Cookie and Privacy Settings

This website uses cookies to enable essential functions like the user login and sessions. We also use cookies and third-party tools to improve your surfing experience on preplounge.com. You can choose to activate only essential cookies or all cookies. You can always change your preference in the cookie and privacy settings. This link can also be found in the footer of the site. If you need more information, please visit our privacy policy.

Data processing in the USA: By clicking on "I accept", you also consent, in accordance with article 49 paragraph 1 sentence 1 lit. GDPR, to your data being processed in the USA (by Google LLC, Facebook Inc., LinkedIn Inc., Stripe, Paypal).

Manage settings individually I accept
expert
Expert with best answer

Daniel

100% Recommendation Rate

169 Meetings

1,056 Q&A Upvotes

USD 319 / Coaching

6

Estimate the number of self-driving cars (SDC) needed for the US?

Clarifying questions:

  1. Are we planning launch Self-driving cars for the first time or will it exist with the current set of cars in the recent future?

    1. Assuming this for the initial launch

  2. Car hailed by a standalone app or by existing tech product?

    1. Assuming via Google maps

  3. Self-driving cars will serve the need for passenger/personal transport and not freight, delivery, etc.

High-level equations:

# of cars = (Peak demand for cars per day)/ (Capacity of each car)

Assuming each car’s capacity is 4 passengers.

Peak demand for personal cars = Demand in urban + demand in rural areas

Let’s calculate TAM for self driving car:

US population is 300M, our target users are in the range 15-65

Assuming the average life expectance of 80 years, the target user count is:

40/80*300M = 150M users

Of this, I am assuming 50% will continue using their personal cars for commuting. Of the remaining 50%, I am assuming 80% will have the financial means to actually request an SDC (Since in 1 out of 8 in the US is considered poor). This leaves our TAM to be 0.8*75M

Of these 60M users, 20% of the US is urban and 80% of the US is rural.

12M urban and 48M rural

For the initial launch, the self-driving car may not get complete attention due to worry about new technology. I am assuming that initially for the first few months the adoption rate will be around 40% in urban cities and 10% in rural cities.

Thus TAM will be 4.8M urban and 4.8M rural. → 9.6M total

Assuming this peak demand for 12M cars over a 24-hour time frame. Also assuming each self-driving car will take 20 mins to complete ride for 1 passenger.

In one hour an SDC can complete 3 rides/passengers. In 24 hours it can complete, 72 rides.

Thus in order to serve a peak demand of 9.6M, we need → 9.6M/72 ~ 150K self-driving cars would be needed for initial launch.

Any feedback on my approach and assumptions?

Clarifying questions:

  1. Are we planning launch Self-driving cars for the first time or will it exist with the current set of cars in the recent future?

    1. Assuming this for the initial launch

  2. Car hailed by a standalone app or by existing tech product?

    1. Assuming via Google maps

  3. Self-driving cars will serve the need for passenger/personal transport and not freight, delivery, etc.

High-level equations:

# of cars = (Peak demand for cars per day)/ (Capacity of each car)

Assuming each car’s capacity is 4 passengers.

Peak demand for personal cars = Demand in urban + demand in rural areas

Let’s calculate TAM for self driving car:

US population is 300M, our target users are in the range 15-65

Assuming the average life expectance of 80 years, the target user count is:

40/80*300M = 150M users

Of this, I am assuming 50% will continue using their personal cars for commuting. Of the remaining 50%, I am assuming 80% will have the financial means to actually request an SDC (Since in 1 out of 8 in the US is considered poor). This leaves our TAM to be 0.8*75M

Of these 60M users, 20% of the US is urban and 80% of the US is rural.

12M urban and 48M rural

For the initial launch, the self-driving car may not get complete attention due to worry about new technology. I am assuming that initially for the first few months the adoption rate will be around 40% in urban cities and 10% in rural cities.

Thus TAM will be 4.8M urban and 4.8M rural. → 9.6M total

Assuming this peak demand for 12M cars over a 24-hour time frame. Also assuming each self-driving car will take 20 mins to complete ride for 1 passenger.

