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[Group C]

S i t u a t i o n A n a l y s i s

Tesla Motors Inc. Company Analysis1

Tesla Motors Inc. Company Analysis


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Table of Contents

Table of Contents.............................................................................................................................2

Executive ummary.........................................................................................................................!

Tesla Motors...................................................................................................................................."

Company #istory.........................................................................................................................."

Company $inancial %esource......................................................................................................"

&ro'uct &ortfolio.........................................................................................................................."

Mission.........................................................................................................................................(

Company Goals............................................................................................................................(

Company Core Competency an' ustainable trate)ic Analysis................................................*

In'ustry %evie+...............................................................................................................................*

In'ustry General ,utloo-.............................................................................................................*

T#e i)# En' e)ment................................................................................................................/

T#e Electric 0e#icle Mar-et........................................................................................................./

A )reen ve#icle it#in t#e 3)reen ve#icle4 mar-et5 t#ere are four types..................................6

7ar)ainin) &o+er of Customers...............................................................................................6

7ar)ainin) &o+er of uppliers...............................................................................................18

IT9ATI,:A; A:A;

tren)t#s.....................................................................................................................................1>

ea-nesses.................................................................................................................................1!


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Tesla Motors Inc. Company Analysis>

,pportunities..............................................................................................................................1!

T#reats........................................................................................................................................1!

Assessin) Competitors 0iability....................................................................................................1"

Toyota Motor Company.................................................................................................................1"

Toyota Motor Company ,T ummary................................................................................1"

Toyota?s Competitiveness in t#e E0 in'ustry............................................................................1(

GM.................................................................................................................................................1*

GM ,T ummary................................................................................................................1*

GM?s Competitiveness in t#e E0 in'ustry.................................................................................1/

7M.............................................................................................................................................16

7M ,T analysis................................................................................................................16

7M?s Competitiveness in t#e E0 in'ustry.........................................................................16

Intensity of Existin) Competition..............................................................................................28

Customers an' Competitors.......................................................................................................28

Tesla Mar-et Analysis....................................................................................................................22

Mar-et e)mentation.................................................................................................................22

Tesla &ro'uct Tar)etin) an' &ositionin)....................................................................................22

:e+ Mar-ets..............................................................................................................................2>

:e+ &ro'ucts.............................................................................................................................2!

Tesla?s Mar-etin) trate)y an' Current Customers by e)ments.............................................2!

&ro'uct Mix an' Mar-etin) Activities.......................................................................................2*

T#e ! Ms of A'vertisin)............................................................................................................2/

Conclusion.....................................................................................................................................26


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Tesla Motors Inc. Company Analysis!

or-s Cite'...................................................................................................................................>1

A&&E:=I@ I.................................................................................................................................>2


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Tesla Motors Inc. Company Analysis"

Executive Summary

T#e attractiveness of any in'ustry is often 'etermine' by t#e ease of entry to t#e in'ustry5

)overnmental re)ulations5 capital reuirements5 an' t#e possible earnin) returns from capital

investe'. Eually5 t#e more competitive in'ustry is5 t#e more complex it becomes for ne+

entrants to enter t#e in'ustry. T#is essay uses Tesla Motors to 'iscuss ituation Analysis of t#is

company5 its t#reats opportunities5 +ea-ness5 an' stren)t#s5 in a bi' to realiBe t#e possibility of

inclusion of a ne+ pro'uct t#at mi)#t be muc# c#eaper in t#e mar-et5 t#an t#e currently available

an' future propose' pro'ucts. Tesla operates at t#e premium se)ment of t#e automobile in'ustry5

+#ere it focuses on t#e pro'uct of electric ve#icles Tesla Motors 12D. Most maor incumbent

automobile manufacturers #ave en)a)e' in t#e pro'uction of bot# internal combustion en)ines

ve#icles an' po+erFtrain electrification ve#icles. T#e in'ustry is experiencin) si)nificant

c#an)es +it# t#e impact of ne+ re)ulation bein) felt by existin) manufacturers. Tesla competes

+it# manufacturers in t#e ICE ve#icle5 electric ve#icle5 #ybri' electric ve#icle5 an' plu)FinF

#ybri' section (7loomber) :e+s 2). o+ever5 t#e company faces maor strate)ic c#allen)es.

ey amon) t#em is t#e ability to )uarantee sufficient battery supply as customer 'eman'

balloons. T#e #u)e s#orta)e of lit#iumFion cells is a maor c#allen)e to t#e company pro'uction.

#ile t#e company #as t#e merits of strate)ic partners#ip5 t#e sustainability of lit#iumFion

batteries remains a maor c#allen)e to t#e company.


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Tesla Motors Inc. Company Analysis(

Tesla Motors

Company history

Tesla Motors is a #i)#Fen' car manufacturer foun'e' in 288> by &alo Alto 7renan 2D. T#e

company focuses on t#e pro'uction of electric ve#icles an' E0 po+er train components. T#e

company first E0 +as launc#e' in 288/ un'er t#e Tesla %oaster. Currently5 t#e company sells

t#e Mo'el luxury se'an in :ort# America5 C#ina5 an' European mar-ets Tesla Motors 1>D.

Accor'in) to consumer reports5 t#e Tesla Mo'el receive' t#e #i)#est customer satisfaction

score of any car in t#e +orl'. Currently5 t#e company #as a capitaliBation of 2*.6/billion +it# an

operatin) income of aroun' (1 billion 9= D. Eually5 t#e company total liabilities #ave experience an eual measure of

increase +it# 281! recor'e' as t#e #i)#est year +it# #i)# levels of liabilities !5/*65>!"D. T#e

company total stoc-#ol'ers? euity #as risen from 12!5*88 in 28125 to ((*5128 in 281>5 an'

t#en 6115*18 in 281! 7renan >D. T#e company )ross mar)in for 281! +as 2*."*5 operatin) at a

mar)in of F(./6J. #ile t#e )ross mar)in +as #i)#5 t#e net mar)in +as very lo+ F6.16J. T#e

return on investment #as remaine' lo+ at F1!.(8J


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Tesla Motors Inc. Company Analysis*

Mo'el pro'uct line an' t#e ot#er mo'el to be release'5 Mo'el @. T#e company #as patent ri)#t

for Electric po+er trains an' ot#er relate' pro'ucts. Eually5 t#e company #as investe'

si)nificantly in t#e pro'uction of rec#ar)eable po+er pro'ucts an' t#e establis#ment of

%ec#ar)in) stations.

