Exhibits
Foundations of Business Strategy 1 Strategic Analysis Report: Tesla Motors Inc.
Exhibits Exhibit A: Environmental Analysis Demographic Trends
• •
•
Socio-‐Cultural Influences
Technological Development
Political Legal Pressures
Macroeconomi
Environmental Analysis Tesla’s high price point caters towards individuals with a yearly disposable income of $100,000+ Influx of baby boomers set to retire and increase in younger generation will mean an consumer base catered more consciously towards buying green friendly products Target market are car enthusiasts, follow trends and are environmentally conscious
Major automobile market holders are: • Toyota Motor Corporation • General Motors Corporation • Ford Motor Company • Hyundai-‐Kia Automotive • Hondo Motor Ltd. The industry it self is segmented into the following type of vehicles: • Compact and subcompact cars (36%) • Midsize and full-‐size sedans (44%) • Sports cars (5%) • Luxury cars (15%) • As fuel prices remain high and greater concern for the environment is seen from Consumers, more energy efficient cars are increasing in demand. • The major automakers are required to also release more energy efficient vehicles to the market as per Govt. bail out agreements. • Maximum range for Tesla cars is 300 miles • Charging station infrastructure expected to be deployed along high ways • Department of Transportation has created charging stations and listed them on publicly accessible website • Over 50 patents related to Powertrain components • Canada has many cities with 120 volt outlets ideal for charging • Plug-‐in hybrids and all-‐electric vehicles qualify for a $2,500 to $7,500 federal tax credit • Department of Energy grants US$465 million loan to Tesla in 2009 • House Bill 3351/Senate Bill 1659 which would allow manufacturers of electric cars to sell directly to consumers in Texas • Ontario government has announced it requires one in every 20 vehicles to be electrically powered by 2020 with Incentives in rebates from $4,000 to $10,000 • Cost of operating a vehicle is increasing due to rising fuel costs
c Impacts
• • •
Steady economic growth and job creation as well as low inflation and strong stock market should motivate consumers to buy new cars Fleet of cars from recession times are nearing and-‐of life which will drive consumers to the new car market Estimated 300,000 additional lease returners compared to 2013 will create an increase in number of leases/purchases of new vehicles in 2014
Exhibit B: Competitor Analysis
Company Market Share Sales Growth (1 year) Employees Revenue (ttm) Unique Selling Point
Tesla .01% 74.95%
Competitor Analysis BMW GM 2% 10% 13.08% 1.32%
2964 1.32B • High quality electric vehicles with excellent features and design as well as superior functionalit y and performanc e.
106870 10.48B • Evident effort being directed towards entering low-‐ emission, low-‐ consumption auto market • Company’s first all-‐ electric series production vehicle is available • Designs and builds its own electric motors for its models
213000 152.84B • Innovative and keeping up with competito rs through products such as the Chevy Volt • Well establishe d brand since 1908
Toyota 12% -‐2.16% 333498 289.95B • Well-‐known brand with a large market presence and large manufacturi ng capability. • Unique pricing practices and operations that lowers buyer power and provides competitivel y priced cars
Foundations of Business Strategy 3 Strategic Analysis Report: Tesla Motors Inc.
