What is the proportion of electric cars in the UK?

Market sizing
New answer on Dec 13, 2019
3 Answers
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Jorgie asked on Dec 12, 2019

Got asked this question for a market sizing interview that threw me off - I had never seen an example that made you estimate a proportion. I thought it was interesting to share this, as well as the approach I used and the approach that interviewer suggested. It would be great to hear what the community thinks of these approaches and any other ideas!

Assumptions: no hybrid cars, no commercial cars, 4-wheeled cars

Approach 1

Weighted average of the proportion of electric cars in city areas and in rural areas

  • find number of people in UK in city and in rural areas
  • find number of cars per person
  • find proportion of electric cars in cities (based on personal experience) and in rural areas (proportion of that in cities)
  • multiply the numbers with a weighted average of the number of cars

Approach 2

Assume it is a newly-formed market and use sales of electric cars to derive current proportion

  • decide the year in which first sales of electric cars were made
  • find yearly increase in proportion of yearly sales that were electric cars
  • assume that age of market is less than average replacement rate - add all electric cars that were old as a proportion of all cars sold, which means that total cars sold since market started is equal to the current number of electric cars (no need to convert from percentages to numbers)
  • find total numnber of cars in the UK in terms of sales per year (using replacement rate)
  • divide numebr of electric cars (in terms of x) over total number of cars

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Luca
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updated an answer on Dec 13, 2019
BCG |NASA |20+ interviews with 100% success rate| 120+ students coached |GMAT expert 780/800 score

Hi Jorgie,

I like the way you approached the problem but I would suggest an approach that is a mixture of the 2:

  1. Calculate the population that lives in cities that have the facilities to charge electric cars (Your idea of considering only cities is similar, but this condition could be even more restrictive)
  2. Calculate how many cars have been replaced since when electric car have really entered the market (similar to what you did in the second approach)
  3. Try to estimate the percentage of electric cars bought, dividing the population per age groups (It's more likely that an electric car is bought by a 25 years old than a 60 years old)

Thank you for sharing your experience!

(edited)

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Vlad
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replied on Dec 13, 2019
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

The first approach seems a lot like guessing taking into account the nature of the question (%, not the absolute number)

The second approach is better

Another option might be calculating the number of electric charging stations, their occupancy and frequency, assume % charged at home and then get the # of cars

Best

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Antonello
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replied on Dec 12, 2019
McKinsey | MBA professor for consulting interviews

Hi Jorgie,
I appreciate the 2 both KPI you considered, I would include it in a unique approach. Even the income can be considered in order to divide the population in 3 segments.

Best,
Antonello

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Luca gave the best answer

Luca

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