B.

3
1

TESLA

Tesla Motors designs and sells high performance, super efficient electric cars. Tesla Motors cars join style,
acceleration, and handling with advanced technologies that make them the quickest and the most energy-efficient
cars on the planet. (Tesla Motors, Mission)

Tesla Motors has brought the best of the

automotive and technology worlds together
to permanently bury the image of an
electric car as a step backwards in
performance, efficiency, or design
Tesla Motors key technology is the 100%
electric powertrain
They set out to forever alter perceptions of
electric vehicles and to make electric cars a
viable alternative by producing a car that is
at once beautiful and exciting to drive,
along with being the most efficient
production automobile on the planet

(Tesla Motors, Vision)

Tesla

Milestones
2003

Founded

2010

Strategic
Partnership
announced
with Toyota
Initial Public
Offering
Opened

2006

Prototypes of the
Roadster introduced
to the public

2011

Stopped
taking
Roadster orders
Unveiled Model X

2007

2008

2009

Two batches of 100

Roadsters sell

Opened first retail

store in Los Angeles,
second in Menlo
Park

Unveiled the
Model S

2012

2013

2014

Commercial deliveries
of the Model S begin
Began building
Supercharger stations

Model X will
Time Magazines Best
enter production
25 Inventions of 2012
80%
of
US
Musk promises US to
population
be
covered
with
covered
by
Supercharger stations
Supercharger
First partial recall
Strategic
Analysis
stations

Tesla

Roadmap
Shipping since 2008
Over 1,800 sold in over 30 countries
Over 13 million miles driven

Modified
Lotus Elise Platform

Available mid 2012

20,000 units per year, pricing starting at $49,900
Worlds first, production intent all-EV platform design

Revealed by end of 2011 - Available late 2013

10,000 15,000 units per year
Based on Model S platform

Tesla S Platform

Additional vehicle(s) that leverage the S platform

Smaller vehicle platform; pricing starting at $30K

Positioned for mass-market appeal and volume

Teslas
Gen III
Platform

B.3
2

INDUSTRY ANALYSIS

Industry Analysis

Market
US auto industry is full of auto manufacturing companies, BMW Group, Chrysler/Dodge/Jeep, Ford Motors, General Motors,
Honda/Acura, Hyundai/Kia, Mazda, Nissan, Subaru are the main competitors in US Auto market
For 2012 as a whole, automakers sold approximately 14.5 million vehicles in the U.S. market, a 13 percent increase from 2011 and
the highest annual sales total since 2007 marking the third consecutive year of annual sales increases of at least 10 percent

Auto Manufacturer Market Share in America (Feb 2013)

Luxury Auto Market Share in America (Jan 2013)

Strategic Analysis

Industry Analysis

Market
As fuel prices remain high and there is greater concern for the environment, more energy efficient cars are increasing in demand

Moreover, as part of their bailout specifications, the Big Three automakers are required to quickly release more energy efficient
vehicles to the market. This increasing popularity for hybrid and electric cars are going to affect the industry in big ways as it will
create a new market for businesses to cater to these new forms of vehicles.
Auto Manufacturer sales in 2012

Strategic Analysis

Industry Analysis

Market
Global automobile sales forecasts project divergent market penetration rates of approximately 0.6 0.9% for plug-in hybrid electric
vehicles (PHEVs) by 2015, 9% by 2020, and 22% by 2030 for Electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEV)
Market penetration will depend on battery pack costs, charging infrastructure, competing technologies, oil prices, manufacturer
investments in EV and PHEVs, and consumer skepticism of EVs and PHEVs

USA Monthly PEV Sales

Cumulative U.S Plug-In Vehicle Sales

Tesla Model S Grabs 8.4% of Luxury Vehicle Sales in US in First Half of 2013

Strategic Analysis

Industry Analysis

Market
As a result electric vehicle sales forecast by type in 2015 is:
EV Type

n of Models

Volumes

% of EV Market

Regular Hybrid

57

518.200

55,20%

Full electric

37

215.200

22,90%

Plug-in

18

200.500

21,30%

5700

0,60%

118

939.600

100,00%

Fuel cell vehicle

All electric Vehicles

Source: JD Power and Bernstein

Strategic Analysis

B.3
3

STRATEGIC GOALS &

COMPETITIVE ADVANTAGE

Strategic goals & Competitive advantage

Strategic goals
Teslas long-term strategic goal is to create affordable mass market electric vehicles (EV)

In order to achieve that goal it will increase the number and variety of EVs available to mainstream consumers in 3 ways:
Selling its own vehicles in a growing number of company-owned showrooms and online. First vehicles have been the
Roadster, the Model S, and its expected to start selling the Model X next year
Selling patented electric powertrain components to other auto manufacturers so that they may get their own Evs to
customers sooner. As a result it has partnered with Toyota and Mercedes in order to supply batteries and charging systems
Serving as a catalyst and positive example to others automakers, demonstrating that there is pent-up consumer demand
for vehicles that are both high-performance and efficient.

