TESLA

STRATEGIC ANALYSIS

Asawari Patil | Dinesh Pushpavanam | Helen Di Wu | Vineet Verma

Strategic Management | April 22, 2016

Contents
Executive Summary ............................................................................................................ 3
Industry ............................................................................................................................... 4
Past performance and 2016 Outlook ................................................................................... 5
Competitive Forces ............................................................................................................. 5
Support of Government ................................................................................................... 5
Price ................................................................................................................................. 6
Maintenance..................................................................................................................... 6
Running Costs.................................................................................................................. 6
Mileage Costs .................................................................................................................. 6
Five forces ....................................................................................................................... 7
Industry competitors ..................................................................................................... 7
New Entrants ................................................................................................................ 8
Suppliers ....................................................................................................................... 9
Substitutes..................................................................................................................... 9
Buyers ........................................................................................................................... 9
Strategy ............................................................................................................................. 10
Business Level Strategy................................................................................................. 11
Corporate Strategy ......................................................................................................... 12
Value Chain ................................................................................................................... 13
Primary Activities ....................................................................................................... 14
Support Activities ....................................................................................................... 14
Performance drivers ....................................................................................................... 15
Recommendations: ............................................................................................................ 16
Marketing Aspect: ......................................................................................................... 16
Research and development: ........................................................................................... 16
Manufacturing and production: ..................................................................................... 16
Infrastructure Development and Investments: ............................................................... 16
Corporate social responsibility: ..................................................................................... 16
Bibliography ..................................................................................................................... 18
PAGE 1

List of Figures
Figure 1 - Annual Sales of EVs globally ............................................................................ 4
Figure 2 Luxury Car sales comparison .......................................................................... 10
Figure 3 Tesla motors Revenue and Profit Historical Data ........................................ 13
Figure 4 Value Chain ..................................................................................................... 15

PAGE 2

Executive Summary
This report was commissioned to perform a strategic analysis of Tesla Motors Inc.
The methods of analysis make use of various tools like Michael Porters five forces
analysis framework, and the Value chain model. The report critically analyzes the business
and corporate level strategies and aims to connect it to the value chain of the organization.
The industries of luxury car markets and Electric Vehicle industry are also discussed and
analyzed in this report. The metrics displayed should provide the reader with a snapshot of
the industry.
Based on the analyses of Tesla Motors, several conclusions and recommendations are
drawn. These recommendations would allow the company to maintain and/or improve its
competitive advantage compared to its competitors.
Recommendations provided cover the following areas which are detailed further in the
document:

Marketing
Research and Development
Manufacturing and Production
Infrastructure development and Investments
Corporate Social Responsibility

The sources for the research of the company involve various online and offline sources that
included but are not limited to books, academic papers and websites; all of which are
referenced in the Bibliography section. All other references are maintained at the end of
each page for the perusal of the reader.
Word Count: 4800.

PAGE 3

Industry
Annual sales of EVs globally
565000

600000
500000
400000

315000

300000

213000

200000
100000

125000
50000

0
2011

2012

2013

2014

2015

Sales

In five years, global sales

of
plug-in
electric
vehicles have increased
more than ten-fold,
totaling
more
than
565,000 units in 2015.
The sales are mainly
driven by China and
Europe. Since 2011, the
cumulative global sales
in total were about
1.27 million plug-in cars
and utility vans by the
end of 2015.1

Figure 1 - Annual Sales of EVs globally

Till December 2015,

more than 425,000 plugin electric passenger cars and vans had been registered in Europe, which made Europe the
world's largest plug-in regional market.
If all segments of the plug-in electric vehicle market are
considered altogether, China is the world's leader with
444,447 new energy vehicle sold between January 2011 and
December 2015 and 90% of them were sold during the last
two years, which is 331,092 units.2

Quarter

Model S Sales

Q1-13

4901

Q2-13

5150

Q3-13

5500

California leads the US plug-in car, it has the largest

American car market, which crossed the 200,000 unit
milestone in March 2016, out of approximately 425,000
plug-in cars sold nationwide till February 2016, and it
represents almost 47% of all plug-in cars sold in the U.S.
since 2008.

