Indian Institute of Management, Sambalpur

Master of Business Administration

Case submission: Tesla, Inc

Submitted to

Prof. Diptiranjan Mahapatra

By: Section A | Group 1

Anshika Rani 2023MBA010

Badigi Sai Sandeep 2023MBA014
Kanderi Durga Brahmini 2023MBA031
Kumud Acharya 2023MBA036
Kuraganti Sajani 2023MBA037
Raksha Singh 2023MBA052
Akash Shukla 2023MBA063
Souradip Das 2023MBA064
Swastika Upadhaya 2023MBA070
Swapnil Bhawale 2023MBA321

Submitted
On
6th March, 2024
Tesla .inc : Group 1

Question 1:
Conduct a PESTEL analysis to identify which PESTEL factors are the most salient
for the electric vehicle segment of the car industry? Do you see a future for
electric vehicles? Why or why not?

Solution:

PESTEL

Political: With governments incentivizing the purchase of electric vehicles due to their

environmental benefits, the removal of tariffs on these vehicles and their increasing market

Adoption has been facilitated.

Economic: The decreased demand for electric vehicles amid lower gasoline prices and higher

Unemployment resulting from the COVID-19 pandemic has been observed. However, the

declining cost of sustainable energy due to advancements in lithium-ion battery technology

could potentially make electric vehicles more affordable.

Social: The decreasing cost of electric vehicles is expected to encourage more individuals to

opt for them, leading to rapid technological advancements to support market growth and adapt

driving habits.

Technological: Progress in lithium-ion battery technology is enabling faster charging times and

longer battery lifespans, potentially accelerating the transition from conventional to electric

vehicles.
Legal: Tesla could benefit from legal frameworks promoting production, trade, and utilization

of renewable energy.

Environmental: Research by Vestas suggests that countries with higher GDPs are more likely
to embrace green products and renewable energy. Additionally, nearly half of the respondents
are willing to pay a premium for products made using renewable energy, indicating the
significant importance of environmental concerns on a global scale.

For the below reasons we believe that electric cars (EVs) have a promising future :

1. Technological advancements With ongoing improvements in EV technology, they are

becoming increasingly practical and convenient for everyday use.

2. By enacting laws that favor electric vehicles and providing incentives, governments are
promoting these vehicles.

3. Keeping electric automobiles fueled is more convenient thanks to the growing number of
charging outlets.

4. Consumer interest in electric vehicles is rising, indicating that environmental concerns are
driving up the popularity of these vehicles.

Overall, the combination of government support, technological progress, cost advantages, and

Environmental benefits are expected to drive increased adoption of electric vehicles (EVs).

Question 2: In which stage of the industry life cycle is the electric vehicle
industry? Apply the crossing-the-chasm framework to explain some of the
challenges Tesla is facing and provide some recommendations on how to
overcome them?

Solution:
The Electronic Vehicle industry is on the rise and is in its growth stage, the factors that affect the
industry are as follows:

● Rapidly increasing sales: Despite representing a small fraction of the total automobile
market, electric vehicle (EV) sales are growing substantially worldwide. For instance, in
2022, electric car sales increased by more than 60% compared to the previous year.
● New entrants and investment: Established automotive manufacturers are making
substantial investments in electric vehicles (EVs), and new entrants are joining the
market. This trend indicates a competitive and expanding industry.

● Technological advancements:Continuous advancements in battery technology are

leading to increased range and shorter charging times, enhancing the appeal of electric
vehicles (EVs) for consumers.

Ongoing improvements in battery technology are extending the range of electric vehicles (EVs)
and reducing charging times, making them more attractive to consumers.

● Market share:Despite their growth, electric vehicles (EVs) still constitute a small fraction
of the total car market when compared to traditional gasoline-powered vehicles.
● Infrastructure limitations: The availability of charging infrastructure, particularly fast-
charging stations, remains less widespread compared to gasoline stations, particularly in
specific regions.
● Cost considerations: Although prices are decreasing, electric vehicles (EVs) are
typically more costly than comparable gasoline-powered vehicles, which affects
affordability for some consumers.
Thus, even though the EV industry is unquestionably experiencing growth, there is still
space for additional development and infrastructure improvement before it reaches full
maturity.

Applying the Crossing the Chasm framework to analyze challenges faced by Tesla in reaching
the mainstream market:

1. Value Proposition:
 ● Early adopter focus: Tesla initially concentrated on high-performance, luxury electric
vehicles, which appealed to early adopters valuing innovation and environmental
consciousness. However, the high price point might not appeal to the price-conscious
early majority.

● Beyond environmental benefits: Although environmental benefits are crucial, the early
majority might also be influenced by factors such as fuel and maintenance cost savings,
which Tesla needs to effectively emphasize in their messaging.

2. Reduced Complexity:

● Electric vehicles' complexity: Electric vehicles are typically viewed as more complex
than traditional gasoline vehicles due to factors such as charging infrastructure, range
anxiety, and different driving characteristics. Tesla must simplify the ownership
experience by addressing consumer concerns and ensuring a seamless transition.

3. Lower Risk:

● Perceived risk of new technology: The early majority may view electric vehicles as a
novel and untested technology compared to well-established gasoline vehicles. Tesla
must alleviate concerns regarding battery life, reliability, and safety to establish trust and
diminish the perceived risk.
● Limitations in charging infrastructure: The scarcity of widespread and easily
accessible charging infrastructure, particularly fast-charging stations, can pose a
significant barrier for the early majority, who may be cautious due to range anxiety.

4. Visibility and Social Proof:

● Limited market share: Despite its expansion, Tesla's market share remains relatively
modest compared to traditional car manufacturers. The early majority might be swayed
by the perception that electric vehicles are not yet widely adopted.
● Negative media coverage: Incidents involving Tesla vehicles, such as accidents
involving self-driving cars, can generate adverse publicity and discourage the early
majority, who prioritize reliable and safe transportation.
To overcome these challenges and cross the chasm, Tesla can consider below mentioned
strategies like:

● Expanding the electric vehicle lineup: Introducing more cost-effective models tailored
to various early majority segments and needs.
● Enhancing the purchasing and ownership experience: Simplifying the buying
process, offering extensive customer support, and resolving charging concerns through
partnerships or innovative approaches.
● Emphasizing cost-effectiveness and practical advantages: Highlighting the potential
long-term savings on fuel and maintenance in comparison to gasoline vehicles, while
also addressing environmental considerations.
● Forging partnerships: Collaborating with governments and other stakeholders to
enhance charging infrastructure and encourage widespread adoption.
● Addressing safety apprehensions: Continuously enhancing safety features and
openly discussing ongoing advancements in self-driving technology.

By tackling these challenges and deploying effective strategies, Tesla can enhance its
attractiveness to the early majority and strengthen its position as a frontrunner in the electric
vehicle market.