CAPARAL. HAMAWY. MAGALIAO. NACILLA. PARAISO. REYES.BA 190 - STRATEGIC MANAGEMENT

UNIVERSITY OF THE PHILIPPINESPROF. MITA ANGELA M. DIMALANTA

2013

• 4500-PERSO COMPANY• CREATED 2 REMARKABLE CARS• POSTED ITS 1ST QUARTERLY PROFIT• REPAID ITS GOVERNMENT LOANS• LOOKED LIKE IT MIGHT SURVIVE• BENEFITED FROM ENTHUSIASM OF “ECO-WEALTHY”

HISTORY

HISTORY

• MARTIN ERBERHERD• ENGINEER LOOKING FOR HIS NEXT BIG PROJECT• SERIAL ENTREPRENEUR WHO LAUNCHED A NUMBER OF START-UPS• HAD CONCERNS FOR GLOBAL WARMING & USA’S DEPENDENCE ON THE

MIDDLE EAST FOR OIL• LOOKED FOR A SPORTS CAR THAT WAS ENVIRONMENTALLY FRIENDLY

“IT WAS CLEAR THAT PEOPLE WEREN’T BUYING A PRIUS TO SAVE MONEY ON GAS – GAS WAS SELLING CLOSE TO INFLATION – ADJUSTED ALL TIME LOWS. THEY WERE

BUYING THEM TO MAKE A STATEMENT ABOUT THE ENVIRONMENT.”

HISTORY

• ALTERNATIVE FUEL OPTIONS:• HYDROGEN FUEL CELLS• NATURAL GAS• DIESEL• ELECTRICITY

HISTORY

• AL COCCONI, FOUNDER OF AC PROPULSION & PRODUCER OF TZERO• TZERO

• COULD GO FROM 0-60 MILES/HOUR IN 4.1 SECONDS• POWERED WITH EXTREMELY HEAVY LEAD-ACID BATTERIES

• EBERHARD APPROACHED COCCONI WITH IDEA OF USING LIGHTER LITHIUM ION BATTERIES

• HE LICENSED ELECTRIC-DRIVE-TRAIN TECHNOLOGY FROM AC PROPULSION & ESTABLISHED HIS COMPANY, TESLA MOTORS

HISTORY

ELON MUSK• FOUNDED PAYPAL BUT SOLD IT TO EBAY FOR $1.5 BILLION• STARTED SPACEX• ONE OF THE INSPIRATIONS FOR TONY STARK IN IRON MAN SERIES OF

MOVIES• APPROACHED EBERHARD ABOUT BUYING TZERO BUT LATER ON

AGREED TO JUST FINANCE PLAN WITH $6.3 MILLION

HISTORY

ROADSTER• FIRST TESLA PROTOTYPE• FEATURES: 400 VOLTS OF ELECTRIC POTENTIAL, LIQUID-

COOLED LITHIUM ION BATTERIES, AND A SERIES OF SILICON TRANSISTORS• GIVE CAR ACCELERATION SO POWERFUL, DRIVER WOULD BE

PRESSED BACK AGAINST THEIR SEAT

PERSONALITY CLASHES: EBERHARD VS. MUSK

BOTH WERE TECHNICALLY SAVVY & VIGOROUSLY ADDRESSING PROBLEMS WITHIN TESLAEBERHARD: “JUST BRILLIANT, AND HE HAS THIS TENACITY THAT IS UNBELIEVABLE. . . HE IS THE GUY YOU WANT AROUND IN THOSE EARLY DAYS WHEN YOU HAVE NAYSAYERS ALL AROUND.” BUT ABRASIVE & CRITICAL

PERSONALITY CLASHES: EBERHARD VS. MUSK

AT ODDS OVER DECISIONS OF:BODY PANELS

MARKETING

Use lighter, stronger – and more expensive – carbon fiber

PERSONALITY CLASHES: EBERHARD VS. MUSK

CHASSIS

PERSONALITY CLASHES: EBERHARD VS. MUSKMUSK’S PREFERENCE PREVAILED EVERY TIMEMUSK’S INSISTENCE ON BEST MATERIALS&PARTS +EBERHARD’S INEXPERIENCE AS MANAGER OF A MAJOR FIRM = DELAYS AND RUNAWAY COSTSEBERHARD: CEO TO PRESIDENT OF TECHNOLOGY TO NOTHINGMICHAEL MARKS, TEMPORARY CEO FOCUSED ON ROADSTERALL-TIME LOW TO ALL-STAR CELEBRITY STATUSTESLA ANNOUNCED MODEL S - A HIGH PERFORMANCEALL-ELECTRIC SEDAN

OBSTACLES TO ADOPTION OF ELECTRIC

VEHICLES

PRICE

E-VEHICLES ARE MORE EXPENSIVE

TESLA’S RESPONSEA. SUPER CHARGER NETWORK

- FREE- 6 STATIONS IN THE WORLD AS OF 2013

B. GUARANTEES- FREE REPAIRS & FREE CAR REPLACEMENT WHILE

CAR IS UNDER REPAIR

LIMITED RANGE & ASSOCIATED “RANGE ANXIETY”

PEOPLE ARE CONCERNED ABOUT DRIVING TO PLACES WHERE CHARGING STATIONS ARE UNAVAILABLE

TESLA’S RESPONSEA. NOT A BIG ISSUE FOR TESLA’S CARS DUE TO ITS LONG RANGE CAPACITY

COMPETITION IN THE ELECTRIC VEHICLE

HYBRID ELECTRIC VEHICLESTOYOTA PRIUS, 2000

REQUIRE NO CHANGE IN TYPICAL CONSUMER USAGE HABITSHAVE EXTREMELY LIMITED ELECTRIC RANGE

ALL-ELECTRIC VEHICLES/PLUG-IN ELECTRIC VEHICLES

Nissan Leaf Chevy Volt

TESLA’S STRATEGY

STRATEGIES

LOOKING TO THE FUTURE

NOT OUT OF THE WOODS YET

TESLA’S SUCCESS• REVENUE OF $562 MILLION & PROFIT OF $11.2 MILLION• MODEL S EARNED CONSUMER REPORT’S HIGHEST RATING• MAY 2013: COMPANY RAISED $1 BILLION BY ISSUING NEW SHARES• PAID BACK GOVERNMENT LOAN WITH $679 MILLION CASH STILL AVAILABLE• SURVIVED INFANCY, APPEARED TO BE SOLVENT, & WAS MEETING SALES

OBJECTIVES

NOT OUT OF THE WOODS YET

INVESTMENT ANALYSTS SAY• 2013 PROFITS INCLUDE STOCK WARRANT PROFITS & ZEV CREDIT SALES

• WARRANT REVENUES WOULD NOT BE REPEATED• NO FORECAST FOR YEARLY DEMAND OF ZEV CREDITS• NO ONE KNOWS WHETHER REVENUES WERE SUSTAINABLE

• INCREASING COMPETITION • WHAT’S MARKET SIZE FOR ELECTRIC VEHICLES & WHAT PORTION OF MARKET WOULD

PAY HIGHER PRICE OF A TESLA?• POSSIBILITY OF TESLA’S STOCK PRICE TO BE AN OVERINFLATED BUBBLE

REFERENCE : HILL, C. & JONES, G. (2013). STRATEGIC MANAGEMENT: AN INTEGRATED APPROACH (11TH ED., PP. C-201-C-210). STAMFORD, CT: CENGAGE LEARNING.