Q4-13

6892

Q1-14

6457

Q2-14

7579

Q3-14

7785

Q4-14

9834

Q1-15

10030

Q2-15

11507

Q3-15

11580

Talking about Tesla Motors, it delivered 11,580 vehicles in

the July-September quarter in 2015, up from 11,507 units in
the previous quarter. Tesla delivered around 33,117 cars to
customers in the first nine months of the year 2015, which

1 Argonne National Laboratory, United States Department of Energy (2016-03-28). "Fact #918: March 28, 2016 - Global Plug-in
Light Vehicles Sales Increased By About 80% in 2015". Office of Energy Efficiency & Renewable Energy. Retrieved 2016-03-29.
2 Automotive Industry Data (AID) (2016-02-15).
AID Newsletter. Retrieved 2016-02-19.
Association Nationale pour le Dveloppement de la Mobilit Electrique - AVERE France (2016-03-24).

PAGE 4

is 52 percent increase from the same period in 2014. Tesla has a roadmap to sell 500,000
cars a year by 2020.3

Past performance and 2016 Outlook

For the year ended December 31, 2015, Teslas recognized total revenues is $4.05 billion,
an increase of $847.7 million over of $3.20 billion for the year ended December 31, 2014.
Gross margin for the same period was 22.8%, decreased from 27.6% for the year ended
December 31, 2014.
Automotive revenue during the years ending 2015, 2014, and 2013 were $3.74, $3.00, and
$1.92 billion respectively. Service and other revenue during the same period were $305.0,
$191.3, and $91.6 million respectively.
Gross profit for the year 2015, 2014, and 2013 were $923.5 million, $881.7 million and
$456.3 million. Gross margin for the years 2015, 2014, and 2013 were 22.8%, 27.6%, and
22.7%. Compared to 2014, 2015 had a lower margin as there was a shift in product and
regional mix for Tesla.
A crude oil supply slump and a downturn in demand from China have sent gasoline prices
to lows unseen since the 2009 Recession.
The lowest gasoline prices (dollar/barrel) in years are making Americans to use more
gasoline, lower fuel economy vehicles and battery electric vehicle sales. Although, sales
of popular electric and gas-electric hybrids have dropped down at high speed, wealthy
Tesla Motors loyalists continue to drive up sales.
The operating expenses for Tesla are expected to grow about 20% in 2016 as compared to
2015. Also, Tesla expects to generate positive net cash flow and achieve non-GAAP
profitability for the year 2016.4

Competitive Forces
The major competitive forces of the electric cars against internal combustion engines are
as follows:
SUPPORT OF GOVERNMENT

President Barack Obama in his 2011 State of the Union address, set the goal for the U.S.
to become the first country to have one million electric vehicles on the road by 2015. Based
on forecasts made by the U.S. Department of Energy (DoE) this goal was set , and the
Motor companies such as Fisker Karma, Fisker Nina, Ford Transit Connect, Ford Focus

http://www.ibtimes.com/tesla-model-s-only-electric-car-demand-right-now-low-us-gas-prices-batter-plug-car-2125907
4 Tesla Annual Report 2016 (http://ir.teslamotors.com/) ibtimes.com

PAGE 5

Electric, Chevrolet Volt, Nissan Leaf, Smith Newton, Tesla Roadster, Tesla Model
S and Th!nk City had set the target.5
PRICE

The most important goal for any electric vehicles is to overcome the disparity between their
development cost, production cost, and operation cost, compared to those of
equivalent internal combustion engine vehicles (ICEVs).
Till 2013, electric cars were significantly more expensive compared to
conventional internal combustion engine vehicles and hybrid electric vehicles because of
the cost of their lithium-ion battery pack. Although, now battery prices are down about 8%
per annum with production in bulk, and are expected to drop even more.6
MAINTENANCE

Generally, the electric cars have batteries which are quite expensive. In case, the battery
becomes defective, those expensive batteries are needed to be replaced. However, the life
of the batteries can be very long. Beside battery replacement, the maintenance of the
electric cars are low, specially, if the cars are using current lithium based designs. 7
RUNNING COSTS

