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TESLA MOTORS INC.

Competitive Position Analysis & Future


Growth Strategy

CSTR_Group F11
MOONIS AHMED, MANISH AGARWAL, NIKHIL RATANPAL, HARSH
SUREKA

TABLE OF CONTENTS
1

Executive Summary ......................................................................................................................... 2

Automotive Industry and Tesla Motors .......................................................................................... 3

2.1

History The Early Years......................................................................................................... 3

2.2

Tesla Motors ........................................................................................................................... 3

2.3

Current Market Scenario......................................................................................................... 4

Industry analysis: Electric cars ........................................................................................................ 5


3.1

Electric Car Industry Structure before Tesla opened up its patents ....................................... 5

3.2

Electric Car Industry Structure after Tesla opened up its patents .......................................... 6

Financial Analysis and Investors view ............................................................................................ 7

Teslas Competitive Advantage ....................................................................................................... 8

5.1

Innovative Lithium ion batteries ............................................................................................. 8

5.2

Large Network of Supercharger stations ................................................................................ 9

5.3

Unique direct-to-customer selling model ............................................................................... 9

5.4

Development of Lithium ion cells Gigafactory .................................................................... 10

Teslas strategy to sustain market leadership .............................................................................. 11


6.1

All Our Patent Belong To You An act of philanthropy or a strategic game changer?........ 11

6.2

Joint Ventures ....................................................................................................................... 14

6.3

International Expansion ........................................................................................................ 14

Conclusion ..................................................................................................................................... 15

Bibliography .................................................................................................................................. 17

APPENDIX: One Page Project Outline ........................................................................................... 18

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1 EXECUTIVE SUMMARY
The following company report talks about the strategic plays that Tesla Motors has employed
to gain a competitive advantage in the electric vehicle segment of the automobile industry. It
has effectively played a new game strategy creating a niche product and a position for itself in
the market. Tesla has turned its lack of knowledge into an advantage by going for a new electric
drivetrain for its vehicles and a unique direct-to-customer selling model. This has enabled it to
provide an end-user experience unmatched by any existing automobile manufacturer.
Tesla has been successful because of innovation in product and supply chain. Electric hybrid
vehicles were already present in the market when Tesla entered but the innovative Lithiumion battery packs developed by Tesla are more efficient compared to the competitors. The
company has also developed a whole ecosystem with huge investments in the setup of
Supercharger stations and with projected further investments and government incentives, the
electric vehicle (EV) market is destined to take off. The setup of a Gigafactory for production
of Lithium-ion cells on a large scale, will help Tesla become one of the largest cell manufacturer
in the US and a potential supplier to other EV automobile manufacturers.
The opening up of the patents might be a dangerous move but Tesla could potentially convert
its competitors into collaborators and reduce the EV manufacturing costs. We feel Tesla has
identified that it cannot develop the whole ecosystem of EVs on its own and needs partners.
However, with its first mover advantage in the R&D of EVs and move towards being a battery
producer, it will still be able to secure a key position in the future EV market. This is reflected
in the stock price of the firm which is on a growing path despite low earnings per share.
Investors are confident in the strategies employed by Tesla and believe in it to become a
market leader in future.
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2 AUTOMOTIVE INDUSTRY AND TESLA MOTORS


2.1 HISTORY THE EARLY YEARS
Rising fuel costs, fear of exhausting fuel supplies and a growing concern for air pollution
resulted in the re-emergence of electric vehicle prototypes in the 1960s and 1970s such as the
Vanguard-Sebring CitiCar and the REVA. Better versions of electric cars arrived over the next
two decades with GM's EV1 making it to production but proving infeasible to mass produce.

2.2 TESLA MOTORS


Tesla Motors was set up in the heart of Silicon Valley in Palo Alto, CA in 2003. The firm was
established with the commitment to develop only fully-electric vehicles. Elon Musk, the
billionaire CEO of the Tesla Motors, is one of the primary driving factors behind its success.
Tesla Motors unveiled the ultra-sporty Tesla Roadster at the SF International Auto Show in Nov.
2006. While the models design was not unique, Teslas electric drivetrain technology was
revolutionary. It was the first vehicle to use lithium ion technology and was the first all-electric
vehicle to travel more than 200 miles on a single charge. Tesla proved that electric engines can
be extremely powerful and can provide acceleration well in excess of their petrol powered
rivals. The base price of the car in USA was around $109,000 targeting the premium segment.
Sales volumes of electric and hybrid cars in the USA was significantly hit by the economic
downturn of 2008. However sales picked up in 2012, when the countrys economy stabilized,
governmental regulations shifted in favour of high efficiency vehicles and gasoline prices rose.
The Model S sedan, launched in June 2012, is the current flagship vehicle for Tesla. It comes
with options of a 60 or 85 kW battery pack, allowing a mileage of 208 to 265 miles. It is priced
between $70,000 and $100,000 in the USA, again targeting the premium segment.