In one hour an SDC can complete 3 rides/passengers. In 24 hours it can complete, 72 rides.

Thus in order to serve a peak demand of 9.6M, we need → 9.6M/72 ~ 150K self-driving cars would be needed for initial launch.

Any feedback on my approach and assumptions?

(edited)

6 answers

  • Upvotes
  • Date ascending
  • Date descending
Best Answer
Book a coaching with Daniel

100% Recommendation Rate

169 Meetings

1,056 Q&A Upvotes

USD 319 / Coaching

Hi Piyush,

I've read carefully all your assumptions, looks very good! In the real estimation within the case probably the second part would be left out (dividing demand by # of rides) because it becomes too cumbersome. You would probably just need to estimate it from the population top town, would arrive at 9.6 M and the interviewer would already stop you there.

Best,

Daniel

Hi Piyush,

I've read carefully all your assumptions, looks very good! In the real estimation within the case probably the second part would be left out (dividing demand by # of rides) because it becomes too cumbersome. You would probably just need to estimate it from the population top town, would arrive at 9.6 M and the interviewer would already stop you there.

Best,

Daniel

Thanks for your feedback. — PK on Mar 20, 2020

Hi Piyush,

that sounds reasonable to me.

Best,

André

Hi Piyush,

that sounds reasonable to me.

Best,

André

I used to work in the Automotive Practice before on the topics related to autonomous vehicles. If you have any further specific questions, feel free to drop a line. Good luck! André — Anonymous on Mar 22, 2020

Hi Piyush,

Looking at the question it seems you want to estimate how many car owners in the US will be early adopters and buy a SDC. However, you start developing the answer very nicely to end in what seems to indicate that you are estimating the number of SDC that will be initially adopted for raid hailing services.

If you want to estimate the later, I would use the other post you have where you solve how many Uber cars are in the US -remember to add Lyft and other minor competitors and assume that the companies would replace x% of their fleet with SDC.

if you want to estimate the former, your structure is very good but you tend to overcomplicate yourself. Start with a solid foundation and be sharp to get a good number fast. For example, the US has one of the highest ownership vehicle rates per 1,000 inhabitants in the world. On average, a household owns two vehicles. Therefore, state very clearly that you are estimating just cars. I guess every household has at least one car, and the average household size must be around 2.5. Thats around 130 million cars.

Then you can estimate the % of early adopters and also take into account that X cars would be replaced that year. So you can also add to your calculation how many people would replaced their dead car with a new SDC.

Best,

Ruben

Hi Piyush,

Looking at the question it seems you want to estimate how many car owners in the US will be early adopters and buy a SDC. However, you start developing the answer very nicely to end in what seems to indicate that you are estimating the number of SDC that will be initially adopted for raid hailing services.

If you want to estimate the later, I would use the other post you have where you solve how many Uber cars are in the US -remember to add Lyft and other minor competitors and assume that the companies would replace x% of their fleet with SDC.

if you want to estimate the former, your structure is very good but you tend to overcomplicate yourself. Start with a solid foundation and be sharp to get a good number fast. For example, the US has one of the highest ownership vehicle rates per 1,000 inhabitants in the world. On average, a household owns two vehicles. Therefore, state very clearly that you are estimating just cars. I guess every household has at least one car, and the average household size must be around 2.5. Thats around 130 million cars.

Then you can estimate the % of early adopters and also take into account that X cars would be replaced that year. So you can also add to your calculation how many people would replaced their dead car with a new SDC.

Best,

Ruben

Book a coaching with Clara

100% Recommendation Rate

40 Meetings

5,659 Q&A Upvotes

USD 229 / Coaching

Agree!

Agree!

Book a coaching with Anton

100% Recommendation Rate

4 Meetings

972 Q&A Upvotes

USD 179 / Coaching

Hi,

Your approach is indeed a good one.