According to a study by US department of Energy, cost of per mile for EVs is much lower
than the traditional ICEVs.
The cost of charging the battery depends on the price paid per kWh of electricity which
depends on location. As of 2012, a Nissan Leaf driving 500 miles per week is estimated to
cost approximately US$600 per year in charging costs in Illinois, as compared to cars
using gasoline which costs around US$2,300 per year in fuel.8
MILEAGE COSTS

The mileage-related cost of an electric vehicle can be attributed mostly related to costs of
charging the battery pack, and its replacement with its age, since the gasoline cars have
hundreds of its parts involved in internal combustion engines compared to an electric
vehicle which has just five moving parts in the motor. Hence, the cost on battery is required
to be calculated to calculate the cost per kilometer of an electric vehicle. The capacity of
the battery is also dependent on the usage of the car. Not to forget, even a battery with no
life has market value as it can be recycled and used as a spare battery.

5 U.S. Department of Energy (February 2011). "One Million Electric Vehicles By 2015 - February 2011 Status Report" (PDF). Office
of Energy Efficiency and Renewable Energy (EERE). Retrieved2013-02-27.
6 Siddiq Khan and Martin Kushler (June 2013). "Plug-in Electric Vehicles: Challenges and Opportunities" (PDF). American Council
for an Energy-Efficient Economy.
7 http://cleantechnica.com/2013/09/27/tesla-model-s-almost-maintenance-free/
http://www.earth911.com/eco-tech/electric-car-home-charging-guide/
8 U. S. Environmental Protection Agency and U.S. Department of Energy (2015-12-04). "Fueleconomy.gov's Top Fuel Sippers (EPA
Ratings, All Years)". fueleconomy.gov.

PAGE 6

The Tesla Roadster's very large battery pack is expected to last seven years with typical
driving and costs US$12,000 when pre-purchased today. The battery pack of Tesla
Roadster costs around US $ 12,000 currently and lasts for approximately seven years. For
example, driving Tesla Roadster for 40 miles per day for seven years
(365days*7years*40miles = 102,200 miles) leads to a battery consumption cost of US
$ 0.1174 per mile.9
FIVE FORCES

The five forces from Michael Porter give us a good insight about the positioning of the
corporation or business organization in a particular industry.
Taking a look at these five forces for Tesla:
Industry competitors

The new generation of electric vehicles powered by alternate drive trains have emerged in
the past few years. These are not only electrically powered but also advanced gas electric
hybrids; plug-in hybrids. This variation in technology can be one the major segregation.
Toyota Prius in gas hybrid and the Chevrolet Volt for plug-in hybrids are good successful
examples.10 The following table lists companies that are involved in this technology:

COMPANY

BEV

MODELS(TIMELINE)

COMPETITION ANALYSIS SUMMARY

Audi

Yes

e-tron(2012), A1eTron(2012)

Limited, small build production output. Price:

$123,000. Range: 150 miles. Direct competition
for Tesla Roadster.

Yes

Mini-E(N/D)*,Active-E
(N/D),
Megacity (2013)

Only 500 Mini-Es is slated for the production.

Active-E scheduled for mass production. Price
$500/mo. Range: 100 miles. Direct competition
for Tesla Model S but Tesla enjoys technology
and range advantages.

E6 (2012), S6DM (N/A)

Production output objectives unknown.

Price:$35,000. Range: 200 miles. Significant
direct competition for Teslas planned Blue Star
(mass market) product line.

BMW

BYD

Yes

CODA

Yes

CODA Sedan (2012)

To produce 14,000 cars within 12 months of

debut. Price $40,000. Range: 120 miles.
Significant direct competition for Teslas
planned Blue Star (mass market) product line.

Chrysler

Yes

Dodge Circuit (2011)

Priced in the same range as Teslas Roadster.

Range: 200 miles. Low production numbers

United States Environmental Protection Agency and U.S. Department of Energy (2014-07-04). "Compare Side-by-Side: 2014 BMW
i3 BEV & 2014 BMW i3 REx". fueleconomy.gov. Retrieved2014-07-26.
10

Myles Edwin Mangram, The globalization of Tesla Motors: a strategic marketing plan analysis, Journal
of Strategic Marketing, Vol. 20, No. 4, July 2012, 289312

PAGE 7

anticipated Direct competition for Roadster.