Potential Entrants
Exhibit C: Five Forces Analysis
Threat: Low • • • •
Small number of competing vehicles in different niches present Laws and regulations make entry to industry difficult Main vehicle manufacturers are in collaboration with Tesla Large capital investment required to setup manufacturing factory
Suppliers
Industry Competitors Competition: Moderate
Threat: Low •
• •
•
Battery: Bargaining Power is low since Tesla buys Li-‐ion cells from different manufacturers Engine: in house development Chassis/Engineering: High bargaining power with in house development due to exclusive partnership with Lotus for the Roadster. Transmission: In house
• • •
•
High entry barrier Major brands are competing and hold close to 60% market share Tesla sector is niche and yet to be discovered but rising interest may disrupt this No other EV in that sector
Substitutes Threat: Moderate • High entry barrier: Large number of • •
substitutes available (Chevrolet Volt etc.) Competition with Hybrids and Plug-‐in Hybrids Low displacement turbo diesels with low emissions and good fuel economy
Buyers Threat: Low • •
B2C: Bargaining Power: Low due to Demand being Very High B2B: Bargaining Power: Low; No other comparable technology available
Exhibit D: VRIN Analysis Value
•
Rare
•
Imperfectly Imitable
•
Non-‐substitutable
•
Car manufacturers are leveraging Tesla Motors powertrain components for use in their own vehicles due to its superior performance compared to other industry alternatives Tesla cars are the only electric vehicles currently that have a range of 300 miles on a single charge due to its use of powertrain technology complemented by excellent structural design All major automobile manufacturers have created electric powered models using various technology but none of achieved the level of performance offered by the powertrain model and Tesla car design Substitutes available include the use of powertrains used in hybrid cars and other electric vehicles, however none have been able to achieve the performance delivered by Tesla’s powertrain technology
Exhibit E: SWOT Analysis Strengths •
• • • •
• • •
Battery electric vehicle ‘first mover’ advantage Rising revenues Bold marketing strategy Self-‐operating and distribution Strong partnerships with other automobile manufacturers Leading edge technology Strong brand image Excellent product being fastest and more energy efficient car on the market
Weaknesses •
• •
• • •
•
Limited scale of operations, no economies of scales and low sales volume High priced products Increasing competition in the market Low market share Slow growth in electric car market Strong laws and regulations in industry by government Component supply problems if demand increases significantly
Opportunities •
•
•
•
Rising costs of oil and gasoline can lead to growth in energy automobile market due to consumers choosing to spend more in order to purchase an electric car Increased awareness seen from consumers regarding carbon footprint and environmentally consciousness Strong government support on transition to energy efficient vehicles Large international market potential
Threats •
•
•
•
•
•
Large manufacturers devoting more money towards research and development of electric cars and fuel cells Increased internal combustion engine efficiency seen in new cars Concentrated and heavily regulated industry Loss of government subsidies Technological innovation from competitors Future competitors entering market
Foundations of Business Strategy 5 Strategic Analysis Report: Tesla Motors Inc.
Exhibit F: Capabilities Analysis
Leading Technology • •
•
•
Leader in electric power technology. Battery pack capable of storing 53 kilowatt hours of usable energy, double that of any other commercially available electric vehicle battery pack Powertrain technology leveraged in its own set of vehicles through expertise in electric vehicle design and systems integration Highly competent electrical engineering, software, and controls as well as vehicle engineering and manufacturing
Sales •
•
•
•
•
Rapid customer focused product development process Perception in community of a brand that is a leader in high-‐performance long-‐range electric vehicles Utilization of direct to customer sales through its unique showrooms Owns its vehicle sales and service network and sells and services its cars through the internet Excellent brand management in terms of leveraging appeal of CEO Elon Musk when it comes to marketing the brand
Partnerships •
•
•
•
Strong alliance with other auto makers such as Daimler and Toyota Diversification to become a electric powertrain production facility catered to other electric vehicle manufacturers Combined research and development with Panasonic on Li-‐ion batteries Coordinated design of electric vehicles with Toyota
Exhibit G: References 1. 2. 3. 4. 5. 6.
7.