Mission

T#e company mission since its inception #as remaine' unc#an)e' 3To accelerate t#e

a'vent of sustainable transport by brin)in) compellin) mass mar-et electric cars to mar-et as

soon as possible.4 #ttpKK+++.teslamotors.comKblo)KmissionFteslaD

T#e company )oals surroun' t#is mission statement. Accor'in) to t#e C#airman5 t#e

company #as focuse' on acceleratin) t#e transition of t#e +orl' from )asoline 'epen'ent

ve#icles to electric mobility +it# increase' affor'ability. Accor'in) to t#e company +ebsite5

Lt#ey are catalyBin) c#an)e in t#e automobile in'ustry.L ince t#e ve#icles are fun to 'rive an'

environmentally profitable5 t#e company #as +on t#e #earts of environmentally sensitive

clientele. In ma-in) sure t#at t#e company ac#ieves its mission5 t#e company #as 'evelope'

more stations an' promises to continue t#is 'evelopment tren' across t#e +orl'. T#e aim is to

ensure availability of battery tec#nolo)ies to act as competin) a)ents for )asolineFrun ve#icles.

Company Goals

Accor'in) to t#e company +ebsite5 t#e company )oal remains t#e same 3To accelerate

t#e a'vent of sustainable transport by brin)in) compellin) mass mar-et electric cars to mar-et as

soon as possible4 #ttpKK+++.teslamotors.comKblo)KmissionFteslaD

Company Core Competency and Sustainable Strategic nalysis

T#e company #as focuse' on 'ifferentiation strate)y as t#e main business level strate)y.

T#e company offers #i)#Fuality luxurious E0s to its consumers. At t#e cooperate level5 t#e


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Tesla Motors Inc. Company Analysis/

company #as c#osen to focus on pro'uct en#ancement an' customer experience. T#e company

focuses on expan'in) its international mar-ets in t#e European 9nion5 C#ina5 an' apan.

Accor'in) to &rice ater#ouse Coopers5 t#e company is strate)ically position as a #i)#Fen'

mar-et manufacturer an' 'ealer. T#e company o+ns its stores an' service centers5 invests

si)nificantly in innovation an' #i)#Fperformance ve#icle5 an' #as alrea'y acuire' its

manufacturin) plant in $remont. T#e company #as 'eparte' from t#e tra'itional business mo'el

employe' by ot#er players in t#e in'ustry by exclusively focusin) on Electric po+er train

tec#nolo)y an' o+nin) t#eir stores an' services stations. 9nli-e ot#er players in t#e mar-et5 t#e

company #as 'evelope' +#at most critics #ave 'escribe' as a 'isruptive tec#nolo)y in +#ic#

o+ners of suc# tec#nolo)ies 'eploy it successfully to a specific nic#e. Eually5 t#e company #as

secure' strate)ic alliances +it# &anasonic cooperate for t#e 'evelopment of more efficient an'

reliable batteries. T#e company cooperates +it# companies li-e Toyota an' =aimler in its

pro'uction process.

!ndustry Revie"

!ndustry General #utloo$

T#e in'ustry is one of t#e most competitive in'ustries in t#e +orl'. T#e in'ustry #as >"

players but t#e 18 lar)est companies control up to /8J of t#e mar-et s#are Tesla Motors 12D.

TeslaNs current mar-et s#are is estimate' to be 2.(J. T#e in'ustry #as +itnesse' si)nificant

)ro+t# rates over t#e past fe+ years. 18(.> million 0e#icles +ere sol' )lobally in 281! Tesla

Motors 1!D.

In t#e 9. +#ere Tesla #as its main s#are of mar-et5 t#e follo+in) facts c#aracteriBe t#e mar-et

O 9 Automobile In'ustry represents "J of &rivate ector G=&

O *(J of t#e mar-et is ma'e up of $or'5 GM5 an' C#rysler


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O 1/J of sales are from apanese car ma-ers

O (.(m Americans are employe' 'irectly or in'irectly in t#e automotive in'ustry.

O ybri' sales +as note' torepresente' 1.2J of t#e mar-et in 288"5 1.(J in 288(.

O $orecasts estimate "J of car sales +ill be #ybri's by 281>


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,argaining Po"er of Customers

T#e bar)ainin) po+er of consumers is often 'etermine' by t#e sensitivity of prices. Tesla

is operatin) in an in'ustry +#ere t#e buyers of t#e pro'uces are #ouse#ol's an' businesses. T#e

company main consumers are private #ouse#ol' consumers t#is type of consumers is #i)#ly

sensitive to price c#an)es. T#e sensitivity of t#ese clientele means t#at companies in t#e

automobile in'ustry fin' it 'ifficult to offset t#e increasin) costs of pro'ucts by increasin) prices

Tovey >D. $urt#ermore5 suc# an action +oul' mean t#at t#e company pro'ucts +oul' +itness a

)oFslo+. As suc#5 companies #ave to sell at lo+ prices in or'er to re'uce inventory. To counter

t#e impact of #i)# consumer bar)ainin) po+er5 companies #ave to invest si)nificantly on bran'

buil'in) in or'er to +ea-en t#e customer?s bar)ainin) po+er. o+ever5 t#e inverse is true in t#e

premium se)ment +#ere consumers are less sensitive to prices. Companies operatin) in t#is

section are lo+ly expose' to economic 'o+nturn as evi'ence' by recent profits earne' by

premium se)ment players suc# as 7M an' Au'i compare' to ot#er players 2D. ince t#e

company operates maor in t#e premium se)ment5 t#e bar)ainin) po+er of buyers is mo'erate

an' sli)#tly lo+er in t#is section as compare' to t#e ot#er se)ment of t#e automotive in'ustry.

