Analysis of the Automotive Industry | Threat of New Entrants – LOW | Supplier Power - LOW | Buyer Power – MEDIUM | Threat of Substitutes - LOW | Competitive Rivalry – HIGH | Capital Requirements * High upfront capital expenditure for designing and manufacturing. Cost Disadvantages * Car manufacturing has a long learning and experience curve, which results in higher defect costs.Product Differentiation * Established companies benefit from brand awareness/loyalty as a result of high expenditures in advertising * New entrants will incur high marketing/sales and distribution expenses to compete | * High number of suppliers selling undifferentiated materials to a limited number of buyers in the automotive industry | * Customers: Buyers have full access to information, are able to switch to different car brands, used cars, or alternative transportation method at a low cost. | * Substitutes: Busses, subway/train, bicycle, airplane, walking * Threat depends on convenience, cost/benefit, specific purpose for use, rising cost of possessing a car * Substitutes are less convenient than the car, as a result pose a minimal threat | * The three largest companies make up 49% of the total U.S. market. * Intense advertising, increased distribution, and constant innovation are necessary to successfully compete. * Exit costs are high for automakers. | Analysis of the Electric Vehicle (EV) Industry | Threat of New Entrants – Medium | Supplier Power - Low | Buyer Power – Medium | Threat of Substitutes - High | Competitive Rivalry – Low | Capital Requirements * High upfront capital expenditure for designing and manufacturing an EV * CV firms possess capital assets, and other necessary resources to transition into the EV industry Cost Disadvantages * Car manufacturing has a long learning and experience curve, which results