1. MKT380 T - New Product Development
Prof. Ben L. Recarey
Spring 2015
Students:
Alejandro Echeverria
Alexander Bozo
Gerd Peintner
Julian Peñalver
Nicole Halfon
2. 2
Index
1. Description of the New Product Concept......................................................................3
a. Type ................................................................................................................................3
b. Form and Feature .........................................................................................................3
c. Benefits ...........................................................................................................................5
d. Problem solving.............................................................................................................6
e. Target market ................................................................................................................6
f. Sales data .......................................................................................................................7
2. The Firm .............................................................................................................................8
a. Mission Statement ........................................................................................................8
b. Matching Tesla´s Mission............................................................................................8
c. Tesla´s strengths needed for the Motorcycle............................................................8
d. Required Technology...................................................................................................9
e. Tesla´s weaknesses .....................................................................................................9
f. Minimum Sales Volume ..............................................................................................10
3. The Environment.............................................................................................................10
a. Change in the environment and opportunity for the Tesla Bike ..........................10
b. Competition..................................................................................................................11
c. Strength’s and Weaknesses of our competitors.....................................................12
d. Determinant Gap Map................................................................................................13
4. The Product Innovation Charter ...................................................................................14
a. Background..................................................................................................................14
b. Focus ............................................................................................................................19
c. Goals-Objectives .........................................................................................................20
d. Special Guidelines......................................................................................................21
5. The Product Portfolio......................................................................................................21
Appendix .................................................................................................................................23
Tables
Table 1: Estimated Market and Sales Data ......................................................................23
Figures
Figure 1: Tesla Bike Sketch ...................................................................................................4
Figure 3: Tesla Bike Benefits .................................................................................................5
Figure 3: Estimated Market and Sales Data........................................................................7
Figure 4: Determinant Gap Map ..........................................................................................13
3. 3
1. Description of the New ProductConcept
Tesla Motors is only producing cars at the moment. The following is a concept for the
first Tesla Motorcycle that will allow them to enter a completely new market.
a. Type
The new Tesla motorcycle will be a “New to the Company” product. Motorcycles in
their ordinary form are gas-operated vehicles that come in a variety of different
styles. A Motorcycle or Motorbike can either be a Scooter, a Cruiser, a Sport Bike, a
Touring Bike, a Sport Touring Bike, a Dual-Sport or an Off-Road.
The Tesla Motorcycle will be a hybrid mix between a cruiser and a sport bike. The
most important attributes of the cruiser (less demanding to ride, comfortable, visual
attractiveness) combined with the most important attributes of a sport bike (speed,
acceleration, cornering) will be added together with Tesla´s mission of a more
sustainable transport.1
At the moment there are some companies building electric motorcycles (Zero
Motorcycles, Brammo Inc. and others), but none of them has Tesla’s technological
“Know-How” or marketing strength.
b. Form and Feature
The Tesla bike will combine all the most important features of electric transportation
and motorcycles dynamics in one cohesive product.
1 http://www.teslamotors.com/blog/mission-tesla
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Figure 1: Tesla Bike Sketch
The basic design of the Tesla bike is something akin to an original Harley Davidson.
Particularly the large back wheel and the handlebars have something in common
with Harley’s world famous bike. The rest of the bike will be more futuristic looking
with a smooth surface and a rechargeable battery pack hidden within a small tank.
The section of the bike where the engine block is usually located will be covered with
a high quality carbon fiber panel. Lastly, the innovative seat pad will guarantee
perfect comfort for the biker.
An important feature of the Tesla bike is the weight. Without the usual need for a
traditional engine block and gas tank, the bike will be much lighter than others in its
class. The bike will also be a lot faster than basic cruisers and will have better
cornering abilities due to this.
Other features of the Tesla bike include its easy handling due to its lightness, its
quick acceleration which is very similar to a Sport Bike, and the low energy
consumption of the battery pack.
In terms of technology, the bike will have parking sensors that make for reverse
parking as comfortable as possible. The screen on the tank (where the battery is
concealed) will have GPS navigation system capability as well and will be updated
automatically when the bike is plugged in to recharge.