,argaining Po"er of Suppliers

T#e automotive in'ustry particularly at t#e premium sector is or)aniBe' into suppliers of

motor parts suc# as exterior5 po+er train5 interior5 c#assis5 bo'y5 an' electrical5 an'

manufacturers of t#e materials. T#e suppliers are autoFspecific an' #ave to rely on a limite'

number of clients to remain profitable. T#is 'epen'ency on t#e limite' number of client ma-es

t#em limite' in terms of t#e bar)ainin) po+er. o+ever5 t#e bar)ainin) po+er of t#ese suppliers

lar)ely 'epen' on t#e material supplie'P &rice ater#ouse Cooper5 21D observe t#at suppliers of

c#assis an' po+er train #ave a relatively stron)er bar)ainin) po+er. Manufactures of t#e #i)#


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uality materials reuire' for t#e pro'uction of E0s #ave #i)# bar)ainin) po+er. o+ever5 t#is

po+er as ar)ue' by ;ittle 1"D is #i)# s+itc#in) +it# cost relative to massFmar-et competitors

because only a fe+ number of suppliers for t#e materials are available. T#e fact t#at t#ere are a

+i'e number of suppliers at t#e euipment manufacturin) level means t#at t#e company can

t#reaten to +it#'ra+ purc#ase an' t#erefore re'uces t#e bar)ainin) po+er of a sin)le supplier.

Inputs suc# as nic-el5 steel5 aluminum5 copper5 an' lit#ium offer limite' 'ifferentiationFma-in)

suppliers rat#er #omo)enous an' t#erefore less po+erful. As suc#5 t#e bar)ainin) po+er of

suppliers is mo'erate.


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S!T-T!#./ ./0S!S

Tesla S(#T Summary

S(#T nalysis

STRE.GT%S

• Goo' en)ineerin) an' tec#nolo)y

researc# capability

• Able to raise lar)e amounts of capital

• $irst mover a'vanta)eP t#e first

company to offer a relatively practical

fully electric car5 customers inclu'e

#i)#Fprofile fi)ures li-e Arnol'

c#+arBene))er5 Geor)e Clooney5 an'

ay ;eno

• =esi)ns an' buil's many of t#e

components in its cars5 inclu'in) t#e

po+er electronics5 motor an' battery

pac-s

• 0ertically inte)rate' value c#ain allo+

for cost an' uality control

• &roprietary tec#nolo)y

• ;o+ mar-etin) expenses

• Efficient pro'uction

• ;o+er battery costs

•Goo' bran' perception

(E1.ESSES

• =oesn?t #ave muc# bran' reco)nition

amon) t#e )eneral public

• A very small company +it# small sales

volume5 so no economies of scale

• &ossible supply problems +it#

components5 especially if 'eman'

increases

• T#e Tesla %oa'ster #asn?t been on t#e

mar-et for very lon)5 t#e lon)evity of

fully electric cars remains to be proven

• Alrea'y #i)# ,&E@ is expecte' to

increase

• &oor return on investe' capital an'

euity

• i)#er CA&E@ reuirements over t#e

next years

• i)# lon)Fterm liui'ity ris-

#PP#RT-.!T!ES

• Movin) to+ar's t#e family se'an

mar-et an' ma-in) a pro'uct t#at is

meant for more of t#e automotive

T%RETS

• ri)#t spee' @15 a prototype #i)#

performance electric car t#at caters to

t#e same mar-etP t#e only 'irect


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Tesla Motors Inc. Company Analysis1>

mar-et

• &rice of oil an' )asoline s-yroc-etin)5

ma-in) t#e price premium for an

electric car less of an issue• Expan'in) into 'evelopin) lit#iumFion

batteries an' ot#er ener)y tec#nolo)ies5

partnerin) +it# a battery company to

improve battery tec#nolo)y

• Economic )ro+t# in -ey mar-ets an'

especially in C#ina

• tricter emission policies• Currently lo+ interest rates

competitor to Tesla t#at offers a similar

pro'uct

• ;ar)e automobile companies enterin)

t#e mar-et +it# full an' #ybri' electric

cars5 t#e GM 0olt an' Toyota &rius

• T#e price of oil fallin) 'ramatically in

t#e s#ort run

• A competitor #avin) a brea-t#rou)# in

relate' ener)y tec#nolo)ies5 li-e

#y'ro)en po+ere' cars5 natural )as5 or

et#anol

• i)#er ra+ material prices

• E0 incentives p#ase out

• ;it#ium supply constraint

• ;o+er oil prices s#ort term

2escription of S(#T analysis

Strengths

Tesla #as a number of stren)t#s t#at )ive it competitive a'vanta)e +#en compare' +it#

t#e ot#er players in t#e in'ustry. To be)in +it#5 t#e company #as a vertically inte)rate' value

c#ain5 +#ic# allo+s cost re'uction an' promotes uality control. Cost is one of t#e main

c#allen)es facin) companies operatin) in t#e premium se)ment of automotive in'ustry5 +it# an

inte)rate' an' +aterti)#t value c#ain5 t#e company is able to control cost an' uality of t#e

pro'ucts at t#e same time. A perfect example of t#e company 'e'ication to cost is t#e Mo'el

'esi)n Tesla Motors 1"D. T#e car is 'esi)ne' to be t#e best in t#e +orl' offerin) in'ustryF

lea'in) tec#nolo)y5 in performance5 safety5 an' practicality. Conseuently5 t#e company #as an

establis#e' an' loyal customer base. T#e ability of t#e company to offer #i)# uality pro'ucts


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Tesla Motors Inc. Company Analysis1!

#as seen it +in t#e #earts of most of t#e premium car consumers in t#e in'ustry. Innovation is

also anot#er -ey stren)t# for t#e company. Tesla #as t#rive' to be t#e best innovator in t#e

in'ustry since its inception. T#e company #as continue' to up'ate its Mo'el pro'uct an' t#e

promise for better innovation in to t#e to be launc#e' Mo'el @. ot#er facts suc# as lo+

mar-etin) expenses5 efficient pro'uction5 lo+ battery costs an' )oo' bran' perception #ave

+or-e' to t#e a'vanta)e of t#e company. $urt#ermore5 +it# )oo' bran' perception5 t#e company

is poise' to +in more customers. Efficient pro'ucts lo+er battery costs5 an' lo+ mar-etin)

expensive all contribute to+ar's improve' profitability.

