The author of this assignment reviews the Tesla’s business model approach and its strategy in the non-domestic German market. Tesla’s firm specific advantages are especially related to innovation of the vehicle, the battery and the infrastructure. Tesla Motors follows a product strategy entering from premium market and moving towards mass market. After starting with a high-price Roadster model Tesla launched the more affordable Sedan and a SUV model. In 2017 Tesla plans to launch its first mass market EV. Tesla shows a new value chain in the automotive industry by a deep of vertical integration from EVs manufacturing towards software, recharging network and battery manufacturing. Tesla entered the German market to export premium EVs. The Automaker also builds a charging network in Germany and prepares the market for its future mass production Model 3 coming in 2017. This work consists of three major parts. The first part deals with the theoretical background of international strategies for MNEs. The second part describes Tesla as a company and its strategy. The last part analyzes the competitive advantages of Tesla and shows how they are used to enter the German market. This work ends with a final reflection and a conclusion of the research.
Table of Contents
- Executive Summary
- List of Abbreviations
- List of Figures
- List of Tables
- Table of Contents
- 1. Introduction
- 1.1 Problem definition
- 1.2 Methodology
- 2. International Market Entry Modes
- 2.1 Overview
- 2.2 Advantages and Disadvantages
- 3. Tesla Motors Inc.
- 3.1 Tesla Motors – The company
- 3.2 Financial Situation
- 4. Corporate Strategy
- 4.1 Corporate Vision
- 4.1.1 Build a Sport car
- 4.1.2 Use that money to build an affordable car
- 4.1.3 Use that money to build an even more affordable car
- 4.1.4 Provide zero emission electric power generation options
- 4.2 Tesla`s Firm Specific Advantages
- 4.2.1 Electric Vehicle
- 4.2.2 The Battery
- 4.2.3 The Infrastructure
- 4.3 Additional FSAs
- 4.4 Location Bound FSAs
- 4.5 Non-Location Bound FSAs
- 4.1 Corporate Vision
- 5. Tesla’s Strategy in Germany
Objectives and Key Themes
This assignment analyzes Tesla's market entry strategy in Germany, examining whether a successful, internationally transferable business model for electric vehicles can be created without extensive experience in the capital-intensive automotive industry. The analysis focuses on Tesla's business model, its firm-specific advantages, and its application of these advantages in the German market.
- Tesla's business model as a provider of mobility solutions, not just electric vehicles.
- Tesla's firm-specific advantages (FSAs) in vehicle technology, battery systems, and infrastructure.
- Tesla's market entry strategy in Germany, including its use of export, a charging network, and direct sales.
- The competitive landscape of the German EV market and Tesla's position within it.
- The challenges and risks associated with Tesla's strategy.
Chapter Summaries
1. Introduction: This chapter introduces the central research question: Can a successful international business model for electric vehicles be built without a long history in the automotive industry? It sets the stage by highlighting Tesla's entry into the German market and the challenges of electric mobility, particularly customer concerns about range anxiety. The methodology, focusing on data collected from various sources, is also briefly described.
2. International Market Entry Modes: This chapter provides a theoretical framework for understanding market entry strategies, differentiating between non-equity modes (export, licensing) and equity modes (joint ventures, wholly-owned subsidiaries). It details the advantages and disadvantages of each mode, providing a foundation for analyzing Tesla’s chosen strategy.
3. Tesla Motors Inc.: This chapter introduces Tesla Motors, its history, and its financial situation. It highlights Tesla’s unique corporate culture, shaped by Elon Musk, and examines its financial performance, showing revenue growth despite continued negative EBIT, illustrating the investor confidence in Tesla's long-term vision.
4. Corporate Strategy: This chapter delves into Tesla's corporate vision—to accelerate the world's transition to electric mobility—and its accompanying master plan: building progressively more affordable electric vehicles and developing zero-emission power generation. It analyzes Tesla's firm-specific advantages (FSAs), which stem from innovations in electric vehicles, battery technology, and charging infrastructure. The chapter also differentiates between location-bound and non-location-bound FSAs, discussing their transferability to international markets. The deep vertical integration within Tesla's value chain is also examined.