Thanks to Tesla’s technological “Know-How” the charging process will be very short
and the battery will last longer than other electric bikes on the market.
One other very important feature will be the sound. A motorcycle with a unique sound
attracts bikers. Tesla will deliver different artificial sound options customizable to
every single bike.
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c. Benefits
Figure 2: Tesla Bike Benefits
The Tesla bike has many different benefits. The most important benefit is the impact
the product has on the environment. Tesla is famous for high quality electric cars,
and the Tesla bike will fit perfectly with the company’s belief in sustainable
transportation.
The bike will not only be “eco-friendly”, but also guarantee’s a high level of comfort
while riding, outstanding cornering abilities and a very impressive high speed. Other
benefits are its cost advantage (over the use a gas-operated car or bike), the easy
parking with special parking sensors and last but not least the excitement provided
by the Tesla bike.
TESLA
Bike
Sustainability
Comf ort
Cornering
Abilities
Highest
quality
standards
Cost
adv antage
Exciting
Easy
parking
Speed
6. 6
d. Problem solving
The Tesla bike will solve a few very important problems of our generation.
Over the last couple of years, sustainability has become more and more important for
society. The Tesla bike will represent another step in advancing and providing
society with sustainable transport as well as protecting our environment. As a high-
class electric motorcycle, it meets with all the necessary prerequisites that will allow it
to replace standard motorcycles.
The Tesla bike will also satisfy the need of having a comfortable bike, that at the
same time is fast and easy to handle. Weekend drivers will not have any problems in
handling the bike because of its low weight.
e. Target market
In entering the market for motorcycles, the Tesla bike has unique qualities that will
replace some of the famous brands in the market or at least gets some of their
market shares.
The future Tesla biker will be between 30 and 60 years old. The bike will be a high
quality motorcycle and the price will be higher than the standard models on the
market right now. The typical biker will have a high income and not be the everyday
motorcycle user.
Below is a list of countries with a minimum of one Tesla store and/or charge station
that are ideal locations for selling the bike:
North America (Hawaii included), Europe (especially Germany, France, Northern
Italy, UK, Norway, Sweden, Belgium, Netherlands, Italy, Monaco, Denmark), China
and Japan form the target market for the Tesla bike.2
2 http://www.teslamotors.com/findus#/bounds/25.771853, -80.24503979999997,25.6272091,-
80.30130000000003,d?search=supercharger,
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Market Capacity
1,488,432 Motorcycles
Market Potential (Motorcycle)
$ 21,562,914,384.00
Sales Volume (Electric Motorcycle)
$ 9,000,000,000.00
f. Sales data
Since the Tesla bike will be a new product for the company, it´s difficult to predict
exact sales data.
The following are data based on statistics about the motorcycle market in the US,
Europe, China and Japan.
Figure 3: Estimated Market and Sales Data
The capacity of the motorcycle market was nearly 1.5 Million sold bikes in the year
2014 in North America, Europe, China and Japan. Multiplied by an average price for
a motorcycle of $ 14,487.00 it leads to a market potential of $ 21,562,914,384.00.
An actual study predicts that about 55,000,000 Million Electric Motorcycles and
Scooters will be sold worldwide from 2014 to 2023 (6.2 Million a year). If 10% of the
motorcycles are sold in our target market for the average price of $ 15,000.00 the
sales volume will be $ 9,000,000,000.00 per year.
Considering Tesla´s technological advantage and the marketing strength it could lead
to three different scenarios:
Scenario 1: Tesla becomes the leader in selling electric motorcycles and gets a
market share of 65%. The sales volume would be 5.85 Billion per year.
Scenario 2: Tesla shares the whole market with three other competitors (Harley
Davidson, Brammo Inc., Zero Motorcycles). Each of the four companies retain 25%
market share and the sales volume would be 2.25 Billion per year.
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Scenario 3: Tesla is not competitive with the other companies and reaches a market
share of 3%. The sales volume would be 270 Million per year.
All of the exact calculations and sources for the data are available in the appendix.
