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MGX5181 Presentation - Tesla Motors

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Kayla Graham

on 29 May 2013

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Transcript of MGX5181 Presentation - Tesla Motors

Why China? In China Why Tesla? Wanted to look at the
intermixing of everyday transport, energy concerns and luxury goods The first zero emission
performance vehicle readily available to the public Very popular with
consumers- won the Motor Trend 2013 Car of the Year Award Why Tesla? Overview: Company background
China
Opportunities
Risks
Competitors
Recommendations
Case study questions Kayla Graham, Mary McGoye & Cassie Oaten Company Background Founded in 2003 by a group of engineers in Silicon Valley
Currently produces one car, the Model S
Zero emission luxury electric car
2013 Motor Trend Car of the year
Plans to introduce Model X
CEO Elon Musk TESLA Company Structure Utilizes vertical integration in all aspects of the company
Marketing strategy akin to Apple
refined the typical dealership structure Internationalisation Operating in 13 countries
13 new stores opened in 2012
Plans to open 25 stores in 2013
including 1 store in Beijing Size
Growing middle class
One of the world's top markets for luxury products
Automotive industry in its infancy
Demand for eco friendly products growing TESLA in China Increased pollution/dependency on oil imports
Government investment/subsidies in EV market
Industry support
Power grid investment TESLA in China Risks in China Risks in China Government regulations for international companies
Intellectual property
Reverse engineering of technology
Inconsistencies in legal system
Corruption
Need for Guanxi Risks in China - Consumers Price
Highly price sensitive consumers
Local firms supported by Government
Import tariffs
Limited charging infrastructure
access to garages
battery swapping vs. charging stations Competition in China Competition - Broad Context Highest number of vehicle manufacturers and models in the world
More than 90 brands, 130 automakers, 475 models
Produce in massive scales
Large role of government
Large use of electric bicycles, electric scooters Competition - EVs & Premium Foreign EV manufacturers are wary to enter the Chinese market
no vehicles that can directly compete with Tesla
German brands Audi, BMW, Mercedes and Volkswagen make up 80% of premium market
Competition increasing in premium sector
GM & Volkswagen capacity increase
Size and power of competitors mean Tesla must move quickly Recommendations TESLA Recommendations Test market before entry via JV
Direct Export
Develop brand awareness/penetrate market
Position as luxury brand Case Study Questions 1. Apply Dunning’s Eclectic Paradigm to Tesla’s proposed strategy of operating in the Chinese market, highlighting the ownership, location and internalisation advantages associated with this strategy. What is the best mode of entry into the Chinese market? Answer 2. What are Tesla’s core competencies? How will these competencies be utilised in the Chinese market? Will the company need to further develop its competencies to be successful in China? Answer 3. What are the unique factors of the Chinese market that Tesla should consider before engaging in domestic production? Answer 4. Is the Tesla sales model proven enough to be expanded and be competitive in China? Answer Questions? Thank You. O (Ownership) - Engineering of EVs and unique structure of company
L (Location) - Expanding market for luxury vehicles and potential market for EVs
I (Internaization) - Exposure of IP if Tesla enters into a JV

Direct Export would be the best starting point Core Competencies
Vehicle engineering
Forward and backward integration
How to Utilize in China
Focus on the luxury market
Use engineering to compete with BMW, Mercedes, Audi, etc.
Tesla will need to continually develop in order to remain relevant compared to the other big market players. Government regulation - Tesla must enter into a JV
Large proportion of JVs fail in China
Intellectual Property at risk

Guanxi is essential for doing business in China
US anti-corruption laws

Inconsistencies in Legal System Model based on US market, but China is very different!

Need for a more aggressive approach in China
More retail stores
Difficult to maintain control over all aspects of the value chain

Need for a new structure in China
Most likely a more traditional dealership structure
Full transcript