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Competitive Analysis of Tesla Motors
Outline
Outline
1. Introduction
2. Case for the Electric Car
3. Internal Rivalry
4. Barriers to entry
5. Substitutes and complements
6. Supplier Power
7. Buyer Power
8. Strategy
Tesla MotorsTesla 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
Industry FactsIndustry Facts • Transportation accounts for 63% of Oil
Demand
Industry FactsIndustry Facts
Industry FactsIndustry 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
Market DefinitionCase 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.
Tesla MotorsEfficiency vs. Performance
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
Internal Rivalry
Internal RivalryGM EV1 – Early Electric
Internal RivalryHonda Insight – Early Hybrid
Internal RivalryToyota Prius - Hybrid
Internal RivalryTesla Roadster - Electric
Internal RivalryVenturi Fetish - Electric
Entry
Barriers to Entry
• Economies of Scale
• Regulation Issues
• Technological Innovations
• Brand Loyalty
• Infrastructure
Substitutes
• Hybrids
• Flex Fuel
• Hydrogen
• Diesel
• Compressed Natural Gas
• Mass Transportation
Substitutes
Energy EfficiencyEnergy Efficiency
Energy EfficiencyEnergy Efficiency
ComplementsComplements
• 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
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
Supplier Power
Buyer PowerBuyer Power
• Ability of buyer to extract profits from seller
• Green market is emerging
• Buyer power is limited due to lack of competition
Buyer PowerBuyer Power
Implementation Phase
Vehicle
Technology
Market
Competiti
ve vehicle
Penetration
across new
vehicle
production
Major
Penetration
Total Time
for impact
Turbocharged
Gasoline Engines
5 years 10 years 10 years 20 years
Low Emission
Diesel
5 years 15 years 10-15 years 30 years
Gasoline Hybrid 5 years 20 years 10-15 years 35 years
Hydrogen Cell
Hybrid
15 years 25 years 20 years 55 years
ConclusionConclusion
• Short to medium term strategy
• Sell 100 Roadsters
• Create recognizable product
• Self funding of future expansion plans
• Change opinion of electric vehicles
ConclusionConclusion
• Long term strategy
• Focus on brand recognition
• Cost optimization
• Compete in mass market
• Build infrastructure
ConclusionMartin 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.”