Should Avis Budget Group prioritize expanding its electric vehicle fleet to meet sustainability goals, or focus on maintaining a larger selection of traditional fuel vehicles to maximize short-term revenue?

Introduction

The trade-off Avis Budget Group faces is whether to prioritize expanding its electric vehicle (EV) fleet to meet sustainability goals or maintain a larger selection of traditional fuel vehicles to maximize short-term revenue. This scenario involves balancing long-term environmental objectives against immediate financial considerations. I'll analyze this trade-off by examining the business context, user impact, technical feasibility, and strategic implications.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking Avis might be facing pressure from competitors or regulators. Could you share more about the market dynamics driving this decision?

Why it matters: Helps understand external factors influencing the trade-off Expected answer: Increasing consumer demand for EVs and stricter environmental regulations Impact on approach: Would emphasize the urgency of EV adoption if confirmed

• Business Context: Based on the revenue model, I assume traditional vehicles currently generate more profit. Is this correct, and how significant is the difference?

Why it matters: Clarifies the financial stakes of the decision Expected answer: Traditional vehicles are more profitable, but the gap is narrowing Impact on approach: Would influence the pace of EV adoption and financial projections

• User Impact: I'm thinking different customer segments might have varying preferences. Can you provide insights into customer demand for EVs versus traditional vehicles?

Why it matters: Helps tailor the solution to meet customer needs Expected answer: Growing demand for EVs, especially among younger and urban customers Impact on approach: Would inform targeted rollout strategies and marketing efforts

• Technical: Considering the infrastructure needed for EVs, what's our current charging station coverage at rental locations?

Why it matters: Assesses the feasibility of rapid EV expansion Expected answer: Limited coverage, with plans to increase Impact on approach: Would influence the timeline and resource allocation for EV fleet expansion

• Resource: Given the potential capital investment required, what's our budget allocation for fleet upgrades over the next 2-3 years?

Why it matters: Determines the scope and pace of possible changes Expected answer: Moderate budget increase, with flexibility based on market conditions Impact on approach: Would help balance short-term costs with long-term sustainability goals