Tesla: Internal Combustion Engine and Electric Vehicle

Topics: Internal combustion engine, Electric vehicle, Electric car Pages: 8 (2415 words) Published: November 16, 2012
2.0 Situation Analysis

Tesla Motors incorporated is recognized as a leader in quality innovation for its electric powertrain engineering, performance and battery technology. Tesla was founded in 2003 with a conceptual thought of a fully electric, lithium ion powered vehicle that is eco-friendly, aesthetic appealing and a premier performance competitor. Their business plan was simple and had three steps. First, develop a high-end performance sports car to prove that electric vehicle (EV) were both cool and feasible and also can product economically. Second, develop luxury sedan/SUV that would compete with high-end brands like Mercedes, Audi and BMW. Third, mass produce low cost electric vehicles to compete in general category.

In 2004, the company raised initial venture capital, while designing their first vehicle, the “Roadster”, later that year. Initially, the company was primarily funded my Elon Musk and other venture capital investors. The pooled funds fell short of the capital needed to fund the manufacturing facility and the latest Model S project. In 2009 Daimler bought preferred stock in Tesla for $50M and in 2010 Toyota invested $50M and Panasonic $30M in stock options. Three months after the Model S unveiling the Department of Energy announced in Jan 2010 that it would loan Tesla $465 million to bring the sedan to market as part of the Advanced Technology Vehicles Manufacturing Loan Program, other major manufacturer received substantially higher loan amounts, Ford was awarded $5.9 billion, and Nissan got $1.6 billion . In 2010 company acquired New United Motor Manufacturing Inc (NUMMI) factory in Fremont, California, which was developed as joint manufacturing facility between GM and Toyota. It’s a 5.5 million square feet plant and contains plastics molding factory, two paint facilities, 1.5 miles of assembly lines, and a 50-megawatt power plant .

Tesla Motors Company is trying to transform the future of electric cars by providing new meaning to fully electric vehicles as not just only eco-friendly but also attractive and fun to drive. Most other companies tried and introduced all electric vehicles in late last century but none was able to mass produce it economically. Tesla Motors has sold over 2300 Roadster across the world, delivered its first Model S in June 2012 and is currently building its electric sedan at a rate of 80 per week rate (Sep 2012). This vehicle completely set itself apart from its competitor with its efficiency, performance and technology breakthroughs. The company plans is to build 5,000 by the end of 2012 and increase its production to 20,000 cars in 2013. Being a small and startup player in electric auto industry, Tesla Motors has freedom to build the sales model from ground zero that’s very untraditional. Forget traditional dealerships, their Tesla’s main sales locations are in malls and their cars are delivered directly to customers.

2.1 Market Summary

Why electric vehicle? Rising gasoline prices, depleting oil reserves, growing pollution, increasing environment awareness, is creating the market for clean and efficient vehicles. There’s no doubt in my mind that in near future this will become the preferred mode of transportation across the world. Currently EV technology is at its infancy but commitment from government and manufacturer will soon take it to next level by building the infrastructure for next generation vehicles.

2.1.1 Market Demographics

Tesla Motors is a California based company that currently operates in Northa America, Europe, and Japan. All sales are handled through its headquarters in North America, with brokerage service centers located in major metropolitan areas, such as Paris, London, Munich and Tokyo. Tesla has a minute number of stores, when compared to other automobile competitors. A large portion of Tesla’s sales are handled online, which minimializes costs, and adds to the company’s overall efficiency. Shopping malls, in...
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