5. Tesla’s Strategy in Germany: This chapter details Tesla's market-seeking and strategic-seeking approach in Germany. It describes Tesla's activities, including the establishment of a Supercharger network, direct sales through Tesla stores, and website localization. The chapter also discusses the relatively small size of the German EV market and Tesla's market share within this niche. The opening of a final assembly plant in the Netherlands to reduce delivery times and costs for European customers is also mentioned.
Keywords
Tesla Motors, electric vehicles (EVs), market entry strategy, Germany, firm-specific advantages (FSAs), business model, mobility solutions, charging infrastructure, vertical integration, competitive advantage, international expansion, premium market, mass market, electric mobility, innovation, Silicon Valley.
Tesla's Market Entry Strategy in Germany: FAQ
What is the main research question of this document?
The central research question is: Can a successful international business model for electric vehicles be built without a long history in the capital-intensive automotive industry? The analysis uses Tesla's German market entry as a case study.
What are the key themes explored in this analysis?
The analysis focuses on Tesla's business model, its firm-specific advantages (FSAs), and how these advantages are applied in the German market. Specific themes include Tesla's business model as a mobility solutions provider, its FSAs in vehicle technology, battery systems, and infrastructure, its market entry strategy in Germany (including export, charging network, and direct sales), the competitive landscape of the German EV market, and the challenges and risks associated with Tesla's strategy.
What is Tesla's corporate vision and master plan?
Tesla's corporate vision is to accelerate the world's transition to sustainable transport. Its master plan involves building progressively more affordable electric vehicles and developing zero-emission power generation options.
What are Tesla's firm-specific advantages (FSAs)?
Tesla's FSAs stem from innovations in electric vehicles, battery technology, and charging infrastructure. The analysis distinguishes between location-bound and non-location-bound FSAs, examining their transferability to international markets. Tesla's deep vertical integration within its value chain is also a key FSA.
How does Tesla's business model differ from traditional automakers?
Tesla positions itself as a provider of mobility solutions, not just electric vehicles. This approach encompasses the entire user experience, including charging infrastructure and software updates, differentiating it from traditional automakers.
What market entry strategy did Tesla employ in Germany?
Tesla utilized a market-seeking and strategic-seeking approach in Germany. This included establishing a Supercharger network, direct sales through Tesla stores and website localization. The opening of a final assembly plant in the Netherlands to reduce delivery times and costs for European customers is also noted.
What is the competitive landscape of the German EV market, and where does Tesla fit in?
The analysis acknowledges the relatively small size of the German EV market at the time of the study and discusses Tesla's market share within this niche. The competitive dynamics and Tesla's positioning within this landscape are examined.
What are the challenges and risks associated with Tesla's strategy?
The document identifies several challenges and risks inherent in Tesla's strategy, though these are not explicitly detailed in the provided summary. Further research within the complete document would be needed for a complete answer.
What methodology was used in this analysis?
The methodology involved collecting data from various sources, although the specifics of these sources are not detailed in the provided summary. The introduction chapter mentions this methodology briefly.
What are the key chapters and their respective contents?
The document is structured into five chapters: 1. Introduction (problem definition and methodology), 2. International Market Entry Modes (theoretical framework and analysis of entry strategies), 3. Tesla Motors Inc. (company overview and financial situation), 4. Corporate Strategy (Tesla's vision, FSAs, and vertical integration), and 5. Tesla’s Strategy in Germany (detailed market entry strategy and competitive analysis).
What are the key words associated with this analysis?
Key words include: Tesla Motors, electric vehicles (EVs), market entry strategy, Germany, firm-specific advantages (FSAs), business model, mobility solutions, charging infrastructure, vertical integration, competitive advantage, international expansion, premium market, mass market, electric mobility, innovation, and Silicon Valley.
- Quote paper
- Andreas Kauerhof (Author), 2016, Tesla Motors Inc. Market Entry Strategy in Germany, Munich, GRIN Verlag, https://www.grin.com/document/354492
