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Tesla Motors

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on 24 November 2015

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Transcript of Tesla Motors

Agenda
History
Tesla's Mission & Vision
Company Values
Current Strategy
External Environment
PESTEL
Porter's 5 Forces
Strategy Mapping
Key Success Factors
Internal Environment
SWOT Analysis
VRIN
Financial Analysis
Competitive Strength Assessment
Winning Strategy Assessment
Recommendations
Company History
Tesla's Mission & Vision
Mission
"To accelerate the world's transition to sustainable transport by bringing compelling mass market electric cars to the market as soon as possible"

Vision
"To utilize the company's proprietary batteries and powertain technology to put millions more electric cars on the road and dramatically curtail global dependence on petroleum-based transportation"
Values
Environmentally Friendly

Innovation

Superior Customer Service

Commitment to Quality
Current Strategy
Tesla currently has a Focused Differentiation Strategy
Providing highly differentiated products at a premium price to their consumers

Tesla's Distribution Strategy: selling cars direct to the consumer through their stores and website

Tesla's Manufacturing Strategy: sourcing parts from a large number of suppliers, but utilize in-house manufacturing for key components

Tesla's R&D Strategy: batteries, induction motors, gearbox and control software
PESTEL
Analysis
Strategy Maps
Recommendations
Tesla Motors
Ashley Dauke, Chris Yoon,
Krysta Williamson, Nebojsa Vujacic, Robin Dhingra, Scott Bewley

Porter's 5 Forces
Key Success Factors
Technology Development

Customer Loyalty and Retention

Product Differentiation

Supply Chain Management
SWOT Analysis
Opportunities
Increase marketing and advertising

Create further strategic partnerships to develop technology for cars

Acquisitions to improve market share

Increase product breadth

Market for environmentally friendly products is increasing
Weaknesses
Narrow product line

Limited brand awareness

Limit demographics due to pricing

Battery life limits mileage distance

Cash flow struggles

CEO Elon Musk - dependency and incompatibility

Tesla vehicles require Tesla specialists to make repairs
Strengths
Global recognition for technological innovation and product development

Strong management team and Elon Musk

Supply chain well established

Strong customer service

Differentiated product

Good R&D team

Developed a strong and viable alternative to fossil fuels
Competitors are beginning to produce electric vehicles which will reduce competitive advantage

Consumer conscientiousness and ethical behaviour has not reached maximum levels

Lower priced products are readily available to consumers

Economic downturn could adversely effect Tesla
Threats
Bargaining Power of Suppliers
Suppliers must be highly specialized and diversified
Utilizes 300+ suppliers for generic parts
Contracts are short term which could either increase or decrease power of suppliers
Technological parts are not readily available and may require design modifications
Bargaining Power of Buyers
Potential New Entrants
Capital requirements to become a car manufacturer are extremely high
Intellectual requirements are high
Strategic partnerships are not as difficult to cultivate
Some customers already have established brand loyalty
Establishing manufacturing plants and distribution channels are significant barriers to overcome
Substitute Products
Public transit
Taxi
Uber
Car2Go
Carpooling
Walking
Bicycle

Not all substitutes are readily available or viable options and can vary depending on where you live
Rivalry with Competing Firms
Buyer demand is slowly decreasing
Switching costs are moderate
Numerous competitors
Limited number of luxury brand competitors, even few electric luxury
Competitors are well established in the market and industry
Cost of switching is low
Buyers have the ability to negotiate prices
Buyer demand is decreasing and is minimal in comparison to supply
Buyers have the power to demand quality, better service and a fair price
Tesla offers a differentiated product, which decreases the power of buyers
Buyers have the ability to delay purchases do to cars being a discretionary good
Buyers: High
Suppliers: Moderate
New Entrants: Low
Substitutes: Low to Moderate
Rivalry: High
Power and Threat Levels
Political
Federal tax rebates for electric vehicles
Government subsidies for fuel extraction vs. battery production
Government support for placement of charging stations and electric cars

Economic
Fuel prices on the rise
Changes in disposable income and attitude toward spending vs. saving
Inflation and unemployment rates
US dollar strength
Sociocultural
Increase in demand for vehicles
Environmental awareness has increased significantly
Consumer confidence is at an all time high

Technology
Self-driving vehicles
Development of battery technology
Software development
Demand for fuel alternatives
Environmental
Decrease reserve for fossil fuels
Battery disposal
Recyclable materials used in production
Impact of greenhouse gas emissions

Legal
Gas emission laws
Vehicle safety standards
Patent protection for technological development
Complex consumer and environmental laws
VRIN Test
Financial Analysis
Gross Profit Margin
Return on Equity
Liquidity and Leverage
Inventory Turnover
Market Activity
Financial Statements
Winning Strategy Test
Fit Test
Competitive Advantage Test
Performance Test
March 2008
March 2009
October 2010
June 2010
February 2004
July 2003

Regular production
of The Roadster
begins
The second model
is revealed:
The Model S
Initial IPO on the NASDAQ
with 13.3M shares at $17
raising $226M
Tesla was
incorporated

Elon Musk joins Tesla as
Chairman on the
Board of Directors
The Tesla Factory
is opened
February 2014
April 2014
Today
April 2014
August 2013
February 2012
Tesla announces
plans for
Gigafactory
Deliveries to China begin
and announces plans
for factory in China
100th Supercharger
installed
400+ Supercharger stations
Implented solar powered charging stations
80+ awards for Tesla and Elon Musk
Highest mileage range in any electric vehicle on the market
The third model
is revealed:
The Model X
The first Model S
is delivered
in Europe
Company History continued
Auto-Pilot Technology

18650 Batteries

Auto-Pilot Technology
Valuable
Provides competitive advantage
Rare
Few manufacturers provide this technology
Inimitable
Advanced technology not easily replicated
Nonsubstitutable
People could drive the vehicles themselves
18650 Batteries
Service Software
Elon Musk
Valuable
Longest mileage range of any lithium ion battery
Rare
No other manufacturers utilize this battery pack
Inimitable
Developed in house, but not impossible to replicate
Nonsubstitutable
Other batteries are available and R&D for them is constantly evolving
Valuable
Provides customers with premium and convenient after purchase servicing
Rare
In-car software automatically uploads data from the vehicle to service centers
Inimitable
No, but would be costly to develop software and implement
Nonsubstitutable
People could take their cars into the shop to be diagnosed
Valuable
He's an inspring and visionary entrepreneur, with ambition coupled with willingness to invest in risky ventures
Rare
Only one Elon Musk
Inimitable
Only one Elon Musk
Nonsubstitutable
Only one Elon Musk
Service Software

Elon Musk
Competitive Strength
Competitive Strength Assessment
Competitor Product Comparison
Diversified, high quality and environmentally friendly products amongst competitors

Opportunities for competing in the lower priced markets not fully utilized

Doesn't fit with Tesla's current resources and capabilities
Currently have an advantage in electric car market, although may not be sustainable

High quality product being sold in small quantities to target market

Due to continuous purchases, there appears to be a strong demand for Tesla cars

Overall it doesn't appear to be a sustainable competitive advantage as more manufacturers move into the electric car market
Tesla continues to lose money every year even though they are trending upwards

Automotive sales are rapidly increasing

Market share in the car industry is low, showing a weak competitive strength

The company is not performing well for profit or market standing
Fit Test
Competitive Advantage Test
Performance Test
A for Effort
Horizontal aquisition of a company with lower priced products to match current market demands

Continue to develop marketing strategy to enhance advertising

Vertical integration into a technology company
Full transcript