(ea$nesses

T#e company #as a very small sales volume5 +#ic# means t#at t#ere are re'uce'

economies of scale. T#e company small volume of salves means t#at t#ere is small return on

investment. i)#er CA&E@ reuirements are also anot#er +ea-ness for t#e company. T#e

company also faces t#e ris- of lon)Fterm liui'ity Tesla Motors 1(D. T#e nature of Tesla

investment 'eman's si)nificant amount of investment in t#e company infrastructure5 +#ic# runs

t#e ris- of liui'ity in t#e future. T#e company bran' is not +ell -no+n to t#e public. T#e

company #as small bran' euity an' t#e company can easily be overs#a'o+e' by ot#er lar)e

automa-ers.

#pportunities

T#e company is operatin) in a ne+ mar-et +#ere t#ere are immense opportunities. Mo'el

accor'in) to t#e company is t#e only true luxurious electric car. Consi'erin) t#at t#e company

mar-et is ne+ an' fully unexplore'5 t#e company can capitaliBe on t#e opportunity t#at currently

exists. T#ere is also proecte' economic )ro+t# in -ey mar-ets an' especially in C#ina5 since

t#ere is al+ays a positive correlation bet+een automotive 'eman' an' economic )ro+t# t#e


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Tesla Motors Inc. Company Analysis1"

company s#oul' anticipate increase' 'eman' Tovey 2D. tricter emission policies are also in

favor of t#e company. T#is means t#at consumers +ill continue to be influence' by )overnment

incentives to+ar's turnin) to E0s as t#e viable option for sustainable 'evelopment. T#e current

lo+ interest rates couple' +it# #i)# availability of cre'it is )oo' ne+s for t#e company.

Threats

T#e first si)nificant t#reat to t#e company is t#e incumbent automa-ers. T#ese companies

#ave establis#e' t#emselves in t#e in'ustry an' #ave very stron) bran' euity an' resources. If

t#ese bran's +ere to release E0s t#at may be 'ifferent at a tec#nical level +it# Mo'el an'

Mo'el @5 t#e company bran' names +ill +ei)#t in si)nificantly in t#e customer?s 'ecision

ma-in) process. :e+s t#at companies suc# as %enault5 0ol-s+a)en5 $iat5 Au'i5 ;exus5 =aimler5

an' 7M some of t#e most establis#e' players in t#e premium se)ment of t#e automobile

in'ustry are involve' in t#e pro'uction of E0s is a maor t#reat to t#e existence an' profitability

to Tesla. Conseuently5 t#e company faces a maor t#reat financially. T#e company #as limite'

resources an' very lo+ mar)in of error. Any mista-e can #ave a si)nificant cost implication on

t#e company finances. i)# cost for ra+ materials5 E0 incentives p#aseFouts5 an' lit#ium supply

constraints are some of t#e t#reats t#at face t#e company. E0 incentives are not permanent an'

+ill out p#ase' +it# time5 t#is means t#at t#e company +ill #ave to bear t#e full cost of

pro'uction an' innovation. %a+ materials for E0 pro'uction are very expensive. Increase'

'eman' for t#ese materials mi)#t affect t#eir availability an' force t#e prices to )o up. Eually5

lit#ium is t#e main lifebloo' for E0s. T#is commo'ity is not abun'antly available an' t#erefore

t#e ris- of re'uce' supply +ill #ave a ne)ative effect on t#e company profitability. $inally5 lo+

oil process is li-ely )oin) to affect t#e consumption of E0s. Most of t#e companies in t#e ICE

se)ment of t#e automotive in'ustry #ave investe' si)nificantly on ener)y efficient automotives.


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Tesla Motors Inc. Company Analysis1(

T#is means t#at most of t#e consumers +ill prefer #i)#ly ener)y efficient ICEs 'ue to t#e lo+

costs of maintenance as compare' to E0s Tovey !D. Competition from relate' ener)y

brea-t#rou)# suc# as natural )as an' et#anol.

ssessing Competitors &iability

Toyota Motor Company

Toyota Motor Company S(#T Summary

STRE.GT%S

• tron) mar-et position an' bran'

reco)nition

• tron) focus on %esearc# an'

=evelopment

• Extensive pro'uction an' 'istribution

net+or-s

• 7ran' loyalty

• or-in) in 7ot# i)# en' an' lo+

en'er user se)ments of t#e automotive

in'ustry

(E1.ESSES

• &ro'uct recalls coul' affect bran'

ima)e

• =eclinin) sales in -ey )eo)rap#ic

se)ments

• &oor allocation of resources compare'

to peers

• i)# interest rates an' lo+ availability

of cre'it

• i)# oil prices

#PP#RT-.!T!ES

• Gro+in) )lobal automotive in'ustry

•

Gro+in) partners#ip +it# 7M

• tron) outloo- in t#e E0 mar-et

T%RETS

• Intense competition

•

Appreciation of apanese


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Tesla Motors Inc. Company Analysis1*

Toyota3s Competitiveness in the E& industry

Toyota is t#e ol'est company to venture into t#e #ybri'KE0 se)ment. 7efore t#e

intro'uction of Toyota &rius t#e first #ybri' mo'el of E0 in t#e 9. in 28885 t#e car #a' receive'

+i'e popularity in apan by 166* Tovey 2D. As of eptember 28185 over #alf a million &rius

version of E0 #a' been sol' in t#e 9. mar-et alone. T#e car is c#eap fetc#in) aroun' 215888

an' #as been applie' to t#e ;exus ;(88#5 +#ic# )oes for 18!5888 Tovey >D. T#e ;(88# a

lar)e luxury care is in t#e same cate)ory as t#e Tesla %oa'ster5 +#ic# is less specious an' less

luxurious. Tesla s#oul' be very concern about Toyota ambitious plan to offer a lar)er battery

pac- an' a #ome c#ar)in) station as options for t#e &rius. 7y provi'in) t#is option5 t#e company

+ill be +ell poise' to launc# a full E0 pro'uct line5 +#ic# +ill 'efinitely #ave si)nificant

success in t#e mar-et. T#e plan by Toyota to offer lar)er battery pac-s an' #ome c#ar)in)

options +ill be 'irect competition to Tesla?s plans to offer fully electric se'ans at 'ifferent prince

points. Eually5 t#e planne' Tesla se'ans price' at "85888 to *85888 #itestar an' >85888

7luestar are very #i)# compare' to Toyota5 +#ic# can offer fully electric se'ans for ;exus for

un'er Tovay 2D +#ic# +ill be 'irect competition to t#e company pro'uct. Anot#er $ully electric

version of t#e Toyota Camry is alrea'y available in t#e mar-et. T#e company #as also release'

t#e Toyota iH E0 in response of Tesla Mo'el version of t#e E0 )eneration.

