The true costs of internationally purchasing of energy storage systems in the Electromobility sector - A case study of Volvo Trucks battery supply chain

Abstract

Prior studies which are written in the field of the total cost of ownership (TCO) have focused on the application of TCO concept on mature industry sectors. The argument for the usefulness of TCO is mainly based on the fact that in the case of a mature industry the structure of supply chain can be easily and effectively identified. However, few numbers of researches have applied the concept of TCO on relatively new and emerging industrial sectors. Our study tends to use the concept of TCO to identify major costs that incurred during the international purchasing of energy storage systems [immature product] at a multinational company located in Sweden and operating in the commercial vehicle industry. This investigation was based on conducting interviews at Volvo Trucks Electromobility Purchasing department. The result shows that there are seven cost factors in addition to the purchase price have been incurred during the international purchase of energy storage systems. In the immature electric vehicle industry sector, we could find that the reliability of the ‘make-buy’ decision that can be made based only on the value of TCO is restricted by other decision-influencing factors. Yet, we believe that through the concept of TCO the real cost of international procurement can be reliably assessed. This study adds to the existing literature by enhancing the understanding of the interconnected theoretical fields: MNC supply chain management and total cost of ownership.