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Tesla's Price

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by

Bonnie Stanfill

on 28 May 2013

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Transcript of Tesla's Price

$ C C Price Company Objectives
Customers
Costs
Competition
Channel Members
Price Strategy C ompany Objective Most Common
Competitor-Oriented Objectives
Primary Competitive Factors
Customer-Oriented Objectives C ustomers Demand Curve
or Prestige Products

Price Elasticity ompetition Type of market
Monopoly
Oligopoly
Monopolistic Competition
Pure Competition C osts Fixed
Variable
Total
Break Even hannel Members Strengths
Weaknesses Tesla has Prestige Products
very high quality
premium price
Demand Curve Alternative Fuel Cars
lower priced electric models
Nissan Leaf
Toyota Prius
Chevy Volt.
Moving over with Model X and Bluestar Not as sensitive
price of the car high is part of the draw
Income Effects
Sales are a “close measure of the economy" General Consumer
Price is key
Price is dropping
Sales are increasing

Cross price elasticity
Gas Prices Monopoly on the Luxury Electric Car
high priced
interested customers
Now Oligopolistic competition
Only three electric
29 hybrid
Tesla is set apart
Battery system
Supercharger network
Direct sales Monopolistic Competition
More car manufactures are getting into luxury cars
Increased demand
More options are being developed
Pressure to engage in price lowering
Model X and Bluestar
Model S is not as price sensitive Tesla's Variable Costs:

2012 = 383,189,000.00
Per unit = $123,609.35. Tesla's Fixed Costs:

2012 = $424,350,000.00 Tesla's Total Cost:

$807,539,000 Break Even Point:

3411 Model S

Tesla’s contribution per unit
385,699,000.00/3100=$124,419.03
Tesla’s break-even point is
$424,350,000.00 /$124,419.03 = 3410.65 units Price Strategy Innovation
Research and Development The four most common company objectives are:
profit-oriented
sales-oriented
competitor-oriented
customer-oriented

Tesla’s Company Objectives:
Competitor-oriented
Customer-oriented Competitor-Oriented Objectives
Competing against:
Gasoline and hybrid vehicles
Established auto companies
High-pricing luxury with a premium to low-pricing luxury
Making the first move -> Status quo pricing
Discourage any possible new competitors
Learning Rate
Electric propulsion and Battery technologies
Streamline process and supply chain Primary Competitive Factors
Technological innovation
Product quality and safety
Service options
Product performance
Design and styling
Product price
Manufacturing efficiency Customer-Oriented Objectives

Customer satisfaction and expectations:
Cost of luxury/ family cars
Long-range and charging flexibility
Energy efficiency and fewer maintenance costs
High-performance without compromising the design or functionality plus personalizing the vehicle
Safety & Environmentally Friendly

“Our future growth is dependent upon consumers’ willingness to adopt electric vehicles” Tesla’s Strengths:
Better Control on Inventory
Manage Warranty Service & Pricing
Maintain and Strengthen Tesla Brand
Customer Feedback and Loyalty

What about Dealerships? Tesla’s Weaknesses:
No written agreements some suppliers
Negotiations from both sides
Tesla’s demands
Suppliers demands

Tesla’s supply chain needs time to mature Tesla's Price Strategy - High Price but dropping
Initial high price toward innovators
Lower price options going forward
Start with narrow customer base
Gain brand awareness and expand
Offer unique cars that set it apart from competition
Innovative tech requires high price
Improve Supply Chain to bring down price
Operate at a loss initially
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