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- 1. Tesla vs. GeneralMotors (David and Goliath Story) Gim Eduardo Palacios Lau A look into the electric vehicle industry and the future viability of the market
- 2. Executive Summary “Electric carsare not going to take the market by storm, but it’s going to be a gradual improvement.” -Carlos Ghosn (Businessman) Why is the EV industry interesting? Emerging Market Battery Improvements Alternative Resource Incumbent vs. Challenger
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- 4. External Factors Source: Beckerand Sidhu 2009 Source: International Council on Clean Transportation Fuel Direct correlation between sales of EV and fuel prices Oil and gasoline prices will rice over the next two decades Consumers make decisions based on the cost of fuels
- 5. External Factors Direct correlationbetween government incentives for buyers and uptake of EV Government
- 6. Industry Factors Costof batteries will decrease over the years Worldwide fast charging stations will increase
- 7. GM’s strategy isto be a fast follower Vision: To continue to be the major automotive manufacturer globally Strategy: To invest in EV technology as a small proportion of overall investment Resource Leverage • Supply chain efficiencies and access to low cost inputs due to volume. • Well established infrastructure and global manufacturing footprint. • Access to capital • Portfolio of trademarks and strong brand. • Acceleration of R&D when required • Globally recognised brand Creating high barriers to entry • Large costs to enter the market for new challengers. Currently the only pure play EV firms are Tesla and BYD. • Extensive patent library • The strategy is to go mass market when EV becomes viable to produce
- 8. Tesla’s strategy isto lead innovation Vision: EV’s to become a mass market product Strategy: Drive down the cost of battery to reduce the overall cost of car as well as to grow the EV market Resources and capabilities • Innovative culture with a skilled workforce built by selective hiring of senior Executives from Google, Apple and Toyota. • Building Tesla only charging station network in US and now in China. • Strategic partnerships particularly with Panasonic on Gigafactory, and with Toyota for access to automotive knowledge and skills. • Release patents in order to growth the industry, open the market, and being the industry standard
- 9. The Automotive Industry AutomotiveIndustry The automotive industry is the red ocean industry with over 50 manufacturers and intense competition. GM is the largest automotive manufacturer with a high R&D focus fuel based vehicles. Electric Vehicle Niche The blue ocean in the automotive industry is the electric vehicle market, where firms are innovating and creating a new segment due to minimal competition. Tesla is the incumbent in this industry by innovating through technology to increase the driving distance on a single charge. Tesla is also creating an exciting driving experience while reducing the cost of production through a focus on reducing the battery cost through economies of scale.
- 10. Conclusion Tesla Tesla isdriving down the cost and production of battery to make the EV market affordable for the masses General Motors Leveraging from innovation driven by other automotive companies and charging towards being a fast follower in the EV market. EV Market Demonstrated by these two power houses ,the EV market is undoubtedly a contender in the broader automotive industry. The EV Market will be viable by 2020?
Editor's Notes
- #2 taking a look into the Electric Vehicle Industry and the future viability of the market. Focus a David vs Goliath, a pure Incumbent against a pure challenger. General Motors- A mass market producer of automotive vehicles and the first producer of a modern day electric car. Tesla- an innovative, entrepreneurial spirited start up, ready to make Electric Vehicle truly mass. Will the EV market be viable by 2020?????????
- #3 The Automotive industry is growing Mckinsey suggests that by 2020, emerging markets = two-thirds of the total automotive profit, and China will be the driving force. Consumers are demanding greener and more fuel efficient cars manufacturers with battery expertise, skills and resources come out on top in the fight for market advantage.
- #4 So its still niche, There is however, a significant percentage in growth But what needs to happened to make sure that this prediction turns to reality?
- #5 So what is going to drive an increase in demand Consumers make decisions based on the cost of fuel In July 2012 you can see as Fuel rises (blue) EV Sales increase (Green line) As prices drop, EV sales drop (Look at Oct and Nov 2012)
- #6 In Norway for example they receive around 11.5k EUR per EV (which is the equivalent to 55% of the vehicle base price) is a 6% market share and a 90% market share increase from 2012- 2013. In the Netherlands, you can see an enormous growth in market share when their incentives kicked in. There are limitations however, as you can see with the UK which has a relatively high incentive program but low uptake.
- #9 The factory is being built close to the raw material Gain cost advantage over competing electric car makers. Currently the world’s largest lithium-ion battery production is in China Partnering with Panasonic has ensure a high switching cost for them, meaning we will gain the benefits of their resources, knowledge and experience and obviously take significant control of the supply chain. We also believe that we may indeed become suppliers to our competitors in many ways,
- #10 For GM: Focusing in low cost Car Industry saturated in America and Europe, moving to China For Tesla Tesla Motors is the first automobile company to combine the attributes of the green vehicle with those of the premium sports vehicle New “green performance vehicle” market space.