Tesla will be able to compete on technology
advantages and range.

Daimler

Fisker

Yes

No

Smart EV (2012) Mercedes A

class E-Cell

Smart EV production schedule 1500 global

sales in 2011. Price: $36,000. Range 65 miles.
Mercedes A-Class in serial production. Price
TBA. Range: 125 miles. Both models are likely
significant competition for Teslas planned Blue
Star (mass market) line.

Karma (2011), Nina (2012)

Plug-In Hybrid. To produce 15000 Karmas

annually. Company focused on producing sports
luxury plug-in hybrid vehicles. Presents
substitute competition to Tesla Roadster models.

Detroit Electric

Yes

e63 (2011) e46 (2011)

To produce 270,000 + vehicles by 2012. Price

$25,000. Range: 110-200 miles. Significant
Direct competition for Teslas planned Blue Star
(mass market) product line.

Aptera

Yes

2e

Price $30,000. Range: 120 miles. Manufacturer

currently experiencing serious solvency issues.
Likely bankruptcy prospect.

Focus BEV (2011)

To produce 5,000-10,000 BEVs annually. No

price information available. Range: 100 miles.
Significant direct competition for Teslas
planned Model X.

Ford

Yes

Force rating: Medium, as Tesla already has alliances with major automotive industry
brands and has a high technological factor.
New Entrants

This industry requires huge initial capital investment in terms of Research and
Development, Manufacturing facilities, human resource etc. It is very difficult for a new
entrant to gather and invest such capital. Hence the Greenfield entry is very challenging.
Another possibility for a new entrant would be through mergers which are again quite
challenging. The revenue from other companies owned by Elon Musk provided the huge
capital required for Tesla Motors. This wouldnt be possible for small companies willing
to enter this segment.
Force Rating: Medium, completely new company being established chances are pretty
low, but the existing automotive industry giants like BMW, Audi etc. are exploring this
segment and hence can be competitive as these companies have longer experience in car
manufacturing sector.

PAGE 8

Suppliers

Tesla ensures the highest safety standards for its cars and has high safety ratings. The
suppliers are mainly evaluated by their ability to provide high quality parts. Hence it
becomes expensive as most of the time these suppliers are mainly concentrated in the
economically strong countries. It also makes shipping expensive. The cost of production
too fluctuates according to the world economies .The threat to suppliers would be that some
of the major components are manufactured in-house like drive trains, engines etc. Some of
the major suppliers for Tesla are Panasonic for batteries. Hence the bargaining power of
the suppliers is low.11
Force Rating: Low, Tesla is planning to increase its in-house production for most of its
parts to cope up with quality requirements and hence suppliers power doesnt play a major
role.
Substitutes

Tesla also has a great competitive advantage as it being the pioneer can very well integrate
its power train technology with its vehicle design and software to produce a high
performing product. But the technological variances like the hybrid, the conventional
Internal Combustion (IC) engines or the lug in cars make the situation more competitive.
The other factor of considering Tesla as a mode of locomotion is also critical to access as
there are other cheaper and more environmental friendly options available to the customer
segments like buses, trains, bicycles etc.
Force Rating: High, the technology is disruptive technology as cracking the tradition IC
engine market is difficult and the network of other modes of locomotion is well established.
Buyers

The main customer segment targeted by Tesla is eco-friendly, technology loving people.
They are focusing on B2B and B2C markets; An Example of B2B is Tesla and Uber. The
price sensitivity of the customer segment is also low as these people are generally who are
willing to invest in the luxury cars. Tesla is the pioneer in the high performance electric
car segment and hence in terms of technology, it is incomparable in this aspect. Being an
early mover has also gained the attention of the customers.12
Force Rating: High, the customer segment has greater capacity to spend and hence might
move to established brands like BMW and Audi once the option is available.