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2.3

CURRENT MARKET SCENARIO

The mile per gallon (MPG) standards for passenger cars under CAFE (Corporate Average Fuel
Economy) in the US remained static between 1990 and 2010. However, CAFE passenger car
MPG standards rose sharply in 2011 and 2012. This prompted manufacturers to begin offering
a wider array of alternative fuel and hybrid vehicles in the US in order to comply with the rising
standards. Under new agreements finalized by the Obama administration in August 2012, MPG
standards are set to rise steadily between now and 2025. Consequently, it is essential for
manufacturers to look to hybrid and electric vehicles in an attempt to increase the average fuel
efficiency of their vehicles, releasing more of these vehicle types in the US market.
The return to relatively high gasoline prices in the US in 2011 had a positive effect on the hybrid
market: the market returned to rapid expansion in 2012. Higher gasoline prices drove priceconscious motorists towards purchasing hybrid and electric cars, as potential running cost
savings increased, justifying the typical premium paid by consumers at the purchase of hybrid
and electric cars.
Toyota is the clear leader in the Hybrid and Electric car segment in the US, with a 2013 market
share of 58.2% in terms of volume. It offers both plug-in mid-range sedans as well as premium
EVs under the Lexus brand. Ford has been in the ascendancy in recent years: its share of the
US hybrid segment has increased significantly, and it has also seen similar success in the plugin segment. However in 2013, Toyotas market share was almost 9% lower than for the whole
of 2012. Consequently, strong sales of Ford, Nissan and Tesla plug-in vehicles have eroded
Toyotas overall market share. It will be interesting to see how the industry will shape up in the
coming years with new and small players like Tesla trying to leapfrog the incumbents in Toyota
and Ford.

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3 INDUSTRY ANALYSIS: ELECTRIC CARS


Founder Elon Musks vision for Tesla is to become an independent car maker and offer
electric cars at affordable prices to the consumer but there were significant roadblocks to
achieving this dream. An industry analysis using Porters 5 forces of the Electric car Industry
before and after Tesla move to open up its patents shows the ingenuity of the strategy of Tesla
to change the entire game that they were playing and turn competitors into collaborators and
their major weaknesses into their major strengths. The strategy is very similar to what Android
has done to Apple.

3.1 ELECTRIC CAR INDUSTRY STRUCTURE BEFORE TESLA OPENED UP ITS PATENTS

High cost and the safety risks associated with


batteries and high amount of time required
to recharge the battery make electric cars
unattractive compared to its rival gasoline
cars. Efficient technology not available
Potential entrants
Heave infrastructure required to develop
(Low)
charging stations (like gasoline stations)

Rivalry (Very Low)

Supplier power
(Very High)

* Existing car manufacturers tried to


come with electric cars but got
limited success
* Currently no major players in the
electric car industry

Highly Segmented
Differentiated product
Quality (Mileage, battery cycle, comfort,
style) are of high importance
Low switching cost

Buyer power
(Moderate)

* Most of the cars manufactured are


gasoline based.

Battery suppliers (Differentiated and few


players)
Super charging network (Very few players)
Component suppliers (Very few)
Electric vehicle Power train (viable
technology for cars developed and known
only to Tesla)

Substitutes
(Very High)

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Only 1% of the total cars manufactured are


Electric cars even though electric cars have been
known for more than a decade the industry could
not take off because of the high risk of substitutes
from the gasoline cars.
Gasoline car manufacturers have the advantage
of efficiency of scale because of mass
manufacturing and low cost of supporting
infrastructure like gas stations and give tough
competition to manufacturers of electric cars
which is in the nascent stage

Though the competition was low and Tesla was the leader in Electric car industry, the huge
supplier power of electric car component suppliers (a lot of them single suppliers for autocomponents for Tesla), limited super charging stations and battery manufacturers and the high
risk of substitutes from gasoline cars made the industry unattractive for Tesla even with a huge
competitive advantage because of its innovative technology.

