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Testla Motors

History , Development & Growth

In 2013

Martin Eberhard Elon Musk


Martin Eberhard was serial enterprenuer who had launched a number of start up , including
a company called Nuvo Media who sold in $187 million

Eberhard was looking for a sport car that would be environmentally friendly car as the
Usa dependence on Middle East for Oil

Eberhard began to consider a range of alternative fuel options of his car :hydrogen fuel
cells ,natural gas diesel

Eberhand lucky meet the Al Cocooni Founder of the AC propulsion and one of the original
concern engineers for GMs had concluded

Elon Musk was a 31 year old south African who founded a company that ulimately become a
PayPal and then company was sold to Ebay in 2002 for $1.5 billion

Like Eberhard musk thought electric cars were the key to US achieveing energy
interdependence and the approached Coccani about buying the Tzero

Tom Gage who was then the AC propulsions CEO suggested that Musk Collaborate with

After 2 hours of the meeting in Feburary 2004 Musk agreed to fund Eberhards plans with 6.3 $
million . He would be the companys chairmans and Eberhard would be CEO

The first Testla prototype named as the Roadster was the roadster was based on the $45,000
lotus Elise a fast and light sports car that seemed perfect for creation of the eberhand and
musk idea

The car would be 400 volts of the electric potential liquid cooled lithium ion batteries and
series of silicon transistor that would be give a car acceleration so powerful driver would be
pressed back against their seat

By 2008 the morale of the company was high at the all time . Production problems had
been forgotten as the first seven Roadsters hit the road

The most ambitious project did not stop niche high end car . Testla announced the
Model S a high performance all electric sedan that would be sell for the price of
ranging from $57,400 to $77.400 and compete against the cars like BMW 5 series

Model S 500 million to develop however offering that cost was a $465 million loan from
tesla received from U.S government to build

In May 2012 Tesla reported that it already had 10,000 reservation for the customers hoping
a buy the Model S and Musk claimed that company would soon sell 20,000 model s were
more smoothly than that of Roadster

Testla bought a recently closed automobile factory in Fremont Calfornia that had been used
for New United Motor Manufacturing Inc venture between toyota and General Motors

Testla also used the factory to produce battery packs for Toyota Rav R4 and a charger for the
subcompact Daimler AG electric vehicle

These projects would supplement the Tesla income while also helping it to build scale and
learning curve effencies in its technology

Musk also had a plans to produce a sport utlity vehicles the Model X which could be $ 250
million to develop would go to the production in late 2013
Companies Internal Strength and Weakness


Automated Marketing

Manufacturing was performed at its foremont
plant . Its manufacturing process was highly with
extensive use of eight to ten foot all red robots .
Each robot has single mulit joined arm Tesla robots
perform up to 4 tasks
Welding , Riveting , Bonding , Installing

Musk saw the franchise dealership arrangements

Distribution that US car companies use to sell the car
companies use to sell cars as an expensive margin
killing model. He chose instead to own and
operate tesla dealership himself. Tesla dealership
are the more like stores in upscale shopping malls
had 35 stores across the US. Europe
Marketing Testla spend no money on the advertising nor
does it have any plans to hire advertising
agencies or run ads in the future. It in house
marketing team had only seven staff people and
internal team runs website. Nissan by contrast
spent $ 25 million advertising the leaf in 2012.

Musk and Eberhard were at odds over decision such as the body panels

Musk wanted to use lighter stronger

Musk insistence on the best
and more stronger and more expensive
material and parts
carbon , marketing and
Eberhands inexperience led
Eberhand had aprroved
to many major problems
PR professional to build pubilcity for the
manager of major firms
car before the launch
resulted in delay and runways
Musk Fired believe that his own
involvement and car itself will create
the publicity

The major obstacles to obstacles to adoption of electric vehicles were their limited
ranges and associated range anxiety

These concerns were not so much of issue for the Testla cars due their
exceptionally long range . The other mass market electric vehicle faced tougher

