Approach

Tesla Model S Value Creation

Part 1 Introduction
Company overview
Business model
Stackholder map
Value flow

Part 2 Situation Analysis

EV industry
Strategic marketing
EV consumers
Competitors
Opportunity identification

Part 3 Value Creation

Value framework
Finnal value framework

Part 4 Summary
Conclusion
Appendix
Reference
 Company Overview
Supercharger network One of the major concerns for electric vehicles are their batteries;
Te s l a c a n c h a r g e t h e i r they encompass the largest single expenditure of an electric vehicle,
customers to charge their will likely need to be replaced at a large cost and leave many people
cars, recovering the costs of questioning the environmental impact of these ‘dead’ batteries.
the implementation of the Battery
network as well.

If it kept charging free for

Tesla owners, it would also
1
Battery
2
Battery
3
Battery
4
Battery Patent
have a Unique Selling Point
for buying a Tesla car.
design Development disposal/re-use Gigafactory
Sharing

30% This new factory is expected to

drop the battery prices world-
wide by more than 30%.
Tesla’s business model is derived from a unique strategy: develop high-end expensive electric luxury
In turn it will enable the creation supercars for the wealthy, use those profits to drive R&D, and in the future be able to develop a $35,000
of an affordable, fully functional
electric vehicle for the masses.
electric vehicle for the masses. To deliver on that strategy, Tesla flips the current traditional auto
market on its head.
g R&
r g in D The end product is an electric luxury car that combines the best of electrical technology, design
Over-the-air updates
ha
and performance. The Tesla Model S, the flagship car, has won multiple design awards and has

C
It uses this strategy of getting users “hooked” on
its hardware, and then make money from selling The Tesla platform can be changed
them additional services through apps, of which in order to provide for a different been proven to be the fastest 0 to 60mph sedan in history. The vehicle’s technology is cutting edge,

E n gine erin g
design.
allowing Tesla to upgrade and remedy many issues remotely, and a battery system that provides over

Hardware
supercharging is just one example.

Software

S ervic e
It could easily be used to build a 250 miles per charge is not shabby either, along with free charging stations across the United States,
convertible, a commercial van,
a pick-up truck or a sports car,
Asia and Europe.

ls Mf
you name it
e
ann Ch
g At the crux of Tesla’s business model are two elements: Tesla sells directly from the manufacturer
to the customer, so there are no auto-dealer middlemen, and Tesla owns and operates beautifully
By letting other companies use its hardware,
Tesla gets an even bigger pool of users
designed retail stores, similar to Apple, in upscale locations. This setup delivers the best experience
to whom they can sell such services and
make money even if they’ve given away the
and value to the customer, and customers receive unparalleled service. Tesla’s brand strategy hinges
patents to the hardware. here, as Tesla believes the traditional auto-dealer diminishes value and brand image—the exact same
reasons why Apple has its own stores. Tesla and Apple can control the customer experience and
Value and brand image brand.
Tesla sells directly from the manufacturer
to the customer, so there are no auto-dealer
middlemen, and Tesla owns and operates
beautifully designed retail stores in upscale Despite the deviation from the traditional dealer model, Tesla still makes money simply by selling
locations.
cars. Intellectual property is typically another area of revenue, but recently, Tesla has made all of the
battery technology intellectual property, among others, public; even though it is keeping some IP to
This setup delivers the best experience and
itself, releasing the battery technology is revolutionary to say the least, especially since the batteries
value to the customer, and customers receive are a key element of Tesla’s competitive advantage. Tesla believes this move of making the IP public
unparalleled service.
will help accelerate the adoption of electric vehicles.
Company overvew
Tesla Business Plan Business Model
Sales of Cars

Revenue

Step 1: Partnerships
High-priced, low-volume car for the super rich
Gross Profit
Come out with the expensive first product, but
make the car so fancy that it’s worth that price—i.e.
just make it a legit Ferrari competitor and then it’s
okay to charge over $100,000 for it. Others
The Roadster (2008) This revenues fund development of
this.

Step 2: Profit
Mid-priced, mid-volume car for the pretty rich.
R&D Nevada Battery Plant
Use the profits from Step 1 to develop the Step 2 car.
It would still be expensive, but more like a $75,000
Mercedes or BMW competitor instead of Ferrari. Engineering
This revenues fund development of
The Model S (2012) this.

Other Costs Manufacturing

Step 3:
Low-priced, high-volume car for the masses.

Use the profits from Step 2 to develop a $35,000-ish Brand Strategy

car that, after the government’s $7,500 EV tax credit
and the savings on gas, would be affordable to the
middle class. Channels
The Model 3 (2017)

Service
Business Model Business Model

Login APP,
Visit, Order & Updade & Select charging
Payment Progress Communicate with points and
the car stations Customer
Key partners Key activities Value proposition Customer relationships Customer segment

Component suppliers Vehicle testing Brand strategy Customer service High net worth influencers
Panasonic Anglytics and big data Customer brand evangelists
Repair & Install Regulators Nevada battery plant Direct sales from manufacture to
Car awards
customer, no auto dealers
Retail stores
High-end retail stores
Free charging stations

Customer journey
Core offering
Key resources Channels
Advanced electric cars
Technology
High miles per charge
R&D Online and retail stores
Electric car & technological
knowledge
Manufacturing & assembling
Software
Research & Mfg Channels Service Charging Complementary offering
Engineering
Development
Free electric charging stations
Upgrades via remote access
Repair
Value Chain (owned by Tesla)

Cost structure Revenue streams

Component Suppliers Financing Electricity Suppliers
Manufacturing, technology, engineering salaries, real estate, maintenance Sales of cars
Business activities Partnerships
 High net worth influencers Customer
Stakeholder Map
High class
Panasonic
The rich

First market
Online order/ Show room
Material
Advanced electric cars Free electric charging
Technology stations
Component suppliers Technology
R&D Upgrades via remote
High miles per charge access
Severce
Core offering Complementary offering

Government
Possible partnership

Regulators Factory

Company R&D Vehicle testing

Electric car & Anglytics & big data

technological knowledge
Nevada battery plant
Manufacturing &
assembling
Government Electric station Bank
Software Hotel

Second market
University/ Knowledge center Energy company Office
Public
Shopping mall

Restaurant

Domestic
 High net worth influencers Customer
Value Flow
High class
Panasonic
The rich

First market
Online order/ Show room
Material Customer service

Advanced electric cars Free electric charging Customer brand evangelists

Technology stations
Component suppliers Technology Direct sales from manufacture to
R&D Upgrades via remote Relationships
High miles per charge access customer, no auto dealers
Severce
Core offering Complementary offering High-end retail stores

Car awards Free charging stations

Government
Possible partnership

Brand strategy
Regulators Factory

Company R&D Vehicle testing

Retail stores
Electric car & Anglytics & big data
technological knowledge
Nevada battery plant
Manufacturing &
assembling
Government Electric station Bank
Software Hotel

Second market
University/ Knowledge center Energy company Office
Public
Shopping mall

Restaurant

Domestic
Value Framework

Society Transformation

Levels of value Ecosystem Doing good

Organization Doing well

User Experience

Value for Eco-

money footprint

Eco-
Profit effectiveness
Happiness Belonging
Stability Ecology
Sustainability
Wealth
Economy
Social responsibility Livability
Core values
of the environment

Shared drivers Reciprocity

Perspectives
Psychology
on value Sociology