3.2 ELECTRIC CAR INDUSTRY STRUCTURE AFTER TESLA OPENED UP ITS PATENTS

Opening up the patents by Tesla made


the technology available to everyone.
Incumbent gasoline car manufacturers
could use much of their existing
expertise in manufacturing cars

Potential
Entrants

(Moderate Increasing)

Battery suppliers (Increasing)


Super charging network
(Increasing)
Component Suppliers
(increasing)
Electric vehicle Power train
(technology known to everyone)
Commodities like steel etc.
(easily available at competitive
prices)

Highly Segmented
Differentiated product
Quality (Mileage, battery cycle,
comfort, style) are of high
importance
Low switching cost

Rivalry
Moderate/High (Increasing)
Supplier Power
(ModerateDecreasing)

* Existing car manufacturers


started entering into the electric
car market

Buyer Power
(Moderate)

* Currently there are globally 29


companies making electric cars.

Substitutes

(ModerateDecreasing)

Opening the patents decreased the threat of


substitutes significantly as manufacturers of
gasoline cars themselves started making
electric cars and trying to convert the existing
market.
For the first time, Electric cars recorded higher
sales growth that gasoline cars.

The move significantly lowered the barrier of entry of existing car manufacturers to enter into
the electric car industry and collectively develop the infrastructure to support the electric car
market. This effectively converted their major competitor i.e. the gasoline car makers to join

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Tesla in meeting their vision to make economic electric cars available to the consumers. This
also increased the number of suppliers for high efficiency batteries and auto-components.
Though Teslas moves came as a surprise, it was well appreciated by most of its investors (~10%
increase in share price after the announcement) and resulted in other top car manufacturing
companies showing interest in making supercharging stations and developing batteries.
Tesla makes electric cars, and will only succeed if the entire electric-vehicle industry
succeeds. Newyorker.com

4 FINANCIAL ANALYSIS AND INVESTORS VIEW


In the last 4 years Stocks of Tesla
have grown by more than 1000%.
More interestingly the company
grew by around 350% in the
calendar year 2013 alone and has
already grown by more than 50%
in the current year in spite of
% Growth in Tesla (NASDAQ: TSLA) (Finance.google.com)

having negative profit figures. This


can be primarily attributed to the huge success of Model S by Tesla whose delivery started in
June 2012 onwards and the perceived future potential of the company. Tesla revenues grew
by more than 400% in the year 2013 (see below table for actual figures). The journey however
has not been smooth sailing for
the company with news of the

Key Financial Fig.


Revenue
Operating Margin
Net Margin

car catching fire on a couple of instances.

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2012 ($ million)
2013.5
-61.3
-74.0

2013 ($ million)
413.2
-394.2
-396.2

5 TESLAS COMPETITIVE ADVANTAGE


Tesla Motors source of competitive advantage comes from its ability to use an existing
technology in a more efficient way. They have differentiated themselves from their
competitors in the automotive industry by revolutionizing the lithium ion batteries to hold
more charge and in effect, provide better mileage compared to conventional hybrid or plug-in
based electric vehicles. The performance figures generated by Teslas batteries is unmatched
in the automotive industry. Besides the batteries, Tesla has developed a robust and unique
value chain ecosystem around its cars which provides better value and end-user experience to
customers.

5.1 INNOVATIVE LITHIUM ION BATTERIES


While competitors discussed the long-term viability of the lithium ion battery and debated on
its feasibility, Tesla Motors launched their cars with it and entered a market where there were
few competitors. Hybrid cars were in production before their entry but Tesla was the first to
introduce cars reliant fully on battery power. To gain a lead over competitors, Tesla made
highly efficient battery pack to give cars a better mileage. By compacting thousands of highly
efficient Lithium-ion cells into a liquid-cooled battery pack Tesla created highest energy density
batteries in the industry.
Despite the highly compact
structure and weight (450
kg), the battery pack is tuned to provide reliability, efficiency and safety. As a result, the
performance figures are at par with industry leaders.

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Competitors can imitate this technology but Tesla has a significant first mover advantage. A
new model development for an established automaker can take anywhere from 1 year (e.g.
Toyota) to a decade (Mercedes & BMW) besides having significant fixed costs investment.