Expansion

Partner with traditional auto makers

Look for new Applications of tech

Achieve 20K Model S

Production Goal

Partnership with Toyota and Mercedes

Expand to all automakers
Standardize Ev Parts for efficient
manufacturing

Battery technology and electric

motors have broad application
potential

Strategic Analysis

Strategic goals & Competitive advantage

Partnerships
In order to achieve its second strategic goal it has partnered with several auto manufacturers:
Partners

Date

2009
2008

2010

2010
2010

2008

2010

Agreements

Worth

Blackstar Investco (an affiliate of Daimler) purchases 19.901.290 share of

series E convertible preferred stock for $50M
Tesla begins development of battery pack & charger for Smart fortwo
Daimler agrees to purchase 1500 battery packs and charger to support
European trial
Agreement for Tesla to develop and manufacture battery packs % chargers
for Daimlers A-class vehicles

$50M

Toyota purchases 2.941.176 common shares in private placement

Toyota RAV4 Program: Tesla to develop powertrain for RAV4 prototype
Toyota RAV4 Program: Tesla to develop validated powertrain system,
including battery, power electronic module, gearbox and software

$50M
$9M

Tesla uses Panasonic battery cells in its advanced battery packs and has
collaborates with Panasonic in the development of the next generation
battery cells for electric vehicles
Panasonic purchases 1418573 common shares in private placement

$23.3M

$14.1

$60M

$30M

Strategic Analysis

Strategic goals & Competitive advantage

As a result of those strategic goals we can see a clear differentiation in the incomes of the two paths:
Vehicles sales & development services

Strategic Analysis

Strategic goals & Competitive advantage

Competitive Advantage
Teslas central competitive advantage is the low cost of Teslas battery pack, which allow to sell the Model S at a reasonable price
but with a near-normal (up to) 300 mile range, a combination other EVs have yet to deliver
Tesla Model S battery pack costs will be at/below ~$300/kWh, well below from other OEMs/battery makers ($500-600/kWh for
2011-2012 timeframe, and $375-500/kWh mid-decade target)
A key source of Teslas cost advantage is its ability to apply commoditized small cylindrical lithium cells (used in consumer electronics)
to a car via proprietary thermal/power management

Tesla Leads on Range (maximum miles per single charge)

Tesla Leads on Cost (battery pack cost in $/kWh)

Strategic Analysis

Strategic goals & Competitive advantage

Competitive Advantage
It also has a comprehensive, proprietary technology with 40 patents awarded & over 200 patent applications pending

Unique Chemistry
Proprietary Cathode Geometry
Automotive-Grade Construction
Passive Safety Features
Modified Cell Case

High Energy Density

Active Cooling
Mfg Trade Secrets
Charge Balancing
Active Safety Features

Power Mgmt Software

2 Way Inverter
Charge Mgmt Software
On Board Charger
Flux Phasing & Mgmt
Compact Design
Thermal Mgmt Software

Instant Peak Torque

A/C Induction Motor
No Rare Earth Metals
87% Avg Efficiency
In House Mfg

Proprietary Design
Up to 18,000 RPM
No Shifting
In House Mfg

Strategic goals & Competitive advantage

Competitive Advantage
With an unique platform for the development of EV vehicles

B.3
4

COMPETITORS ANALYSIS

Competitors Analysis

By Company

Strategic Analysis
Source: Tesla Motors

Competitors Analysis

By Company

Tesla
Market Cap:

BMW

Daimler AG

General Motors

Toyota

21.98B

51.57B

61.33B

49.41B

202.81B

Employees:

2964

106870

276044

213000

333498

Revenue (ttm):