GM

GM S(#T Summary

STRE.GT%S

• Global presence

• :e+ vision an' strate)y

• tron) bran' portfolio

(E1.ESSES

• i)# cost structure

• 7ran' 'ilution

• 7ureaucratic culture


18/32

Tesla Motors Inc. Company Analysis1/

• tron) presence in C#ina

• no+le')e of #ome mar-et

• ! +ell performin) bran's

• Car recalls

#PP#RT-.!T!ES

• &ositive attitu'e to+ar's 3)reen4

ve#icles

• Increasin) fuel prices

• C#an)in) customer nee's

• Gro+t# t#rou)# acuisitions

T%RETS

• $luctuatin) fuel prices

• :e+ emission stan'ar's

• %isin) ra+ material prices


• Exc#an)e rates

GM3s Competitiveness in the E& industry

General Motors is a si)nificantly formi'able force in t#e in'ustry t#at poses a maor

c#allen)e to Tesla. T#e company #as investe' a lar)e amount of its capital in t#e 'evelopment of

alternative ve#icles for E0s. T#e current 'evelopment of 0olt5 +#ic# is not true E05 in'icates

t#at GM is #i)#ly intereste' in #ybri' care mar-et an' +ill continue to pursue t#e )oal to ac#ieve

E0 capabilities in t#e future. A preor'er of 285888 0olt as t#e care )ot into pro'uct in'icates t#at

t#e mar-et for 0olt is formi'able IE=C (D. T#e car is 'esi)ne' approximately forty miles on

battery po+er an' t#en t#e care en)a)es 1.8; turboc#ar)e' )as en)ine automatically to rec#ar)e

t#e battery solves t#at main c#allen)es facin) E0 ve#icles. $urt#ermore5 t#e main c#allen)e

facin) purely E0s is battery rec#ar)e. Conseuently5 t#e option provi'e' by GM can run on bot#

bio'iesel an' )asoline. T#e company EF$lex system a'opte' in t#e pro'uction of 0olt represents

a si)nificant force in stan'ar'iBin) E0 components ma-in) it an a''e' a'vanta)e for t#e

company. T#e company?s alternative mo'el for Mo'el is relatively c#eap. It +ill 'efinitely


19/32


attract more client base compare to t#e current Tesla &ro'uct. If t#e company +ere to c#oose t#e

lo+er en' mar-et5 it +oul' face si)nificant competition from GM.

,M(

,M( S(#T analysis

STRE.GT%S

• 7ran' reputation

• Environment frien'ly ve#icles

• Huality pro'ucts

• i)#ly s-ille' +or-force

• Corporate ocial %esponsibility C%D

• tron) bran' presence in C#ina

(E1.ESSES

• i)# cost structure

• ea- bran' portfolio

• &erception of #i)# prices

• Too fe+ acuisitions an' strate)ic

partners#ips

#PP#RT-.!T!ES

• Increasin) fuel prices

• &ositive attitu'e to+ar's 3)reen4

ve#icles

• Expan' bran' portfolio

• C#an)in) customer nee's

T%RETS


• %isin) ra+ material prices

• =ecreasin) fuel prices

• Gro+in) euro exc#an)e rate

,M(3s Competitiveness in the E& industry

7M #as been an establis#e' player in t#e luxury mar-et. T#e company #as continue' to

innovate an' pro'uce lo+ consumption automobiles5 #i)# performance luxury pro'ucts. 7M

#as maor a'vanta)es 'ue to its ability to its ability to manufacture efficient =ynamics5 suc# as

Mil' #ybri' tec#nolo)ies. T#e company #as sole patents in startFstop systems +#ic# s#uts en)ine

off +#en not nee'e'5 re)enerative brea-in) system5 an' small !Fcylin'er )as an' 'iesel en)ine.


20/32


T#e company #as establis#e' #ybri' tec#nolo)y mo'el options particularly t#e 7M @" mo'el.

Couple' +it# its 7M vision efficient 'ynamics5 t#e company #as prototypes for solar po+ere'

#ybri' tec#nolo)ies an' 7M #y'ro)en *Fpo+ere' version of t#e ;uxury * series. T#e

company is t#e +orl' fist #y'ro)enF'rive luxury. T#e i series mo'el of 7M E0 #as performe'

exemplary +ell +it# t#e latest mo'el i/ sellin) aroun' 185888 units imme'iately after its

pro'uction. Consi'erin) its tec#nolo)ical capabilities5 t#e company is a si)nificant competitor to

Tesla 7renan5 n.pD.

!ntensity of Existing Competition

Competition in t#e automobile in'ustry is intense. Material costs are al+ays #i)#5 price

+ars an' strict re)ulations by t#e )overnment re'uce profitability. #ile t#e automotive in'ustry

is at a mature sta)e in t#e 'evelope' nations5 t#e only +ay for manufacturers to capture ne+

mar-ets is t#rou)# innovation. At t#e +orl' sta)e5 >" automobile pro'ucts companies exist in t#e

mar-et5 22 of t#ese companies are base' on Asia IE=C !D. o+ever5 only t#e ICE se)ment of

t#e automobile in'ustry #as reac#e' a maturity sta)e. T#e E0 se)ment #as #i)# potential an'

most of t#e automa-ers are increasin)ly investin) a si)nificant amount of t#eir resources on

pro'uction of E0s. Companies are increasin)ly bein) force' to innovate an' any company t#at

see-s to remain competitive in t#e automobile in'ustry must be innovative. As suc#5 t#e intensity

of rivalry in existin) automa-ers is very #i)#. $urt#ermore5 automa-ers are bein) force' to )o

+it# contemporary c#an)es in environmental sensitivity5 +#ic# 'eman' for fe+er ICEs an' more

of E0s.