5.2 LARGE NETWORK OF SUPERCHARGER STATIONS


Teslas electric vehicles require long charging durations for the batteries. A full charge of a Tesla
car from home plug takes around 12 hours but 40 minutes from a Supercharger station. Still it
is comparatively long to conventional fuel based vehicles. So Tesla Motors has offered the
option of switching batteries at the Supercharger station with a fully charged one. Moreover,
for the premium car model owners, this service will be fully free. This significantly reduced the
cost of vehicle ownership and gives them a competitive edge over rival electric, hybrid or
gasoline-based car makers. The only downside is the low number of these stations in the US.
Currently at 37 this doesnt pose much problem for existing owners but with increasing in EVs
on the road, this might become an issue. Tesla plans to increase the number of its service
stations by 75% and Supercharger stations by 200 globally this year.
However, Tesla does not have to be the only one developing the supercharger stations.
Because of Teslas opening up the patents, other automakers will not only develop cars but will
also have to develop the supporting infrastructure. In the long run, this might substantially
decrease Teslas investment costs. Given the small size of the EV market, it doesnt make sense
for a rival competitor to make proprietary charging stations as it could, in effect, kill the market.

5.3 UNIQUE DIRECT-TO-CUSTOMER SELLING MODEL


Tesla has played a differentiation game by focusing on providing a unique consumer
experience by selling directly to the end users without the middle man route of dealership.
Customers get to customize their car before purchasing online. Tesla runs over 50 stores
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worldwide and because of full control over its operations, gets to maintain the same level of
customer service at these locations. Transferring ownership to dealers might put Tesla in a
disadvantage as it might not be able to control the service level. Maintaining a similar level of
customer experience is an intangible benefit which competitors cannot imitate easily.
Moreover, for the competitors, there are significant costs involved moving away from their
current model to imitate Teslas.
However Tesla is facing legal troubles in their online selling model from dealer associations in
the states of New Jersey, Texas, Colorado and Arizona with ongoing lawsuits in other states.
The problem is exacerbated for Tesla because these dealers enjoy political clout and could
influence regulations against Tesla (as seen in the state of New Jersey where the National
Automobile Dealers Association played a key role in the ban on Teslas direct to customer
approach). But the Federal Trade Commission (FTC) in US supports Teslas model and finds it
legal. It will be a challenge for Tesla to see how long they can sustain this online model of selling
to customers given the current challenge from dealers.

5.4 DEVELOPMENT OF LITHIUM ION CELLS GIGAFACTORY


Tesla is gradually shifting its strategy from being a
niche player to follow a rather blue ocean strategy.
After creating a unique product in Tesla cars, it is
focusing on reducing the costs of manufacturing
thereby reducing the prices of its products and
make the cars more mass market. Another reason
is that to recover its large fixed costs investment in

Battery Pack costs forecast. Source: The Economist

supercharger stations, it needs to boost sales but sales have not been able to meet the demand

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because of slow production of Li-ion cells. To mitigate this risk, Tesla plans to launch a
Gigafactory by the end of 2017 to minimize the crunch of supply-demand gap of Li-ion cells.
It has already raised 2 bn US$ by issuing a convertible bond for the factory and human resource
requirements and even Panasonic has promised investment in the setup. Tesla aims to reduce
car manufacturing costs by up to 30% with development of more efficient batteries and in large
numbers. Their current battery costs per car stands at $300 per kWh which is already
substantially lower than competitors. Proprietary designed batteries will help them bring their
cars to the market faster compared to automakers that rely on a third-party battery supplier.
With the opening up of the patents, while competitors will be focused on producing EV models
of their own, Tesla plans to setup up the factory to become a supplier of battery pack to these
automakers when the competitor models finally roll off the line. Moreover, as demand for
more efficient electric vehicles will go up, automakers will look towards going into joint
ventures with battery makers such as Tesla to secure raw material supply. Because of these
measures, Tesla will be in a strong position to be a market leader in Li-ion cells manufacturing
and supply. Reduced costs of manufacturing and reduced prices of cars will increase the
competitive edge of Tesla and make its cars a viable substitute for conventional oil-based cars.

