TESLA, Inc.

International Business Strategies

Presented By : KenilKumar I. Donda

MBA Sem-4

Presented To : Dr. Rajesh Bhatt

Department Of Business Administration
MKBU
 • Introducing Tesla
• Mission
• Reasons for Choosing Tesla
• International Strategies Tesla
Employed in the Foreign Market
Flow of Presentation
• Problems Tesla Should Solve in
the Foreign Market
• Factors of Tesla’s Success in the
Foreign Market
• Summary
• Conclusion
 • Tesla, Inc. (formerly known as
Tesla Motors Inc.) is a US-based
automobile company that
designs, manufactures, and sells
electric cars and electric vehicle
powertrain components, with a
focus on energy innovation.
Introducing Tesla • Although Tesla was initially co-
founded by Martin Eberhard and
Marc Tarpenning in 2003, it also
considers JB Straubel, Ian Wright,
and Elon Musk as its co-founders.
• Its current CEO is Elon Musk—
who owns 22.25% stake in the
company.
Introducing Tesla
(Mission)

Tesla’s mission is to

accelerate the world’s

transition to sustainable

energy.
 • Tesla currently has about 272 stores
worldwide, 164 of which are in 26
different countries outside the US, with
Germany having the highest number
(27) of its foreign stores.
Introducing Tesla
• Tesla’s first expansion moves into the
foreign market were its opening of a
showroom in London on 25 June 2009
and a store in Munich in September
2009.
• Tesla’s core competencies are
powertrain and vehicle
engineering.
• Its basic pricing strategy is price
skimming: it initially entered the
automotive market with an expensive,
high-end product, the Tesla Roadster,
targeted at wealthy customers. With
profits generated from the sales of the
Roadster, it could finance the Introducing Tesla
production of a less expensive car
model, the Tesla Model S. Profits
obtained from the sales of the Model
S, in turn, helped finance the
production of an even cheaper car
model targeted at a larger and less
affluent market, the Tesla Model X.
Introducing Tesla (Car Models)

The Tesla Roadster:

• The first fully electric car in the
world and the first production
automobile to use lithium-ion
battery cells.
Introducing Tesla (Car Models)

The Tesla Model S:

•An electric luxury sedan which ranks as the
world’s all-time second best-selling plug-in
electric car as of December 2016.

•Range: 479.6 to 613.2 km battery-only

•Acceleration 0-62 mph: 2.7 seconds

•Max speed: 139.8 to 155.3 mph

•Battery charge time: 1.75h at 440V

 Introducing Tesla (Car
Models)

The Tesla Model X:

•A full-size crossover SUV first
delivered to the public in September
2015.
•Acceleration 0-62 mph: 3.1 to 5.2
seconds
•Range: 416.8 to 540.7 km battery-
only
•Max speed: 139.8 to 155.3 mph
Introducing Tesla (Car
Models)

The Tesla Model 3:

•Unveiled in March 2016

•Its production was started

from end 2017
Reasons for Choosing Tesla
“What are the problems that are most likely to affect the future of the
world or the future of humanity? Sustainable energy problem is the
biggest problem that we have to solve this century” (Elon Musk).

• The significant role Tesla plays in transitioning the world to sustainable energy:

14% of the global greenhouse gas emissions in 2010 and 26% of the total US
greenhouse gas emissions in 2014 originated from the transport sector (IPCC
2014, 8; United States Environmental Protection Agency 2017) .
 • Tesla’s dominance in the electric
car sector:

Reasons for As of December 2016, Tesla had sold

Choosing Tesla
over 185,000 electric cars worldwide,
making it the second largest global pure
electric car manufacturer after the
Renault-Nissan Alliance.
 International Strategies Tesla Employed in
the Foreign Market
• Tesla’s international-level strategy is the transnational strategy

Tesla’s international strategies are similar to those it employs in the US

• Direct Selling:
Tesla sells its cars directly to customers through its stores and galleries or
through the Tesla website
• Certified Pre-Owned (CPO) Program:
Tesla uses a buyback program called Certified Pre-Owned (CPO) in countries
such as Germany, France, Sweden, Norway, and Canada.
 • Strategic Positioning of Stores and
Galleries:
Tesla deliberately positions its stores
and galleries in high foot traffic, high
visibility retail venues, like malls and
shopping streets that people regularly
International Strategies visit in a relatively open-minded buying
Tesla Employed in the mood (Musk 2012).
Foreign Market • Local Responsiveness:
Made modifications to the Tesla Model
S in China, including an ‘executive rear
seat’ option, which costs $2000 over the
standard model and aims to make the
rear seat experience more comfortable
(O’Hara 2015).
International Strategies
Tesla Employed in the
Foreign Market

• Related Diversification:

Tesla’s collaboration with Toyota,

Daimler AG, and Panasonic
Problems Tesla Should Solve in the Foreign
Market
• High Prices and Threat of Substitutes:
As a comparison, Europeans paid an average of US$30,700 for new fuel-using
vehicles bought in H1-16 (Munoz 2016), but a Tesla Model X was priced at
US$80,000 at that time.

