Action Learning Project
Larry K. Y. Poon
May 10th, 2015
Business Strategy of Tesla in the US:
Value proposition and Competitive advantage:
Customer, Market and Competitor Analysis in U.S.:
Key research findings – China as a potential market
Analysis of Tesla in the China Market
Value Chain Analysis:
Key Survey Findings
Conclusion from the Research and Surveys
Tesla Motors is an Electric Vehicle (EV) manufacturer with a vision to create the best electric cars ever seen and revolutionize the auto industry by changing the face of motoring forever by shifting consumer mindset and leading consumers away from the usage of gasoline variants to the more environmentally friendly electric vehicles. In the past, many automakers have tried and failed to lure customers to adopt the electric vehicle concept. Tesla has succeeded by breaking the barrier of performance and range and changed the perception of customers that electric vehicles cannot compete with the conventional gasoline technology. This report provides an insight into Tesla Motors and its set of business strategies in the U.S., which is its primary market till date and its global strategies that it has implemented expanding to markets overseas focusing on China. This report backed by research methodologies including literature review, customer survey and in-person interviews assesses and analyses these current set of strategies to present three robust recommendations related to Tesla Motors venture and performance in the Chinese market.
The methodology applied to study the business strategies of Tesla and draft the recommendations is as follows: U.S., the primary market of Tesla is used as a benchmark to study the global strategies of Tesla and understand the key similarities and differences between the U.S. and Chinese market. The data collated through research and surveys conducted are analyzed using various frameworks such as PEST and Value chain analysis. The various analysis (customer, market, competitor, etc.) enable us to understand the the needs and motivations of customers and assess the effectiveness of Tesla’s value proposition and competencies in China. Based on the above study, the business strategies of Tesla are evaluated to derive the similarities and differences in the two markets under study. These key findings and conclusions are used to make three critical recommendations with supporting rationale which Tesla can adopt to reassess its global strategy for establishing it as a viable brand and competitor in the Chinese market.
Business Strategy of Tesla in the U.S.
The long-term goal of Tesla Motors is to create affordable mass-market electric vehicles, with a wide range of options, and facilitate shifting from a fossil fuel based economy to a solar electric based economy1. To meet this objective, Tesla started by entering the high end market with premium products so as to re-invest the profits to develop pure electric cars targeted at the mass market which are produced at lower cost through economies of scale. This is observed in the succession of products offered (Roadster->Model S->Model 3, see Exhibit 1), each model cheaper than the previous. In 2008, Tesla Motors launched its first product Roadster, a pure electric sports car sold at a price of over US$100,000. Tesla ceased production of Roadster in 2012 and focused on the Model S, a cheaper yet more...
References: 5. Chinese Government initiative of Setting up charging stations - People’s Government of Beijing. 2014. Beijing City Electric Vehicle Promotion Application Action Plan (2014 – 2017)
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