Tesla Motors, Inc. Market Analysis and Definition

I.Table of Contents

Contents

I.Table of Contents

II.List of Abbreviations

III.List of Figures

1.Introduction
1.1 Problem Definition and Objective
1.2 Structure

2.Company and products – an Overview
2.1 Tesla Motors – Company Profile
2.2 Electric Cars by Tesla

3.Market Analysis and Definition
3.1 STEEP-Analysis
3.1.1 Definition
3.1.2 Political
3.1.3 Economic
3.1.4 Social
3.1.5 Technological
3.1.6 Environmental
3.2 SWOT-Analysis
3.2.1 Definition
3.2.2 Opportunities
3.2.3 Threats
3.2.4 Strengths
3.2.5 Weaknesses
3.3 Customer-Analysis
3.4 Competitor Analysis

4. Conclusion and Outlook

IV. List of References

II. List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

III. List of Figures

Figure 1 - The existing Tesla models: Tesla Roadster and Tesla Model S.

Figure 2 - To be launched in 2015: Tesla’s all-electric Model X

Figure 3 - PESTEL components

Figure 4 - Sources of CO2-Emissions of a typical household.

Figure 5 - Development of total amount of electric cars worldwide.

Figure 6 – Overview substitute technologies.

Figure 7 - Tesla R&D Investments.

Figure 8 - Tesla's planned U.S. and Canada Supercharger network for 2015.

Figure 9 - Amount of sold electric cars by Tesla Motors.

Figure 10 - Financial situation Tesla (in 1.000 USD).

Figure 11 - Tesla's target group.

Figure 12 - Competitor Analysis.

Figure 13- Amount of sold large luxury cars in the US in 2014.

Figure 14 - The Best-Selling Electric Vehicles of 2014 in the US.

Figure 15 - Tesla's Unique Selling Proposition.

1. Introduction

1.1 Problem Definition and Objective

More than 100 years after the invention of the internal combus

tion engine, incumbent automobile manufacturers are at a crossroads and face nowadays significant industry-wide challenges. The reliance on the gasoline-powered internal combustion engine as the principal automobile powertrain technology is connected with several negative aspects: It raises environmental concerns, creates dependence among industrialized and developing nations on imported oil and it also exposes consumers to volatile fuel prices. All these challenges offer a historic opportunity for companies with innovative electric powertrain technologies to lead the next technological era of the automotive industry (Tesla Motors 2015a).

Therefore, the objective of this assignment is to analyze the market situation of the all-electric vehicle manufacturer Tesla Motors, Inc. and to find out its unique selling proposition. The focus will be on the company’s domestic market, the United States of America. Moreover, this assignment will only take Tesla’s automotive products into consideration.

1.2 Structure

The second chapter will first of all give an overview over the company “Tesla Motors, Inc.” itself, by describing its history as well as its automotive products.

The following chapter will then address the analysis of Tesla’s strategic market situation. Hereby, the first step will be to understand the company’s macro environment. Therefore, the technique of a STEEP-Analysis will be applied to find out the relevant external influences. Those findings will then flow into the SWOT analysis, where they will be contrasted with the internal weaknesses and strengths of the company to obtain a genuinely comprehensive picture. Afterwards, the subchapters 3.3 and 3.4 will focus on analyzing Tesla’s micro environment, by having a closer look onto the demanders of the market as well as onto the competitors.

The assignment will eventually result in defining the unique selling proposition of Tesla Motors by creating a positional map and finally an outlook on the future will be given.

2. Company and products – an Overview

2.1 Tesla Motors – Company Profile

Tesla Motors was founded in 2003 by a group of engineers - among them, the world famous Elon Musk who is considered to be one of the most innovative entrepreneurs of

our time (Allis 2015) - in Silicon Valley. They wanted to prove that electric cars could be better than gasoline-powered cars (Tesla Motors 2015b). Meanwhile, Tesla Motors designs, develops, manufactures and sells several models of electric vehicles, electric vehicle powertrain components and stationary energy storage systems worldwide. Moreover, it has a collaboration agreement with EnerNOC, Inc. for the deployment and management of energy storage systems in commercial and industrial buildings (Bloomberg 2015).

Tesla is therefore not just an automaker, but also a technology and design company with a focus on energy innovation. (Tesla Motors 2015b).

2.2 Electric Cars by Tesla

Almost ten years ago, Tesla co-founder and CEO Elon Musk already had a clear vision of the company’s “master plan” and described their strategy in his blog as follows:

1. Step: Building a high performance electric sports car, since in this segment the willingness to pay a premium is the highest and it is intended to show that electric motors can be superior to traditional combustion engines.
2. Step: Using this money, in order to build a sporty four door car at roughly half the price point of the first model.
3. Step: Investing the earned money in building an again cheaper family car.
4. Step: Meanwhile, the option for a charging possibility without CO2 emissions shall be offered.

Therefore, the strategy of Tesla was to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible in order to higher unit volume and lower prices with each successive model (Musk 2006).

