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Tesla in China - Part 1

A Presentation as to why Tesla Motors' entry into the Chinese market should succeed

Maciej Dudek

on 17 October 2013

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Transcript of Tesla in China - Part 1

In February Tesla announced that it is opening its first store in China, an 8,000 square foot facility in Beijing
Some have questioned this move as, despite Chinese government's efforts, the Chinese consumers have not been interested in purchasing and using electric vehicles.
But Tesla Motors needs to continue growing if Elon Musk's vision of electric cars for the masses is ever to come to fruition.
Current Mine-and-burn hydrocarbon economy
electric economy
Build Expensive Sports Car
Use Profits to build a more Affordable Car(s)
Use Profits to build an even more Affordable Car
Roadster $100k
Model S & X $60k-100k
Around $30k
Even though Model S sales are exceeding expectations (4,900 vs 4,500 in Q1) Tesla Motors needs China & Chinese consumers:
China is the largest single-country automotive market
Overall auto sales larger than North America and Europe by 2020*
Rise in disposable income in 2012
*"Bigger, Better, Broader: A perspective on China's auto market 2020 - McKinsey & Co 2013
High Growth Rate *
But aren't Chinese consumers uninterested in electric vehicles?
Maybe so, but Tesla Motors makes
vehicles (at this stage) that happen to be electric
So what makes Tesla Motors a luxury brand:
Chinese consumers are certainly interested in luxury goods:
Purchases by Chinese (home and abroad) account for over 27% of global total - 34% by 2015
Rising numbers of very wealthy consumers
High Financial
"Luxury Without Borders, China's New Class of Shoppers Take on the World" - McKinsey 2012
Even though the study concentrated on Luxury goods, such as:
Similar trends can be expected for luxury vehicles
Per "Luxury Retail Management" - Michel Chevalier & Michel Gutsatz, 2012
History and Heritage:
Nikola Tesla
Unique and Creative Vision:
Elon Musk - CEO
Franz Von Holzhausen - Chief Designer
George Blankenship - VP of Sales & Ownership Experience
Catering to Elites at High Prices:
Roadster $110k
Model S $60-100k
Universally Admired
Of course Tesla is far from alone in the luxury automotive space in China:
Well-Respected Brands With Deep Pockets!
How can Tesla Motors compete with limited resources?
Luxury Business Objectives:
Make a Product (and match with Service) that builds emotions
Distribution system that organizes forms of scarcity
Per "Luxury Retail Management" - Michel Chevalier & Michel Gutsatz, 2012
In conclusion, by focusing on Luxury Retailing Tesla Motors can really differentiate itself from other auto makers in China
Focus on Luxury Retailing
2013 Motor Trend Car of the Year
Automobile Magazine's 2013 Car of the Year Time
Time Magazine Best 25 Inventions of the Year 2012 award
Consumer Reports' top-scoring car ever
No Dealerships, all stores are company owned
Stores located at high-end malls
Online purchasing
""If everyone who comes into a Tesla store leaves it with a smile, we've done our job" - Blankenship, VP of Sales and Ownership Experience
."..eventually [customers] will come back and buy a Tesla not because it was sold to them, but because they really want to become part of the Tesla community."
- George Blankenship
Retail Stores carry no inventory
Cars are purchased Online, Built to Order & Delivered directly to customer
No large dealer lots filled with cars & Waiting list for new orders
Design and communicate consistent Brand Image
Company-Owned Stores =
High control
over customer interaction
Loyal customers can be vocal spokespersons
Private Drive events enhance the
premium feel
of the brand
Online advertising
However, Brand Image is primarily built with media coverage and word of mouth and not a concerned Marketing Effort, saving on costs...
This can lead to inconsistencies
Part 2, with in depth analysis and recommendations can be seen here:

Thank you for watching!
Part 1
Nikola Tesla - famous inventor, engineer, physicist; and a
He was a major contributor to
electrical power generation
and a proponent of
Alternating Current (AC)
Tesla Motors
is not only named after him and his legacy but also uses an
AC motor
that is a direct descendant of Nikola's original 1882 design
Elon Musk
- Co-Founder,
& Product Architect
Main vision behind the company
Co-founder of PayPal and SpaceX
Franz Von Holzhausen
Chief Designer
Ex-director of Design at the Mazda North American Design Center
Pioneer of the Nagare surface language design philosophy
George Blankenship
VP of Sales & Ownership Experience
Ex-chief strategist behind Apple's revolutionary retail stores
wants to re-imagine the way people buy cars, forgoing the traditional dealership model in favor of stylish, consumer-focused showrooms
Are Chinese customers willing to wait a long time for their cars to arrive?
(46% in US)
Full transcript