Improvements for Telsa Motors’ Marketing Campaigns
By
Chao Yang
The Ohio State University
539 Stinchcomb Dr
Apt 7
Columbus, Ohio 43202
(614) 800-4999
yang.717@osu.edu
Prepared for
Tesla Motors
Abstract: Tesla’s technological developments and innovations did not
transfer to pronounced sales performance due to ineffective marketing
campaign. This proposal summarizes Telsa’s strength and weaknesses in
terms of capabilities and resources in the BEV industry. A program is
proposed to enhance Tesla’s marketing and infrastructure building
strategies as well as their products’ reliability. The program contains four
parts:(1) Develop new models targeting at larger market with prices below
$30,000; (2)Expand its BEV infrastructure network quickly; (3)Monitor
each production step carefully, improve the efficiency of manufacturing
processes and train employees continuously; (4)Promote public education
campaigns and car sharing. My enthusiasm and relevant research in the
battery electric vehicle industry, along with my experience in
accomplishing complex projects qualify me for this particular proposal.
With the new strategies being proposed, Tesla would be able to reinforce
the importance of EV technology and bring their zero emission BEVs to the
main stream.
February 25th, 2014
Improvements for Telsa’s Marketing Campaigns
Yang
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Introduction
Statement of Problem
The electric vehicle (EV) is one of the few realistic solutions to the transportation pollution because of its
lower emissions compared with internal combustion engine vehicle (ICV). The electricity EVs consume
could be generated from a wide range of sources, including fossil fuels, nuclear power, solar power, and
wind power. Plug-in electric vehicle (PEV) is one promising subcategory of EV family, which includes
battery electric vehicles (BEV) and plug-in hybrid vehicle (PEHV). [1]According to Global EV Outlook,
global EV stock is 180,000(through end of 2012) which represent 2% of total passenger cars. During
2012, sales of pure electric cars in United States contributed 26% market share. [2]It is predicted that
the global plug-in electric vehicle (PEV) industry is poised to grow by 86% which would bring the global
total of PEVs on the road to more than 700,000 by the end of 2014. [3] Tesla is a Silicon Valley-based
company dedicates to design, manufacture and market BEVs. The group pegged the PEV’s market share
at 8.4 % and achieved steady-state production run rate of 20,000 vehicles per year in 2012.By the end of
2013, Telsa motors achieved around 20% market share in the PEV market. This capped a year in which
Tesla Motors delivered 22,477 vehicles, resulting in over $2 billion in sales. [4]
Figure1: Electric vehicle market share 2013. [2]
Figure2: Plug-in Electric vehicle market share 2013[5]
Although the sales of BEVs has been continually growing, Tesla’s technological developments and
innovations in the BEV field fail to produce pronounced sales performance due to ineffective marketing
campaign. Because of this, the EV manufacturer needs to improve their marketing and infrastructure
building strategies as well as their products’ reliability to obtain a larger market share while competing
with conventional ICVs and other EV manufacturers.
Objective
This proposal will first briefly overview the Tesla’s current strengths and limitations in terms of
capabilities and resources in the BEV industry. A solution is then presented to improve the group’s
marketing campaign, and product reliability.
Significance
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Increasing the EVs’ market share is always an ultimate goal for newly growing EV manufacturers like
Tesla Motors. In order to compete with ICVs and eventually stimulate a new energy revolution in the
automobile industry, the EV manufacturer has to make some adjustments in marketing, infrastructure
building as well as product reliability. The company has a chance to bring their sales to a brand new level
and become a leader in the BEV industry if the new strategies are adopted. With further detailed
comprehensive research being performed, Tesla Motors would be able to reinforce the importance of
EV technology and bring their zero emissioned BEVs to the main stream. It is because of that I believe
my proposal should be considered by Tesla Motors Inc.
Current Strengths and Weaknesses
Tesla’s major strength includes its innovative technologies in vehicle design and battery technologies.