2. The Firm
a. Mission Statement
Tesla Motors was founded in 2003 by a group of engineers who wanted to
demonstrate that electric cars, by having zero emissions and incredible power, could
be more effective than fuel-based cars. Tesla’s mission statement is to accelerate the
world’s transition to sustainable transport.
b. Matching Tesla´s Mission
Nowadays, a significant percentage of the world’s population uses motorcycles as
means of transportation. As stated above, Tesla’s mission statement is to accelerate
the world’s transition to sustainable transport. Our new product would stand as a
substitute product to traditional fuel-based motorcycles. By adding Tesla Bike to their
product line, the firm could make a great impact on sustainable transport by offering
the target audience a possibility to cut their CO2 emissions while riding a similar
vehicle that can accomplish the same goals as those of a traditional motorcycle and
offer additional benefits.
c. Tesla´s strengths needed for the Motorcycle
Among Tesla’s strengths that our product could benefit from is the company’s
extensive knowledge and ability to work effectively with the Electric car technology.
Tesla Motors, in fact, only works with this sort of technology to power their cars. They
have decided to ignore alternatives such as diesel, ethanol, hybrids and traditional
fuel since all of these are finite resources whilst electricity will work as long as the
sun shines. To further add on this strength is the fact that Elon Musk, the CEO of
Tesla Motors, is also owner of SolarCity, a company that installs solar panels, which
collaborates with Tesla. As part of Tesla’s electric car technology expertise, the firm
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owns several Supercharges that are spread around the world in conventional areas.
This supercharges consist of free connectors that charge Tesla’s vehicles in minutes
instead of hours. Tesla’s supercharges are considered to be, on average, 16 times
faster than most public charging stations. Our new product could greatly benefit from
these charging stations, as it would need them as well to recharge its battery and it
would not incur an additional cost to the firm.
Our new product would also benefit from the significantly established image and
reputation the company has been able to build over time. One of Tesla’s cars, the
Model S, won as The safest car ever according to crash tests in the 2013 Motor
Trend’s Car of the Year award. Safety is one of the most important attributes clients
take into consideration before purchasing a vehicle. Even though our bike would
have to go through crash tests as well, the reputation Tesla already has immediately
gives the client reassurance that the vehicle they are buying has everything working
properly. Moreover, Tesla vehicles are popular among celebrities such as George
Clooney, the founders of Google, David Letterman and many more. This popularity,
which Tesla has strategically built, will catapult our product ahead of its competitors.
Another strength our product could benefit from is the fact that only 20% of Tesla’s
factory is currently being used to produce their vehicles. The firm purposely decided
this so that as new Tesla models arrive, the company would not have to build a new
factory. This directly applies to our product, Tesla Bike, since it would not add any
additional costs to the firm in terms of purchasing a new factory or additional space. It
would only use the already available space in a more cost-efficient manner.
d. Required Technology
Electric car technology – already mentioned.
e. Tesla´s weaknesses
Among the firm’s weaknesses is the fact that even though Tesla Motors is an expert
in Electric car Technology, it has never dealt with motorbikes before. Introducing a
bike would mean targeting a completely new market where the company still hasn’t
established its reputation. Furthermore, as Tesla Motors was founded in 2003, it
already has limited operating history compared to its competitors in the car
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industries, which are well-established brands, and it has no operating history at all
when dealing with the motorcycle industry.
A major weakness Tesla is facing is managing its cash flow. This is because of its
expansions in capital expenditures accounting for $89 million in the fourth quarter of
2013 to $141 million in the first quarter of 2014. A vast majority of these costs are
caused by Tesla’s investing activities in expanding their charging stations. In fact,
fuel-based car companies do not have to invest on creating gas stations as these are
already provided, however, Tesla needs to satisfy this need at its own expenses,
resulting as a major start-up cost for the company.
f. Minimum Sales Volume
There is nothing similar to a Minimum Sales Volume published and requested by
Tesla Motors.
3. The Environment
a. Change in the environment and opportunity for the Tesla Bike
Tesla’s Motorcycle is a product that adapts to the present market needs.
One of the key factors behind Tesla’s success is in targeting people that care about
environmental issues and high-end professionals; that buy based on design and
technology.
Tesla’s Motorcycle will have several benefits that will standout from its competitors:
Eco-friendly:
Its electric engines have zero emissions and thus pollute less than any other
gas engine in the market.
Save money:
All Tesla’s batteries have a guarantee of eight years minimum. Ensured eight
years of only paying for electricity.
“Access to federal tax credits up to $7,500.”
Clients will not need to buy gas.
Design:
Ultimate design that will set the Tesla Bike apart from regular bikes just made
to fulfill the need of “traveling”.
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Technology:
Tesla’s engineers have created motors with revolutionary technology and
features.
Clients might perceive that our motorcycle also have some weaknesses:
Expensive: All tesla products are targeted to medium- high and high class
individuals.
Simplicity: Bike lovers perceive electric bikes as an insult. Some electric
motorcycle brands are producing bikes that imitate Ducati or Harley Davidson,
which are looked upon more favorably by bike lovers.
There are several changes in the environment that can lead to Opportunities for our
product:
Higher price of gas: Higher prices of gas will make electric vehicles more
affordable, since you will end up saving money on gas.
Laws against pollution: Gas engines pollute more. Any restrictions for gas
engines will benefit our product.
Increase of population: Bikes are a bigger need in industrialized cities, due to
how convenient parking is compared to a car and how easy it is to drive
around jammed areas. Larger population translates to a bigger need for bikes.
Some of the following changes in the environment can be a threat for our Tesla
motorbike.
Demand and Supply: If people start using electric transportation, the demand could
make the prices of electricity increase, and make Tesla products less affordable to
own.
Stronger competition: Tesla’s competitors can produce cheaper bikes or bikes with
better features.
b. Competition
Tesla motorcycle’s competition will be, all motorcycles built for ”everyday use”. In
other words, racing bikes, off road bikes, and Quad bikes will not be seen as
competition, since this last group doesn’t satisfy the “everyday use” need. Examples
of competitors are Aprillia, Yamaha, Honda, Ducati, Derbi, Suzuki etc…
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We divide our competition in two groups: Electric Motorcycles and Motorcycles with
gas engines.
We consider regular gas-engine bikes our competitors, but the biggest threats are
bikes with electric engines, since these have a similar product differentiation as ours.
“Zero Motorcycles” are the biggest competitor Tesla will compete against. They have
four different models available (Zero S, Zero SR, Zero DS and Zero FX) targeted to
police departments and “Old School Bikers”. The second group is focusing on
imitating the noise of fuel engines and classic designs. “Brammo” is our second
biggest threat. Brammo also produces electric bikes, targeted to more specific
demographics. They produce mainly racing- and sport bikes.
c. Strength’s and Weaknesses of our competitors
Electric Bikes: This group is motorcycles of any brand, built with electric engines.
They represent the biggest threat, since they have the most outstanding product
differentiation Tesla has; electric engines.
Zero:
Strengths: Unique designs and engines that imitate classic bikes
Weaknesses: Its bikes are uncomfortable to drive and
too expensive.
Brammo:
Strengths: Its bikes are fast and made for circuit (specialization).
Weaknesses: Inconvenient for a daily use and dangerous.
Bikes with gas engines: Motorcycles of any brand built with gas engines.
They represent a smaller threat to our product since its gas engines are a step
behind our product, in terms of eco-friendly care, trend and expense-wise.
In order to harm our market share, they could produce:
a) Comfortable bikes that will attract clients that just need transportation, and
don’t care about design or technology.
b) Classic bikes targeted to “bike lovers” that don’t consider electric bikes, a
bike.