1.32B

76.45B

114.20B

152.84B

289.95B

-156.36M

10.48B

13.32B

7.90B

36.35B

-16.38%

10.34

5.51%

1.39%

7.54%

-219.99M

5.17B

6.64B

4.53B

15.68B

EPS (ttm):

-1.95

7.88

6.22

2.79

9.90

P/E (ttm):

N/A

9.97

9.22

12.79

12.93

PEG (5 yr expected):

16.13

2.26

N/A

0.60

0.34

P/S (ttm):

16.61

0.68

0.54

0.32

0.70

EBITDA (ttm):
Operating Margin (ttm):
Net Income (ttm):

Strategic Analysis

Competitors Analysis

By Company
General Motors

Toyota

Competitor Response Profile:

Competitor Response Profile:

GM represents a significant future threat to Tesla, if, as

planned, Tesla decides to enter the small premium market
near the $30,000 price point

Toyota Motor Companys has a longstanding hybrid

technology and possible entry into the plug-in hybrid and
fully electric car market

The current development of the Volt, although it is not a

true electric car, indicates that GM remains interested in
the electric/hybrid car market, and will continue to pursue
the market in the foreseeable future

Toyotas Prius first took the road in Japan in 1997, arrived

in America in 2000, making it the most prevalent hybrid
car

Designed for approximately 40 miles of battery powered

driving before the 1.0L turbocharged gas engine
automatically begins to recharge the battery, thus
extending the range of the Volt to up to 640 miles of
highway driving

Tesla should be wary of Toyota offering a larger battery

pack and a home charging station as options for the Prius,
as this could eventually lead to Toyota offering a full
electric version of the Prius.
This would cut into Teslas plans to offer fully electric
sedans at different price points

Actions:

Actions:

The only way for Tesla to compete effectively would be

through differentiation, which would focus mainly on
technology

Tesla should focus on improving their technological

advantage in fully electric cars so that by the time Toyota
enters the electric car market, Tesla has a technological
advantage.

Competitors Analysis

By Company
BMW

Daimler AG

Competitor Response Profile:

Competitor Response Profile:

Teslas one of the potential competitor is BMW, which

continues to put effort into entering the luxury, highperformance, low-emissions, low-consumption auto
market
In August it unveiled the production version of the i3

The Mercedes-Benz B-Class Electric Drive will go on sale in

the US and Europe from early next year

The companys first all-electric series production vehicle

will be available next year some time before June and at a
seriously competitive price.

Mercedes-Benz product R&D manager Dr Thomas Weber

says electric vehicle technology will move quickly enough
to make dedicated electric vehicles viable even for those
who want to travel longer distances and not pay a
premium over a traditional petrol or diesel car.

Moreover, the i3 is not merely but the first of a line of EVs

planned to deliver individual mobility thats what the
i brand stands for

Most of the systems that charge and run the little B-Class
will be shared with the upcoming SLS AMG Coupe E-Cell.

Mercedes-Benz has partnered with Tesla for its electric

motor and battery technology

BMW has designed and built its own electric motors for its
models
Actions:
Tesla should improve brand awareness and Global expansion before the most serious threats vehicles from European
companies enter the game

Competitors Analysis

By Product

Premium
Vehicles

Tesla Model S

Mercedes Benz SLS AMG

E-Cell Roadster

BMW i-8

Tesla Model X

Mercedes B Electric Class

BMW i-3

Small Premium
Vehicles

Competitors Analysis

By Product

B.3
5

FIVE FORCES ANALYSIS

Five Forces Analysis

Potential Entrants
Threat: Low
Small number of competing vehicles,
different niches.
Some are collaborating with Tesla Motors
European companies developing their own
technology

Suppliers
Battery Companies
Bargaining Power: Low since Tesla buys Liion cells from different manufactures
Engine: In house
Chasis/Engineering:
In house. There was a exclusive
partnership with Lotus for the Roadster.
Bargaining Power: High
Transmission: In house

Industry Competitors
Competition: Moderate
High entry barrier
Majors brands are competing
Tesla sector is niche and yet to be
discovered
No other EV in that sector

Substitutes
Threat: high
High entry barrier: Large number of
substitutes available
Hybrids and Plug-in Hybrids
Low displacement turbo diesels with low
emissions and good fuel economy

Buyers
B2C
Bargaining Power: Low
Demand very high
B2B
Bargaining Power: Low
No other comparable technology
available

