Strategies for developing batteries for electric vehicles: a real options model

Abstract

In this article we consider the task of developing batteries for electric vehicles, and we use a tool that incorporates a real option model and Monte Carlo simulation in order to define the best strategy for managing it. We assume that different levels of resources can be used to undertake the task, leading to different average advancement speeds and different costs, and that the level of resources being used may be changed according to the way the task is developing. We present a procedure that aims at identifying the strategies that maximize the net present value of the task. The approach is used in several different scenarios, in order to define some general rules that can help managers have an idea of the resources that may be available in the future, without endangering the maximization of the net present value of the crucial tasks.