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4. The Product Innovation Charter
The Product Innovation Charter is a strategic plan for the development of new goods
used by companies that manufacture products, like Tesla Motors. More specifically it
is a critical as well as strategic document at the heart of Tesla's new effort to
commercialize the Tesla Motorcycle. It will serve as the definitive point of reference
for Tesla’s different units and branches or SBU’s and will focus efforts company-
wide. It contains the reasons the project has been started, the goals, objectives,
guidelines, and the project’s boundaries. It is the “who, what, where, when, and why”
of the product development project. Tesla needs the Product Innovation Charter to
set the product development team’s goals and objectives in terms of sales, profit, and
market share to list just a few. Additionally the PIC is crucial in establishing a
particular product’s place within the company’s wider goals. In the case of the new
Tesla Motorcycle, senior management has determined that the product is well in li ne
with the company’s mission statement, “To accelerate the world’s transition to
sustainable transport“. Members of senior management that have collectively added
input and developed the PIC include: CEO, Co-Founder, and product architect Elon
Musk, CTO and Co-Founder JB Straubel, Chief Designer Franz Von Holzhausen,
Chief Financial Officer Deepak Ahuja, Chief Information Officer Jay Vijayan, Vice
President of Worldwide Sales and Service Jerome Guillen, Vice President of
Production Greg Reichow, Vice President of Business Development Diarmuid
O’Connell, Vice President of Human Resources Arnnon Geshuri and Vice President
of Supply Chain Peter Carlsson. Tesla has made a promise of sorts and this promise
extends to offering motorcycles in addition to cars as methods of sustainable
transport. The Motorcycle project will begin as a smaller branch of Tesla’s portfolio,
yet it is destined to grow organically, contingent on demand variables.
a. Background
Tesla Motors is in the business of manufacturing and selling world-class electric
vehicles. Tesla purchases most of the components for their vehicles from suppliers
and uses their factories for assembly but they have also innovated in terms of
processes. Tesla vehicles are currently custom-ordered via Tesla showrooms across
the world. Vehicles therefore are produced on a demand basis, something that Tesla
has found highly efficient and will choose to maintain for all future product endeavors.
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Management has determined that manufacturing motorcycles is a logical progression
for the company as it fits with both company goals and currently established
production platforms.
When the initial concept for the Tesla Motorcycle arose, the PIC eliminated several
new product ideas even before they were considered for development as product
concepts. These included ideas that required for technologies that the firm did not
have, such as a gas powered or hybrid motorcycle. Tesla decided to rule these
options out and focus on what they knew how to make best, which is fully electric
vehicles. Other ideas eliminated were those that included selling to customers about
whom the firm has no close knowledge. Trying to impact a low-end market was
eliminated because Tesla has far more experience with high-end markets and their
tendencies. Ideas that offered too much or too little innovativeness were also
eliminated. An idea for a hovering motorcycle as well as one for a retrogressive
styled gasoline-powered motorcycle was eliminated. The hovering motorcycle idea
was too innovative and required too much technology while the “old school”
motorcycle concept didn't prove sophisticated enough. Other ideas such as those,
which have high production costs or are overly similar to competitors, were also
eliminated. A solar powered motorcycle, which would have cost 78 million dollars to
prototype, was eliminated for obvious reasons. Additionally an electric motorcycle
concept and design that was nearly identical to competitor Brammo Motorcycle’s
“Empulse-R” model was also eliminated.
The firm developed its particular strategy for several reasons. Firstly, Tesla’s
automobiles were highly successful and due to this success, company stock rose
significantly. In exploring new revenue streams in parallel development concepts, the
Tesla Motorcycle stood out. Over the past decade, Tesla has been building up the
Tesla brand name to its current and prestigious standing. It has built a sophisticated
charging station infrastructure spanning across various continents, giving potential
motorcycle enthusiasts an added incentive to buy. Tesla plans to release all of its
motorcycles with compatible parts so that current and new Tesla vehicle owners can
take full advantage of Tesla charging stations as well. If for example a current Tesla
Car owner purchased a Tesla Motorcycle, he or she could use the same charger and
station for both vehicles. Tesla's battery packs consist of Lithium Ion battery cells,
which have proved to be extremely reliable and efficient. Since motorcycles have a
much lower drag-coefficient than traditional cars, the motorcycle will be much faster
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and the charges will last proportionally longer, giving clients even more reasons to
buy.