11

Edward Peter Stringham Jennifer Kelly Miller J.R. Clark, CALIFORNIA MANAGEMENT REVIEW
VOL. 57, NO. 4 SUMMER 2015 CMR.BERKELEY.EDU
12
Foundations of Business Strategy Strategic Analysis Report: Tesla Motors Inc.

PAGE 9

Strategy13
Teslas primary strategy is to be a market disruptor in the automotive industry. It follows
a top down disruptive strategy; by which it launched its most expensive product in very
few numbers first and used the profits to develop the next generation of cheaper cars in
larger volume to appeal to a larger customer segment. This is further discussed in the
corporate strategy section.

Luxury Car Sales Comparison

30000

26566

25000
20000

18480

15000
10000
5000
0
2014

2015

Mercedes Benz S-Class

Tesla Model S

BMW 7 Series

BMW 6 Series

Lexus LS

Audi A7

Mercedes Benz CLS Class

Audi A8

Porsche Panamera

Jaguar XJ

Figure 2 Luxury Car sales comparison

This strategy of tesla has been on track as expected and the company is now launching its
fourth generation of cars; the Model 3. The success of this strategy can be seen by the
number of cars that were sold in each of its generation.
The above infographic shows how Tesla has seen success in the number of its cars sold
from the year 2014 to 2015. Every other luxury car maker has seen a drop in the number
of cars sold. This could partially be true due to Tesla gaining on their market shares.
The main reason Tesla has been able to increase its sales while its competitors are losing
it, is the fact that it is able to embed technology deeper into the car than its competitors.
The digital revolution has made the modern consumer more affinitive to technology and
one of the industries that was unable to keep pace with this technological revolution is the
13

http://cleantechnica.com/2016/01/15/1-large-luxury-car-in-us-tesla-model-s-2015-sales-comparison/

PAGE 10

car industry. Since most luxury car makers are well established and large organizations,
they lack the innovative and entrepreneurial spirit to develop newer technologies without
the corporate sluggishness slowing down the entire process. Since Tesla has minimal
bureaucracy, it is more agile and able to innovate quicker than its well established
competitors.
Most of the customers that purchase a Tesla car, do so because of the technological factor
of the vehicle. The environmental friendliness and cheaper refueling (recharging) are only
minor added bonuses. The customers are generally early adopters of technology who are
comfortable with experimenting with newer technologies. This also allows them to
distinguish themselves from the mass market. These customers are the primary revenue
drivers for Tesla.
Another important advantage of Tesla would be the fact that the entire car is controlled
with the use of software. This allows the company to keep updating its vehicles with newer
features for the existing hardware. This is a disruptive concept that no other car maker has
ventured into. The customer is able to enjoy the newer features of the next generation
without having to purchase an entirely new car.
BUSINESS LEVEL STRATEGY

The primary business level strategy for Tesla is a focused differentiation strategy, targeted
at middle and upper income customers. It is currently handicapped in one aspect compared
to its competitors; lack of traditional gas engine. This is one of the Unique Value
Propositions that Tesla has to offer to its customers. However, this also limits the customers
from being able to refuel their vehicles at any of the extensive network of gas stations. This
forces Tesla to develop its own network of Super-charger network across the countries
that it operates in.
Although the consumers can recharge their cars at home, to make Tesla truly compete
against the traditional car industry, it would need to extend the range currently available.
Tesla tackles this problem with two solutions. Firstly with its increasingly large number of
super charging stations enabling its customers to travel longer distances without worrying
too much about the recharging. Providing this service free of cost attracts more customers.
Secondly, Tesla motors is continually working on improving its battery technology. By
increasing the capacity of batteries included in each generation of the vehicle, the reliance
on recharging of the vehicle is reduced considerably compared to older generations.
Another important aspect to consider is the entire industry of electric vehicles. Since this
is disruptive to the traditional car industry, there hasnt been much support for these
ventures. To address this issue; Tesla motors has open sourced several of its patents for

PAGE 11

other companies to utilize.14 This will allow the entire industry to mature and eventually
overtake the traditional car market.
CORPORATE STRATEGY

Traditionally disruptive technologies start from the bottom, and gradually increase the user
base to a point where the technology can no longer be ignored and becomes a main stream
product. Alternatively, Tesla Motors had selected a major product viz. an electric car and
aims to bring it to the mass market as quickly as possible.
This strategy can be better explained by analyzing by what the companys chairman calls
his Master Plan. This plan consists of the five following steps for the company to
achieve15:

Build sports car

Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero emission electric power generation options
Don't tell anyone.

