The Corporate Rundown Tesla Motors

Topics: Electric car, Tesla Motors, Tesla Roadster Pages: 12 (2665 words) Published: January 22, 2015

JWI 515: Assignment Five:
Tesla Motors
Professor Serluco
Financial Management II

Charles W. Slaven
December 14th, 2014

Tesla Motors, Inc. is a Silicon Valley based company that designs, manufactures and sells electric cars and electric vehicle power train components. Entrepreneur/Inventor Elon Musk and four other associates founded Tesla in 2003. Tesla is strategically positioned in the electric vehicle market as a high end manufacturer and dealer. Tesla gains competitive advantage over auto industry competitors because of their direct-to-consumer sales, stores and service centers, innovative consumer financing options, and technological innovations. Tesla faces multiple risks in its ongoing operations and strategic plans for future growth. Tesla’s 2012 annual report cites 63 risks related to Tesla’s business and industry and an additional 6 risks related to the ownership of their common stock. In an attempt to identify gaps and propose recommendations for future implementation an analysis of the principal forces of supply and demand on the industry / company is required. Tesla Motors—Objective and Strategy

Tesla Motors eschews the traditional auto industry “dealership” model and bypasses dealers and reaches customers directly through company-owned showrooms and online retail channels Value-added services are included, such as supercharger stations being installed in major markets throughout the US. Strategy

Tesla aims to become a mass producer of electric vehicles.
In 2008, it launched the Tesla Roadster model—a paradigm shift/keystone in the EV market. Tesla has positioned itself as a key competitor in the EV market. Market Positioning
Tesla covers key EV market segments and dominates the EV segment of the larger automotive industry. The 2012 Model S targeted at the middle- and upper-middle-class customer. The 2014 Model X to take advantage of the booming SUV crossover segment. The 2016 Gen III is positioned to compete with mass market EVs. Alliances

To facilitate growth, Tesla has cultivated X types of partnerships, including supplier alliances, R&D alliances, and OEM alliances with other automobile manufacturers. Additional revenue is generated from the sale of electric power train components and development services. Tesla Motors—Financial Performance and Future Guidance

Tesla Motors held its initial public offering (IPO) on January 29th of 2010. According to a break even analysis the firm became cash flow positive for the first time in its history in Q4 of FY2012. Tesla has unique business structure. Its competitors in its industry are highly mature as opposed to Tesla’s newly developed business model, thus finding comparable companies can be difficult. Given Tesla’s uniqueness, two comparable analyses were required. One comparable analysis captures Tesla’s industry competitors and one comparable analysis will capture Tesla’s high growth rate. For the industry comparable analysis, seven companies are utilized to derive the industry average EV/Revenue and EV/Gross Profit levels. Using a weighted EV/Revenue and EV/Gross Profit for both set at 50%, the top line and the gross profit of the industry will sustain Tesla’s future target levels. When screening for comparable for the growth rates in order to calculate the companies that have relative high revenue growth rate for 2013 and 2014 a weighted EV/Revenue of 70% and EV/Gross Profit of 30% is the best achievable outcome and is the most important measurement to consider for the high growth company. Existing Tesla Market Dynamics–

Lifecycle / Supply Chain Management: Tesla created its life cycle and supply train strategy with the full understanding it wouldn't be the only producer of all-electric vehicles for long. Tesla’s value proposition or “uniqueness” had to come from a commitment to being "at least two generations ahead" of its rivals. But how could it achieve that goal, when its battery packs came from a...

References: Bowman, Robert J. SupplyChainBrain, Tesla Motors: A Tale of Beauty and Pain, Mar 01, 2010
Bullis, Kevin; Why Tesla Survived and Fisker Won’t MIT Technology Review; April 4, 2013
Doucet, Jenna; The Automotive Industry (Macroeconomic Analysis) WordPress, 2010
Eisenstein, Paul; Tesla Model S Gets Best NHTSA Safety Rating Ever; MSN Autos; Aug 20, 2013
Hirschey, Mark; Managerial Economics 12th Ed. Soth-Western, A Cenage Learning Company; 2009
Mamudi, Sam; Believe the Tesla Hype: Morgan Stanley; Barrons; May 14, 2013
Seeking Alpha, Tesla Motors: A Perfect Hedge, Mar 13, 2013
Van Susteren, Eric Silicon Valley Business Journal Tesla says Gigafactory will source only North American materials, Apr 21, 2014
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