the roads in Britain • £30,000,000 second year sales would indicate ½% market share in terms of total vehicles • Cost of production: Not specified • Cost of energy/maintenance: Not specified The lack of financial clarity presented in the case and the lack of long-term business specifics thought through by Sinclair are indicative of the long path to success for this company. It seems like there is a lot of work to be done before this company can be successfully launched.

4. Recommendations C-5 • Do not pursue C-5 • No clear target market: is it for bicyclists or motorists? Car owners? Who would want this and is there a demand? No marketing analysis was mentioned in the case details compared to Lit Motors • Should have market tested with consumers to see how they felt about the vehicle and its costs. Was £399 reasonable to charge? • Unclear safety standards - consulted Department of Transport, but regulation that you do not need a license, insurance, or helmet to operate is off putting • Overall, no strong value proposition or market strategy that is convincing to pursue C-5 C-1 • Continue pursuing Lit Motors, but not the Cargo Scooter • Not enough time and resources for Kim to focus on both, should choose the one he cares most about which is Lit Motors • Only benefit of Cargo Scooter would be a monetary benefit to help Lit Motors, but because of legal reasons Kim should keep these two companies separate • There is a targeted consumer (Generation Jones and young urban professionals) that Kim has identified and market tested with positive outcomes • Passes clear safety concerns consumers and lawmakers might fear • No direct competitors on the market: previous ones of similar nature all failed to fully see the idea through • Hire someone who is experienced in the manufacturing side that can help Lit Motors get to manufacturing and figure out their supply chain. Kim is inexperienced on this front, but it is an integral step to moving forward for the company. • See how/if the C-1 would not have to require a special license, but a normal driver’s license because that may hinder a large population from considering buying the C-1