Tesla has not been able to establish stores in any underdeveloped countries, where
it would have very few customers.
• Lack of Acquisitions and Joint Ventures in the Foreign Market:
Tesla currently has no main foreign acquisitions or joint ventures
Problems Tesla Should Solve in the Foreign
Market
• An Insufficient Number of Stores and a Lack of Superchargers:

With only about 164 stores outside the US, Tesla is far behind its main
competitors such as Ford, which as of the end of 2015 already had about 8733
Ford and Lincoln dealerships outside the US (Ford 2016).
Factors of Tesla’s Success in the Foreign
Market
• First-Mover Advantage
and Weak Competition:
First company to offer a fully
electric sports car—the Tesla
Roadster.

Fewer number of electric

carmakers as compared to the
number of fuel-using car
manufacturers
Factors of Tesla’s Success in the Foreign Market

• Support by Governments for Environmentally Friendly Vehicles:

For example, in countries like Malaysia and Hong Kong, zero-emissions electric
vehicles like those offered by Tesla are fully tax exempted.

The Singaporean failure case.

 • Focused Differentiation, Low
Bargaining Power of Buyers,
and Inelastic Demand:
Tesla’s generic business strategy is
Factors of Tesla’s focused differentiation
Success in the
Foreign Market Tesla cars are a luxury good

• Direct Selling:
Creates a closer relationship with
its customers
 Summary

• Tesla is a US-based automobile company that was founded by a group of

innovative Silicon-Valley engineers in 2003.
• Its mission is to accelerate the world’s transition to sustainable energy.
• Its objective is to manufacture affordable zero-emission electric cars.
• It delivered the world’s first fully electric car model, the Tesla Roadster, in
February 2008.
• In addition to the Roadster, Tesla has produced two other fully electric car models
(the Tesla Model S and Model X) and unveiled a fourth model, the Tesla Model 3.
• Tesla’s first expansion moves into the foreign market were its opening of a
showroom in London on 25 June 2009 and a store in Munich in September 2009.
 Summary

Tesla uses similar strategies both in the US and abroad

• Its corporate-level strategy is related diversification

• Its business-level strategy is focused differentiation, and

• Its international business strategy is the transnational strategy.

 Summary
Factors of Tesla’s success in the foreign market include

• the existence of a weak competition in the electric car sector and its
first-mover advantage

• its unique strategies of focused differentiation and direct selling, and

• the support it receives from governments in the form of grants and tax
breaks through programs encouraging green technology
 Summary

Problems Tesla should solve in the foreign market include

• its lack of acquisitions and joint ventures in the foreign market

• the high prices of its car models

• its limited number of stores compared to that of its competitors, and

• its insufficient number of superchargers

 • Tesla is in the right direction, and to maintain its
dominant position in the electric vehicle sector,
it should continue with its direct-selling strategy.
• On the other hand, it must establish more
factories, stores, and galleries worldwide, enter
into more alliances and joint ventures with and
acquire local firms in the foreign market.
Conclusion • Tesla should continue with the focused-
differentiation strategy in developed countries,
but should use a focused-cost-leadership
strategy to enter underdeveloped countries since
potential customers in third-world nations have
relatively low incomes compared to customers
in developed countries.
 Do you have any
QUESTIONS questions?
Thank
you!
References
• Burns, Matt, Greg Kumparak, and Anna Escher. 2015. “A Brief History of Tesla.” TechCrunch, July 28, 2015.
https://techcrunch.com/gallery/a-brief-history-of-tesla/.
• Ford. n.d. “Working with Ford – Dealers.” Accessed April 08, 2017.
http://corporate.ford.com/microsites/sustainability-report-2015-16/people-dealers.html.
• IPCC, 2014: Summary for Policymakers. In: Climate Change 2014: Mitigation of Climate Change.
• Munoz, Felipe. 2016. “Europeans paid an average of €27,500 for the new cars bought in H1-16.” JATO Dynamics. Last
modified September 12, 2016. http://www.jato.com/europeans-payed-average-e27500-new-cars-bought-h1-16/.
• Musk, Elon. 2012. “The Tesla Approach to Distributing and Servicing Cars.” Tesla, Inc. Last modified October 22, 2012.
https://www.tesla.com/blog/tesla-approach-distributing-and-servicing-cars?redirect=no.
• O’Hara, Mark. 2015. “What is Tesla Doing to put Things Right in China?” Market Realist, Inc. Last modified August 31,
2015. http://marketrealist.com/2015/08/tesla-put-things-right-china/.
• Tesla. n.d. “About Tesla.” Accessed March 28, 2017. https://www.tesla.com/about?redirect=no.
• Tesla. n.d. “Careers: Investors.” Accessed March 28, 2017. http://ir.tesla.com/.
• Tesla. n.d. “Find Us.” Accessed March 28, 2017. https://www.tesla.com/findus/list.