Tesla MotorsJordan Ashley - Jon Farchmin - Matthew Kosmal - Anish Patel

● Introduction to Tesla

● Problems/Issues

● Industry Analysis

o Market

o Competitors

● Firm Analysis

o Competitive Advantages/Disadvantages

o Sustainability

● Conclusion

● Recommendations

Roadmap

Mission

Use proprietary technology, world-class

design and state-of-the-art manufacturing

processes to create a new generation of

highway capable electric vehicles (EVs).

Vision

Alter the world’s perception of EVs and

make EVs a viable alternative to gas

powered vehicles by producing an

automobile that is beautiful, exciting to drive

and the most efficient on the planet.

Plan

Enter at the high-end of the market and then

lower prices as cost efficiency and

technology improve (3 phases).

Tesla Vehicles

Recently released: Autopilot and Dual Motor AWD

Problem

Firm Strategy and Issues

Strategy:

● Long term: create affordable

mass market EVs

● Uniqueness and Innovation

● Strategic partnerships

● Serve as catalyst - “All Our

Patent Are Belong To You”

Issues:

● Customer uncertainty

● Legal restrictions

● Unknown mass market demand

● Open Source implications

● Cost

● Inability to meet production dates

● Potential Competition

Industry/Competitive Analysis

“By the same token, it means the market is enormous. Our true

competition is not the small trickle of non-Tesla electric cars being

produced, but rather the enormous flood of gasoline cars pouring out of

the world’s factories every day.”

Industry/Competitive Analysis

Industry Growth and PEV Trends

● A stronger economy and slumping gas prices has seen a rebound in auto sales

● Electric and Hybrid vehicles have also seen growth in sales in recent years

o A long term steady increase in gas prices, stricter fuel economy standards, and consumer

sentiment toward environmental issues has sparked hybrid and electric vehicle interest

US Total Market Sales and Growth US Monthly PEV Sales

Market Share

US Auto Industry Markets Share ● Many players in the auto industry

● Ford, GM, Chrysler, and Toyota control

over 60% of the market

● 97% of the vehicles in the industry utilize

traditional combustion engines

● Nearly 3% utilize hybrid technology

● .34% of autos are plug in EV

● Tesla commands .01% of the entire auto

industry

● Growth in hybrid and EV market will

depend largely on future oil prices,

consumer sentiment, costs and R&D

o Recent reductions in oil and gas

prices puts less strain on

manufacturers and consumers

Five Forces Analysis

Rivalry (-)● Numerous established competitors

○ brand loyalty

○ access to capital/economies of

scale

○ diverse product lines

Substitutes (+)● Substitutes for automobile’s exist

○ public transportation, airplanes

● Public transportation is cheaper, air travel

potentially cheaper over longer distances

and frequencies

● But, neither as convenient

Entry (+)● High barriers to entry

○ regulated industry

○ capital intensive

● Shallow experience curve

○ learning is hard

Customers (+)● Significant bargaining power in traditional

industry supply chain

○ dealers and consumers can

negotiate prices

● Tesla’s direct to consumer online sales

model eliminates bargaining power.

Suppliers (+)● Bargaining power is low

● Tesla gets ion cells from multiple

manufacturers

● Other vital components like engine,

chassis, transmission all manufactured in

house

The Competitive Landscape

● With the Roadster, Tesla entered the market as the only all electric high performance vehicle

● Tesla’s strategy is to enter into cheaper and more broad markets

Tesla’s Generic Strategy Moving ForwardAppeal to the broad market

Broad Narrow

Cost

Leadership

Differentiation

Firm Analysis

SWOT

Strengths Weaknesses Opportunities Threats

● Products - most

energy efficient cars

● Innovation, Tech,

Design

● Image

● Strategic

Partnerships

● Leadership and

Management

● Gigafactory

● Lack economies of

scale

● Low sales

● Dependent on

innovation

● Financial profile

● Capital of

Competitors

● Production delays

● Terms of

competition not set

yet

● Adaptable battery

uses

● Growing EV market

● Consumer sentiment

- climate awareness

● International Market

● Laws preventing

sales

● Proximity fear factor

● Small EV market

● Loss of Govt

subsidies

● Competitors

entering EV market

● Open Sourcing

Unique Distribution Model

Current Differentiation

Technical Superiority● Advanced lithium-ion battery technology with longest range EV

● Lowest cost for battery ($/kWh)

● Better R&D → over 240 patents and patents pending

● Best Powertrain → Dual engines/motors

● Exclusive EV market focus places Tesla ahead on experience curve

● Smoother & quieter ride

● Max torque immediately

● Battery swap in 90 seconds

Competitive Advantages

Technological Knowledge via Human Capital Network of free SuperChargers

Competitive Advantages

Fast Quick Charge and Full Recharge via SuperCharger

Competitive Disadvantages

➢ Cost of ownership still favors traditional gas vehicles

○ Gas prices have continued to drop throughout 2014

➢ Small demand and production restricts economies of scales

○ 2013 US Total EV Sales: 46,148 → 38.2% of US EV market

○ 2013 US Total Car & Trucks: 15.6M → 0.3% EV vs. total US market

➢ Significant competition if EV gains enough market share to go mainstream

Source: http://www.fuelgaugereport.com/

Competitive Disadvantages

➢ “Range Anxiety” → Fear of being

stranded with a dead battery

➢ Battery performs poorly in cold weather

➢ Competition working to create the

charging standard

➢ Trying to create the market for EV where

robust demand is nonexistent

➢ Long lead-time ~8-10+ weeks

“Battery-powered vehicles will probably

account for just 1 percent of the global car

market by 2020, compared to 0.3 percent

predicted for this year (2014)” - IHS Automotive

Competitive Disadvantages

Inability to sell in many states● Ban Direct Sales: 26

● Allow Tesla to Sell Cars: 22

● Fighting to Overturn Ban: 2

Limited Service Centers

Limited SuperChargers● 129 in North America

Competitive Disadvantages

● Hydrogen Fuel Cell Technology

● Competitor Partnerships- Toyota & BMW

- Honda & General Motors

- Ford, Daimler and Nissan

● Toyota Mirai○ 300 mile range

○ $57,500

○ 2015: 700 vehicles

“Hydrogen fuel cell vehicles function like

electric cars, using onboard hydrogen to

create electricity with only water as a

byproduct.” - IHS Automotive

- The Wall Street Journal - November 17, 2014

No SCA→ All “Competitive Advantages” are

Long-Term Operational Effectiveness

Conclusion

Potential Industry Outcomes

What Tesla Believes:● A fundamental shift to EV will

occur in auto industry

● Superior technical expertise and

relentless innovation will continue

to render current open source

patents obsolete.

● Will maintain industry leading

technology through continuous

improvement

Alternative Outcome:● The market may never shift to EV

● Competitors leverage their

resources, channels of distribution

and economies of scale to quickly

meet demand of non-gas vehicles

● Competitor options coming quickly

● Equal if not superior to Tesla’s

existing products

Recommendations

Recommendations

● Continue adding EV Supercharging stations (~80%)

● License technology to establish an industry standard

● Leverage brand equity to augment brand awareness

● Maintain fiscally responsible technology development

● Adjust production capability as demand requires

● Increase market share within the EV segment

o Next Gen vehicle

● Expand service centers in key markets

o Option: Partner with national service chain

● Gather support to fight legislation against direct sales

● Investigate hydrogen fuel cell technology

Questions?