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TESLA MOTORS Robbin Verma

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TESLA MOTORS

Robbin Verma

Background• Founded in July 2003 by Martin Eberhard and Marc Tarpenning• Headquarter are in Silicon Valley, Palo Alto, California• Manufactures electric vehicles• CEO Elon Musk • Tesla designed its own advanced battery pack, high efficiency motor & control

software. • More than 100 retailer’s and R&D in more than 31 locations all over the world• More than 6000 specialist

Continued….• Partner’s Daimler AG , Mercedes-Benz , Smart Fortwo , Toyota ,

Panasonic• March 2008- Tesla begins production of Roadster. • Eventually sells 2,150 of Roadsters. • June 2008- Announce Model S • May 2010- Tesla buys former GM factory in Fremont, CA and Toyota

signs deal to cooperate in EV development • In 2012, launched supercharger network

Tesla’s MissionTesla Motors designs and sells high-performance; highly efficient electric

sports cars — with no compromises.

Tesla Motors cars combine style, acceleration, and handling with advanced technologies that make them among the quickest and the

most energy-efficient cars on the road.

Tesla Master Plan According to Elon Musk, CEO:a) Build sports car b) Use that money to build an affordable car c) Use that money to build an even more affordable car d) While doing above, also provide zero emission electric power generation options

Elon Musk also puts into action his Master plan which he already planned after setting the Vision of the company. Model by model the company’s target is to create a cheaper model than the previous model.

Strategies Used• No Stationed Tesla Dealers- only sale through their own showrooms

and by ordering on website. Moreover, the cars are marketed better as the company will be dealing directly with the customers.

• The plan intends to create more electronic vehicles, this will also create competition. This will lead for others to create power stations all around which will reduce the cost of making their own power stations by Tesla Company. The main reason behind the plan is that Elon Musk needs the electronic industry to succeed for him to be in business for a longer time.

Industry Analysis• Fully electric vehicles• Tesla- focus differentiation• Driving forces

o Fuel priceso Tax incentives and subsidieso Fuel economy standardso Environmentally conscience mindseto Technological advances

Five Forces Analysis• Competitive Pressures from Potential New Entrants-

Moderateo High capital investment for true new comerso Slow/moderate growth in demand for EVo Opening of patents – technology sharingo Traditional auto manufacturers entering market

• Competition from Substitute Products- Higho Gas vehicles more fuel efficiento Hybrids are a happy mediumo Traditional vehicles cost lesso Buyer switching costs are low

Five Forces Analysis• Supplier Bargaining Power- Moderate

o Lithium batteries more prevalent- numerous supplierso Reliance on partnerships- Tesla suppliero Backwards integration

• Buyer Bargaining Power- Low/Moderateo Demand is moderateo Low switching costs/ not a necessityo Products are differentiatedo Few sellers

Five Forces Analysis• Strength of Rivalry-

Moderateo Increasing number of competitors

• Especially existing car manufacturers

o Sharing of technology- less differentiation

o Buyer demand is moderate- slow growing

o Low buyer switching costs

P.E.S.T.E.L• Political• Economic• Social• Technological• Environmental• Legal

Value Chain• Operations

o Everything manufactured in Northern California• Innovative and automated

processo Produce approx. 83 vehicles

per dayo Easily programmed to

produce different car models

• Inbound Logisticso Most important components

manufactured in-houseo Other components are

produced/delivered by suppliers

o This minimized wait periods and improves efficiency of production

o Predominantly consumes aluminum, steel, cobalt, nickel, and copper

Value Chain• Marketing & Sales

o Tesla does not market or employ an advertising agency

o Locations are strategically located in high foot traffic and wealth districts

o Celebrity advertising also increases its popularity

• Outbound Logisticso Distributed in own stores

across 18 countrieso Purchasing is made via

online channels and showrooms

o Delivery options are also available

Value Chain• Infrastructure

o Flat/horizontal organizational structure• CEO – decision maker• Delegates authority to

lower levelo Allows for better

communication and faster decision-making, etc.

• Serviceo Locations in North America,

Europe and Asiao Many charging stations for

customer vehicleso Provide 50,000 mile

warranty policy

Value Chain• HR

o High Street Partners• Used for hiring process to

employ talented workforce and preserving culture

o Provides employees with company shares motivating managers to adopt strategies that increase the share price of organization

• Procuremento Developed good relationship

with strategic suppliers• Partnership with

Panasonic• R&D

o Provides Tesla with competitive edge

o Incredibly innovativeo Elegant product design,

superior quality and value

Tesla Financials• Leverage Ratios

2013 2014 2015-1,000,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

Total revenues

Total cost of revenues

Gross profit

Total operating expenses

Loss from operations

Net loss

2014 2015

Current Ratio

1.51 .99

Debt to Asset .83 .86

Debt to Equity

5.33 6.39

Working Capital

1M -24.7K

Tesla Financials• P/E Ratio

1/1/20

13

3/1/20

13

5/1/20

13

7/1/20

13

9/1/20

13

11/1/

2013

1/1/20

14

3/1/20

14

5/1/20

14

7/1/20

14

9/1/20

14

11/1/

2014

1/1/20

15

3/1/20

15

5/1/20

15

7/1/20

15

9/1/20

15

11/1/

2015

0

50

100

150

200

250

300Tesla Stock Price 2013-2015

Adj Close

2014 2015(94.24) (34.63)

SWOT Analysis- Internal• Strengths

o Innovation- strong R& D capabilitieso Backward & forward integrationo Best battery rangeo Awards & accoladeso Brand recognitiono Exceptional serviceo Warranty

SWOT Analysis- Internal• Weaknesses

o Vehicle costso Autocratic structureo Product line breadtho Liquidity/ financial performanceo Forward integrationo Detour frustration & range anxietyo Long battery charging times

SWOT Analysis- External• Opportunities

o Leading company in car manufacturing innovation and technology

o Take advantage of the renewable energy and environmental protection craze alongside the rapid technological developments

o Continue growth pattern to become the leading auto company providing best technologies and vehicle design at convenient prices

o Development of affordable mass market electric vehicles

SWOT Analysis- External• Threats

o Established manufacturers entering the electric car marketo Companies with greater economies of scale, o Well trusted and recognizable brand image recognitiono Companies with more experience and higher expertise in

automobile marketo The ability to manage at lower prices than Tesla for an extended

period of timeo General Motors, Toyota Motors, BMW, etc.

Recommendations• Focused differentiation strategy targeting upper-income customers• Provide high performance and innovative vehicles they started with • Continue research and development on cutting edge technology • Continue to improve and increase battery life and distance• Use Tesla technology to create the standard for future charging

system• Seek a global presence as the premium electric car manufacturer• Create a strategic alliance with Apple or Google (1+1=3)