Customers and Competitors

Tesla is a nic#e car manufacturer. It is t#e only allFelectric5 commercial luxury sports

ve#icle5 +#ic# ma-es Tesla?s customers an' competitors very uniue. #ile explorin) Tesla?s


21/32


customers an' competitors5 +e can simultaneously loo- at its ! M?s of a'vertisin). T#is

consists of to +#om Tesla mar-ets an' +#o t#e mar-et consists of5 +#at motivates

customers to buy5 +#at messa)e Tesla is relayin) to consumers5 an' #o+ Tesla

communicates to its consumers t#rou)# me'ia.Tesla?s mar-et consists of early a'opters5 consumers t#at are seen as affluent5

e'ucate'5 an' motivate' by social presti)e. Consumers are also vie+e' as #i)#ly

tec#nolo)ically literate. Mo'el o+ners typically #ave an income of over 18858885 an' t#ey

consist of mostly men Tesla Motors 1>D. Tesla is a status symbol an' customers see o+nin)

one as part of 'efinin) t#eir personal bran'. T#e social presti)e of o+nin) a slee-5

sop#isticate'5 luxurious ve#icle t#at is also environmentally frien'ly is t#e main5 but not t#e

only motivator. T#e ve#icles safety also influences buyers. In fact5 Tesla?s mo'el receive'

t#e #i)#est safety ratin)s out of any car ever manufacture'. Tesla sells so +ell because

t#e messa)e it relays is t#e t#e 'rivin) force for customers5 but it?s not all about t#e

loo-. Mus- says5 3It is more t#an ust a company5 it is more t#an ust a pro'uct. T#ere

is a cause t#ere t#at really matters45 an' t#is is somet#in) t#at all consumers -no+. T#e

Mo'el is often compare' to t#e C#evy 0olt an' :issan ;EA$ because t#ey are t#e

top t#ree sellin) allFelectric or exten'e'Fran)e electric cars IE=C >D. o+ever5 it attracts a

completely 'ifferent type of buyer. ,n avera)e5 Tesla o+ner are youn)er an' +ealt#ier

t#an o+ners of t#e 0olt or ;EA$. Customers are not particularly priceFsensitive an' seem

to typically place a premium on service an' 'esi)n5 ma-in) Tesla?s main competition

luxury ve#icles rat#er t#an electric.


22/32


Tesla Mar$et nalysis

Mar$et Segmentation

T#e company #as a'opte' a )eo)rap#ical se)mentation approac#. T#e company #as t#ree

)eo)rap#ic mar-ets5 :ort# America5 Europe5 an' Asia. :ort# America #as remaine' t#e lar)est

se)ment of t#e company sales accountin) to **J of t#e total revenues )enerate' by t#e company

IE=C !D. Europe is t#e secon' lea'in) in terms of sales )enerate' by t#e company. T#e

company #as focuse' on countries suc# as +itBerlan'5 =enmar-5 an' ot#er can'inavian

countries. In Asia5 t#e company #as starte' rollin) out some of its pro'ucts in apan an' C#ina.

T#e 'ia)ram belo+ captures Tesla Mar-et e)mentation.

Tesla Product Targeting and Positioning

T#e company tar)ets #i)#Fen' users in t#e luxury se)ment of t#e automotive in'ustry. 7y

'ifferentiatin) itself from t#e existin) bran's5 t#e company #as prove' t#at electric ve#icles are

possible by offerin) mo'els of electric ve#icles t#at are fun to ri'e an' comfortable to t#e user.

To control t#e mar-et5 t#e company #as se)mente' its tar)et mar-et into four sections

t#e 7luetar5 t#e #itetar5 t#e %oa'ster5 an' $uture mo'els IE=C 2D. T#e se)ment values are

represente' as follo+s


23/32

Tesla Motors Inc. Company Analysis2>

A'opte' from5 &riceater#ouseCooper5 21.

T#e company #as positione' itself in t#e mar-et t#rou)# t#e Bero emission an'

environmental frien'ly ta). 7y embar-in) on environmental a+areness5 t#e company pro'ucts

use 188J rene+able ener)y5 an' are better for t#e +orl' economy. ome of t#e benefits

associate' +it# company pro'ucts inclu'e5 Bero )as price5 tax incentives in selecte' states5

sin)leFoccupancy access to car pool lanes5 'iscounte' electrical rates5 free par-in) at ;A@ an'

ot#er airports5 no par-in) meter fees5 an' t#e re'uction of oil 'epen'ency in t#e +orl'.

.e" Mar$ets

C#ina offers one of t#e most reliable mar-ets for t#e company. Contemporary statistics

in'icate t#at c#ina is t#e lar)est automotive consumer in t#e +orl'. Eually5 it is t#e lar)est

+orl' )reen #ouse )ases emitter. Conseuently5 statistics s#o+ t#at it is t#e lar)est )ro+in)

luxury ve#icle mar-et across t#e )lobe IE=C !D. C#ina t#erefore offers a )reat opportunity for

Tesla. %eco)niBin) t#is opportunity5 t#e company #as alrea'y be)an establis#in) its presence in

C#ina. o+ever5 t#e company faces maor c#allen)es in t#e C#inese mar-et because of import

'uties impose' on forei)n ve#icles. $or example5 t#e current mo'el is price' at 1285888

approximately "8J more t#an t#e prices in t#e 9. &rice ater#ouse Cooper 12D. T#ese prices

position Tesla at t#e mi''le in t#e luxury bran's in C#ina.


24/32

Tesla Motors Inc. Company Analysis2!

