To run a successful transportation
system in Northern Ireland for low-income group and those residing in rural
areas, government should launch electric buses on large scale. This can be
witnessed in the last few years, as advanced technologies have played crucial
role in developing transportation around the world.
In
1950s the cost of electrification was so expensive as compared to fossil fuel.
As per the report of International Renewable Energy Agency, the cost of
renewable energy is decreasing in long term investment. It has exceptionally minimal maintenance cost and noise free. In the meanwhile, we also need to keep
focus on sustainability, to achieve the goal it is extremely
important to shift the dependency from exhaustible
sources of energies to inexhaustible sources.
In countries such as China, approximately 59.1 percent of city buses are powered by pure electricity. Recently, India's capital city announced the purchase of approximately 8000 electric buses to replace existing CNG-powered buses. Because these buses are being ordered in bulk, the total cost will be reduced. This will also ensure that pollution levels are reduced, and the country meets its goal of reducing its carbon footprint. To make electrification successful in the transportation sector the role of economies of scale is significant.
Economies
of Scale (EOS)
Economies of scale are financial
benefits that can happen as a producing company expands and becomes more
productive, which lowers costs. When a company's production becomes more
efficient, it benefits from economies of scale. Businesses can accomplish this
by increasing output while decreasing costs. This happens because costs are
spread across a larger number of products. Fixed or variable costs are
possible. (Will Kenton, 2022)
Production increases from Q to Q2 , average cost per unit decreases from C to C1. LRAC is the long-run average cost
Significance
Understanding economies of scale is
critical because of the implications for a company's production costs.
Economies of scale give larger companies a competitive advantage by allowing
them to produce more units while decreasing their overall cost per unit.
Companies can spread their variable
and fixed costs across a larger number of goods as they increase production,
lowering the per-unit cost of the product. When this happens, consumers may
benefit from lower product prices. (Indeed, Editorial team UK, 2022)
Focussing on the current situation,
if we
apply this model and focus primarily on external and internal economies by
mass-launching electric buses, we will reduce long-term fixed costs. By
implementing economies of scale model personnel cost which includes the cost of
staff for administration, traffic cost, maintenance cost, and repair cost cab
be reduced. It will also maintain sustainability by reducing carbon emissions
and noise pollution, which will benefit the rural population, which is
primarily composed of the elderly and children. The rollout of electric buses plays
a key role in decrease of harmful emission (CO2, noise) which are caused by the
operation of fossil fuel buses. (European commission 2016)
Two Main factors of Economies of
scale:
External EOS are caused by factors
beyond the company's control, such as the industry, geographic area, and
government. These are also more likely to have long-term effects for the entire
industry, which means that everyone benefits in the long run and are more difficult
to convert into short-term gains. (Paul Boyce, 2021)
People in rural areas usually have
to travel farther to get to services. According to
Department of Transportation report, people in rural areas travel nearly 50%
farther per year than those in urban areas. The challenging issues are limited
transportation and long waiting times. Using the EOS factor and improving
infrastructure required for running electronic buses, developing short routes,
and launching buses on a larger scale must be beneficial to the entity as well
as the rural population residing in such area. (Government Office for Science,
2021)
This can be also achieved by
Recurring revenue model. This model will help to generate a continuous source
of income for the government, and it will also enable a customer to have other
benefits such as paying low costs etc.
Internal EOS results from internal
factors such as bulk purchasing, hiring more efficient and highly skilled
managers, and lowering production costs through technological advancements.
These frequently have immediate effects on an organisation and can be developed
for increased long-term growth. Purchasing bulk vehicles in the current
situation will reduce long-term maintenance costs, per unit cost and maximising
profit and ensuring the success of this project. We can ensure long-term
success by using technical and marketing economies to run a successful project.
(Paul Boyce, 2021)
By improving the efficiency and launching
the electric buses on large scale, the economies of scale can be achieved. When
authority doubles the output, manufacturing costs can fall rapidly. Hence, by
adopting an advanced technology, equipment the transport authority shall
generate significant profit eventually.
By using monopsony, the government
can buy vehicles in bulk or through a public-private partnership model,
lowering long-term costs.
By using managerial economies of scale:
It means government can hire strategists, and these specialists can improve the
model and it will enhance the productivity along with keeping in mind the needs
of rural population, geographical structure, and
the sustainability. This can be also achieved by Recurring revenue model. This
model will help to generate a continuous source of income for the government,
and it will also enable a customer to have other benefits such as paying low
costs etc.
Prospects: Air pollution emissions from transportation must be drastically reduced due to the detrimental effects that they have on human life and health as well as the ecosystem as a whole. This is only feasible by switching to low emission mobility. (C Johnson 2020) With the use of renewable sources of energies in transportation sector and by implementing models such as Economies of scale, public-private partnership, recurring revenue model it is possible to enhance the transportation in Northern Ireland successfully.
Comments
Post a Comment