6 TESLAS STRATEGY TO SUSTAIN MARKET LEADERSHIP


6.1 ALL OUR PATENT BELONG TO YOU AN ACT OF PHILANTHROPY OR A STRATEGIC GAME
CHANGER?
On June 12, 2014, Elon Musk surprised all by announcing that Tesla will open its patents to all
and will not initiate lawsuits against anybody who is good faith wants to use the technology.
Teslas patent policy reversal comes as a surprise, as Tesla has been developing its $5 billion

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battery factory in recent months and many have thought the company would make much of
its money on its battery technology intellectual property.
Musk says that the new policys goal is to provide impetus to the advent of sustainable
transport and stem climate change. Teslas competitors can now freely take advantage of
its batteries, chargers, or sunroofs. These market disrupting innovations have lowered the cost
and increased the safety of battery packs. Its cars recharge much faster than others on the
market, thanks to connector, software, and power-management advances. Now Tesla intends
to offer these innovations to the entire industry asking for nothing but goodwill in return.
However, is this altruistic action of the Tesla CEO a genuine act of philanthropy or a strategic
game changer for Tesla? We analyze that ramifications of this move on both the EV (Electric
Vehicle) industry as a whole and on Tesla Motors.

Transforming competitor into collaborator: Tesla has realized that its biggest competitors
arent EV innovations from other car manufactures. Instead, its from the enormous flood
of gasoline cars. Tesla makes electric cars, and will only succeed if the entire electric-vehicle
industry succeeds. It needs an ecosystem comprising other enterprises to help build
charging stations, to improve batteries, and to change the widespread perception that only
the rich and famous can drive these vehicles. Tesla wins if for e.g. its patents help General
Motors improve its batteries, which then leads GM to make more electric vehicles, which
then leads someone else to start a chain of charging stations.

Promoting standardization: If open patents promote standardization, this would imply that
Tesla would be setting the de facto industry standard that other EV manufacturers would
adopt. It would likely mean faster innovation for all as well as cementing Teslas position as

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the market leader (as it still holds legal rights to the patents and could use these at a later
stage to gain back the advantage).

Increasing Teslas rate


of adoption: It only
delivers

small

fraction of the worlds


automobiles

today.

While its cars have so


far been heralded as ground breaking winning several prestigious Car of the Year awards,
its proportion of the worlds automobile sales has been dismal in its seven years of
existence. Opening its patents may encourage other companies to start building charging
stations and other products that would support Teslas growth. As Musk puts it, electric
car programs (or programs for any vehicle that doesnt burn hydrocarbons) at the major
manufacturers are small to non-existent, constituting an average of far less than 1% of their
total vehicle sales.. Tesla is trying to change that.

Achieving greater economies of scale: An electric car is made up of thousands of parts; if


more companies begin using the same ones, the process of putting cars together and
setting up the ecosystem to sustain them becomes simpler and more profitable. For
example, Tesla's patents for its vehicle Supercharging (allowing Tesla drivers to charge half
the car's battery life in about 20 minutes) stations could be shared with other auto makers,
which could help Tesla spread costs and more quickly open more stations.

Attracting human capital: Tesla needs to retain the brightest talent in its attempt to stay
ahead of the innovation curve. If the EV standard is adopted by all and sundry, this will help

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Tesla attract and motivate the world's best technical talent by giving them an opportunity
to work at the mecca of EV technology.
Prima facie, it appears to be a good move by Tesla. However, there are several unanswered
questions. For instance, if Ford or GM were to use the patents to create their own Tesla
knockoffs, would Tesla let that revenue go. What if its a rival start-up instead?

6.2 JOINT VENTURES


In addition to raising capital from investors, Tesla has, over the years, entered into several
strategic partnerships with suppliers. Weve summarized the important ones below:
Panasonic: In 2010, Tesla entered into an agreement with Panasonic to accelerate its
development of next generation EV cells and also further its battery pack performance. Under
the terms, Tesla uses Panasonics battery cells for its newest battery packs because of their
high capacity, light weight, durability and long life. Tesla is also working on completing its
Gigafactory by 2017 and Panasonic has signed a letter of intent to join the project.
Toyota: In July 2010, Tesla partnered with Toyota Motor Corp. for the development of the
electric version of the RAV4. This deal was aimed at increasing Teslas engineering,
manufacturing, and production expertise. However, recent reports suggest that Toyota plans
to terminate the deal ahead of schedule due to lackluster sales. This is good for Tesla as it frees
up more lithium battery packs, translating into deliveries of Model S.

6.3 INTERNATIONAL EXPANSION


Tesla has recently been targeting international markets outside its strongholds in North
America. In 2014, at a minimum, Tesla is expected to focus on a continued push in Europe, and
other emerging markets like Japan, Hong Kong, and Australia. Tesla is looking to install 30 more
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service and sales locations in Europe. It intends to construct a plant in Europe once its electric
cars achieve the sales target of 160,000 units annually in the region. The auto maker also
intends to launch a R&D center in the UK within the next two years and expand its final
assembly factory in Netherlands. In the Asian market too, Tesla intends to raise sales of its
Model S by more than 56% in 2014 by expanding sales to the Chinese markets. Tesla is poised
to invest hundreds of millions of dollars in China helped by various government incentives.

