Tesla Motors Case Study

Topics: Electric car, Automotive industry, Renault Pages: 8 (1986 words) Published: October 21, 2013
Tesla Motors

Tesla Motors, Inc is a Palo Alto, CA based company that designs, manufactures, and sells electric luxury cars and electric vehicle powertrain components. These cars are primarily sold in the United States, however they are becoming increasingly popular in the United Kingdom, Ireland, Japan, Hong Kong and Singapore. Currently, Tesla has two models available for purchase, the Roadster and Model S. A third model, Model X, will be available at beginning of 2014. Model S car owners are provided with Supercharger Stations, allowing them to charge their car thus making long distance drives possible. This service is only offered in the United States, and are in the process of building Supercharger Stations internationally by the end of 2013.

Martin Eberhard and Marc Tarpenning founded Tesla Motors in San Carlos, California on July 2003. However in 2004, Elon Musk joined the team as Chairman of the Board of Directors by investing in the company. Musk, still holds its CEO in addition to a product architect position, becoming the company's most valuable human capital and visionary. On June 29, 2010 Tesla Motors was part of NASDAQ under the symbol TSLA and has been the first American car company to go public since Ford Motors in 1956.

Tesla Motor’s main competitors feature BMW, Mercedes, Audi, and Lexus. Although it has been able to stay competitive, Tesla preparing to give new depths to the company by rolling out a new affordable car line in 20172018.

However, they will face the inevitable challenge of designing and massproducing
a budget electric car without brand dilution.
Industry Analysis
The automotive industry covers a wide range of companies and organizations involved in the design, development, manufacture, marketing, and selling of motor vehicles. It is one of the world's most important economic sectors by revenue. Tesla Motors falls under the EV niche industry, within the automobile manufacturing industry. An EV is an automobile that is propelled by one electric motor or more, using electrical energy stored in batteries or another energy storage device. As concerns about the environment rise and the costs of fossil fuels increase, the auto industry, specially the EV industry has taken upon the opportunity to provide alternative solutions to the conventional gas and diesel vehicles. Leading to changes in design to provide cleaner and more energy efficient vehicles. Much of the focus is on electric vehicles (EVs), such as hybrid cars. Hybrids partially run on electric power and currently increasing in popularity among drivers. Yet, attention is now being shifted to plugin

cars, which has reduced the need for fuel.
Five Forces: Electric Car Industry
1.Bargaining Power of Suppliers: HIGH
The bargaining power of suppliers is high based on the fact that the components that go into an EV are specialized. For example, Tesla has over 2,000 auto parts sourced globally, and over 150 suppliers. Panasonic provides Tesla with batteries, and Lotus Cars Limited with Tesla’s Roadster chassis and engineering.

2. Bargaining Power of Customers: LOW
The bargaining power of customers is low in the industry of EVs due to the scarce amount of comparable products. Under the electric car niche industry, Tesla holds the only luxury electric car line of products, making it difficult for customers to compare prices and bargain for lower prices. Moreover, 2 Team

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the Nissan Leaf, Toyota Prius, and Ford Volt’s prices all range between $21,000 to $30,000. All with similar features and packages, giving little room for customers to cross compare and negotiate. 3.Threat of New Entrants: MODERATE

Throughout the decades, there have been many automobile companies that have created their own versions of electriconly
vehicles, however very few have been able to become profitable, like Tesla. “Larger, established companies that want some of what Tesla has… respond by saying they’ll be part of this exciting new...
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