Goldman Sachs Group, Inc. Americas: Clean Energy: Energy Storage. June 27, 2010. http://www.docin.com/p-61696011.html Ashtiani, C., Cullen, G., Davis, P., Greenwald, J., Hardigan, P., Eladio, K., . . . Zimmerman, D. (2011, February). Plug-in electric vehicles: A practical plan for progress. Expert Panel Report, School of Public and Environmental Affairs at Indiana University. Gairthwaite, J. (2011). Tesla prepares for a gap as roadster winds down. New York Times. Retrieved July 14, 2014, from http://www.nytimes.com/2011/05/08/automobiles/08TESLA.html Patel,H.,&Aalok, V. (2010,August). TeslaMotors: Electrifying luxury. Report. J.P.Morgan Securities. Ramsey, M. (2010, October). High battery cost curbs electric cars. Wall Street Journal. Retrieved July 24, 2014, from http://online.wsj.com/article/SB10001424052748703735804575536242934528502.html Boeing 787 Dreamline Battery Problems, Retrieved July 24, 2014, from http://en.wikipedia.org/wiki/Boeing_787_Dreamliner_battery_problems
Exhibits Exhibit A: Environmental Analysis Demographic Trends
• •
•
Socio-‐Cultural Influences
Technological Development
Political Legal Pressures
Macroeconomi
Environmental Analysis Tesla’s high price point caters towards individuals with a yearly disposable income of $100,000+ Influx of baby boomers set to retire and increase in younger generation will mean an consumer base catered more consciously towards buying green friendly products Target market are car enthusiasts, follow trends and are environmentally conscious
Major automobile market holders are: • Toyota Motor Corporation • General Motors Corporation • Ford Motor Company • Hyundai-‐Kia Automotive • Hondo Motor Ltd. The industry it self is segmented into the following type of vehicles: • Compact and subcompact cars (36%) • Midsize and full-‐size sedans (44%) • Sports cars (5%) • Luxury cars (15%) • As fuel prices remain high and greater concern for the environment is seen from Consumers, more energy efficient cars are increasing in demand. • The major automakers are required to also release more energy efficient vehicles to the market as per Govt. bail out agreements. • Maximum range for Tesla cars is 300 miles • Charging station infrastructure expected to be deployed along high ways • Department of Transportation has created charging stations and listed them on publicly accessible website • Over 50 patents related to Powertrain components • Canada has many cities with 120 volt outlets ideal for charging • Plug-‐in hybrids and all-‐electric vehicles qualify for a $2,500 to $7,500 federal tax credit • Department of Energy grants US$465 million loan to Tesla in 2009 • House Bill 3351/Senate Bill 1659 which would allow manufacturers of electric cars to sell directly to consumers in Texas • Ontario government has announced it requires one in every 20 vehicles to be electrically powered by 2020 with Incentives in rebates from $4,000 to $10,000 • Cost of operating a vehicle is increasing due to rising fuel costs
c Impacts
• • •
Steady economic growth and job creation as well as low inflation and strong stock market should motivate consumers to buy new cars Fleet of cars from recession times are nearing and-‐of life which will drive consumers to the new car market Estimated 300,000 additional lease returners compared to 2013 will create an increase in number of leases/purchases of new vehicles in 2014
Exhibit B: Competitor Analysis
Company Market Share Sales Growth (1 year) Employees Revenue (ttm) Unique Selling Point
Tesla .01% 74.95%
Competitor Analysis BMW GM 2% 10% 13.08% 1.32%
2964 1.32B • High quality electric vehicles with excellent features and design as well as superior functionalit y and performanc e.
106870 10.48B • Evident effort being directed towards entering low-‐ emission, low-‐ consumption auto market • Company’s first all-‐ electric series production vehicle is available • Designs and builds its own electric motors for its models
213000 152.84B • Innovative and keeping up with competito rs through products such as the Chevy Volt • Well establishe d brand since 1908
Toyota 12% -‐2.16% 333498 289.95B • Well-‐known brand with a large market presence and large manufacturi ng capability. • Unique pricing practices and operations that lowers buyer power and provides competitivel y priced cars
Foundations of Business Strategy 3 Strategic Analysis Report: Tesla Motors Inc.
