Tesla Export Plan to India

David Abboud

Ayoub Essoufi

Bryan Fraser

Will Loveall

Tiffany Mejia-Hernandez

Joseph Sensale

Professor Austin

MAR4144 - Export Marketing

July 12th, 2021

TABLE OF CONTENTS

Executive Summary………………………………………………………………………..3

Why this Company Should Export?.....................................................................................4

Export Policy Commitment Statement…………………………………………………..5

Mission/Vision…………………………………………………………………………….5

Short Term Goals…………………………………………………………………………..5

Long Term Goals…………………………………………………………………………..5-6

Situation or Background Analysis………………………………………………………....6-8

Business Model……………………………………………………………………………..8-9

Key Activities………………………………………………………………………………..9

Resources Inside and Outside the Firm……………………………………………………...9-14

Marketing Component……………………………………………………………………....15-18

Marketing StrategyUSD
5.178…………………………………………………………………………...18

Action Plan…………………………………………………………………………………..19-21

Income Statement…………………………………………………………………………….22-23

Balance Sheet………………………………………………………………………………..24-25

Cash Flow Statement………………………………………………………………………..25-26

Background Data on Target Countries and Markets………………………………………...27-29

APA Bibliography………………………………………………………………………...…30
Appendix…………………………………………………………………………………….31-33
Executive Summary

Tesla was ranked as the best-selling electric vehicle manufacturer worldwide in 2020 with

500,000 units produced. Not only that, but they are the most valuable automaker in the world.

With an increasing global focus on the negative environmental impacts we cause, a mode of

transportation that runs on sustainable energy is an inescapable need for the longevity of our

species. Founded in 2003, Tesla is headquartered in San Carlo, California, where they have

developed 4 different models of electric cars with different versions for varying lifestyles. While

Tesla was developing their brand, they were also innovating the manufacturing process used to

create some of their models, and making batteries more affordable with their gigafactories.

Tesla’s mission statement is to accelerate the world’s transition to sustainable energy.

Tesla created a “Gigafactory” in Nevada in June of 2014 to meet their sustainable energy needs by

creating more batteries and making them more affordable for everybody. Since then, two other

Gigafactories have been made in New York and China, with two more being developed in

Germany and Texas. These gigafactories have been touted as having net-zero carbon emissions.

Tesla’s innovation in the manufacturing process is one of the main causes of their success.

With the use of artificial intelligence, and a process called “stamping,” Tesla can manufacture

faster and safer than the competition. With this process, a newer $25,000 model is rumored to be

coming from Tesla’s China factory in the next year. With this in mind as well as the environmental

focus mentioned earlier, a logical place to export into would be India. With the pollution levels in

India and the affordability of the incoming model, it would be beneficial for not only Tesla, but

the rest of the world if they were to export into India.

Why this Company Should Export?

Since Tesla has been a hugely successful company in the United States, China, and Europe,

it has created a buzz across the world, especially in India. Tesla currently has high growing

profitability and healthy cash flow. They are also working on more affordable cars since battery

prices are decreasing, causing the cost of production to also decrease. Due to this, Tesla is in a

perfect state to expand and export into India. Tesla has been teasing on Twitter about exporting

into India, which has many users excited and patiently waiting.

India is currently the 4th largest manufacturer of cars in the world. In 2019, there were over

227 thousand cars sold in just a month of May. In 2020, the number of cars sold in May was about

33.5 thousand cars. This number is significantly lower due to the pandemic the past year. However,

for the year 2021, this number will be increasing as the world opens back up. Regarding Luxury

Cars in India, there is about a record of 60,000 units sold. This number has increased by 20% each

year.

As of July 5th, 2021, the gas price in India is 384.571 INR ($5.178 USD). At the moment,

the most sold car in India is a Hyundai Creta. This particular car has a fuel tank capacity of 50.

Assuming the average driver travels 100km per day (about 62.14 miles per day), the total cost to

fill up the gas tank would be about 13218 INR ($177.12), based on the average mileage of 21.4

kmpl (50.34 US MPG). If the average driver fills their tank up weekly, they are spending $708.48

monthly solely on gas. Given that Tesla is an electric car and does not rely on fuel to function,

exporting these cars to India would save the average driver plenty of money.

Business model
 The business model that we have chosen was carried out before the business plan, and its

objective is to establish the product, which is the Tesla cars, to India through a franchise in that

country.

Franchises are a form of business in which a person or company known as a franchisor

grants the right to exploit its brand or business model to a franchisee, who in return pays certain

fees and royalties. The franchise owner also has an obligation to transmit all the knowledge about

how the business works and the processes that must be followed to obtain returns.

For a business to be franchised, there is a whole process behind it that takes years. You

must first prove that you are profitable and have some success, which will allow you to expand

and open more branches.

In addition, the structure of the company has had to adapt to be able to be replicated. But,

unfortunately, many companies do not survive these processes, 33 percent of the businesses do not

go beyond the first year of life, and in five years, 65 percent of the companies have disappeared.

For this reason, franchises are beautiful businesses because they have an already proven

model, which has proven to be successful, they have a recognized and positioned brand, there are

even loyal customers to it, and it has the backing of the franchisor, which keeps the brand updated

with new ones. Products or services.

There are many types of franchises and different lines of business. Although choosing one

will depend entirely on your profile as an entrepreneur and your area of experience, 85 percent of

brands reach five years of operation when it comes to franchises.

 Different ways of classifying them depend on the service or product they sell, the

relationship established between the franchisor and the franchisee, or the location.

Before choosing a type of franchise, consider that not only do they target a certain audience

and have a specific focus, but even the contract and the investment are different in each one. That

is why we have chosen the following model for ours:

Industrial. In this type of business, the franchisor assigns the knowledge and rights to

manufacture the products of its brand, in addition to the marketing, administrative procedures,

sale, and management. Some examples of this type are companies that manufacture food or

beverages of recognized brands but in different countries.

The legal framework in which franchisees operate is contained in the Industrial Property

Law and the Regulations of the same law. The generalities of the contract are established in article

142 of the Industrial Property Law, which states that it must contain at least some points such as:

• The geographical area where the activity will take place.

• The size and characteristics of the establishment, if any.

• Inventory and advertising policies.

• The characteristics for the technical training of the franchisor's teams.

• The causes for the termination of the contract.

Export product
 Our export product will be electric cars to India. As we have mentioned, it has great

potential within the country. Considering the price of a Tesla, you will probably not be able to sell

an electric vehicle to the majority of the population in emerging economies. However, when

looking at population size and economic growth potential, Tesla will likely be targeting a rapidly

growing group of wealthy people who, in absolute terms, compares quite favorably to what we see

in many developed countries. In other words, geography and the target market are taken into

account to which it is intended to distribute both the exclusive and the best-selling designs of the

brand. Since to decision to export the vehicle to that country, a previous market study and potential

buyers have been carried out.

SWOT

Strengths

1. A company that employs the best: Any organization is only as good as its employees. In

the case of Tesla Inc., it is one of the key factors in the company's remarkable success. The Wall

Street Journal reports that Tesla has become an ideal company for employees due to its diversity

and culture that encourages innovation.

It has recently been listed as one of the ideal places to work, attracting young job seekers

with talent and energy. The company has also been featured on the Forbes ‘America’s Best

Employer 2019’ list.

2. The leading automotive company: Despite its problems, Tesla's sales have only

increased. It became the leading automotive brand in 2019, with the delivery of 367,500 vehicles.
 Thanks to its unrivaled advancement in innovation and luxury, the company has left behind

some very exclusive car brands such as Mercedes and BMW.

3. Best-in-class electric cars: Tesla has outpaced every other brand in the best electric car

race. When compared for their range, Tesla electric cars have proven to be the best at covering

maximum distances. The recent comparison shows that Tesla ranks in the top three spots in terms

of range. The Tesla Model S goes the furthest: it travels up to 600 kilometers on a single battery

charge. The closest thing to another brand is the Opel Ampera, with a range of 520 kilometers.

4. Tesla dominates electric vehicle sales in the United States: According to Statista, the

Tesla Model 3 is the best-selling electric vehicle of 2019, with a sales figure of 187,971. In the

second position is the Chevrolet Volt, with 155,477 cars sold. Finally, the Tesla Model S is again

in the third position with a very tight figure, with 134,392 cars sold. In short, Tesla tops the electric

car sales chart.

5. Cross-selling and diversification: Tesla has launched a comprehensive insurance

program for its vehicles in partnership with the insurer Liberty Mutual called InsureMyTesla.

Weaknesses

1. Manufacturing complications: The higher the level of innovation, the greater the

mechanical complications and the production risk factor. Tesla faces ongoing launch,

manufacturing, and production ramp delays as it launches its new vehicles and other products.
 For example, Tesla faced a myriad of manufacturing problems when it was about to launch

the Model X, causing constant delays in distribution. Similarly, the company went through extreme

problems while manufacturing the Model X battery module assembly line at Gigafactory 1.

2. Failure to meet demand could affect brand equity: Due to extensive experimentation and

complicated procedures, Tesla could face an imbalance between supply and demand, unable to

meet production requirements.

In fact, its delivery pace in the first quarter of 2019 is quite alarming. The company

delivered 63,000 cars in the first quarter of 2019, a 31% drop compared to the last quarter of 2018.

3. Lack of high-volume production: There is no question that Tesla is the pioneer of real

energy-saving cars. But it has failed to produce high-volume cars of any of its models.

When the company plans to build Model 3 vehicles in high volume, it faces problems in

terms of cost of production and resources for managing and expanding space at Gigafactory.

4. Shortage of batteries: At the annual shareholders' meetings, CEO Elon Musk accepted

that his production rate has decreased due to the limited supply of batteries. The shortage directly

affected sales of electric vehicles and energy storage systems.

5. Elon Musk as the sole representative of Tesla: Tesla accepts that the company is a "one-

man show." Sadly, that man, Elon Musk, has a lot on his shoulders to give one hundred percent of

him to the company.

 Musk is also deeply involved in other projects such as space launch vehicles at Space

Exploration Technologies Corporation and The Boring Company.

Opportunities

1. Expansion of sales in an untapped market: The most important opportunity for the

company at the moment is the Asian market, which is not yet saturated in the field of automotive

and renewable energy, especially in the situation where Tesla needs to expand its global market to

increase its financial stability and a greater presence in the market.

2. Least expensive car: Tesla is expensive due to its unconventional reliance on innovation,

requiring maximum financial support to entertain new technology.

Recently, Tesla has launched the Model 3, a more affordable version of the Model S with

less range, power, and fewer features. However, it is an excellent opportunity for Tesla to expand

the size of its audience market.

3. Bring battery production technology in-house: Tesla intends to manufacture its own

battery cells. This can be a game-changer as it will help the company increase its manufacturing

rate and reduce its production costs. Today, Panasonic is its main supplier of batteries.

4. Introduction of the pick-up truck: According to market share data from the National

Association of Automobile Dealers, trucks represent 17.6% of the automotive market in the US,

which is a large growth opportunity for electric vehicles.

The Tesla cyber market has a great growth opportunity in the truck segment.
 5. Market confidence in Tesla: The stock market has shown its confidence in Tesla after

seeing two consecutive quarters of profits. Tesla's share price has doubled since the beginning of

this year.

Threats

1. Product Liability Claims: Despite Tesla's superior quality assurance and high

manufacturing standards, the automotive industry, in particular, is used to facing significant

product liability claims that the company fears will be one of the biggest financial hits.

