Competitive Analysis of Tesla
Motors
Outline
1. Introduction
2. Case for the Electric Car
Outline
3. Internal Rivalry
4. Barriers to entry
5. Substitutes and complements
6. Supplier Power
7. Buyer Power
8. Strategy
Tesla Motors
Tesla Motors
• California based start-up company
• Developed a high performance electric sports car
• Initial funding ($60m) provided by PayPal, eBay
and Google Founders
• Car does 0-60 mph in about 4 seconds
• Car can travel 250 miles between charges
• First 100 vehicles have been sold at the asking
price of $100k
Industry FactsIndustry
Facts
• Transportation accounts for 63% of Oil Demand
Industry Facts
Industry Facts
Industry
Facts
Industry Facts
• US Automobile Industry represents 5% of Private
sector GDP
• 76% of the market is made up of Ford, GM and
Chrysler
• 18% of sales are from Japanese car makers
• 6.6m Americans are directly or indirectly
employed in the automotive industry.
• Hybrid sales represented 1.2% of the market in
2005, 1.6% in 2006 (est).
• Forecasts estimate 5% of car sales will be hybrids
by 2013
Market
Definition
Case for the Electric Car
• Environmental friendliness and low
emissions
• High performance
• Improved battery technologies and driving
range
• Electric cars are more energy efficient than
gasoline cars.
Efficiency vs. Performance
Tesla Motors
Internal
Rivalry
Internal Rivalry
A green vehicle:
• Reduces consumption of petroleum
• Uses renewable energy sources
• Has Low emissions
• Is Fuel efficient
Within the “green vehicle” market there are four types:
• Electric Vehicles
• Flexible-Fuel Vehicles
• Hydrogen Vehicles
• Hybrid Vehicles
Internal
Rivalry
GM EV1 – Early Electric
Internal
Rivalry
Honda Insight – Early Hybrid
Internal
Rivalry
Toyota Prius - Hybrid
Internal
Rivalry
Tesla Roadster - Electric
Internal
Rivalry
Venturi Fetish - Electric
Barriers to Entry
• Economies of Scale
• Regulation Issues
•
Entry
Technological Innovations
• Brand Loyalty
• Infrastructure
Substitutes
Substitutes
• Hybrids
• Flex Fuel
• Hydrogen
• Diesel
• Compressed Natural Gas
• Mass Transportation
Energy
Energy Efficiency
Efficiency
Energy
Efficiency
Energy Efficiency
Complements
Complements
• Government tax breaks
• Utility incentive programs
• Free Parking at Airports
• Single Occupancy use of carpool lanes
• No parking meter fees
• 50% discount by California utilities for
changing electric cars
Supplier Power
Supplier Power
• Lotus main outsourcing partner
• Lotus is providing chassis, body and building Tesla
Roadster at Lotus factory in England
• AC Propulsion drive train
• Lithium Ion battery
• Flexibility to adopt new technologies
Buyer Power
Buyer Power
• Ability of buyer to extract profits from seller
• Green market is emerging
• Buyer power is limited due to lack of
competition
Buyer Power
Buyer Power
Implementation Phase
Vehicle Technology Market
Penetration
Major
Total Time
Competiti
across new
Penetration
for impact
ve vehicle
vehicle
production
Turbocharged
5 years
10 years
10 years
20 years
5 years
15 years
10-15 years
30 years
Gasoline Hybrid
5 years
20 years
10-15 years
35 years
Hydrogen Cell
15 years
25 years
20 years
55 years
Gasoline Engines
Low Emission
Diesel
Hybrid
Conclusion
Conclusion
• Short to medium term strategy
• Sell 100 Roadsters
• Create recognizable product
• Self funding of future expansion plans
• Change opinion of electric vehicles
Conclusion
Conclusion
• Long term strategy
• Focus on brand recognition
• Cost optimization
• Compete in mass market
• Build infrastructure
Conclusion
Martin Eberhard, CEO
“There have been tons and tons of companies, for the
last 40 years that have tried to make little commuter
electric cars. The trouble is that, for the most part, it
requires the buyer of such a car to change his or
her nature. You’re buying a car that is not as good
as an equivalent gas car at all—slower, uglier, with
not as much range—and they’re trying to compete
essentially on price, where they can’t win. None of
those cars were built for people who really like to
drive. I get the feeling they’re for people who don’t
really think you should be driving, but think if you do
have to drive, it should be an electric car. I think if
you build a car for people as they are, not requiring
them to change their nature, it’s much more likely
for you to succeed. And I think our investors agree.”