If you want to master your market sizing skills I suggest that you should focus on segmentations patterns. You can use the following segmentation for market sizes:

B2C:
-Demographics (Age, education, income, family size, race, gender, occupation, nationality)
-Behavioral (Purchasing behavior, customer journey stage, occasion & timing,
customer loyalty & interest, risk tolerance, user status)
-Psychographic (Lifestyle, personality traits, values, opinions, interests of consumers)
-Geographic (Geographical boundaries)

B2B:
-Company characteristics (Industry, company size, number of employees)
-Geography (Geographical boundaries)
-Purchasing Approach (Occasion & timing, customer capabilities, nature of existing relationship)
-Personal Characteristics (Loyalty, risk attitude, user status)

B2G:
-Demographics (Type of agency, size of budget, the amount of autonomy)
-Geographic (Geographical boundaries)
-Government Tier (Federal , State, Local, Quasi-governmental, International)
-Bid type (Closed, Open)

But sometimes you don’t need to segmentation. Here is an example of case that could be solved with high level top down approach - estimate the size of credit card market in the US:
https://www.preplounge.com/en/consulting-forum/how-should-i-approach-the-following-question-estimate-the-market-size-of-credit-cards-in-the-us-6695

Hi,

Your approach is indeed a good one.

If you want to master your market sizing skills I suggest that you should focus on segmentations patterns. You can use the following segmentation for market sizes:

B2C:
-Demographics (Age, education, income, family size, race, gender, occupation, nationality)
-Behavioral (Purchasing behavior, customer journey stage, occasion & timing,
customer loyalty & interest, risk tolerance, user status)
-Psychographic (Lifestyle, personality traits, values, opinions, interests of consumers)
-Geographic (Geographical boundaries)

B2B:
-Company characteristics (Industry, company size, number of employees)
-Geography (Geographical boundaries)
-Purchasing Approach (Occasion & timing, customer capabilities, nature of existing relationship)
-Personal Characteristics (Loyalty, risk attitude, user status)

B2G:
-Demographics (Type of agency, size of budget, the amount of autonomy)
-Geographic (Geographical boundaries)
-Government Tier (Federal , State, Local, Quasi-governmental, International)
-Bid type (Closed, Open)

But sometimes you don’t need to segmentation. Here is an example of case that could be solved with high level top down approach - estimate the size of credit card market in the US:
https://www.preplounge.com/en/consulting-forum/how-should-i-approach-the-following-question-estimate-the-market-size-of-credit-cards-in-the-us-6695

Book a coaching with Antonello

98% Recommendation Rate

104 Meetings

2,202 Q&A Upvotes

USD 189 / Coaching

Hi,
I find it reasonable.

Best,
Antonello

Hi,
I find it reasonable.

Best,
Antonello

Related BootCamp article(s)

Important Facts

It's essential to know some key figures regarding geographies, population, economies for your case interviews. We summarized them for you here.

1 Q&A

Market Sizing

Market Sizing Questions are used to test your quantitative & reasoning skills. Learn more on how interviewers evaluate your given answer!

2 Q&As

Related case(s)

Oliver Wyman case: Full Electrons Ahead

Solved 86.6k times
Oliver Wyman case: Full Electrons Ahead Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise them on how to adjust the product offering.
4.6 5 5961
| Rating: (4.6 / 5.0)

Your client, large automotive OEM WyCar, has developed its first fully electric vehicle (EV) and introduced it as a pilot on the Austrian market last year. However, sales have been far below the expected numbers. The management has engaged you to support them in understanding the reasons and advise ... Open whole case

Bain Case: Old Winery

Solved 58.1k times
Bain Case: Old Winery You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. they are not organically farmed and certified. The vine stocks are in a good condition regarding age and care. Overall, only ¼ of the harvest is made into wine by the winery itself; the rest is sold. Your grandfather never wanted to change the image of the winery and left the managerial and administrative task to a young and energetic wine-maker. Due to the not so well-known brand , the demand for the “Old Winery” wine is currently rather low. You do not intent to run the winery operatively, given your limited knowledge of wine making, but find the idea of owning a winery exciting. Your plan is to give the winery some fresh impetus.
4.4 5 1538
| Rating: (4.4 / 5.0)

You have inherited the “Old Winery” from your grandfather, a winery which has been family owned for five generations and can be dated back to the 16th century. Half of the eleven hectares are used to grow white grapes, the other half to grow red grapes. They are grown in the conventional way, i.e. ... Open whole case

