Electric Car and Tesla Motors

Financially, Tesla has been moderate with a market capitalization of $30 billion and about 25,000 cars sold around the world over the last three years (Niedermeyer, 2014), however compared to its competitors like Toyota and General Motors, this growth is small. Their most recent annual report shows a negative net income due to their high cost of goods and operating expenses. This is because the lithium ion battery used for these electric cars is a highly expensive product in which Tesla currently buys from an outside supplier, Panasonic. Tesla’s is considering building their own “giga plant” to start producing their own batteries and becoming their own supplier so that they can have control over the market price and their operating expenses (Putros, 2014). Tesla’s current market price is at $241 and seems to be growing strong as

Preview of main points: Today I am going to talk about history of electric cars, where is electric cars today and finally we will explore what is to come of electric cars in the future.

Environmental concerns have been raised from time to time because of the dependency on the gasoline-fueled engine as the chief auto powertrain technology. This has resulted in exposing many automobile users to unpredictable prices of fuel. These issues were, however, the reason for

Tesla are competing with not only “green” vehicle market that consists of Electric vehicles (EV), plug in hybrid electric vehicles (PHEV) and hybrid vehicle, but with the overall vehicles industry.

Summer 2012 NEW YORK UNIVERSITY STRATEGIC MARKETING PLAN Strategic Marketing Plan Model S Premium Electric Car, Tesla Motors Inc August 20, 2012. New York University Author: Partha Mitra 2 Strategic Marketing Revision History Date Version Description

Tesla Motors is an automobile company that provides electric vehicles. It was founded in 2003, in San Carlos, California. Although Tesla was chosen to be the provider of the best innovative vehicles, its sales indicated that the company could not sustain in the business since the sales appeared to be not enough to compensate the cost of the production of the vehicles. By launching the new model of its car, Roadster, in 2008 Tesla sold around 2,450 vehicles. After announcing the Model S, the company started to receive approximately 12,000 reservations by 2012. This redesigned Tesla vehicles started to be delivered and received positive feedback. In addition to this model, the company began to work on the new one, Model X, to be delivered in 2014.

The car market has been ran by companies such as Volkswagen, Toyota, Ford, BMW, and many other companies, but one of the newer, up and coming companies in this market is Tesla Motors Inc. Tesla has been around for a little over 10 years, and have come quite a long way from where they began. Tesla now sells luxury electric vehicles different than any other electric vehicles today, and they have big plans for expansion in the future. Tesla may not be one of the biggest car companies today, but one day they will be considered alongside companies such as Toyota and Ford.

Problem Statement: Disruptors of domestic and international competitors are expanding upon the alternative fuel vehicle market and can offer a wider variety of products ranging from hybrid, plug-in hybrid, and fully electric vehicles due to the access to more resources available to them.

Porter’s Five Competitive Forces Analysis is a framework developed by Michael E. Porter of Harvard Business School for study of industry analysis by analyzing five competitive forces which define industry and its business strategy. These five competitive forces determine the competitive advantages, disadvantages and attractiveness or profitability of industry.

Stehan further summarizes that potential electrical vehicle drivers are most likely to buy (lease) the Tesla Model 3 (about 55%), which is also the car people are most excited about (about 56%), and current electrical vehicle drivers would most likely get as next car (almost 40%). This suggests that Tesla stands out in consumer intersest, even above Nissan and GM. The Tesla 3 will be discussed more in detail further in this paper.

Tesla Motors has confronted the market in an entirely unique way for the auto making business. Tesla plans to entirely bypass the dealer by providing vehicles directly to the consumer via the

Tesla Motors is a very forward thinking company that interests lay more in the future than the present. The entire basis of Tesla Motors is the realistic theory that sometime in the next couple decades, the world will be completely empty of petroleum, forcing those who choose to use automobiles to switch to non gas powered vehicles. Being a company based on electric vehicles, as long as this theory comes to fruition, they are set to be successful. According to Tesla Motors’ website, their mission statement is to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible. On the same lines as Tesla Motor’s mission statement, their vision statement is to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles. According to Tesla Motors’ mission and vision statement, it is clear to see that electric power is the core of what the entire company was founded upon.

New Competition: Tesla Motors is not just competing with the regular car and automobile manufacture but needs to compete against a technology which has been in use for over hundred years i.e. the combustion engines. Further people are often resistant to change and it is a challenging task for the company to convince their potential customers on the use of electric cars over combustion cars which may take a lot of time and directly affect the sales and revenue of the company (Woodyard, Chris 2008).

CarsDirect. (2012, January 27). Advantages and Disadvantages of Electric Cars. Retrieved November 05, 2013, from CarsDirect: http://www.carsdirect.com/green-cars/electric-cars-advantages-and-disadvantages

Michael Porter’s Five Forces Model is a useful tool for analyzing a business. The model is used to analyze the competitive forces and determine a strategy to develop a competitive advantage for profitability of a business. With Porter’s Five Force Model, it is possible to combat the completive forces by identifying opportunities, competitive advantages, and competitive intelligence. If the forces are strong, they increase competition; if the forces are weak, they decrease competition. The Five Forces are: