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Tesla Motors Presentation

  1. 1. Business Policy University of Guelph-Humber BADM 4000 Charles Janthur Mark Bilhete Timothy Brilhante Narinder Dhaliwal Savanna Fernandes Jelisaveta Knezevic Karen Macwan Presentation Date July 27, 2015
  2. 2. 2 ROADMAP 1 2 3 Tracking Tesla Situation Analysis Industry Analysis 5 4 Strategic Recommendations Problem Analysis 6 Synthesis/Q&A
  3. 3. 3 TESLA MOTORS • Founded in 2003 by engineers in Silicon Valley • Electric car with instant torque, incredible power, and zero emissions • Accelerate the world’s transition to sustainable transport
  4. 4. 4 1888 2003 2008 2010 2012 TRACKING TESLA Nikola Tesla patents powertrain design built around AC induction motor Tesla Motors incorporated Tesla Roadster launched with 0-60 mph acceleration in 3.7 seconds and 245 miles per charge on a lithium-ion battery IPO raised US $226M (NASDAQ:TSLA) at $17/share and closed at $23.89 (+40.5%) The world’s first premium electric sedan is launched – Model S
  5. 5. 5 2013 2014 TRACKING TESLA Model S named Motor Trend’s Car of the Year and achieved 5- star rating from the U.S. National Highway Traffic Safety Administration CEO Elon Musk unveils two dual motor all-wheel drive configurations of Model S that further improve the vehicle’s handling and performance Announcement of Battery Swap Pilot Program Nevada selected as site for Panasonic and Tesla’s new battery Gigafactory Tesla shares some of its patents to promote open source development of electric cars
  6. 6. 6 TRACKING TESLA 2015 Tesla prepares to launch its new crossover vehicle – Model X Tesla will unveil plans for its future mass market electric vehicle – Model 3 2016
  7. 7. 7 SITUATION ANALYSIS $294M from $74M BOTTOM LINE 54% Decline in Model S SALES $262 NASDAQ: TSLA SHARE PRICE TODAY 30 New Service Locations in EU EXPANSION
  8. 8. 8 INDUSTRY ANALYSIS • Adoption of electric vehicles slow • Tesla Model S $70K+ and X $80K+ • Tesla Model 3 $35K+ in future S SOCIAL • Tax credits and incentives • $7,500 income tax credit across US • $8,500 rebate + carpool access in ON P POLITICAL • Demand for lithium-ion batteries • New $5B ‘Gigafactory’ will provide competitive advantage for Tesla TTECHNOLOGICAL • Emission regulations and penalties • NADA prevents Tesla from selling directly to consumers in some states L LEGAL • Low oil prices (WTI NYMEX $48-60) • 1.2 million EV’s by end of 2015 (0.5% of total global vehicle sales) E ECONOMIC E ETHICAL • Global warming and climate change • G7 goal to eliminate carbon and greenhouse gas emissions by 2100 EENVIRONMENTAL • Higher female employment (47.5% of US workforce in 2013) • Smaller households (smaller cars) DDEMOGRAPHIC • Exporting US jobs and manufacturing • Tesla sharing patents to encourage development of electric vehicle market
  9. 9. 9 PORTER’S 5 FORCES MODEL UNDERSTANDING THE COMPETITIVE LANDSCAPE Barriers to Entry Power of Buyers Power of Suppliers Threat of Substitutes Industry Rivalry HIGH HIGH MODERATE HIGH HIGH
  10. 10. 10 PROBLEM 1 – PRODUCTION CAPACITY KEYISSUE PROBLEM ANALYSIS • Single assembly line causes significant delays and extremely long wait times for consumers • Reliance on few suppliers can threaten production • Unable to generate positive cash flow for the past 5 years Tesla’s vehicle production capacity is low and depends on one manufacturing plant located in Fremont, CA
  11. 11. 11 FIRST QUARTER 2015 10,045 delivered 11,160 produced VEHICLES
  12. 12. 12 EXHIBIT 1.1 – GROSS PROFIT $294 M$0.4 $2.0 $3.1 $0.3 $1.5 $2.3 2012 2013 2014 Gross Profit in Billions ($US) Total Revenues Total Cost of Revenues
  13. 13. 13 EXHIBIT 1.2 – NET LOSS $294 M $154 $254 $396 $74 $294 2010 2011 2012 2013 2014 Net Loss in Millions ($US)
  15. 15. 15 JOINT VENTURE WITH BOEING • Boeing is the largest aerospace company and leading manufacturer of airplane parts and aircrafts • Long tradition of aerospace leadership and innovation • Share similar values of innovation, environmental protection, and inclusive corporate culture – groundwork for strong synergistic strategic alliance
