Competitive Analysis of Tesla Motors

OutlineOutlineIntroduction Case for the Electric CarInternal RivalryBarriers to entrySubstitutes and complementsSupplier PowerBuyer PowerStrategy

Tesla MotorsTesla MotorsCalifornia based start-up companyDeveloped a high performance electric sports carInitial funding ($60m) provided by PayPal, eBay and Google FoundersCar does 0-60 mph in about 4 secondsCar can travel 250 miles between chargesFirst 100 vehicles have been sold at the asking price of $100k

Industry FactsIndustry FactsTransportation accounts for 63% of Oil Demand

Industry FactsIndustry Facts

Industry FactsIndustry Facts

Daily use of Petroleum worldwide. At present, consumers used 80 million barrels a day (MBD) of petroleum (each barrel contains 42 US gallons). Two thirds goes to transportation53 MBDfor transportation overall29 MBD for transport for people19 MBD for transport for freight5 MBD for air transportation for people and freight.

Industry FactsIndustry FactsUS Automobile Industry represents 5% of Private sector GDP76% of the market is made up of Ford, GM and Chrysler18% of sales are from Japanese car makers6.6m 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 DefinitionCase 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.

Tesla MotorsEfficiency vs. Performance

Internal RivalryA 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 VehiclesInternal Rivalry

Internal RivalryGM EV1 Early Electric

Internal RivalryHonda Insight Early Hybrid

Internal RivalryToyota Prius - Hybrid

Internal RivalryTesla Roadster - Electric

Internal RivalryVenturi Fetish - Electric

EntryBarriers to EntryEconomies of ScaleRegulation IssuesTechnological InnovationsBrand LoyaltyInfrastructure

Substitutes Hybrids Flex Fuel Hydrogen Diesel Compressed Natural Gas Mass Transportation

Substitutes

Energy EfficiencyEnergy Efficiency

Energy EfficiencyEnergy Efficiency

ComplementsComplements 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 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

Supplier Power

Buyer PowerBuyer Power Ability of buyer to extract profits from seller Green market is emerging Buyer power is limited due to lack of competition

Buyer PowerBuyer Power

Implementation PhaseVehicle TechnologyMarket Competitive vehiclePenetration across new vehicle productionMajor PenetrationTotal Time for impactTurbocharged Gasoline Engines5 years10 years10 years20 yearsLow Emission Diesel5 years15 years10-15 years30 yearsGasoline Hybrid5 years20 years10-15 years35 yearsHydrogen Cell Hybrid15 years25 years20 years55 years

ConclusionConclusionShort to medium term strategySell 100 RoadstersCreate recognizable productSelf funding of future expansion plansChange opinion of electric vehicles

ConclusionConclusionLong term strategy Focus on brand recognitionCost optimizationCompete in mass marketBuild infrastructure

ConclusionMartin Eberhard, CEOThere 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. Youre buying a car that is not as good as an equivalent gas car at allslower, uglier, with not as much rangeand theyre trying to compete essentially on price, where they cant win. None of those cars were built for people who really like to drive. I get the feeling theyre for people who dont 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, its much more likely for you to succeed. And I think our investors agree.

****Change title: Industry Facts****Tesla has an advanteage because it doesnt have to have volume**