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Tesla Presentation - FINAL (2)

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Tesla Presentation - FINAL (2)

  1. 1. Tesla Motors Jordan Ashley - Jon Farchmin - Matthew Kosmal - Anish Patel
  2. 2. ● Introduction to Tesla ● Problems/Issues ● Industry Analysis o Market o Competitors ● Firm Analysis o Competitive Advantages/Disadvantages o Sustainability ● Conclusion ● Recommendations Roadmap
  3. 3. Mission Use proprietary technology, world-class design and state-of-the-art manufacturing processes to create a new generation of highway capable electric vehicles (EVs).
  4. 4. Vision Alter the world’s perception of EVs and make EVs a viable alternative to gas powered vehicles by producing an automobile that is beautiful, exciting to drive and the most efficient on the planet.
  5. 5. Plan Enter at the high-end of the market and then lower prices as cost efficiency and technology improve (3 phases).
  6. 6. Tesla Vehicles Recently released: Autopilot and Dual Motor AWD
  7. 7. Problem
  8. 8. Firm Strategy and Issues Strategy: ● Long term: create affordable mass market EVs ● Uniqueness and Innovation ● Strategic partnerships ● Serve as catalyst - “All Our Patent Are Belong To You” Issues: ● Customer uncertainty ● Legal restrictions ● Unknown mass market demand ● Open Source implications ● Cost ● Inability to meet production dates ● Potential Competition
  9. 9. Industry/Competitive Analysis
  10. 10. “By the same token, it means the market is enormous. Our true competition is not the small trickle of non-Tesla electric cars being produced, but rather the enormous flood of gasoline cars pouring out of the world’s factories every day.” Industry/Competitive Analysis
  11. 11. Industry Growth and PEV Trends ● A stronger economy and slumping gas prices has seen a rebound in auto sales ● Electric and Hybrid vehicles have also seen growth in sales in recent years o A long term steady increase in gas prices, stricter fuel economy standards, and consumer sentiment toward environmental issues has sparked hybrid and electric vehicle interest US Total Market Sales and Growth US Monthly PEV Sales
  12. 12. Market Share US Auto Industry Markets Share ● Many players in the auto industry ● Ford, GM, Chrysler, and Toyota control over 60% of the market ● 97% of the vehicles in the industry utilize traditional combustion engines ● Nearly 3% utilize hybrid technology ● .34% of autos are plug in EV ● Tesla commands .01% of the entire auto industry ● Growth in hybrid and EV market will depend largely on future oil prices, consumer sentiment, costs and R&D o Recent reductions in oil and gas prices puts less strain on manufacturers and consumers
  13. 13. Five Forces Analysis Rivalry (-) ● Numerous established competitors ○ brand loyalty ○ access to capital/economies of scale ○ diverse product lines Substitutes (+) ● Substitutes for automobile’s exist ○ public transportation, airplanes ● Public transportation is cheaper, air travel potentially cheaper over longer distances and frequencies ● But, neither as convenient Entry (+) ● High barriers to entry ○ regulated industry ○ capital intensive ● Shallow experience curve ○ learning is hard Customers (+) ● Significant bargaining power in traditional industry supply chain ○ dealers and consumers can negotiate prices ● Tesla’s direct to consumer online sales model eliminates bargaining power. Suppliers (+) ● Bargaining power is low ● Tesla gets ion cells from multiple manufacturers ● Other vital components like engine, chassis, transmission all manufactured in house
  14. 14. The Competitive Landscape ● With the Roadster, Tesla entered the market as the only all electric high performance vehicle ● Tesla’s strategy is to enter into cheaper and more broad markets
  15. 15. Tesla’s Generic Strategy Moving Forward Appeal to the broad market Broad Narrow Cost Leadership Differentiation
  16. 16. Firm Analysis
