DECISION MAKING

SKILLS
Tesla: A Comprehensive
Strategic Analysis

Presented to:- Presented By:-

Dr. M.K. Arya Kirti Jha
Kulkit Yadav
Rajesh Raghuvanshi
Chandan Waskel
 Tesla Motors (TSLA) History
• Founded in 2003 by Elon Musk (Current CEO), JB Straubel (CTO), Martin Eberhard, Marc
Tarpenning, and Ian Wright
• Tesla Roadster
• First manufactured product, offered from 2008-2012
• Model S
• 2012-present
• Target Price: $75,000
• Model X
• SUV, 2014-present
• Target Price: $132,000
• Model 3
• 2017-present
• Target Price: $35,000
• IPO: January 29, 2010, raised US$226 million
• First American car company to go public since Ford (F) in 1956
• Turned first profit in Q1, 2013
 Mission and Vision
• Mission Statement: Tesla Motors designs and sells high-performance, highly
efficient electric sports cars, with no compromises. Tesla Motors cars combine style,
acceleration, and handling with advanced technologies that make them among the
quickest and the most energy-efficient cars on the road.

• Vision Statement: To “create the most compelling car company of the 21st century by
driving the world’s transition to electric vehicles.”
 General Environment
Analysis
Segment Elements Industry Effect

Political/Legal • Regulations on Emissions and Safety Standards Moderately high

• National Traffic and Motor Vehicle Safety Act, 1966
• Energy Policy and Conservation Act, 1975

Technology • Higher demand for reliable, fuel efficient vehicles Positive

• Alternate fuel vehicles (Ethanol, Biodiesel, Hydrogen Fuel
Cells, Electric battery)
• Online shopping/research

Sociocultural • Luxury vs. Economy Vehicles Positive

• Power vs. Fuel Efficiency
 Industry
Force
on Industry Analysis Description Influence

Threat of New Entrants • Mature Industry has reached Economies Low

of Scale
• High Initial Capital Requirements
• Difficult Access to Distribution Channels
Bargaining Power of • Private and Commercial buyers account for Moderately High
Buyers majority of revenue
• Low Switching Costs
• Buyers are unable to integrate backwards
Intensity of Rivalry • Gaining Market Share means Reducing High
Among Competitors Market Share of Competitor
• Few Opportunities for Differentiation

Type of Firm Description Industry

Attractiveness
New Entrants High Startup Costs, Legal Fees, Intense Competition Very Unattractive
Incumbent High Liquid Assets, Distribution, Holding Costs Moderate
 Integrated SWOT
• Strengths
Analysis
• Brand Equity
• Product Quality
• Eco-friendly Product Line
• Zero emission cars
• OTA updates/services
• Did a safety recall for almost 30,000 cars in one day

• Enhanced Opportunities
• Increase Market Share through High-Growth EV
Industry

• Limited Threats
• Consumers Deterred due to “Range-Anxiety”
PERSONALITY CLASHES: EBERHARD VS. MUSK
BOTH WERE TECHNICALLY SAVVY & VIGOROUSLY ADDRESSING PROBLEMS WITHIN TESLA
EBERHARD: “JUST BRILLIANT, AND HE HAS THIS TENACITY THAT IS UNBELIEVABLE. . . HE IS THE GUY YOU WANT AROUND IN
THOSE EARLY DAYS WHEN YOU HAVE NAYSAYERS ALL AROUND.” BUT ABRASIVE & CRITICAL

Personality Clashes - At Odds over Decisions of:

Eberhard
Body Panels: Stick with the fiberglass panels used
in the original Elise.
Marketing: Approved the hiring of PR professionals
to build publicity of the car before its launch.
Chassis: Wanted to reap the cost savings of sticking
with the Elise’s original crash-tested, off the rack
chassis.
Musk
Body Panels: Use lighter, stronger and more
expensive carbon fiber.
Marketing: Musk fired them, believing his own
involvement and car itself would generate enough
publicity.
Chassis: Wanted to lower the doorsills by two inches
to make the car easier to enter and exit to redesign
the headlights and door latches and replace the
Elise’s seat with more comfortable and expensive,
custom seats.
Why Electric Cars Are Better Than Gas Cars
• Electric cars cost less than gas vehicles.
• Electric cars are better for the environment.
• Skip the gas station, you can ‘fill-up’ at home and work.
• Electric cars have low maintenance requirements.
• Electric cars are quiet inside and outside.
• Electric vehicles are performance vehicles.
• Range anxiety is quickly becoming a thing of the past.
• The government will pay you to drive one.
• Your Electric Utility will help you pay for charging.
• EV drivers enjoy privileges other drivers do not.
 Competitor Analysis
TOYOTA
Strategy Current Strategy
Business Differentiation: The firm seeks the
broadest possible market with
distinctive offerings
Corporate Related Linked: The firm operates five
automotive brands (including Toyota, Lexus,
and Scion) in addition to partnerships with other
automotive and nonautomotive firms
Cooperative Horizontal Complementary Strategic
Alliance: Each partner is committed to
combining their resources and skills to create
value within the value chain
International Transnational: the firm seeks to
achieve both global efficiency
and local responsiveness.
GENERAL MOTORS
Strategy Current Strategy
Business Differentiation: The firm seeks the
broadest possible market with distinctive
offerings
Corporate Related Linked: The firm operates thirteen brands
(including Chevrolet, Buick and
Cadillac) in addition to partnerships with other
automotive and nonautomotive firms.
Cooperative Horizontal Complementary Strategic Alliance:
Each partner is committed to
combining their resources and skills to create value
within the value chain
International Transnational: The firm seeks to
achieve both global efficiency and
local responsiveness.
 Competitor Analysis:
• Conclusions
Strategic Competitive Advantages Future Industry Assumptions
•
• Toyota • Culture shift towards energy
• Market Power efficient and renewable energy
• Eco-Friendly companies will have
• Capital Resources
• Just-in-Time (JIT) Inventory Management more
System long term success
• General Motors • Future Major Objectives
• Capital Resources • “Greening”
• Diverse Product Offering • Product Lines
• First to Offer New Technology • Supply-Chain Networks
• Chevrolet Volt, Wi-Fi in cars
• Operations
• Marketing Messages
Recent trends of Tesla vs. EV
120