The company’s products have excellent performance in terms of range capability, power system and
unique design. The group has more than 300 patents on its technology, all of them highly technical, and
in addition has a fair amount of proprietary engineering. [6] In addition, Tesla has a good reputation
among customers and press. Tesla Model S was named 2013 Car of the Year by Motor Trend magazine,
marking the first time non-petrol powered vehicle won the title. [2] Founded in 2003, the EV producer
was the first automaker to manufacture and sell high-way capable BEVs in serial production.
Tesla’s primary weakness includes a growing but limited brand name recognition. [7] Besides, the group
is facing regulatory limitations on the ability to sell vehicles directly over internet in some states. Lack of
vehicle infrastructures, such as fast charging stations and service stations also hinder its development.
Furthermore, relatively high price and low model diversity has narrowed their potential targeting group
which may ultimately lead to poor sales performance. As stated in Tesla’s annual 2012 report, the
current level of production of Model S may not be sustained because the manufacturer’s production is
highly dependent on suppliers. [1]
Proposed Program
Description
Currently, Tesla Motors only produces Model S which is a luxury sedan priced at over $60,000.Modle S,
together with the previous discontinued Roadster did help the enterprise build long term brand
awareness and customer loyalty. However, Tesla’s profit from these models is negligible due to high
start-up costs at their factory. In other words, the company’s long-term success will be highly dependent
on future models. The EV manufacturer needs to develop new models targeting at larger market with
prices below $30,000 in order to reach mainstream consumers at affordable prices.
Building fast charging stations is an essential factor of stimulating the group’s BEV sales. One issue Tesla
encountered was that they are trying to build its own infrastructures which is only available and only
works on Telsa vehicles. In a long run, this may jeopardize Tesla’s development because other EV
manufacturers may seek to unite and build general fast-charging stations. Consequently, Tesla’s market
could be influenced by relatively fewer supporting facilities. To avoid this situation, the enterprise has to
quickly expand its BEV infrastructure network while seeking sustainable financing and governmental
investments before other competitors.
The greatest concerns towards production are whether suppliers could deliver qualified parts in a timely
manner and whether Tesla could manufacture those parts for massive production while maintaining
desired quality level. In order to produce qualified vehicles efficiently, the company is required to
Improvements for Telsa’s Marketing Campaigns
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carefully monitor each production step, improve the efficiency of manufacturing processes and train
employees continuously.
Tesla’s future growth is dependent upon consumers’ willingness to adopt electric vehicles. [1]A better
customer education with BEV would help accelerate the adoption. The EV manufacturer should promote
public education campaigns which highlight the environmental contribution and low operating cost.
Besides, utilizing car sharing to provide customers a good opportunity to become familiar with BEV
without actually purchasing would ultimately lead to higher customer adoption.
Qualifications & Experience
I am currently a junior at The Ohio State University majoring Material Science and Engineering. I
performed a lot of projects during my study at college. I accomplished many complex projects in which I
proposed assumptions and obtained the numerical expression of material properties. Furthermore, I
have a strong interest in the BEV industry and Tesla Motors Inc. In addition, I hold an automobile
industry related patent entitled “Metal Fiber Sintered Felt Air Filter”. With a lot of research being
performed in the BEV field prior to this proposal, I believe that I am qualified enough to propose my
program.
Conclusion
Tesla is a promising company with its unique strengths and pronounced weaknesses coexisting. To
enhance its BEV sales in the continually growing EV market, Tesla may consider four strategies: Develop
new models targeting at larger market with prices below $30,000; Expand its BEV infrastructure network
quickly while seeking sustainable financing and governmental investments; Monitor each production
step carefully, improve the efficiency of manufacturing processes and train employees continuously;
Promote public education campaigns and car sharing. Thank you for your time.