.e" Products

To capture t#e lo+Fen' consumer mar-et5 t#e company #as announce' t#at it +ill be

releasin) a t#ir' )eneration mo'el of E0 by 281*. T#e car is estimate' to cost an estimate'

>"5888. T#e ne+ mo'el comes as a response to t#e current )ap on t#e lo+Fen' mar-et. T#e

company #as also announce' t#at it +oul' be releasin) its Mo'el @ cross over by 1* but

commercial pro'uction +ill commence on 281/ after t#e estimate' launc# an' full operation of

Gi) factory. Conseuently5 t#e company #as announce' release of ne+ 'omestic po+er batteries

costin) >5"88 an' 25888. T#e entry into t#e ne+ 'omestic mar-et as explaine' by t#e CE, is

in tan'em +it# t#e company )oals of transitionin) t#e +orl' into )reen ener)y Tovay >D.

o+ever5 to #ave an a'vanta)e in t#e mar-et5 +it# ot#er companies t#at #ave stron)er

bran's an' are )oo' at utiliBin) t#e current tec#nolo)y to pro'uce c#eap yet competitive

pro'ucts as +ell5 Tesla +oul' #ave opte' for a mo'el t#at costs even lesser t#an t#e propose'

ne+ car of >"5888 Tesla Motors 1!D. T#e lo+Fen' consumer mar-et 'oes not prefer

extrava)ant an' leisurely components of a car5 an' t#e company can re'uce t#e leisurely

components of t#e ne+ pro'uct5 +#ic# +ill subseuently re'uce t#e costs of pro'uction5 an'

allo+ t#e company to intro'uce in t#e mar-et5 a pro'uct muc# c#eaper t#an t#e >"5888 car

announce'.

Tesla3s Mar$eting Strategy and Current Customers by Segments

Tesla Motors Company is often attractin) muc# fanfare amon) t#e customers an' t#e

investors as +ell. It #as lon)Fterm fun'amentals #ence E0s are #ere to stay an' t#e company

#ol's an enviable position in t#is mar-et. It #as never 'isappointe' investors an' #as been

outperformin) t#e le)acy carma-ers? stoc- by a #u)e mar)in. o+ever5 t#e prices for E0s #ave

continue' to be pro#ibitive in spite of t#e increase' tec#nolo)ical innovations as +ell as t#e


25/32

Tesla Motors Inc. Company Analysis2"

massive )overnment 'ole outs. A section of t#e mar-et #as been #avin) reservations on t#e lon)F

term utility t#at can be obtaine' from t#e E0s. It #as been ar)ue' t#at t#ey are not

environmentally frien'ly as t#e 'ea'ly fossil fuels al+ays )o into t#e electric )enerators use' to

run t#e ve#icles. ,t#ers 'o uestion its soarin) valuations alt#ou)# Tesla may not be value' +it#

t#e same metrics use' for many automobile companies suc# as $or' an' General Motors. E0s

are not a ne+ concept an' most companies #ave it on t#eir portfolio. :issan?s ;eaf +as t#e best

sellin) electric ve#icle in 281!5 +#ere t#e automa-er mana)e' to sell (85888 units ;ittle 1!D.

Tesla is strivin) to 'eal +it# c#allen)es surroun'in) t#e E0 in'ustry inclu'in) ran)e

anxiety. :o one +ants to purc#ase a ve#icle t#at runs out of po+er or ener)y faster +it# no place

to rec#ar)e t#e battery. T#e company #as been able to a''ress t#e issue by provi'in) a 'rivin)

ran)e of more t#an 2"8 miles in excess (7loomber) :e+s 3). It #as been on t#e ver)e

'evelopin) superc#ar)ers t#at +ill be of #elp to t#ose 'rivin) over lon) 'istances. T#e company

#as ma'e t#is possible by c#oosin) strate)ic places for t#e c#ar)in) pro)ram. 7usy places #ave

been c#osen to reac# out to several clients an' in a +ay mar-et t#e ne+ items bein) intro'uce'

by t#e firm. Tesla #as a'opte' a 'ifferentiate' strate)y in sellin) its cars +#ereby t#e customer

boo-s t#e car online #ence 'oes not nee' to visit a 'ealer. It also offers its potential customers a

'rive test5 +#ic# acts as a contact point +it# t#e customer.


26/32

Tesla Motors Inc. Company Analysis2(

A'opte' from ;ittle 1>D

Tesla is experiencin) competition in t#e area it #as c#osen as its maor se)ment. everal

mo'els from t#e tra'itional automobile manufacturers offer viable alternatives to t#e current

Tesla mo'els in t#e mar-et. T#eir competitors are expecte' to intro'uce E0s as +ell as t#e &lu)F

in #ybri's t#at +ill compete +it# Tesla Mo'el > in t#e mi'Fprice se)ment ;ittle 1!D. It s#oul'

t#us ta-e caution +#ile comin) up +it# t#e ne+ 'esi)ns t#at +ill compete effectively in t#e

mar-et.


27/32

Tesla Motors Inc. Company Analysis2*

A'opte' from ;ittle 1(D

Product Mix and Mar$eting ctivities

Tesla?s current pro'uct mix is comprise' of ve#icles an' accessories. At present5 t#e

only car in t#eir lineup is t#e Mo'el se'an. T#e Mo'el @ crossover +ill be release'

+it#in t#e next year5 an' Tesla is currently plannin) a smaller5 less expensive car

expecte' t#e next fe+ years. T#e Tesla %oa'ster5 +#ic# is no lon)er pro'uce'5 is

available for purc#ase in preFo+ne' form ;ittle 1!D. Accessories inclu'e ve#icle accessories

an' apparel. Tesla?s lar)est source of a'vertisin) comes from its bric-Fan'Fmortar

s#o+rooms5 not a'vertisin) an' me'ia campai)ns. Tesla strate)ically places its 3'ealer4

s#o+rooms in lar)e areas of s#oppin) suc# as malls an' #i)#Fen'retail clusters. It causes a lot

more foot traffic simply +al-in) by5 an' actually )oin) in an' c#ec-in) out t#e

s#o+room t#an typical car 'ealers#ips. T#is in itself is a -ey mar-etin) tool t#at #elps


28/32

Tesla Motors Inc. Company Analysis2/

Tesla )ain bran' a+areness. Tesla?s mar-etin) team is currently comprise' of only seven

people. As of late5 Tesla 'oes not #ave any plans to run any tra'itional or ne+ me'ia

a'vertisin) campai)ns in t#e near future.