Five Forces Analysis

Complementing Factors

Potential Entrants

Suppliers

Industry Competitors

Buyers

Substitutes

Oil prices are expected to rise in comparison

to electricity prices
Low availability of charging stations and
home charging facilities
Tax / Parking incentives: Similar to hybrid
tax breaks
Scope for future development in battery
technology

B.3
6

ENVIRONMENTAL ANALYSIS

Environmental analysis

Political & Legal

Environmental & Social

Economic

US $8 billion program for advanced

vehicle technologies supports engineering
and production of the Model S, and the
development of powertrain technology
Department of Energy granted $465
million loan to Tesla in 2009
Several laws in different US States does
not allow Tesla to sell directly to the
consumers
To facilitate growth, the U.S. government
has invested $5 billion through the
American Recovery and Reinvestment Act
and the DOEs Advanced Technology
Vehicle Manufacturing (ATVM) Loan
Program.
The DOE aims to increase the public
accelerated charging stations from 500 to
20,500 in 2012 and reduce battery pack
costs by 70% by December 2015.

Demographic Trends

Technological developments

Maximum range for Tesla cars is 300

miles
There is a need for charging station
infrastructure required on long highways

Teslas awareness to climatic changes and

low carbon footprint in production
Promotion of new technologies and
changes in energy policies by government
Increase in environmental consciousness
of consumers (green / eco ) products
Declining preference for petroleum fuel
Tesla vehicles produce zero emission

Because Teslas main product is a sports

car, their target market consist mainly of
the male sex.
Due to their currently high price point
these males must be businessmen who
have yearly disposable incomes of
possibly $100,000 and higher.
This target market live stylish lives, are car
enthusiast, and follow trends, such as
going green.

Economic conditions in 2014 also should

mirror those in 2013, including moderate
but steady economic growth and job
creation, low interest rates and readily
available credit, low inflation, a strong
stock market, and improved housing
prices.
These conditions and, in particular, their
persistence over a number of months
inspire
consumer
confidence
and
motivate consumers to buy new cars
The auto industry will enjoy another year
of growth in 2014 with new car sales
topping 16 million for the first time since
2007
The release of pent-up demand from
buyers who deferred sales during the
recession will continue as the increasingly
aged fleet drives more consumers back to
the new car market
Sales will also benefit from an expected
300,000 additional lease returners
compared to 2013, who will lease or buy a
new vehicle when their current leases
terminate

B.3
7

SWOT ANALYSIS

Swot Analysis

Tesla Swot Analysis

According to all data gathered and exposed before we can do the next Tesla SWOT analysis:
Strengths
Product: fastest and most energy-efficient electric car on
the market
Innovative technology
Brand image
Positive strategic partnerships

Weaknesses
Scale of operations, no economies of scales, low sales
volume
Dependent on continuing innovation
Financial profile
Deep pocket competition

Opportunities

Growing market
Increasing oil & gas prices
Rising consumers sentiment
Government support
Young industry with no set standards
Large International market potential
Increasing awareness and support for environmentalist

Threats
Large motor companies devoting more resources to
developing electric cars and cars fuelled by other
alternatives
Increasing Internal Combustion Engine efficiency
Limited EV support Infrastructure
Concentrated industry
Auto buying dynamics
Loss of government subsidies

B.3
8

RECOMMENDATIONS

Recommendations

Market

Cars

Technology Transfer

EV Infrastructure

Performance Vehicles
Premium Vehicles
Small Premium Vehicles
Family Vehicles
Subcompact / City Vehicles
Tesla should focus only in
the Premium sector in
order to achieve its first
strategy goal
Expanding to the other
sectors will dilute its brand
recognition affecting its
premium segment sales
and lowering its margins
It will also require to
expand
its
current
infrastructure to support
mass EV production and
management

In order to achieve its

second
strategy
goal
towards the creation of
affordable mass market
electric vehicles Tesla
should not only license its
technology
to
high
premium manufacturers
like Mercedes but to less
premium ones so Tesla
technology becomes a
standard
and
most
companies dependent for
their EV vehicles on Teslas
improvements

In line with the previous

strategy goal Tesla should
set the industry standard
for EV infrastructure, by
creating
an
unique
charging
system
and
allowing
other
auto
manufactures
whose
vehicles are based on
Teslas technology to
access
Teslas
EV
infrastructure
This should be done
gradually at it can become
a risk by saturating Teslas
own capacity for its
vehicles