References
[1] D. Ahuja. Tesla Motors Annual Report. [Online].Available:
http://ir.teslamotors.com/secfiling.cfm?filingID=1193125-13-96241&CIK=1318605
[2] International Energy Agency. Global EV Outlook 2013. [Online].Available:
http://www.iea.org/publications/globalevoutlook_2013.pdf
[3] D.Hurst,H.Gartner. Electric Vehicle Market Forecasts. [Online]. Available:
http://www.navigantresearch.com/wp-assets/uploads/2013/06/EVMF-13-Executive-Summary.pdf
[4] E.Musk, D.Ahuja. Fourth Quarter & Full Year 2013 Shareholder Letter. [Online]. Available:
http://files.shareholder.com/downloads/ABEA-4CW8X0/3039660396x0x727013/9885dd26-2e824052-b171-3685fd8150b3/Q4'13%20Shareholder%20Letter.pdf
[5] Energy Policy Information Center. Another Record Month of Electric Vehicle Sales. [Online].
Available: http://energypolicyinfo.com/2013/07/another-record-month-of-electric-vehicle-sales/
[6] G.Jon, L.Kratochwill. “The Risk of A New Machine”. Fast Company.vol.164 pp.104-133. 2012
[7] M. E. Mangram. “The Globalization of Tesla Motors: A Strategic Marketing Plan Analysis”. Journal
Of Strategic Marketing. vol. 20 no.4 pp. 289-312. 2012.
Improvements for Telsa’s Marketing Campaigns
Yang
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APPENDIX 1: ANNOTATED BIBLIOGRAPHY
[1] D. Ahuja. Tesla Motors Annual Report. [Online].Available:
http://ir.teslamotors.com/secfiling.cfm?filingID=1193125-13-96241&CIK=1318605
This report summarizes current development condition Of Telsa Motors Inc. in terms of financial
data and manufacturing details. It analyzes some risk factors and uncertainties which may affect
Telsa’s business, financial condition and operating results.
[2] International Energy Agency. Global EV Outlook 2013. [Online].Available:
http://www.iea.org/publications/globalevoutlook_2013.pdf
This source presents primary data on electric vehicle, related infrastructure developments,
investments in research and policies. The information analyzes global market trends and progress
in electric vehicle deployment and the implications of technology.
[3] D.Hurst,H.Gartner. Electric Vehicle Market Forecasts. [Online]. Available:
http://www.navigantresearch.com/wp-assets/uploads/2013/06/EVMF-13-Executive-Summary.pdf
This research predicts the global plug-in electric vehicle sales in 2014.It expects the expansion in
both higher and lower end of EV market which may put competitive pressure on Telsa Motor Inc.
[4] E.Musk, D.Ahuja. Fourth Quarter & Full Year 2013 Shareholder Letter. [Online]. Available:
http://files.shareholder.com/downloads/ABEA-4CW8X0/3039660396x0x727013/9885dd26-2e824052-b171-3685fd8150b3/Q4'13%20Shareholder%20Letter.pdf
The source overviews Tesla Motors’ full year 2013 financial condition. In addition, it provides an
overlook of year 2014 in terms of sales.
[5] Energy Policy Information Center. Another Record Month of Electric Vehicle Sales. [Online].
Available: http://energypolicyinfo.com/2013/07/another-record-month-of-electric-vehicle-sale
This source analyzes the US plug-vehicle market in 2013.It overviews major electric vehicle
manufacturers as well as their market shares.
[6] G.Jon, L.Kratochwill. The Risk Of A New Machine. Fast Company.vol.164 pp.104-133. 2012
This source examines Tesla Motors’ major challenges as well as their capabilities in terms of
advanced technologies.
[7] M. E. Mangram. “The Globalization of Tesla Motors: A Strategic Marketing Plan Analysis”. Journal Of
Strategic Marketing. vol. 20 no.4 pp. 289-312. 2012.
This source analyzes the current strategic marketing plan of Telsa and compares it with the
traditional automobile industry’s marketing management approach. In addition, the case study
overviews the current electric vehicle market.