Recently the Tesla Model S won awards such as the 2013 World Green Car of the
Year, 2013 Motor Trend Car of the Year, Automobile Magazine's 2013 Car of the
Year, Time Magazine Best 25 Inventions of the Year 2012 award and Consumer
Reports' top-scoring car ever. In this spirit Tesla is confident that any future
endeavors into motorcycles will too be successful. Initially however, the Tesla
Motorcycle as the Tesla Car will be costly. Elon Musk expresses this in a very telling
quote, “Our goal when we created Tesla a decade ago was the same as it is today:
to accelerate the advent of sustainable transport by bringing compelling mass market
electric cars to market as soon as possible. If we could have done that with our first
product, we would have, but that was simply impossible to achieve for a startup
company that had never built a car and that had one technology iteration and no
economies of scale. Our first product was going to be expensive no matter what it
looked like, so we decided to build a sports car, as that seemed like it had the best
chance of being competitive with its gasoline alternatives.”
Key Ideas
Demographics:
In the U.S. people interested in leasing or buying electric cars such as Tesla are
wealthy, well educated, predominantly white, male and have a median age of 46
years of age according to a recent survey done by the Electric Vehicle Information
Exchange. Motorcyclists in the gas-powered sector are also predominantly male,
white and share an almost identical median age. The majority prefers Sport-Touring
and touring motorcycles. They are less wealthy and less educated however. As there
is no reliable data in the field of electric motorcycle users, we will choose a
combination of these two findings in moving forward with our analyses.
Social:
There has been an overwhelming trend across various markets in what has been
referred to as “going green” and in “carbon footprint” management. The general
theme is to be more conscious of human impact on fossil fuels, carbon consumption
and over all resource usage. Large sections of society across differing social and
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ethnic groups have listed this as a main concern of theirs as a consumer. The widely
accepted advent of global warming coupled with various pollution disasters such as
Fukushima nuclear power plant spill and the BP oil spill in the Gulf of Mexico have
heightened environmental conscientiousness and as a result electric vehicle sales
have spiked tremendously. The Tesla engine on the current Model S boasts zero
emissions, a significantly less damaging engine than the internal combustion/gas
engine.
Political/Legal:
In the United States, various government incentives to both the electric/hybrid vehicle
consumer and manufacturer/distributor have made electric transport all the more
appealing. In December 2013, California announced it would give Tesla a US$34.7
million tax break to expand production by an estimated 35,000 vehicles annually from
its Fremont, California plant. Specifically under the leadership of President Barrack
Obama, Federal Tax Credits for the purchase of fully electric vehicles have reached
a staggering $7,500. The credits were provided as part of the American Recovery
and Reinvestment Act, otherwise known as the “stimulus bill.” Electric car owners
can also expect better electricity rates. Many electric utilities around the country offer
special rates, including time-of-use (TOU) rates, to reduce the cost of powering an
electric car or plug-in hybrid. The reduced EV rate can significantly reduce the cost of
charging your car. Check with your local utility company for exact rates and other
details. Several major insurance companies, such as Farmers, offer discounts of 5
percent or more for owners of electric and hybrid cars. In addition to discounts on
insurance premiums, electric vehicle owners can also expect the same for their
charging equipment. Some states offer EV buyers and businesses a credit for the
purchase and costs of charging equipment. And there are even incentives for those
reluctant to trade their old gas powered for an electric one. Drivers converting a car
into a plug-in hybrid, or a gas-powered car into an electric vehicle, had received a tax
credit equal to 10 percent of the conversion cost. Individual states, such as Colorado
and Florida, provide additional incentives, such as rebates and state tax credits.
Economic:
The standard argument for electric vehicles is that they are an investment that pays
off over time because the owner will spend little to no money gasoline. Additionally
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company’s offer guarantees on certain pieces of their technology i.e. Tesla’s
batteries have a minimum guarantee of eight years. However there have been lots of
changes in the current economic landscape recently.
Gas prices have fallen more than $1 per gallon over the last 12 months, to a
national average of $2.06, according to AAA. That makes electric cars, with their
higher prices tags, a tougher sell. “Fuel savings are not top of mind to many
consumers right now,” says John Krafcik, president of the car-shopping site
TrueCar.com. Automakers have countered by slashing thousands of dollars off the
sticker price of electrics. Incentives averaged $4,159 per electric car last year, up 68
percent from 2013, according to Kelley Blue Book. The average for all vehicles was
$2,791.The discounting, combined with new vehicles such as the BMW i3, the
electric Kia Soul and the Mercedes B Class, boosted sales of electrics 35 percent
last year, according to Ward’s AutoInfoBank. This all occurred however before the
drastic drop in the price of gasoline.