Tesla motors aims to bring in the disruptive technology of Electric Vehicles to the mass
market. The above statements conform closely to what Tesla has been doing in the past
few years. It released the very first sports car, the Tesla Roadster, back in 200816 for a base
price of $109,000. The Roadster was engineered to compete head to head with high end
sports cars at the time, and it outperformed many, rightly so.
The second phase of Musks plan involved building of a relatively cheaper version; the
Model S. The deliveries of the Model S began in June of 2012. It currently has a retail base
price of $80,000.
The three part plan needed to be extended into four categories due to engineering and
economic challenges faced by Tesla Motors. This led to the announcements of two new
models; the Model X and the Model 3 on February 2013 and March 2016 respectively.
Being a relatively smaller company with limited funds; this strategy allowed Tesla Motors
to strengthen up its economic stand point and thereby allow it to achieve an organic growth.
While this may be true per say in terms of the revenue generated, the company has actually
been making losses year over year as observed in the following illustration.

14

https://www.teslamotors.com/blog/all-our-patent-are-belong-you
https://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
16
https://en.wikipedia.org/wiki/Tesla_Roadster
15

PAGE 12

Tesla Motors Annual Reports

5000

Million USD

4000
3000
2000

1000
0
-1000
-2000
Revenue
Net Income

2012
413.26
-396.21

2013
2013.5
-74.01

2014
3198.36
-294.04

2015
4046.03
-888.66

Figure 3 Tesla motors Revenue and Profit Historical Data17

Any organization reporting such losses would lose the support of its investors and the
company would eventually file for bankruptcy. However, being a younger company and
having the entrepreneurial flexibility has allowed Tesla to take risks in the short term which
would allow it to be profitable in the long term. A clear definition of the future of the
company and the vision for the organization has allowed Elon Musk to appease the
investors in the short run. He had the following message in a letter to the shareholders:
"Simply put, in a choice between a great product or hitting quarterly numbers, we will take
the former. To build long-term value, our first priority always has been, and still is, to
deliver great cars.
VALUE CHAIN18

Tesla has a high degree of vertical integration which is quite uncommon in the automotive
industry. Most car manufacturers focus engine manufacturing and assembly of the cars.
Tesla on the other hand, while it has several suppliers, attempts to build the entire car from
the bottom up.

17
18

Tesla Motors Inc. Financial Reports

http://www.academia.edu/7563935/tesla_motors_startegic_analysis

PAGE 13

Primary Activities

Inbound Logistics. The integral components of the car are manufactured by Tesla inhouse.19 Most of the other components are sourced from several suppliers. This system
improves the efficiency of the entire process.
Operations. The primary market for Tesla was the United States. By producing the cars in
the United States it reduces the cost of the finished car. All of Teslas cars are manufactured
in its production plant in California20. High levels of automation allows the labor costs to
be minimized. The robots can also be easily reprogrammed to create different models
unlike human labor which would require training, thus making this process even more
efficient and cost effective.
Outbound Logistics. Tesla motors sells its cars through its own stores located in 18
countries. Most of the reservations are made online. Forward vertical integration in this
manner allows Tesla to remove the car dealerships which would further reduce the cost of
its products.
Marketing and Sales. Tesla has a rather modern method of advertising. It does not employ
any traditional marketing. The Tesla owned stores attract a lot of foot traffic which allows
the company to educate people of the need to own zero emission vehicles. Several
celebrities owning Tesla cars also provide a mode of advertisement for Tesla.
Service. The USP for Tesla in terms of service is its presence of Super-charging network
which provides free recharging of its vehicles. No other car manufacturer currently offers
free refueling of their products. Tesla is also working on expanding its service centers to
better serve its customers.
Support Activities

Firm Infrastructure. Tesla being a young organization benefits by being flexible in its
organization structure. Elon Musk oversees most of the operations of the company and
delegates authority to the managers. This makes the organizational structure quite
horizontal21 and provides faster communication and quickens the decision making process.
Human Resource Management. Having clearly defined goals for the future of the company,
Tesla attracts a large number of highly talented individuals. Candidates aspire to be a part
of a company that is attempting to affect the world in a positive way.