Making each new generation increasingly affordable intends helping the company with its mission: to accelerate the world’s transition to sustainable transport. (Tesla Motors 2015b).

Abbildung in dieser Leseprobe nicht enthalten

Figure 1 - The existing Tesla models: Tesla Roadster and Tesla Model S.

Sources:http://car-pictures.cars.com/images/?IMG=USC00TSC011A0101.png&WIDTH=624&HEIGHT =300&AUTOTRIM=1and http://buyersguide.caranddriver.com/media/assets/submodel/6667.jpg

Tesla successively implemented their vision by launching the Tesla roadster, a sports car which costed about $100.000 in 2008, followed by the “Model S” in 2012 – the world’s first premium electric sedan at about half the price (Bullis 2013).

Abbildung in dieser Leseprobe nicht enthalten

Figure 2 - To be launched in 2015: Tesla’s all-electric Model X

Sources:http://green.wiwo.de/wp-content/uploads/2014/09/full40.jpgand http://elektrischeautokopen.nl/wp-content/uploads/2014/12/tesla_model-x1.jpg

Now, with more than 50,000 vehicles on the road worldwide, the launch of Model X is getting prepared, a crossover vehicle that enters volume production in 2015 and which is expected to be less expensive than the previous model (Tesla Motors 2015c).

3. Market Analysis and Definition

A company has to monitor key macro environment forces as well as significant microenvironment factors that affect its ability to earn profits. A market intelligence system to track trends, important developments and any related opportunities and threats should be set up. In order to react accordingly to those external impacts, every company has to be aware of their strengths and also weaknesses (Kotler and Keller 2012, p. 70). Suitable methods for this strategic planning process are for example a SWOT- and a PEST-analysis. When combined and viewed systemically, the four components of a SWOT-analysis and the forces in a PEST analysis create a powerful picture of the inside and the outside of an organization (Martinez and Wolverton 2009, p.15).

3.1 STEEP-Analysis

3.1.1 Definition

A PEST-analysis is a common technique which facilitates a wide scan of the context and of the actual as well as the potential factors that would affect corporate objectives if left unmanaged. Originally referred to as PEST-analysis, some further factors were added in more recent times, creating the extended acronyms STEEP and PESTEL (The Stationary Office 2010, p.88). Possible factors are the following:

Abbildung in dieser Leseprobe nicht enthalten

Figure 3 - PESTEL components

Source: Own creation, based on D. Yeates and T. Wakefield,

Systems Analysis and Design (2004), p. 265

As Tesla’s technology is based on renewable energies, this assignment will use the STEEP analysis since it adds the relevant factor ‘environmental’ to the conventional PEST-method.

3.1.2 Political

This aspect focuses on the impact of any political or legislative changes which could affect business operation (Xu 2005, p.25). Electro mobility is being extensively discussed and a highly political topic. In the United States, current President Barack Obama pursues the target of becoming the first country to have a million electric vehicles on the road by 2015. This goal was set in 2011 with the explanation that with more research and incentives, the United States can break their dependence on oil (Obama 2011). The industry therefore experiences positive political impact through tax credits, investments in R&D and competitive programs to encourage communities to invest in infrastructure supporting electric cars (Department of Energy, 2011).

3.1.3 Economic

Those factors are closely related to the political influences. Possible examples are the creation of trading unions (Yeates and Wakefield 2004, p. 265), the economic growth for a special industry sector or overall, as well as overseas economics and trends (Applegate and Johnson 2007, p. 29). In future, U.S. companies might profit economically from the planned free-trade union between the United States and Europe, which is one of the most important trading partners. The so-called TTIP, which is being negotiated since 2013, aims to reduce tariffs as well as non-tariff barriers. Lower costs could therefore increase the competitive situation of American companies in Europe (Frankfurter Allgemeine, 2015).

3.1.4 Social

Social aspects include for example demographic changes as well as the shifting perceptions of the population, new working conditions and lifestyle changes. (Yeates and Wakefield 2004, p. 265). In fact, there is a change in lifestyle on-going as the level of environmental awareness among the society grows. This awareness, which could be labeled a paradigm shift, is a slow moving in the direction of harmonizing economic development and ecological well-being. Therefore, people are increasingly demanding to ensure that the material part of the economy reduces the one-time use of non-renewable resources and increases the use of renewable resources (Cohen 2015).

3.1.5 Technological

This section includes factors like industry technology development, replacement technology and solutions, maturity of technology or its innovation potential (Applegate and Johnson 2007, p. 29). As electric mobility is quite innovative, it faces some technological obstacles due to the relatively low level of maturity in comparison to fuel powered vehicles. Worth mentioning is hereby especially the “range anxiety” of potential customers, which describes the fear that a car’s batteries will run out before the driver reaches a charging station. This fear reveals the two major deficits of the technology: The limited achievable range of the current car batteries as well as the weak infrastructure of charging stations¹(Watkins 2015).

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¹According to the U.S. Department of Energy (2015c), there are over 100.000 gas stations in the United States, but only about 9.300 electric stations.