100

80

60

40

20

0
8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 8 9 9 9 9 9 9
012 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201 201
1/ 5/ 9/ 3/ 7/ 0/ 4/ /8/ 22/ /5/ 19/ /2/ 16/ 30/ 14/ 28/ 11/ 25/ /9/ 23/ /6/ 20/ /3/ 17/ /3/ 17/
4/ 4/1 4/2 5/1 5/2 6/1 6/2 7 7/ 8 8/ 9 9/ 9/ 10/ 10/ 11/ 11/ 12 12/ 1 1/ 2 2/ 3 3/

Tesla: (Worldwide) Electric vehicle: (Worldwide)

Basis
Tesla vs other EV
TESLA Other EV

Cost Much Expensive than other EV Costs usually cheaper than

TESLA
Acceleration Quickest EV in the world Less acceleration compared to
the TESLA
Cargo Space Less cargo space More cargo space than TESLA

Passenger Space: Tesla has more passenger space Usually less passenger space
in the whole EV segment than TESLA

Range Range is the area where TESLA Low range is seen in other
shines brightly ,Especially when vehicles.
you add Supercharging

Extra Features Tesla has tons of Extra features Less Features as compared to
such as Autopilot, Styling, OTA Tesla cars.
updates.
Challenges faced by Tesla
1. Balancing Production With Demand
2. More Competition on the Horizon
3. The China X Factor
4. Legal Issues and Leadership Concerns
Current
Strategies
• Business Level: Focused Differentiation
• Target early adopters with high income
• Corporate Level: Related Constrained
• Dominant business selling cars but also sells electric power train
parts
• Cooperative Level: Strategic Alliances
• Panasonic, Toyota, Dailmer, Mercedes Benz,
• International Level: Transnational
• U.S, Asia, Australia, Europe, and Canada
• Centered in California
Important Financial and Nonfinancial Data (2016)

Tesla Toyota General Motors

Earnings Per Share -$2.36 $10.67 $1.64

ROE -10.81% 14.8% 7.5%

Net Income -$294,000,000 $19,891,000,000 $3,949,000,000

Long-Term Debt to 55.5% 2.8% 18.4%

Capitalization Ratio
Revenue $3,198,000,000 $256,585,000,000 $155,929,000,000

Important Nonfinancial Factor: Culture

 Strategic Issues
• Small company
• Limited capital

• Niche market
• Charge network
• Range concerns

• Lithium-ion batteries
• Distribution network
 New Strategy Formulation
Strategy Positives Negatives Response
New partnerships for -Growth potential -Limited Resources -Imitation
supplying drive -Valuable expertise -Competitor conflicts
train components -Furthers EV adoption -Lower Margins
-Early-mover
-Distribution network
-Low risk

Enter mainstream -New customers -Lacking resources -Pricing

automotive market -Furthers EV adoption -Distribution network -Alliance relations
-Limits partnerships -Moderate risk -Litigation

Enter renewable -Growing industry -Lacking experience -Pricing

energy market -Valuable IP -Higher risk -Contracts
-Green Energy
-New Market
 Not Out Of The Woods Yet
Tesla’s Success
•Revenue of $562 Million and Profit of $ 11.2 Million
•Model S earned consumer report highest ratings
•May 2013: Company raised $1 billion by issuing new shares
•Paid back government loan with $679 million cash still available
•Survived Infancy, appeared to be solvent, & was meeting sales objective

Investment analyst say

•2013 profit include stock warrants profits & ZEV credit sales
a. Warrants revenue would not be repeated
b. No forecast of yearly demand of ZEV credits
c. No one know whether revenues were sustainable
• Increasing Competition
• Possibility of Tesla’s stock price to be an overinflated bubble.