Tesla Final Paper

Tesla Final Paper (Edited).docx1/ 4
Tesla’s mass-market ambitions on charge SummaryThis article discusses the different aspects of Tesla’s rise to prominence and the electric car manufacturer’s strategies for maintaining its status. This profile of Tesla’s roots and its prospects for the future touch on the following topics: niche market competition; financial obstacles in the past, present and future; and production techniques.I. Product DifferentiationIn this section, product differentiation, which is the process of distinguishing a product or service from others to make it more attractive to a particular target market, will be discussed. Since it first introduced the Model S to consumers in 2012, Tesla has been the premier producer of luxury
When buyers compare cars, they often tend to be rational, which leads to choosing the available option that leads to the outcome he or she most prefers. This doesn’t always mean that it will leave them in a better economic payoff. We look at Concerns about Fairness, Bounded Rationality and Risk Aversion to explain why. Concerns about fairness has a buyer asking themselves “Am I gettingthe best deal here? Do they really think this car is right for me? Or are they just trying to get my money?”. Bounded Rationality explains a buyer that chooses a product because it’s close to what they want but doesn’t exactly give the best possible economic outcome. Thirdly, Risk Aversion is a buyer willing to sacrifice some economic payoff in order to avoid a potential loss. If buying a car is the Prisoner’s Dilemma, then it is ultimately better for the salesman and the buyer to come together and reach an agreement (collude) than it is for either of them to try to act independently of one another. The article also brings up the point that because electric cars satisfy a need to “do one’s part” for the environment, the extra cost of paying for a luxury automobile like a Tesla may be offset by a perceived karmic gain.III. FinanceAs mentioned previously, Tesla has reduced its manufacturing costs by using many smaller, inexpensive, mass-produced
Asthe price decreases, more cars are sold. Thisreflects the law of demand which states that ahigher price of a good or service, other thingsequal, leads people to demand a smallerquantity of that good or service. In addition, thegraph also displays what the graph will look like inthe given situation that at a later year, if demand is greater, there will be a shift in the demand curve. This reflects that in 2016 the economy was stronger. The demand curve will also slope downward. The Supply Curve shows the relationship between quantity supplied and price. The supply curve focuses on how much producers are willing to sell at the given prices. A higher price will lead to a higher quantity supplied. So when someone is willing to buy more at a higher price, the producer is more than likely willing to sell that amount. Tesla, like all firms, responds to the forces of supply and demand. If consumers were no longer willing to pay the hefty price tag for aModel S sedan, the price would fall. The Model 3 is an example of the shift in the supply curve to the right caused by a change in technology. Tesla has innovated and created new production methods that allow for the technology of the Model S and Model X to be transmuted into a lowercost variant. This shift in the supply curve will allow for a greater number of electric cars to be produced overall at a lower average cost.Resources:Principles of