For examples tough a Nissan Leaf could be charged at an ordinary 110 household outlet
a full charge by this method could take eight hours . Level 2 charging with 220 volts
outlet could shorten that time to four hours but this was still completely impractical for
recharging during trip .
External Environment PESTLE ANALYSIS

Climate change Agenda

Political Fuel prices
Expansion of EU

Change in the income

Economic growth rate
External Environment PESTLE ANALYSIS

Social Attitude to the envoirnmental factor

Ageing Population

Technology Advance in the manufacturing



Good Engeenering & Technology Research Capabilty

First move advantage - First Company to offer a High quality all electric exotic sports car

Design and build many components in its vehicles including power electronic , battery packs

Company doesnt have a brand recognistion

A small company with small sale volume thus no ecnomies of scale

Possible supply problems with the componets if the demand increases


Testla success was surprising and inspiring .

The company had survived its infancy appeared to be solvent and was meeting its sales and
objective even though serious obstacles remained for electric vehicles . It was also competing
against companies with far greater scale .

.The company had taken in $562 million in revenues and reported an $11.2 million profit . In
May 2013 the company raised $1 billion by issuing new shares and then surprised investors
by announcing that it paid back its government loan . However some investments analysts
were more sketyical .The 2013 profits had included a one time $10.7 million DOE stock
warrant profit and $68 million in ZEV credit sales . The warrant revenues would be repeated
and nobody knew what early

Hybrid vehicles made their appearance in US auto market in 2000 these vehicles were
readily adopted by consumers because they require no change in typical consumer
because they require no change in typical consumer usage. H

Several companies had attempted to enter to all the enter the electric vehicle market
but the run out the cash and ceased operation .These included Fisker , Coda ,Azure

The more serious competition was coming from established automakers who had
deeper pockets to withstand the losses of the building the electric vehicle market
The Nissan Leaf for example retailed for about $35,000 and had a range of about the 90
-100 miles per charge .
5. Tesla corporative-level Strategy
Tesla is pursuing the corporative-level strategy of higher-
level multi-business model which differentiates Tesla
from other rivals.

5.1. Teslas mission and goal:

To design, develop, manufacture and sell high-performance fully

electric vehicles and energy storage system, as well as install, operate
and maintain solar and energy storage products with distinguished
functions and features with a view to freeing our planet from
dependence of fossil fuels.
5. Tesla corporative-level Strategy

5.2. Innovations on manufacturing

- Tesla makes great efforts and investments on developing new

models of electric vehicles with distinguished functions and
- Tesla applies automation to the manufacturing of its electric
vehicles, e.g. using robots in production process with much
higher efficiency at Fremont plant.
- New energy product - Solar Roof has unique excellent
features which may change our way of powering our homes.
5. Tesla corporative-level Strategy

5.3. Pursuance of related

business diversification

- Through its acquisition of SolarCity, Tesla has got a wider

range of products, such as energy storage products. It is no
longer a carmaker merely.
- Different businesses may be promoted with shared
resources and help Tesla achieve more gains from synergy.
- Business diversification may also result in more
competitive advantages and larger market shares.
6. Teslas Business-level Strategy
Teslas business-level strategy is to offer end-to-end clean
energy products globally through differentiation and low-cost

6.1. Differentiation Strategy

Tesla produces electric vehicles with distinguished functions, after sale

services and support. For examples:
- Its long-range electric vehicles can Drive between 210 and 315 miles
on a single charge
- Model S and X cater to the high-end luxury segment
- The Solar Roof with unique features are very attractive to customers.
6. Teslas business-level Strategy

6.2. Low-cost Strategy

To build competitive advantage also with low-cost strategy by striving to

reduce costs for all products:

- Electric vehicles such as Model 3 which might be launched in late 2017

starting at about half the price of its current vehicles

- Solar energy products such as the Solar Roof which is being provided at
lower price and attractive to customers.
6. Teslas business-level Strategy