7 CONCLUSION
Teslas 'Open source' strategy might turn out to be a masterstroke in the long run. While the
commercial incentive to do is clear: encourage investment and provide fresh impetus in
adoption of electrical vehicles by other manufacturers, the reason for acting now isnt so.
Possibly, Tesla has realized that it lacks the scale and financial wherewithal to create the
electric car market on its own and is now prepared to loosen its grip on the market.
While Musks desire to encourage innovation and the transition to an environmentally friendly
transport system is commendable, we feel, Teslas decision is more about securing its position
as a key player, if the not the leader, in the future automobile ecosystem. Much could rest on
Musks definition of acting in good faith. We feel that this is a deft strategy to proclaim that
Teslas technology is in fact the de facto standard of EV industry and the very patents that Tesla
claims to offer for free at this point will allow it to play an important role in shaping the industry.
Teslas technology adopters will most likely sign license agreements to protect themselves if
Tesla decides to back track. Tesla too may wish to retain some right to enforce their patents in
the future, and to protect future inventions using the patent system.
While this move is a risky one, it certainly does make sense from Teslas point of view. The
companys stock has doubled in the past year, but the industry is struggling. We believe that it
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is Teslas strength and innovative business model that will propel it forward, not any reliance
on patent litigation or licensing models. Therefore, opening up its patents in order to evolve
the EV industry, certainly seems to be a stroke of genius for the high flying Elon Musk.

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8 BIBLIOGRAPHY

Why does it cost so much to manufacture cars?

Bloomberg: Teslas Direct Sales Push Raises Auto Dealer Hackles - link

Why dealerships should embrace Teslas direct sales approach - link

FTC comes out in favor of Tesla. Greencarreports.com - FTC in support of Tesla

Economist: Better Power Packs Will Open Road for Electric Vehicles - Better Power Packs

Hybrid and Electric cars in the US: MarketLine Research

Hoovers Company Overview Tesla Motors : Tesla Motors

Tesla: The Californian start-up that made head way on the automotive giants http://advantage.marketline.com/Product?pid=ML00013-051

Rise in EV auto financing to spur demand - Rise in EV autofinancing

Gigafactory will provide multiple benefits to Tesla Gigafactory Benefits

Automakers & Lithium producers - Lithium producer partnernship

Electric Cars Timeline PBS.org Electric Cars Timeline

Electric cars History - http://avt.inl.gov/pdf/fsev/history.pdf

Passenger Vehicle Industry in US Q3 2014 - BMI Report

Teslas Car Buying Experience : Businesswire - Businesswire Report

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9 APPENDIX: ONE PAGE PROJECT OUTLINE


Company - Tesla Motors Inc.
Research Questions
How has Tesla managed to create a niche product in the automotive world and gained a
competitive position in the industry? How does it plan on sustaining its market position?
Why do we find the issues we have selected to study interesting or relevant?
Tesla Motors is an automobile manufacturer involved in producing fully electric vehicles and
powertrains with zero emissions. The core of their product is the batteries that power their
products but the batteries themselves are nothing new which other manufacturers havent
been doing. However, Teslas batteries significantly outperform those of their competitors in
terms of both mileage and charge capacity. Tesla has used this USP to work towards expanding
the electric vehicle segment of the automotive industry which despite the efforts of existing
giant vehicle manufacturers did not pick up pace until Teslas entry. Although Tesla faces a lot
of hurdles from existing competitors and regulations which affects its unique selling approach,
it has managed to grow aggressively and profitably. We would like to evaluate Teslas decision
to open up patents to the market and analyse whether Tesla strategy is a strategic
masterstroke to sustain its competitive advantage or a blunder.
Research Methodology
Research methodology will focus on what new-game strategy did Tesla Motors effectively use
to gain a competitive advantage and how its competitors have responded to its position. It will
also involve analysis of Teslas decision to make their patents publicly available and its effect
on the automotive industry as a whole with respect to Porters Five Forces. Data will be
primarily gathered from company financial reports, industry/company overview databases
such as Factiva and DataMonitor, news articles and technology blogs & forums.
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