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Competitive Analysis of Tesla Motors

Competitive Analysis of Tesla Motors. Outline. Introduction Case for the Electric Car Internal Rivalry Barriers to entry Substitutes and complements Supplier Power Buyer Power Strategy. Outline. Tesla Motors. Tesla Motors. California based start-up company

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Competitive Analysis of Tesla Motors

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  1. Competitive Analysis of Tesla Motors

  2. Outline • Introduction • Case for the Electric Car • Internal Rivalry • Barriers to entry • Substitutes and complements • Supplier Power • Buyer Power • Strategy Outline

  3. Tesla Motors Tesla Motors • California based start-up company • Developed a high performance electric sports car • Initial funding ($60m) provided by PayPal, eBay and Google Founders • Car does 0-60 mph in about 4 seconds • Car can travel 250 miles between charges • First 100 vehicles have been sold at the asking price of $100k

  4. Industry Facts Industry Facts • Transportation accounts for 63% of Oil Demand

  5. Industry Facts Industry Facts

  6. Industry Facts Industry Facts • US Automobile Industry represents 5% of Private sector GDP • 76% of the market is made up of Ford, GM and Chrysler • 18% of sales are from Japanese car makers • 6.6m Americans are directly or indirectly employed in the automotive industry. • Hybrid sales represented 1.2% of the market in 2005, 1.6% in 2006 (est). • Forecasts estimate 5% of car sales will be hybrids by 2013

  7. Market Definition Case for the Electric Car • Environmental friendliness and low emissions • High performance • Improved battery technologies and driving range • Electric cars are more energy efficient than gasoline cars.

  8. Tesla Motors Efficiency vs. Performance

  9. Internal Rivalry Internal Rivalry • A green vehicle: • Reduces consumption of petroleum • Uses renewable energy sources • Has Low emissions • Is Fuel efficient • Within the “green vehicle” market there are four types: • Electric Vehicles • Flexible-Fuel Vehicles • Hydrogen Vehicles • Hybrid Vehicles

  10. Internal Rivalry GM EV1 – Early Electric

  11. Internal Rivalry Honda Insight – Early Hybrid

  12. Internal Rivalry Toyota Prius - Hybrid

  13. Internal Rivalry Tesla Roadster - Electric

  14. Internal Rivalry Venturi Fetish - Electric

  15. Barriers to Entry • Economies of Scale • Regulation Issues • Technological Innovations • Brand Loyalty • Infrastructure Entry

  16. Substitutes Substitutes • Hybrids • Flex Fuel • Hydrogen • Diesel • Compressed Natural Gas • Mass Transportation

  17. Energy Efficiency Energy Efficiency

  18. Energy Efficiency Energy Efficiency

  19. Complements Complements • Government tax breaks • Utility incentive programs • Free Parking at Airports • Single Occupancy use of carpool lanes • No parking meter fees • 50% discount by California utilities for changing electric cars

  20. Supplier Power Supplier Power • Lotus main outsourcing partner • Lotus is providing chassis, body and building Tesla Roadster at Lotus factory in England • AC Propulsion drive train • Lithium Ion battery • Flexibility to adopt new technologies

  21. Buyer Power Buyer Power • Ability of buyer to extract profits from seller • Green market is emerging • Buyer power is limited due to lack of competition

  22. Buyer Power Buyer Power

  23. Conclusion Conclusion • Short to medium term strategy • Sell 100 Roadsters • Create recognizable product • Self funding of future expansion plans • Change opinion of electric vehicles

  24. Conclusion Conclusion • Long term strategy • Focus on brand recognition • Cost optimization • Compete in mass market • Build infrastructure

  25. Conclusion Martin Eberhard, CEO “There have been tons and tons of companies, for the last 40 years that have tried to make little commuter electric cars. The trouble is that, for the most part, it requires the buyer of such a car to change his or her nature. You’re buying a car that is not as good as an equivalent gas car at all—slower, uglier, with not as much range—and they’re trying to compete essentially on price, where they can’t win. None of those cars were built for people who really like to drive. I get the feeling they’re for people who don’t really think you should be driving, but think if you do have to drive, it should be an electric car. I think if you build a car for people as they are, not requiring them to change their nature, it’s much more likely for you to succeed. And I think our investors agree.”

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