Recommendations

International Expansion
Tesla should seek to gain a more global presence and grow their business through international expansion before most established
european firms are able to get their premium EV cars to the market
In order to do that it should:
- Increase its own brand awareness (Most Europeans dont even know that Tesla Motors exist)
- Target countries with EV infrastructure currently developed

Recommendations

Innovation and R&D

Teslas battery pack technology is critical to the companys positioning and competitive differentiation.
The low cost of the battery pack allows Tesla to not only design cars with battery ranges greater than the competition but also place
equal emphasis on design, performance, and energy efficiency.
Electric battery manufacturers rarely release exact battery pack costs, but most estimates range from $500 - $1200/kWh ($33,000 for
100-mile range) depending on chemistry and cell-form factor.
However battery pack costs have decreased faster than expected. In November 2009, Deutsche Bank analysts projected average
battery pack costs reducing from $675/kWh to $500/kWh by 2015 and $325/kWh by 2020; but in March 2010 it cited industry
reports of battery pack bids in the mid-$400/kWh for 2011/2012.2
Further evidence is Nissan reporting the battery pack in its economy EV Leaf costs only $375/kWh.
In addition, Tesla CEO Elon Musk stated that the Model S battery pack cost less than the Leafs pack, a statement corroborated by
calculations of battery pack costs given information in Teslas IPO.
If battery pack costs reduce as the DOE projects, consumers will have further incentive to own EVs and PHEVs since costs are $0.02 $0.04/mile to operate whereas a 25-MPH gasoline vehicle costs $0.12 - $0.15/mile to operate. In addition, maintenance costs will
likely be lower for EVs and PHEVs.
Keeping this crucial advantage is essential for Tesla in order to maintain its competitive advantage in the EV market.

Recommendations

Customer Target
Because of the high cost of the Roadster, Teslas target market was rather small. Owners were often referred to as ecohipsters,affluent environmentalists or rich early adopters
With the goal of selling 20,000 Model S vehicles per year initially, Tesla must target a larger segment of consumers who are both
interested in functionality and performance and are also environmentally and politically conscious
According to the IPO, Tesla believes that the combination of functionality, performance, style, energy efficiency and overall cost of
ownership of the planned Model S will draw buyers from several market segments, including the lower, medium and upper premium
sedan classes
The ideal target market for the Model S will include consumers who see EVs as symbolizing their commitment to the environment
and will embrace the role as a member of a brand community by becoming a Tesla Enthusiast

Tesla is still a young emerging company, but it has created strategic partnerships that have ensured its survival thus far, brought in top
leaders from the automotive and technology industries to run its operations, and given itself a competitive advantage through its
superior battery technology and product design.
If it can see its way through the success of the Model S as its currently seeing, meet projected sales, and increase its operating
margin, Tesla will be well on its way to its mission of increasing the number and variety of electric cars available to mainstream
consumers by creating cars that are fun to drive and environmentally responsible

B.3
9

BIBLIOGRAPHY

Bibliography

Bibliography

Tesla Motors Company Overview - Tesla

Strategic marketing plan - New york university; Partha Mitra
Tesla Strategic Marketing- UC Berkeley; Byron Pittam, Laura DellaGuardia , Lisandra Maioli , Ryan Shi, Svetlana Fedorova
Tesla tomorrow, the future of tesla motors - University of Wisconsin Madison Wisconsin School of Business MBA; Danielle
Boyke Jia Cheng, Jared Clevers, Michael Schroeder, Karen Strupp
Tesla Motors Business Strategy Joseph Baker, Asaf Korkut, Erica Long, Salmon Camhi, Jithu Krishnan
Tesla Motors - An Analysis of Teslas Marketing Efforts in the U.S; Adam Cimala, Evangeline Demos, Pandi Lera, Andre Jordan
Competitive Analysis of Tesla Motors; Charlene Abdo
Goldman Sachs Group, Inc. Americas: Clean Energy: Energy Storage. June 27, 2010. http://www.docin.com/p-61696011.html, p.25
Deutsche Bank. Vehicle Electrification: More Rapid Growth; Steeper Price Declines For Batteries. March 7 2010, p.3.
Garthwaite J. Retrieved from http://gigaom.com/cleantech/tesla-ceo-nissans-leaf-battery-is-primitive/
Goldman Sachs Group, Inc. Americas: Clean Energy: Energy Storage. June 27, 2010. http://www.docin.com/p-61696011.html

Strategic Analysis