  17. 17. SWOT Strengths Weaknesses Opportunities Threats ● Products - most energy efficient cars ● Innovation, Tech, Design ● Image ● Strategic Partnerships ● Leadership and Management ● Gigafactory ● Lack economies of scale ● Low sales ● Dependent on innovation ● Financial profile ● Capital of Competitors ● Production delays ● Terms of competition not set yet ● Adaptable battery uses ● Growing EV market ● Consumer sentiment - climate awareness ● International Market ● Laws preventing sales ● Proximity fear factor ● Small EV market ● Loss of Govt subsidies ● Competitors entering EV market ● Open Sourcing
  18. 18. Unique Distribution Model
  19. 19. Current Differentiation Technical Superiority ● Advanced lithium-ion battery technology with longest range EV ● Lowest cost for battery ($/kWh) ● Better R&D → over 240 patents and patents pending ● Best Powertrain → Dual engines/motors ● Exclusive EV market focus places Tesla ahead on experience curve ● Smoother & quieter ride ● Max torque immediately ● Battery swap in 90 seconds
  20. 20. Competitive Advantages Technological Knowledge via Human Capital Network of free SuperChargers
  21. 21. Competitive Advantages Fast Quick Charge and Full Recharge via SuperCharger
  22. 22. Competitive Disadvantages ➢ Cost of ownership still favors traditional gas vehicles ○ Gas prices have continued to drop throughout 2014 ➢ Small demand and production restricts economies of scales ○ 2013 US Total EV Sales: 46,148 → 38.2% of US EV market ○ 2013 US Total Car & Trucks: 15.6M → 0.3% EV vs. total US market ➢ Significant competition if EV gains enough market share to go mainstream Source: http://www.fuelgaugereport.com/
  23. 23. Competitive Disadvantages ➢ “Range Anxiety” → Fear of being stranded with a dead battery ➢ Battery performs poorly in cold weather ➢ Competition working to create the charging standard ➢ Trying to create the market for EV where robust demand is nonexistent ➢ Long lead-time ~8-10+ weeks “Battery-powered vehicles will probably account for just 1 percent of the global car market by 2020, compared to 0.3 percent predicted for this year (2014)” - IHS Automotive
  24. 24. Competitive Disadvantages Inability to sell in many states ● Ban Direct Sales: 26 ● Allow Tesla to Sell Cars: 22 ● Fighting to Overturn Ban: 2 Limited Service Centers Limited SuperChargers ● 129 in North America
  25. 25. Competitive Disadvantages ● Hydrogen Fuel Cell Technology ● Competitor Partnerships - Toyota & BMW - Honda & General Motors - Ford, Daimler and Nissan ● Toyota Mirai ○ 300 mile range ○ $57,500 ○ 2015: 700 vehicles “Hydrogen fuel cell vehicles function like electric cars, using onboard hydrogen to create electricity with only water as a byproduct.” - IHS Automotive - The Wall Street Journal - November 17, 2014
  26. 26. No SCA → All “Competitive Advantages” are Long-Term Operational Effectiveness Conclusion
  27. 27. Potential Industry Outcomes What Tesla Believes: ● A fundamental shift to EV will occur in auto industry ● Superior technical expertise and relentless innovation will continue to render current open source patents obsolete. ● Will maintain industry leading technology through continuous improvement Alternative Outcome: ● The market may never shift to EV ● Competitors leverage their resources, channels of distribution and economies of scale to quickly meet demand of non-gas vehicles ● Competitor options coming quickly ● Equal if not superior to Tesla’s existing products
  28. 28. Recommendations
  29. 29. Recommendations ● Continue adding EV Supercharging stations (~80%) ● License technology to establish an industry standard ● Leverage brand equity to augment brand awareness ● Maintain fiscally responsible technology development ● Adjust production capability as demand requires ● Increase market share within the EV segment o Next Gen vehicle ● Expand service centers in key markets o Option: Partner with national service chain ● Gather support to fight legislation against direct sales ● Investigate hydrogen fuel cell technology
  30. 30. Questions?

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