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Tesla Strategic Financial Management

By Nicholas LoBrutto & Matthew Morrisey & Gabe Velez
by

Nicholas LoBrutto

on 13 April 2015

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Transcript of Tesla Strategic Financial Management

Nicholas LoBrutto & Matthew Morrisey & Gabe Velez
Timeline of the Company
Business Level Strategy
SWOT Analysis
Tesla Motors Inc. Financial Health (TSLA)
2003
Founded
by Elon Musk,
TELSA is incorporporated
2007
Tesla Roadster receives Index
Design Award
2008
Production of Roadster

Elon name 75 most influential people
2009
Model S Unveiled

$465 M Loan from department of energy

Tesla Named one of americas hottest brands

Strength
Partnerships with Toyota and Panasonic

High Range on one charge -Up to 300 miles
Zero emissions and environmental-friendly electrical
resources
Opportunities
Threats
Weakness
head to head race with same class competitors - BMW i 8 & BMW i 3
New energy technology
- hydrogen energy power
- natural gas
- ethanol
Lack of charging stations
At home charging is long and expensive
11 hours
New typ of car- unfamiliar to the target market
High Price
Dependent on investors
Short Term Strategy
Long Term Strategy
Experienced CEO -> Elon Musk founded companies like Paypal and SpaceX
Economic slowdown limits their market
Who Wants one?
Questions ?
Executive Summary
2010
May 17
Tesla go public at $17/share
Raises $226M

Opens Tesla Factory
2012
Model X Unveiled

Model S begin delivery
(Car of the Future)
Time Magazines Best invention of the year

2013
Consumer Reports Best car ever tested 99/100
Repayment of Energy Loan 9 yrs early
Model S is named car of the year
Opens manuf. plant in Netherlands
Elon named businessperson of the year

2014
Plan for Battery Gigafactory announced

China factory in 2-3 yrs

200th charging factory is opened

431,000 sq ft facility in Cali. acquired

Designs, Manufactures, and sell 100% electronic cars (Zero Emissions)

Headquarters is is Palo Alto, California
6,000 employees

Now in 37 Countries Worldwide
Direct Consumer Sales/owns all store/service centers
Model S, Model X, And Roadster, Battery Producers

Leader in Selling online cars



Top Management
Elon Musk
Founder and CEO of SpaceX—a space launch vehicle company
Prior to SpaceX, he co-founded PayPal, the world's leading electronic payment system (sold to eBay for $1.5 billion)
Elon's first company was an Internet software company called Zip2( sold to Compaq in 1999 for over $300 million in an all cash)
CEO and chairman of Tesla Motors
Trustee of the X Prize Foundation and the Musk Foundation, both of which have a strong interest in promoting renewable and environmentally friendly energy technologies
Deepak Ahuja
15 years of global automotive financial experience
Was-CFO for Ford of Southern Africa
CFO for Auto Alliance International, a joint venture between Ford and Mazda with over $4 billion in revenue
Manufacturing, Marketing and Sales, Treasury, Acquisition and Divestitures
Chief Financial Officer
JB Straubel
Chief Technical Officer
Co-founder of Tesla
Bachelor's in energy systems engineering
Master's in energy engineering (Stanford)
Oversees the technical and engineering design of the vehicles
Handles technical interface with key vendors
Evaluates new technology
Model X
Model S
Model X Competitors
For practicality: Infiniti QX60 Hybrid
$46,500
26/28 City / Highway


For performance: Porsche Cayenne or Porsche Macan
$58,300
20/29 City/highway
Mission Statement
To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible
Fire Proof (Quarter Million last year)
Safety (Best of all cars on road)

85-kilowatt-hour-- $79,900
$7,500-$10,000 Federal Tax Credit
Industry Analysis
Highest safety rating in America
$71,070-Starting At
Zero to 60 mph in as little as 3.2 seconds
Up to 270 miles range (EPA)
50,000 cars in 2015 to 500,000 by 2020
Tesla Competitive Advantage

Model X
Porters 5 Forces Model
Industry Competition
Barriers to Entry
Buyers Power
Supplier Power
Substitutes
Modest Buying Power from consumer
Government incentives give potential customers tax credit deduction($7500-$10,000)
Demand for car is high, with a limited number of vehicles available
Very high
Over 200 Suppliers all over the world
Battery Cells from Panasonic
Own Gigafactory

