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Tesla Motors Analysis

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Kaitlyn Hopfer

on 8 April 2014

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Transcript of Tesla Motors Analysis

Tesla Motors Analysis
Company History &
CEO Bio
Tesla Motors History
CEO Bio:
Elon Musk
Company Financial Performance
Resources and Core Competencies
VRIO Framework
Value Chain
External Environment
Companies in the Industry
Deep intellectual property protected by patents
S Platform
Electric Powertrain
Unique sales and distribution
Effective marketing strategy
Planned factory construction
Analysis Completed By: Sam Fletcher, Kaci Young, Blake Hamilton, Ican Osinjolu, Kaitlyn Hopfer
• Tesla is a fairly young company.
• 2003, Martin Eberhard and Mark Tarpenning founded Tesla with the purpose of leading the electric car industry.
• Elon Musk invested $7 million followed by $30 million.
• Entered a joint venture with Lotus to create the Tesla Roadster.
• Time Magazine, Best Invention 2006.
• Although, Musk realized that Roadster was not at all profitable.
• Musk took control and redesigned all aspects of the car.
• By 2012, new model, new market, new prospects.
• Born in South Africa.
• Studied in Canada to avoid joining the South African Army
• Transferred to University of Pennsylvania.
• Whilst in education, co-founded PayPal.
• PayPal was acquired by eBay for $1.5 billion.
• Used funds to invest and grow companies.
• Tesla Motors, Solar City and SpaceX
• In 2007 Tesla was losing about $50,000 each car sold
• Tesla’s cash flow
• They received a 465 million dollar loan in June 2009, by the end of 2008
• Tesla had lost 205 million and added another 31.5 million in losses by September 30, 2009
Company Financial Overview
Competitive Environment
Choice #1
Initial Public Offering
Choice #3
Choice #2
Stand Alone or Joint Venture with Another Company
Porters 5 Forces Model
SWOT Analysis
Rivalry Among Existing Firms
Moderate Threat
The top 4 automobile companies hold nearly 60% of the total market share
The rising interest in electric vehicles could threaten Tesla's differentiating factor
Threat of Substitute Products
Moderate Threat

There is a low switching cost associate with automobiles
Competition with the hybrid and other environmentally friendly segments of vehicles
Consumers can select from numerous forms of transportation (ex. public transportation, walking, biking, car pooling)
Bargaining Power of Suppliers
Low threat
Tesla has the ability to control the manufacturing and distribution costs of their products
Competition among suppliers lowers the price of the supplies
Low threat
Laws and regulations make it difficult for new companies to enter the industry
Large capital investments are required up front to set up a manufacturing factory
Strong established brands would threaten news brands ability to gain market share
Bargaining Power of Buyers
Low Threat

Consumers choosing electric vehicles have limited choices and Tesla offers the highest quality
Ability to justify price due to high quality inputs
Threat of New Entrants
Technological innovations from competition
Increasing government regulations
Future competitors entering the market
The electric vehicle segment does not grow
Alternative Strategies, Recommendations, and Implementation
What would you do?
Final Recommendations
Strengths
Weaknesses
Opportunities
Threats
Rising revenues
Leading edge technology
Bold marketing strategy
Self-operating and distribution
High price
Large debts
High competition in the market
Low market share
Electric market is a small and growth is slow
Government controls on the industry
The rising costs of oil and gasoline may make consumers less price sensitive to purchasing an electric car
Increased awareness about consumers carbon footprint may influence the product appeal
-Provides an influx of cash for investment, allowing them to compete with larger companies
-The funds are need to expand model selection and increase customer base
-Investments in technology and operations will reduce costs and increase profitability

-New leadership and management may rejuvenate the company
-Ability to build on innovation and design that is currently in place by differentiating Tesla's
-Produce a less expensive electric car in order to make the product available to more consumers
product offering from other electric cars
-Joint venture to create with battery companies to create more affordable replacement batteries
-Work alongside the governments energy efficiency departments to receive funding and grants
Known brand names will have the ability to expand into the electric market, making it difficult for Tesla to compete
There is a high threat of substitution including alternative forms of transportation
Future of alternative fueling is uncertain
Increased growth and research possible for Tesla under larger parent company
Reduced risk
Transition control through selling shares
Elon Musk would have the ability to extend his efforts to his other projects
Sell the company
After conducting our final analysis we believe that Tesla motors should sell out to a larger automobile company would who have the ability to expand product lines and expand research and development in order to gain and retain a larger customer base
Choice #3
Thank you for your time
Cell to battery progression
S Platform
Differentiation advantage
Creates customer value through:
Leading technology
Online community
Unique marketing
Lower cost Gen. III vehicles
Distribution
Selling through dealerships would provide better accessibility for consumers
Consumers value the ability to bargain for price at dealerships
Readily available products give consumers immediate gratification of their purchase
Availability of service though dealerships provides more value to consumers
Market Accessibility
Limited capital makes it difficult to do effective marketing
Raising awareness about the value of electric vehicles would rise awareness and drive a desire for Tesla vehicles
Small product line limits the consumer demographic
Tesla's brand image would remain a separate entity from the buyout company
General Motors, Ford, Chrysler, Toyota, Honda, and Nissan
are the biggest players in the US Auto Industry

Tesla has only .01% of the Market

Dynamic between the Foreign and domestic companies

Monopolistic competition, making it difficult to gain market share especially for smaller companies

Due to high competition, companies are constantly seeking ways to gain a competitive edge

According to the 2012 Consumer Report Survey Tesla was a top 10 brand
Which Alternative Fuel Source will emerge as the new standard ?
Factors most important to consumers when Purchasing vehicle
Tesla Motors
Why Companies Would Want Tesla...
The rising oil prices mean the the electric vehicle segment will begin attracting consumer and automobile manufacturer attention
Tesla's strong brand image will make it attractive to luxury automobile makers
Anti-takeover policies suggest that Tesla is already viewed as a potential threat, making it appealing for consumers to take it over
Full transcript