RSM100- Lecture 1

9749

*Bring name card*

wenqing.xie@mail.utoronto.ca

Do you think Tesla will be successful in the long term? Why?

- A lot of focus on the environment and green license plates, places to park, etc.
- Unique companies that are developing and further improving our economy and
environment.
- Good investment- pays for itself. When calculating gas prices in the future, Save
money on gas in the future.

What caused them to surpass GM and Ford at one point despite sustained losses?
- Underserved market, not a lot of real players in the market. Market growth potential
here.
- The market has growing demand for tesla. Chinese government want more electric
cars. It’s a global trend. Many preorders.
- Has future potential, a lot of other companies are developing electric cars- this is
where market is going. People are investing based on where its going, not where
they are.
- Tesla already recognized, when you think electric car you think Tesla. Already made
a mark in the minds of the consumers. Very strong and recognized brand.
- Traditional cars depend on oil and due to geopolitical unrests (ie OPEC control) with
regards to oil, people want to reduce dependence on oil and thus electric cars are
the way to go.
- To do with Elon Musk- people are very interested in him. He’s a personality. This
promotes Tesla.

What do you think they will need to do to reach and sustain profitability?
- Produce cheaper cars to generate greater revenues and sell more product. More
revenues- more ability to cover fixed cost.
- Have competitive advantage that is more difficult to duplicate so other people don’t
copy.
- Develop more models of the car that appeal to more consumer groups.
- Focus on customer service. With the Nio cars, customer care charges cars on
demand. Since they have better customer service and to compete it would be ideal
for tesla to increase its customer service.

Why would Tesla take such a significant risk?

- See that the market is underserved. They see that there is market demand for these
cars.
- Forse a lot of future growth based on past growth.
 - Realize there are a lot of competitors out there but they’re still ahead of the
competitors. Still have a competitive Advantage. When you think about electric car,
you think Tesla- strong and recognized brand.

Strengths
- Brand
- High Quality
- Trust consumers have in tesla.

Weaknesses
- Not sufficient supply to cover fixed cost. This is a very capital intensive business,
need to have big factories, etc and thus have high fixed costs and need to make sure
they are covering fixed cost with enough revenue.
- Limited capital
- Weren’t meeting sales targets
- Weren’t always able to organize production properly
- Model 3 was kind of the latest Model 2. Had internal weaknesses within Tesla.

Opportunities
- So many people waiting to buy electric car- underserved market.
- People looking for alternative fuel sourced vehicles.

Threats
- Falling oil prices. A lot of people say oil prices are artificially inflated, if they were to
drop the Lower the oil prices, is the less attractive the tesla is. If gas is cheap then
customers not saving much by purchasing a tesla.
- Competition from other competitors. Eg. Nio.