1. Tesla vs. General Motors (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 cars are 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
4. External Factors
Source: Becker and 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
6. Industry Factors
Cost of batteries will decrease over
the years
Worldwide fast charging stations
will increase
7. GM’s strategy is to 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 is to 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
Automotive Industry
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 is driving 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
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?????????
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.
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?
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)
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.
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,
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.