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Market Sizing Case

Market sizing
Recent activity on Feb 26, 2019
2 Answers
2.2 k Views
Anonymous A asked on Feb 26, 2019

Hi everyone! I stumbled across this case: how many self-driving cars are needed to replace the public transportation system in a city

How would you solve this? I find it quite tricky.

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Jorit
Expert
updated an answer on Feb 26, 2019
First session -50%| Former BCG | Kellogg MBA | 200+ coaching session| Flexible scheduling

Interesting question! If you actually want to learn how to do these kind of estimations, try to come up with some structure to do the estimation, there is a lot of learning in that compared to just reading other peoples thoughts.

Some important steps I would consider are:

-How many people are currently using public transportation?

Linked to that are some important subquestions: What are the modes of transportation? Why are they taking these modes of transportation? And how does the demand vary over the day?

-How many self driving cars do we need to meet this current demand?

How many people fit into self-driving cars? Do we also have self-driving buses? Are people willing to rideshare? And maybe most importantly how can we make sure that the capacity is sufficient to account for peaks in demand (e.g. rush hour)

-Do we need to factor in that the availability of self-driving cars will change the behaviour of other people? E.g. If I used to ride my bike, I might now take a self-driving car to work

Hope this helps!

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Vlad
Expert
replied on Feb 26, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

What's your approach?

A quick tip - start with calculating the demand in peak hour:

The total supply of self driving cars = the supply to cover the demand + safety stock

Make an assumption on how many seats the cars will have and how many rides can be shared

Take into account the cannibalization - it may be the case that car owners will switch as well.

Best!

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