  16. 16. 16 ADVANTAGES FOR TESLA • Leverage Boeing’s suppliers, distribution network, production facilities and TQM systems • Maintain centralization in California, but can move production to other areas of the country • Can use Boeing’s large capital structure to purchase a production facility and the necessary equipment to start producing vehicles outside of California
  17. 17. Boeing Facility Everett, WA Tesla Factory Fremont, CA New JV Facility Detroit, MI
  18. 18. 18 BOEING PARTNERSHIP • Would allow Tesla to pursue their differentiation strategy • Partnering with a company in a related industry also creates diversification advantage and increases Tesla’s market share • Tesla’s overall returns would increase as they would be able to better meet customer demand
  19. 19. 19 PROBLEM 2 – CORPORATE LEADERSHIP KEYISSUE PROBLEM ANALYSIS • Overdependence on CEO Elon Musk for strategic direction • Role duality within corporate structure hindering effective decision-making • Need for leadership balance between vision and management • CFO Deepak Ahuja’s retirement Tesla’s performance has been slow to improve due to the current corporate leadership approach
  21. 21. 21 EXHIBIT 2.1 – CURRENT CORPORATE STRUCTURE Elon Musk CEO, Product Architect, Chairman & Board of Director D. Ahuja CFO (Retiring) J. Vijayan CIO JB. Straubel CTO D. O’Connell VP Business Development P. Carlsson VP Supply Chain J. Guillen VP WW Sales Shareholders Board of Directors
  22. 22. 22 EXHIBIT 2.2 – REVISED CORPORATE STRUCTURE A Elon Musk CEO, Product Architect & Board of Director Shareholders Board of Directors President & Board of Director (New Position – Managerial Leader) D. Ahuja CFO (Retiring) J. Vijayan CIO JB. Straubel CTO D. O’Connell VP Business Development P. Carlsson VP Supply Chain COO (New Position) NEW CHAIRMAN
  23. 23. 23 ADVANTAGES FOR TESLA • Elon Musk can focus entirely on leading Tesla as CEO • President can help achieve synergy between vision and management • Tesla’s corporate governance will be more effective in terms of accountability and transparency • Better performance, decision-making, and response to change
  24. 24. 24 EXHIBIT 2.3 – REVISED CORPORATE STRUCTURE B Chief Executive Officer (New Strategic Leader / Vision + Management) Shareholders Board of Directors President & Board of Director (New Position – Managerial Leader) D. Ahuja CFO (Retiring) J. Vijayan CIO JB. Straubel CTO D. O’Connell VP Business Development P. Carlsson VP Supply Chain COO (New Position) ELON MUSK Product Architect, Chairman & Board of Director
  25. 25. 25 ADVANTAGES FOR TESLA • Elon Musk is also the CEO of SpaceX and Chairman of SolarCity • Appointing a new CEO will allow Elon Musk to focus on multiple responsibilities more efficiently, while remaining Chairman of Tesla • Tesla will benefit from strategic leadership with both vision and management effectiveness • Potential candidate: Calin Rovinescu, CEO of Air Canada • Helped Air Canada through bankruptcy and returned it to profitability in 2014 with a 4% profit margin
  26. 26. 26 SYNTHESIS Tesla must address its production capacity and corporate leadership issues Strategic recommendations include a new JV and revised corporate structure Ultimately lead to improvements in Tesla’s performance and strategic direction STEERING TESLA IN THE RIGHT DIRECTION
  27. 27. Thank You
  28. 28. 28 REFERENCES Boeing. (2015, July 20). Our Company. Retrieved from Boeing: Euromonitor International. (2015, July 20). Automotive Industry Analysis. Retrieved from Euromonitor International: Hason, S. (2015, June 19). Tesla Motors Inc Secures $15M In Tax Credits In California. Retrieved from Business Finance News: motors-inc-secures-15m-in-tax-credits-in-california/ Hitt, M. A., Ireland, R. D., Hoskisson, R. E., Rowe, W. G., & Sheppard, J. P. (2009). Strategic Management: Competitiveness and Globalization Concepts (3rd ed.). Toronto, ON, Canada: Nelson Education. Nasdaq. (2015, July 20). Crude Oil WTI (NYMEX) Price. Retrieved from Nasdaq: oil.aspx?timeframe=5y Tesla Motors. (2014, December 31). Annual Report. Retrieved from Tesla Motors: 90-15-1031&CIK=1318605 Tesla Motors. (2015, July 20). About Tesla. Retrieved from Tesla Motors: Tesla Motors. (2015, July 20). Blog. Retrieved from Tesla Motors: Tesla Motors. (2015, July 20). Forums. Retrieved from Tesla Motors: timeline-0 All images sourced from Tesla and Boeing websites.