Fortunately, fueling costs factor very little for motorcycle owners, as bikes tend
to be highly efficient anyway. Furthermore, even when gas prices hover around $2,
it’s cheaper to charge an electric car. Residential electricity averages 12 cents per
kilowatt hour nationally; at that price, it costs around $550 per year to charge the
Nissan Leaf for 15,000 miles of driving. At $2.06 per gallon, it costs $950 per year to
fill the similarly sized, gas-powered Sentra, which averages 33 mpg; at $4 per gallon,
it would cost $1,816. But costs can vary. Model S drivers, for example, can use
Tesla’s network of free Superchargers, which can charge a Model S battery in a
matter of minutes. Additionally, power companies tend to offer reduced rates to
owners who charge their vehicles during off-peak hours. And some owners can leave
the grid altogether and power their electric cars by becoming self-sustainable with
solar energy.
Technological:
Tesla continuously strives to increase their battery’s efficiency and range in its
vehicles, so far leading among electric vehicle manufacturers. This coupled with its
award winning design and tech features will definitely carry over to the electric
motorcycle project. Every new generation of Tesla product outdoes the last and
constantly pushes the limits of innovation.
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Competition:
The two main competitors the Tesla Motorcycle project will compete against are
“Zero Motorcycles” and “Brammo”. Both are small companies, which have neither the
reach nor the resources that Tesla has ie. Tesla is a publically traded company.
Tesla has showrooms in the United States, Canada, Asia, Europe and Australia. With
more than 50,000 vehicles on the road across five different continents worldwide,
Tesla has an established a strong presence in the field of electric vehicles already.
Besides shadowing its two main competitors in this respect, Tesla owners can enjoy
the benefit of charging at home so they never have to visit a gas station or spend a
cent on gasoline. For long distance journeys, Tesla’s Supercharger network provides
convenient and free access to high speed charging, replenishing half a charge in as
little as 20 minutes. Superchargers now connect popular routes in North America,
Europe, and Asia Pacific.
b. Focus
Technology strengths include Tesla’s revolutinary use of high powered chargers and
charging stations, its application of Lithium Ion battery packs, its high end console’s
as well as dash boards, hardware, battery guarantee/waranty, services, product
design and development skills. Marketing requirements include products on the
“cutting edge” that offer a seamless and high performance transition in the world of
electric vehicles, yet are instinctive, effortless, and exciting to use.
Directions to concentrate on in the new product development
What are the firms core competencies? Technological? Marketing? Financial?
Tesla’s core competencies are technology strength, end-use experience and
marketing.
What is the firm’s competitive advantage and the value that the firm can bring
to the target market?
Tesla cars are widely recognized as the world’s highest quality and most efficient
fully electric vehicles. The Tesla brand name stands at the top of its field. The
product’s target market will include current Tesla Car owners but will also target
conventional motorcycle users. Tesla’s position as one of the very few publically
traded automotive companies further places it at a significant competitive advantage.
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Other advantages include its massive super charger as well international distribution
infrastructure.
The value the firm brings to the target market is in the cutting edge technology
and design infused in Tesla products. Some of the world’s greatest engineers and
innovators have grown Tesla into the company it is today. Every single Tesla product
is the result of countless research, development, design and innovation hours.
What are the firm’s advantages in relation to the target market’s needs, wants,
and consumption trends?
Tesla is in many ways leading and shaping needs, wants and consumption trends as
it is at the top of its field. It is an innovator like apple and is in many ways creating
“New to the World products” in terms of range and features.
What are the firm’s marketing capabilities?
Tesla is currently using marketing to alter the auto industry’s current business model.
Apart from there not being any Tesla dealerships, or for that matter, commissioned
sales people, you cannot test drive a Tesla unless you put down a $5,000 deposit.
