Company Background:

 Incorporated in 2003 by Eberhard and Tarpenning

 First vehicle introduced in 2008
 Elon Musk contributed major fund and became chairperson of the company
 Strategic Partnership with Daimler AG in 2009, after Tesla was struggling with cash crunch
 Received $465 billion from US Dept. of Energy (P of PESTEL)
 In 2008, Musk became chief executive as he was making all the major decisions

Elon Musk Background:

 In 2002, founded SpaceX
 Other notable companies are PayPal, Zip2, SolarCity Inc.
 Involved with Tesla Motors because he was “concerned with the environment”
 Split his time between Tesla and SpaceX
 Both praised and criticized for his management style

Strategic Vision of Musk:

 Bring full range of affordable electric powered vehicles to market
 Transition from carbon producing gasoline powered motor vehicles to zero emission electric
vehicles
 At its core, Tesla’s strategy was aimed squarely at utilizing the company’s battery and electric
drivetrain technology to disrupt the world automotive industry
 The challenges in 2016 were:
o Gasoline prices had dropped
o Formidable competition
o Loss rather than profit achieving

Products of Tesla:
 Tesla Roadstar, the Model S, Model X, Model 3
 Innovating and offering better values than previous models

Distribution:
 Relied on company owned retail stores (Forward Integration)
 Other rival motor companies sold to franchised dealers
 There was a US legislation which blocked motor vehicle manufacturers from becoming retailers
 These laws halted Tesla to sell vehicles at company owned showrooms

Product Development Strategy:

 In 2016, Tesla’s strategy was focused on broadening the company’s model lineup, expanding the
company’s production capacity
 Upto 2016, spent over $2 billion on R&D
 Core intellectual property: battery pack, power electronics, induction motor, gearbox and
control software
  Tesla had more than 500 patents, but they pledged not to initiate a lawsuit against anyone
infringing it
 Cars were made light
 Engineers gad core competency in design and crash test simulations

Manufacturing Strategy
 In 2010, purchased a plant in California for $42M.
 Location favored them as talented engineers were nearby in Silicon Valley
 Previously done in London
 In 2012, new facility opened in Netherlands for final assembly
 Tesla’s strategy was to source a number of parts and components from outside suppliers but to
design, develop and manufacture in-house those key components where it had considerable
intellectual property and core competencies
 Initially production costs for the Model S were adversely impacted by assortment of startup
costs
 Engineers redesigned various elements for greater ease of manufacturing
 Production volume greatly rose

Marketing Strategy:
 Manage the existing customer base to create brand loyalty
 Traditional marketing costs were low
 Build long term brand awareness
 Tesla’s innovative resale guarantee program, where the buyers were given the option of selling
their vehicle back to Tesla within a window of 36 to 39 months after delivery for a guaranteed
percentage of the purchase price
 Thus enabling them to enjoy the benefits of ownership without concerning for the resale value
 Tesla partnered with various financial institutions to lease vehicles to customers

Credits from Regulatory Bodies

 Earned credits for zero emission vehicles (ZEV), green house gas (GHG), corporate average fuel
economy (CAFE).
 These credits produced revenues of $2.7 M in 2011.

Competition:
 All other major companies working on Electric Vehicles
 In 2013, BMW began selling i3 series electric car models
 Audi, Mercedes, Porsche, Lexus are developing high end electric vehicles
 Hydrogen Fuel Cells, more eco-friendly than electric cars

Tesla Motor’s financial numbers:

 In May 2013, Tesla raised over $1 B by issuing shares of common stock
 Ended 2015 with $1.2B in cash and cash equivalents
 Loss of $888,663 in 2015