BUSINESS MODEL INNOVATION AT LOG9

The case highlights how business model re-engineering plays an equally vital role in manufacturing a superior product in fostering a company’s success.

Log9, an innovative Electric Vehicle (EV) battery manufacturer based in India, had developed a superior battery technology that promised longer life, faster charging and enhanced performance compared to its competitors. The company partnered with Omega Seiki Motors (OSM), a contract manufacturer that works with vehicle assembly and offered Log9 battery-powered three-wheeler EVs in the market, which were branded as Log9-OSM vehicles. Their primary customers were the fleet owners who used three-wheelers for various delivery services. Initially, Log9 vehicles struggled to gain significant market traction, despite its technological advancements and potential market disruptiveness. The case discusses the primary reason behind the market’s reluctance toward the product and how the traditional business model, which worked well for the competitors, was unsuitable for Log9. The protagonists had to onboard banks and Non-Banking Financial Companies (NBFCs) for a new EV financing model to bring parity with the competitors and infuse the product into the market through a leasing partner (its own subsidiary). Additionally, Log9 had to convince the market about the concept of Total Earning Potential (TEP) instead of going through the traditional route of Total Cost of Ownership (TCO). While the leasing business brought lucrative margins, it had its inherent risks, especially in an era of rapid technological advancements. In this context, Log9 planned to shift toward an ownership model where customers could start owning the vehicle and bear the complete risk. The ownership model, in contrast to the leasing model, would bring a lesser profit margin for Log9, but it would also allow the company to get out of the hassle of multi-stakeholder management and focus on its core competency in technology development and manufacturing.

The main objective of the case is to help students better understand the importance of business model innovation, especially when technology leapfrogs. The case concludes with a specific dilemma between the leasing and ownership models, highlighting the trade-offs involved in such decisions.