The 4 Ms of dvertising

Mar-et T#e tar)et mar-et for Tesla is mi''le a)e' affluent consumers +#o ten' to

balance #i)# en' luxury )oo's +it# social responsibility5 or bein) )reen. T#e

'emo)rap#ics of t#is mar-et se)ment 'o not affect #o+ Tesla con'ucts business as +#o is

'rivin) t#e car is not so muc# important as +#et#er or not t#ey can affor' to 'rive t#e

car. Geo)rap#ically some consumers may not be as intereste' in Tesla?s pro'ucts because

a lac- of c#ar)in) stations.


29/32


an' rely less on customer a'vocacy 7loomber) :e+s 2D. To 'o t#is +e +oul' su))est

t#ey start 'oin) more commercial a'vertisements on c#annels t#eir tar)et mar-et is most

li-ely to be +atc#in)5 li-e maor ne+s stations. Also +e believe it +oul' be a )oo'

i'ea for Tesla to 'o more +it# print an' 'i)ital mar-etin). T#ey s#oul' be placin) a's

in for example5 $orbes ma)aBine5 all treet ournal5 an' maybe even :ational

Geo)rap#ic. it# t#eir 'i)ital a's +e believe t#ey +oul' #ave success not only on

t#ese companies +ebsites mentione' above5 but also maybe a'vertise on maor searc#

en)ines li-e Goo)le.Conclusion

Tesla is ar)uably t#e lea'in) )reen ener)y automotive manufacturer in t#e +orl'. T#e

company #as previously focuse' on t#e #i)#Fen' se)ment of t#e automotive in'ustry. o+ever5

t#e company #as 'iversifie' to 'omestic an' lo+Fen' se)ment of t#e mar-et. A fe+ +ee-s a)o5

t#e company launc#e' t#e first lit#ium battery options for 'omestic customers. A''itionally5 t#e

company #as planne' to release t#e first lo+ en' E0 by 281*5 +#ic# +ill compete +it# ot#er

)reen ve#icles in t#e lo+Fen' se)ment of t#e automotive in'ustry. ,ne of t#e main success

factors in t#e mar-et is its vertically inte)rate' value c#ain. T#is allo+s cost re'uction an'

promotes uality control. Cost is one of t#e main c#allen)es facin) companies operatin) in t#e

premium se)ment of automotive in'ustryP +it# an inte)rate' an' +ater ti)#t value c#ain5 t#e

company is able to control cost an' uality of t#e pro'ucts at t#e same time. o+ever5 t#e

company faces maor strate)ic c#allen)es. ey amon) t#em is t#e ability to )uarantee sufficient

battery supply as customer 'eman' balloons. T#e #u)e s#orta)e of lit#iumFion cells is a maor

c#allen)e to t#e company pro'uction. #ile t#e company #as t#e merits of strate)ic partners#ip5

t#e sustainability of lit#iumFion batteries remains a maor c#allen)e to t#e company.


30/32

Tesla Motors Inc. Company Analysis>8

(or$s Cited

7loomber) :e+s5 Goldman Sees Tesla Consuming Up to 17% of Lithium Output.” eb.

Accesse' from5 #ttpKK+++.bloomber).comKne+sK281!F82F2/K)ol'manFseesFteslaF

consumin)FupFtoF1*FofFlit#iumFoutput.#tml

7renan5 Mor)an. Tesla an' Elon Mus-Ns Nmaor ne+ pro'uct lineNRis it a batteryS C:7C :e+s5

281". Accesse' from5 #ttpKK+++.cnbc.comK281"K8>K>1KteslaFan'FelonFmus-sFmaorF

ne+Fpro'uctFlineFisFitFaFbattery.#tml

International Economic =evelopment Council. Creating the Clean Energy Eonomy! "nalysis of

the Eletri #ehile $ndustry. International Economic =evelopment Council 281>. &rint.

2F>(

;ittle5 =an. attle for Sales in the &remium Segment! Si' (ey Le)ers $mpating Current

"utomoti)e Sales *odels”. Automotive 0ie+point5 281". &rint. 2F1"

&rice ater#ouse Cooper. State of the &lug+in Eletri #ehile *ar,et . E0 Mar-et ,utloo-. &+

C5 281!. &rint. 1F!8

Tesla Motors U "nnual -eport //0 /1/ /11 /1 /12 /13. Tesla Motors5 281!. &rint.

Tovey5 Alan. TeslaNs economy Mo'el > electric car to #it t#e roa' in 281*. T#e Tele)rap#5 281".

Accesse' from5

#ttpKK+++.tele)rap#.co.u-KfinanceKne+sbysectorKin'ustryKen)ineerin)K11/!1(2!KTeslasF

economyFMo'elF>FelectricFcarFtoF#itFt#eFroa'FinF281*.#tml


31/32


6un 78+ 98:;

Mar 7:+

98:;

2ec 7:+

98:4

Sep 78+

98:4

Total Revenue

Gross Profit 9:7+7=8 9>8+8=7 9>:+>

ellin) General an'

A'ministrative2815/!( 16"5>(" 16(56*8 1""518*

:on %ecurrin) F F F F

,t#ers F F F F

Total ,peratin) Expenses F F F F

#perating !ncome or /oss @:=8+:??A @:89+44>A @=4+?7?A @7(6D 25*62D

Earnin)s 7efore Interest An'

Taxes1"(5*8/D 12!5"(*D *"528*D !15621D

Interest Expense 2!5>"2 2(5"*! 2/5*8> 2658(1

Income 7efore Tax 1/158(8D 1"151!1D 18>5618D *856/2D

Income Tax Expense >51(* >58!8 >5*16 >5*2*

Minority Interest F F F F


32/32


:et Income $rom Continuin)

,ps1/!522*D 1"!51/1D 18*5(26D *!5*86D

:onFrecurrin) Events

=iscontinue' ,perations F F F F

Extraor'inary Items F F F F

Effect ,f Accountin) C#an)es F F F F

,t#er Items F F F F

.et !ncome @:?4+99=A @:;4+:?:A @:8=+>9

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MARKETING PLAN FOR Tesla Company

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