6.3. Other Strategies

Tesla also uses other functional strategies:

- Enlarge its business scope through acquisitions, e.g. using the factory
bought in Fremont to produce not only electric vehicles, but also batter
packs and chargers for vehicles; with acquisition of SolarCity to make more
solar energy products such as solar roofs.
- Focus on accelerating the transition of the world into sustainable and
environment protecting transportation
7. Teslas structure, control system and how it match its strategies

7.1. Organizational Structure

Tesla has an organizational structure with forward vertical integration that

increases its product differentiation & lower costs and reduces industry
- facilitating its investments in differentiation-enhancing specialized assets;
- Protecting its product quality;
- Operating its own dealership for distributing its products
- Marketing with no money on advertising
7. Teslas structure, control system and how it match its strategies

7.2. Control System

Teslas CEO Musk plays the most important role in strategic control
- Making greatest influences on other managers behaviors to achieve the
corporate goals
- Getting involved in intimately in all decisions about Teslas operation and
product design.
- Insisting on using best components and materials for products
7. Teslas structure, control system and how it match its strategies

7.3. How Tesla matches its strategies

Teslas management takes effective steps to design control system to

match the strategies:
- Setting up the standards and goals and sharing the values with employees
- Establishing the monitoring and measuring systems for performances
- Making comparison between actual performances and created targets
- Taking appropriate measures and actions when necessary to match the
8. Recommendations

8.1. Identification of Teslas

weaknesses & new targets

- Tesla has delays in the a. Increase sales of the stunning solar roofs
delivery of electric with seamlessly integrated battery
vehicles storage
- It has critical problem b. Expand the electric vehicle product line
of suffering losses or
making no profit. to address all major segments
- It has more c. Develop a self-driving capability that is
challenges such as 10X safer than manual via massive fleet
safety and insufficient learning
supercharger site d. Enable your car to make money for you
issues with electric when you arent using it
(Daniel Sparks, Jul.21, 2016)
8. Recommendations

8.2. Specific Recommendations

a. Tesla should make more efforts in getting more people to know about the
advantages of solar roof and better understand its distinguished features.
For examples, to make close and more communications and promoting
activities with the residential communities and offering brochures with
detailed information to potential customers; to make more online
advertising, with a view to increasing the sales of this kind of new product.
8. Recommendations

8.2. Specific Recommendations

b. As there are many obstacles in expanding the production line of

electric vehicle for addressing all major segments, Tesla has to take
effective measures to minimize the costs in order to offer more
competitive prices to the consumers and meanwhile to gain better
profit for the company. Meanwhile, it should enlarge the production
scale and increase the productivity to ensure timely deliveries of cars.
Moreover, it is essential to enlarge the coverage and volume of
charger-stations and connectors to better meet the customers needs.
8. Recommendations

8.2. Specific Recommendations

c. Tesla needs to focus on ensuring the self-driving vehicle with 10X

greater safety practically so as to erase the consumers worries or
anxieties and doubts. Meanwhile it should take applicable actions to
ensure the massive fleet learning outcomes both theoretically and
8. Recommendations
8.2. Specific Recommendations

d. Regarding its 4th target, the owners of cars might worry about the potential
damages to their cars while the renters or passengers have much concern of
their safety, Tesla should establish more specific, appropriate and applicable
rules and procedures to ensure the interest and safety not only for the owners
of cars but also for the passengers and also ensure both parties willingness of
participation in the project.

In a whole, it is essential for Tesla to establish more effective strategies

in achieving its future goals.
Lecture slide and textbook
Melissa A. Schilling, Tesla Motors, Case 14 in textbook
Matthew, March 23, 2017, Business Insider: Tesla's business just got much
more complicated

Daniel Sparks, Jul 21, 2016, Tesla's New Master Plan: Everything You Need
to Know About Elon Musk's Wild, Futuristic Vision