Analysis of Tesla's Strategy

Date: 10/10/2013

To: Mr. Elon Musk, CEO

Tesla Motors

From: Rahul Ramesh, SRM Corporate Consultancy

Re: Tesla Motors Strategic Analysis

Foreword

Headquartered in Palo Alto, California which had been a cradle for many futuristic innovations, Tesla Motors design, manufacture and sell electric cars and electric vehicle powertrain components. The growth of electric vehicles in the US Market from a mere 2.23% of total vehicle sales in 2011 to 3.90 % of the total vehicle sales till September 2013 is a strong indicator of the company’s growth prospects in the coming years. With a unique goal to accelerate the world’s transition to electric mobility with a full range of increasingly affordable electric cars Tesla has been catalyzing change in the industry.

A report by from Pike Research, predicts annual worldwide sales of electric vehicles (EVs), will reach 3.8 million by 2020. This confirms that Tesla can do a wonderful job and can command the market in years to come by laying out proper strategies and plans. Increasing competition from both old rivals like Toyota, General Motors, and Nissan added with foray of big entrants like BMW, Subaru into the EV market will complicate the situation. In this report I will be focusing on determining the existing positions, both market and competitive, industry structure and capabilities review of Tesla in the US Electric Vehicle Market

The Competition Scenario

Rising expense of fuelling a gas mobile, the ever stringent pollution control norms, the increased attractiveness of customers towards a trendy yet efficient vehicle has altogether made the US Electric Car market an attractive prospect. New davids and the old goliaths are fighting for capturing a sizeable market share. The scenario is much more rewarding than the Hybrid vehicle market according to what reports say. According to the United States Department of Energy, around 40,000 plug-in electric vehicles were purchased by Americans in the first six months of 2013, that’s more than double the amount sold throughout the same period last year. In 2012 there were 52,000 EVs sold, which was an increase from 17,000 in 2011. Tesla delivered right around 10,000 of its Model-S cars in first half, those sales appear to be coming at the expense of BMW, Mercedes, Lexus and Porsche. So it can be approximately estimated that Tesla accounted for almost 25% of the total sales this year. If we combine the sales of Roadster the numbers may go up by a fraction.

At first glance it don’t seem quite bad as BMW and Mercedes are both registering double-digit sales increases for 2013. But exhibit 5 paints a different picture. It’s in the BMW 7-Series and Porsche Panamera that the presence of the Model