Tesla has launched many vehicles with autopilot, and not all have been successful in the

event of an accident. As a result, the company has faced lawsuits and claims related to the failure

of its product technology. If these liability lawsuits continue, then Tesla could suffer further

financial setbacks.

2. Extensive competition: Tesla, Inc. faces aggressive competition from alternative fuel

vehicles (hybrids, plug-in hybrids, fully electric cars) and self-driving technology. Many car

brands in the luxury segment like Mercedes, BMW, Audi, Lexus, and the economy segment like

Toyota, Ford, Volvo, and General Motors are preparing for fierce competition.

Many brands are not only launching or planning to launch their self-driving / eco-friendly

technology, but they are also offering it at a comparatively lower price. It is a definite threat to a

company like Tesla, which thrives on its unique value for innovative cars that are extremely

expensive and unaffordable for many.

 3. Product Defects: Due to the great complexity of engineering innovative vehicles, Tesla

cars, and other energy products have exhibited significant defects in many cases. Defective

products often have weaknesses in design, quality, and other characteristics that can permanently

damage the company's image.

4. Long-term trust: For any company, the guarantee of long-term sustainability is essential

to maintain the public image and morale of the company. Due to its unstable manufacturing

conditions, Tesla suffers from public disbelief about its long-term existence, which may imply a

deficiency in the subsequent development of the business.

5. Adaptation to the client: Any business works based on the acceptance of the client. If

the public is willing to adapt to change, companies benefit from the range of innovative products.

However, it can be a slow and relentless process, producing new challenges for companies like

Tesla. The organization is highly dependent on the willingness of customers to adopt electric

vehicles.

Industry Structure

General management is led by Elon Musk, to whom the CTO and CFO report directly. JB

Straubel, current technology manager, is also a professor at Stanford University, where he teaches

an engineering class and laboratory focused on energy storage integration. Likewise, he is the one

who invented more than 30 patents that cover most areas of Tesla's main battery, motor, and

control systems. Finally, Deepak Ahuja, current CFO, has over 20 years of automotive finance

experience; Before joining Tesla, he was a development controller for Ford products and was also

Ford's CFO in South Africa.

Competition

Tesla's main competitors include traditional auto companies such as:

• Founded in 1903, Ford Motor Company (F), a multinational automobile

manufacturer.

• General Motors (GM), the US-based automaker founded in 1908.

• Honda Motor Company (HMC), a multinational automobile manufacturer founded

in 1948.

• Navistar (NAV), a commercial vehicle holding company.

• Oshkosh (OSK), a manufacturer of trucks and military vehicles, was founded in

1917.

• PACCAR, truck manufacturer.

• Spartan Motors, a specialized manufacturer of chassis and vehicles.

• Tata Motors, the largest automobile manufacturer in India.

• Toyota Motor Corp. (TM), a multinational automotive manufacturer.

• Wabco (WBC), manufacturer of systems for heavy commercial vehicles.

References

• Franchise Business Model. (2021). Retrieved 22 July 2021, from

https://businessmodelanalyst.com/franchise-business-model/

• Tesla Inc.’s Organizational Structure & Its Characteristics (Analysis) - Panmore

Institute. (2021). Retrieved 22 July 2021, from http://panmore.com/tesla-motors-

inc-organizational-structure-characteristics-analysis
• Who Are Tesla’s Biggest Competitors?. (2021). Retrieved 22 July 2021, from

https://www.manufacturing.net/automotive/article/21390017/who-are-teslas-

biggest-

competitors#:~:text=Tesla%20is%20fighting%20off%20competition,companies

%20including%20NIO%20and%20XPeng.&text=The%20automotive%20industr

y%20is%20shifting,EV)%20at%20a%20frantic%20pace.

• Anasagasti. (2020). Tesla SWOT Analysis | Business Strategy Hub. Retrieved 22

July 2021, from https://bstrategyhub.com/tesla-swot-analysis/