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Strategy and Sense Making

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Tesla Motors (Strategy and Sense Making)

UCID: gr252@njit.edu

Tesla Motors, this company we hear a lot these days on the news and social media. So what is all that hype about Tesla Motors? What makes them so special and different? Let’s see,

  • They make great cars
  • They show what electric powered cars can do that conventional powered cars can’t.
  • While achieving these, they are more environmental friendly.

The Hambrick and Fredrickson Strategy Diamond:

Let’s break up Telsa Motors strategy using the five major elements of the strategy diamond.

[pic 1]

Courtesy : Source 2

Arenas:

According to Electric Drive Transportation Association, as of December  2016, 570,000 Units of hybrid, plug-in hybrid cars and battery vehicle have been sold in the United States which accounts for around 3.21% of the market share. Electric cars provide efficiency and are more environment-friendly.  Other conventional cars provide power and luxury. Tesla offers both luxury and efficiency with the all new all-wheel electric car.  Tesla has developed its own core technologies—the batteries, the electric motor, and the systems for controlling them (taken from source 4). One of its core technologies includes the ‘Tesla Powerwall’, which is a high-power rechargeable lithium-ion battery used to charge your Tesla electric vehicle. Tesla Powerwall can also be used for home energy storage, domestic energy consumption, and backup power generator.  The company initially setup its manufacturing plants in USA but now has quickly expanded to Europe, Austrailia and some parts of Asia.  The cars are generally priced at the price of luxury cars. And sports utility vehicle. Tesla currently seeks to target people who plan on spending US$65,000 on a vehicle. Later as the production of cars increase it aims to cut down its price in order to feed the global market with its products more efficiently. Tesla Motors main competitors include BMW, Audi, Porsche, Mercedez Benz, Jaguar, Land Rover.

Vehicles:

Elon Musk the current CEO and CTO of Tesla Motors believes in the future. He believes in the future where all the cars are run by electricity, cars are also self-driven and space travel is possible. For such grand plans, you need to partner with the right people and the right organizations. In 2009 Daimler AG, the parent company of Mercedes Benz, bought out a 10% stake for $50 million. It also developed the Mercedez B Class Electric Drive concept car with the help of a 36 kWh lithium-ion battery from Tesla Motors.  In may 2010, Toyota Motor Corp. invested $52 million in the company and together with help of Tesla Engineers build the Toyota RAV4, an electric car which was ready for mass production in 2012. Tesla sales had grown to 22,000 units in 2013. Lately in 2015, Elon Musk bought SolarCity Corporation, a solar energy company and build one of it’s most innovating product known as the Tesla glass. Tesla glass is solar glass created by mounting solar panels on glass sunroof of the vehicle. It later used the technology in one of its car, Tesla Model S and sold close to 75,000 units till now. According to the company website, Tesla has built a network of 272 charging stations (132 in the U.S., 102 in Europe and 38 in Asia). Tesla Inc. is lead by a world class management team, key people including Key people Elon Musk and JB Straubel. In 2015 Tesla announced its venture called Tesla Energy.

Differentiators:

What makes Tesla Motors different and unique is the combination of electric vehicles and the luxury segment. Also instead of making cars that are first run on fuel or gas and then later switched to the hybrid mode like all the other manufacturers of hybrid cars do, Tesla Motors only builds electric cars. Tesla gives a humongous advantage in terms of miles covered per charge. This puts other competitors at a huge disadvantage. Also in the future, Tesla aims to help owners get rid of ‘Range Anxiety’ by introducing a groundbreaking technology in charging, battery and driver operations. Tesla also opened Tesla Supercharger stations, a network of 480 fast charging stations, to allow longer journeys for their electric vehicles. Tesla says that the electric cars charge around 80% from 30 minutes fast charge. This according to their website, would give Tesla Model S an additional distance of 210 Miles. A car connected to the supercharger will be charged a fee of $0.40 per minute, which is very less as compared to the cost gas for a conventional car. The main characteristics of Tesla's top of the line Model S are range, increased speed, acceleration, and affordabiliity. The model is priced around $60,000.

Cars

Range in Miles

(per charge)

Horsepower

Max Speed

Retail Cost

Ford Focus Electric

76

143

84mph

$27,170

BMW i3

81

170

110mph

$42,400

Volkswagen E-Golf

82

140

95mph

$29,900

Fiat 500e

83

115

95mph

$28,950

Chevrolet Spark EV

86

107

90mph

$29,500

Nissan Leaf

89

111

90mph

$30,000

Mercedes B Class Electric Drive

89

177

105mph

$42,500

Kia Soul EV

93

109

90mph

$32,000

Tesla Model X

250

762

130mph

$100,000

Tesla Model S 85D

265

373

130mph

$57,000


Tesla clearly beating it complettors competitor in terms of officiency

Staging:

Tesla Motors has big plans for us in the future. Its long-term goal is to create affordable cars and a mass market for electric vehicles, capture the market share in the global automobile industry and most importantly build something to improve our future.

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