Potential Entrants
Exhibit C: Five Forces Analysis
Threat: Low • • • •
Small number of competing vehicles in different niches present Laws and regulations make entry to industry difficult Main vehicle manufacturers are in collaboration with Tesla Large capital investment required to setup manufacturing factory
Suppliers
Industry Competitors Competition: Moderate
Threat: Low •
• •
•
Battery: Bargaining Power is low since Tesla buys Li-‐ion cells from different manufacturers Engine: in house development Chassis/Engineering: High bargaining power with in house development due to exclusive partnership with Lotus for the Roadster. Transmission: In house
• • •
•
High entry barrier Major brands are competing and hold close to 60% market share Tesla sector is niche and yet to be discovered but rising interest may disrupt this No other EV in that sector
Substitutes Threat: Moderate • High entry barrier: Large number of • •
substitutes available (Chevrolet Volt etc.) Competition with Hybrids and Plug-‐in Hybrids Low displacement turbo diesels with low emissions and good fuel economy
Buyers Threat: Low • •
B2C: Bargaining Power: Low due to Demand being Very High B2B: Bargaining Power: Low; No other comparable technology available
Exhibit D: VRIN Analysis Value
•
Rare
•
Imperfectly Imitable
•
Non-‐substitutable
•
Car manufacturers are leveraging Tesla Motors powertrain components for use in their own vehicles due to its superior performance compared to other industry alternatives Tesla cars are the only electric vehicles currently that have a range of 300 miles on a single charge due to its use of powertrain technology complemented by excellent structural design All major automobile manufacturers have created electric powered models using various technology but none of achieved the level of performance offered by the powertrain model and Tesla car design Substitutes available include the use of powertrains used in hybrid cars and other electric vehicles, however none have been able to achieve the performance delivered by Tesla’s powertrain technology
Exhibit E: SWOT Analysis Strengths •
• • • •
• • •
Battery electric vehicle ‘first mover’ advantage Rising revenues Bold marketing strategy Self-‐operating and distribution Strong partnerships with other automobile manufacturers Leading edge technology Strong brand image Excellent product being fastest and more energy efficient car on the market
Weaknesses •
• •
• • •
•
Limited scale of operations, no economies of scales and low sales volume High priced products Increasing competition in the market Low market share Slow growth in electric car market Strong laws and regulations in industry by government Component supply problems if demand increases significantly
Opportunities •
•
•
•
Rising costs of oil and gasoline can lead to growth in energy automobile market due to consumers choosing to spend more in order to purchase an electric car Increased awareness seen from consumers regarding carbon footprint and environmentally consciousness Strong government support on transition to energy efficient vehicles Large international market potential
Threats •
•
•
•
•
•
Large manufacturers devoting more money towards research and development of electric cars and fuel cells Increased internal combustion engine efficiency seen in new cars Concentrated and heavily regulated industry Loss of government subsidies Technological innovation from competitors Future competitors entering market
Foundations of Business Strategy 5 Strategic Analysis Report: Tesla Motors Inc.
Exhibit F: Capabilities Analysis
Leading Technology • •
•
•
Leader in electric power technology. Battery pack capable of storing 53 kilowatt hours of usable energy, double that of any other commercially available electric vehicle battery pack Powertrain technology leveraged in its own set of vehicles through expertise in electric vehicle design and systems integration Highly competent electrical engineering, software, and controls as well as vehicle engineering and manufacturing
Sales •
•
•
•
•
Rapid customer focused product development process Perception in community of a brand that is a leader in high-‐performance long-‐range electric vehicles Utilization of direct to customer sales through its unique showrooms Owns its vehicle sales and service network and sells and services its cars through the internet Excellent brand management in terms of leveraging appeal of CEO Elon Musk when it comes to marketing the brand
Partnerships •
•
•
•
Strong alliance with other auto makers such as Daimler and Toyota Diversification to become a electric powertrain production facility catered to other electric vehicle manufacturers Combined research and development with Panasonic on Li-‐ion batteries Coordinated design of electric vehicles with Toyota
Exhibit G: References 1. 2. 3. 4. 5. 6.
7.
Goldman Sachs Group, Inc. Americas: Clean Energy: Energy Storage. June 27, 2010. http://www.docin.com/p-61696011.html Ashtiani, C., Cullen, G., Davis, P., Greenwald, J., Hardigan, P., Eladio, K., . . . Zimmerman, D. (2011, February). Plug-in electric vehicles: A practical plan for progress. Expert Panel Report, School of Public and Environmental Affairs at Indiana University. Gairthwaite, J. (2011). Tesla prepares for a gap as roadster winds down. New York Times. Retrieved July 14, 2014, from http://www.nytimes.com/2011/05/08/automobiles/08TESLA.html Patel,H.,&Aalok, V. (2010,August). TeslaMotors: Electrifying luxury. Report. J.P.Morgan Securities. Ramsey, M. (2010, October). High battery cost curbs electric cars. Wall Street Journal. Retrieved July 24, 2014, from http://online.wsj.com/article/SB10001424052748703735804575536242934528502.html Boeing 787 Dreamline Battery Problems, Retrieved July 24, 2014, from http://en.wikipedia.org/wiki/Boeing_787_Dreamliner_battery_problems