Roland Berger Case: Onlinestar

Solved 39.4k times
Roland Berger Case: Onlinestar Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special business) in Eastern Europe. The company sells its goods via Amazon and ebay, and recently via an online shop on its website. Despite this development, the financial ratios have deteriorated in recent years. In particular, gross profit margin decreased significantly. Combined with a significant increase in shipping costs, this led to a negative result for the first time in the recently ended fiscal year and a resulting strained financial situation. Against the background of expected stagnating sales for the current financial year, short-term action is required. The board of Onlinestar asks you for an analysis of the reasons for the negative result as well as a derived recommendation for action. As a consultant, you should bring in your knowledge in online trading and develop solutions. In addition, the management board would like to receive a sales and gross profit plan from you for the current financial year.
4.3 5 821
| Rating: (4.3 / 5.0)

Onlinestar, an online retailer of furniture and garden products (core business), has grown significantly in recent years as a result of an expansion of its product portfolio. The company mainly imports goods from Chinese manufacturers but also operates its own production of cat lavatories (special b ... Open whole case

TKMC Case: Elevators

Solved 18.8k times
TKMC Case: Elevators Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in bigger city centers. His next target is Manhattan and he wonders how big the potential is.
4.2 5 1307
| Rating: (4.2 / 5.0)

Your customer is the market leader in the North American elevator service business. This is divided into the areas of elevator construction, elevator modernization and service. The customer has a particularly strong branch network in medium-sized cities and would now like to expand its business in ... Open whole case

DB MC Case: Einstieg in das internationale Fernbusgeschäft

Solved 5.9k times
DB MC Case: Einstieg in das internationale Fernbusgeschäft Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Erst vor wenigen Jahren ist ein Start-up mit Know-how im Online-Vertrieb nach der Änderung des Personenbeförderungsgesetzes in den deutschen Fernbusmarkt eingetreten, welches schnell ein großes Netzwerk an Subunternehmen aufgebaut und damit große Marktanteile gewonnen hat. Dies hatte erheblichen Einfluss auf das Kerngeschäft der Deutschen Bahn. Mit dem Ziel Synergien zu nutzen und die Bedürfnisse des Kunden ganzheitlich zu erfüllen, konzentriert sich die Deutsche Bahn nicht allein auf ihre bisherigen Geschäftsmodelle, sondern kooperiert mit anderen „Mobility-Unternehmen“. Von Ihrem Kunden aus dem Topmanagement wurden Sie als Consultant von DB Management Consulting beauftragt, einen Business Case zu bewerten und zu prüfen, ob die Deutsche Bahn ihr bisheriges Geschäftsmodell öffnen sollte, um durch die Kooperation mit einem etablierten mittelständischen Busunternehmen in das internationale Fernbusgeschäft einzusteigen. Die Deutsche Bahn bietet bereits wenige internationale Verbindungen der Marke „IC Bus“ an, jedoch hat die DB-Tochter in der Vergangenheit große Marktanteile verloren. Im Rahmen der Einführung soll dem Kunden zunächst die Verbindung Hamburg – Lund (Schweden) ohne Zwischenstopp in 7 Stunden angeboten werden. Die Distanz zwischen Lund und Hamburg liegt bei 385 km. Bei erfolgreichem Start ist ein schnelles Roll-out auf andere internationale sowie deutschlandweite Strecken geplant. Im Fokus stehen die Erhöhung des Marktanteils, die Bewertung der Nachfrage des Kunden, der Kosten und Erlöse sowie das prognostizierbare Wachstum im Fernbusmarkt.
4.3 5 131
| Rating: (4.3 / 5.0)

Für Unternehmen ergeben sich durch die Digitalisierung neue Chancen und Risiken. Neue Märkte mit großem Potenzial können erschlossen werden – gleichzeitig erhöhen Wettbewerber den Konkurrenzdruck. KMUs, Start-ups und Konzerne bringen unterschiedliche Kompetenzen und finanzielle Möglichkeiten mit. Er ... Open whole case