Furthermore, all Tesla transactions are conducted online and there is no room for
price negotiation. Each Tesla product is built to order, positively impacting
redundancies in inventory and stifling overproduction. Tesla’s choice to kick off its
vehicle production with high-end vehicles proved brilliant for many reasons. Firstly it
lets early adopters fund technology so as volume increases, prices are coming down.
This imminent price drop has been an enduring part of Tesla’s marketing plan.
Secondly these early super cars are media magnets endlessly discussed in droves of
free Tesla publicity. Those interested in acquiring a Tesla have to wait in line for
months and sometimes years to get their car, further adding to the cars desirability.
c. Goals-Objectives
Long Term Goal
Defeat competition and be in control of the electric motorcycle market. Tesla already
possesses the acknowledgement of its customers of being a company with excellent
and high end technology which provides a superior level of performance. This fact is
key in defeating competition because the other brands do not have this recognition in
the market or in people’s consciousness.
21. 21
Short Term Goal
Get a distinct product in the market that is seductive to the public and does not have
all the flaws of the competitors.
d. Special Guidelines
How innovative should the firm be in new products?
Tesla Motors is a company that strives to drive trends and be in people’s mind and
conversations around the world. Innovation is one of the key elements in which the
company was founded upon and it is safe to say that is the main aspect concerning
Tesla’s image. People want to be able to use motorcycles without putting the
ecosystem in danger or polluting the environment. However, at present there are only
a few options in the market concerning this type of product, none of which reach a
premium level of excellence and have several flaws in performance and design. The
company is obligated to be extremely innovative and produce a motorcycle with the
best possible characteristics to overcome the existing competition.
Timing for product introduction
The company is going to approach a “quick second” timing because there already
are electric motorcycles in the market, but the idea is to make a better product than
the few that already exist. By taking this option, Tesla Motors is going to be one of
the automotive industry’s pioneers concerning this product and because of this will
take with it a larger portion of customers than the two other competitive brands.
5. The ProductPortfolio
Tesla Motors is a company that is known for its achievements in producing luxury
cars that only use sustainable energy. An electric motorcycle is a market branch, in
which the company should put in effort with the objective of getting a much more
broad customer group. An electric motorcycle would fit perfectly with the company
because it requires the same technology as cars but provide the benefit of adapting
the products to the different kinds of customers in the market. Even whilst knowing
that cars are much safer than motorcycles, a large amount of individuals prefer
motorcycles, and usually, this type of customer is passionate about bikes. The use of
22. 22
motorcycles is almost a style of living for some people who are not ready to change
their habits and start using cars just by the fact that is not going to pollute the
environment, just as Tesla cars or any other eco friendly products are. This is why
the company needs to get into this market and develop a high quality electric
motorcycle.
23. 23
Appendix
ESTIMATED MARKET AND SALES DATA TESLA
Table 1:EstimatedMarket and Sales Data
Market Capacity
USA3 500.000
Europe4 329.200
China5 220.495
Japan6 438.737
Total Bikes Sold 2014 1.488.432
Market Potential
Av.Price7 $14.487,00
Market Potential $21.562.914.384,00
Sales Volume
55 Million electric bikes sold within the next 9 years8
About 6 Million per year
Average price $ 15,000.00
Scenario
6Mio. * $ 15.000 average price $90.000.000.000,00
10% in our target market $9.000.000.000,00
Best Scenario (65%) $5.850.000.000,00
Intermediate Scenario (25%) $2.250.000.000,00
Worst Scenario (3%) $270.000.000,00
3 http://www.webbikeworld.com/motorcycle-news/statistics/motorcycle-sales-statistics.htm
4 http://www.acem.eu/index.php/market-figures
5 http://www.reuters.com/article/2015/01/06/jialing-brief-idUSL3N0UL3BN20150106
6 http://de.statista.com/statistik/daten/studie/280813/umfrage/anzahl-der-importierten-motorraeder-
nach-japan/
7 http://motorcycles.axlegeeks.com/app-question/161/What-is-the-average-price-of-a-new-motorcycle
8 http://www.navigantresearch.com/newsroom/55-million-electric-motorcycles-and-scooters-will-be-
sold-worldwide-from-2014-to-2023