19

http://www.supplychainbrain.com/content/blogs/think-tank/blog/article/font-size2tesla-motors-a-tale-ofbeauty-and-painfont/
20
http://www.teslamotors.com/about
21
Tesla Motors, 2014

PAGE 14

Figure 4 Value Chain

Technology Development. Attracting these highly skilled individuals allows Tesla to be a
pioneer in technology. Its Research & Development forms the backbone of the company
thereby giving it an advantage over its competitors. Development of newer technologies is
integral to the company to keep up its disruptive technology and stay ahead of the
competition. Tesla places high importance on its R&D and a great value is added to this
process by the personal involvement of Musk to modify and improve Teslas products.
Procurement. Although Tesla has in-house production of most of its key components, it
has several strategic partners to aid in its supply. The batteries used in the production of its
cars are provided by Panasonic.
PERFORMANCE DRIVERS

Tesla was founded by Elon Musk, who has considerable experience in both, the technical
aspect of the business as well as the business perspective. He is the founder of SpaceX,
SolarCity, PayPal, and Hyperloop. His experience with running successful businesses
makes him the most integral resource for Tesla. His personal involvement with the design
and improvement of his products is indispensable to the organization.
Teslas strategic partnership with Toyota which is also a major investor is also a key
resource, to increase its capital. It also has partnerships with other major organizations like
Panasonic, on which it relies for the procurement of the batteries for its cars.

PAGE 15

Recommendations
MARKETING ASPECT

The major goal of Tesla in the marketing field would be to generate demand for its cars
and give leads to its sales teams, generate brand awareness using the advertising media and
social media where they are absent and manage the corporate reputation. They should also
try to keep their existing customer base happy as it would create customer loyalty in the
end and also let customer feedback be a part of their innovation process.22
RESEARCH AND DEVELOPMENT:

Tesla should keep innovating their products at a regular basis. With the competition being
high the perfection in designs and innovations bring about the product and company
differentiation.23The Tesla Model S has zero emissions. Disruptive innovations like the
Auto-pilot feature is a marketing campaign in itself and Tesla would need to continue
innovating to maintain its competitive edge.
MANUFACTURING AND PRODUCTION

Some capital investments for Tesla come from the money customers invest in the upcoming
models. But the problem is the amount of customers investing and the promise to
manufacture huge amount of cars can be risky. Tesla should try to forecast their
manufacturing strategies well in advance to avoid the problem of not meeting the customer
deliveries after the upfront payments. Forecasting would be of immense help to Tesla.
INFRASTRUCTURE DEVELOPMENT AND INVESTMENTS

The major investment other than the manufacturing facilities is the charging and serving
stations that they need to offer. The Model S has a range of 500 miles in a single charge
and hence it is really important to have a good network of charging and to expand their
super-charger network across all geographies of operation. They can also take some help
from the Government for the same. The infrastructure should be globally expanding. For
example in Norway they people have some government subsidy while buying electric cars.
This can boost sales.24
CORPORATE SOCIAL RESPONSIBILITY

They should try to invest money in educating people about the advantages of using electric
cars and should advertise their zero emission concepts for the same. They should arrange

22

Myles Edwin Mangram, The globalization of Tesla Motors: a strategic marketing plan analysis, Journal
of Strategic Marketing, Vol. 20, No. 4, July 2012, 289312
23
Kotler & Keller, 2009, pp. 325326
24
http://europe.autonews.com/article/20150512/ANE/150519968/norway-reaffirms-electric-car-subsidiesafter-boom

PAGE 16

environmental campaigns that would also earn good will for the company. Since their core
manufacturing process or their products are not harmful to the environment, it serves to be
of a good source of reputation for the company. Tesla would need to maintain and improve
this reputation in all means possible.

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