Competitive Analysis of Tesla Motors

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Competitive Analysis of Tesla Motors
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Outline
Outline

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

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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

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Industry Facts
Industry Facts

• Transportation accounts for 63 of Oil Demand

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Industry Facts
Industry Facts
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Industry Facts
Industry Facts
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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

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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.

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Tesla Motors
Efficiency vs. Performance
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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

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Internal Rivalry
GM EV1 Early Electric
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Internal Rivalry
Honda Insight Early Hybrid
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Internal Rivalry
Toyota Prius - Hybrid
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Internal Rivalry
Tesla Roadster - Electric
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Internal Rivalry
Venturi Fetish - Electric
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Entry
Barriers to Entry

• Economies of Scale
• Regulation Issues
• Technological Innovations
• Brand Loyalty
• Infrastructure

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Substitutes
Substitutes

• Hybrids
• Flex Fuel
• Hydrogen
• Diesel
• Compressed Natural Gas
• Mass Transportation

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Energy Efficiency
Energy Efficiency
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Energy Efficiency
Energy Efficiency
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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

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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

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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

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Buyer Power
Buyer Power
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Conclusion
Conclusion

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

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Conclusion
Conclusion

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

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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. Youre buying a
car that is not as good as an equivalent gas car
at allslower, uglier, with not as much rangeand
theyre trying to compete essentially on price,
where they cant win. None of those cars were
built for people who really like to drive. I get
the feeling theyre for people who dont 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, its
much more likely for you to succeed. And I think
our investors agree.