Gasoline powered automotives
Non-Luxury electric vehicles
Nissan Leaf
Chevy Volt
Rivalry is high amongst competing brands
Threat from global companies
High fixed cost



Tesla's own management
Bad MGMT in china=30% fired
Barriers to entry is high

Achieving economies of scale is difficult

High revenue volatility with continual R & D

Now
2016

FREE!! in order to encourage Road Trips

Large number of consumer overseas

Customization and Personalization

Increasing conerns about environmental issue

Running out of oil

Own gigafactory
Build a wide range of models, including affordable priced family cars

Move the economy towards a solar electric economy

keeping a fast growing technology company, all free cash flow is plowed back into R&D to drive down the costs and bring the follow on products to market as fast as possible

co-marketing/partnerships with sustainable energy products and companies

"Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options"
Elon Musk
Electric car without compromises

Beat a gasoline sports car like a Porsche or Ferrari in a head to head showdown
While having twice the energy efficiency of a Prius

Enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model

"Any new technology initially has high unit cost before it can be optimized"-Elon Musk
Conclusion
By 2020, produce more lithium ion batteries annually than were produced worldwide in 2013
$5 B -Gigafactory in Reno Nevada
International Expansion
Continual R & D / Innovation
Appeal to a wider market $$
Continue to add Supercharge Stations for more access when traveling
Generation III in 2017
BUY! BUY! BUY! BUY! BUY!
Bibliography
http://my.teslamotors.com/forum/forums/tesla-timeline-0

http://finance.yahoo.com/echarts?s=TSLA+Interactive#

http://otrans.3cdn.net/084780d60c0f3505e6_x3m6yhfa0.pdf

http://sites.psu.edu/teslammportfolio/executive-summary/

http://www.teslamotors.com/blog/mission-tesla


http://techcrunch.com/2014/10/10/elons-musks-plan-to-sell-half-a-million-teslas-by-the-end-of-next-year/

http://www.ibtimes.com/september-2014-tesla-model-s-sales-ceo-elon-musk-says-global-sales-hit-record-1714929

http://247wallst.com/autos/2015/03/17/tesla-fires-china-staff-as-sales-falter/

http://www.forbes.com/sites/jackperkowski/2015/02/17/tesla-overestimates-the-china-market/

http://www.caranddriver.com/tesla/model-s

http://blogs.marketwatch.com/energy-ticker/2014/05/07/bmw-versus-tesla-compare-the-specs/

http://www.academia.edu/7563935/tesla_motors_startegic_analysis

http://www.lacarguy.com/green/article/tesla-toyota

http://www.teslamotors.com/fr_CH/blog/secret-tesla-motors-master-plan-just-between-you-and-me

http://www.dailytech.com/Tesla+Reveals+Three+New+Upcoming+Vehicles+in+Preparation+for+IPO/article18800.htm

http://www.businessinsider.com/tesla-reveals-gigafactory-plan-2014-2

http://www.trefis.com/stock/tsla/model/trefis?freeAccessToken=PROVIDER_fdb11db659bd1a59ae20da362d0b1971a252c2be

http://library.morningstar.com.pluma.sjfc.edu/stock/key-ratios?t=TSLA&region=USA&culture=en-US

http://www.huffingtonpost.com/2014/09/12/nevada-tesla-gigafactory_n_5808818.html

Key Ratios
Trefis Report
Consumer Reports Best car ever tested 99/100
Repayment of Energy Loan 9 yrs early
Model S is named car of the year


Plan for Battery Gigafactory announced
China factory in 2-3 yrs
Problems in China
Key Financial

Toyota
Toyota-Yen
Ford
Ford
Trailing Twelve Month
Governor's office estimates the 5 million-square-foot factory will create an immediate 3,000 construction jobs, 6,500 factory jobs and 16,000 indirect jobs once completed
2015
Plan to Start production on New Batteries

Not for car though....

These batteries will be for Home use in
Connection with SolarCity (installation of Solar Panels on rooftops )
Full transcript