tesla case study strategy
TRANSCRIPT
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CAPARAL. HAMAWY. MAGALIAO. NACILLA. PARAISO. REYES.BA 190 - STRATEGIC MANAGEMENT
UNIVERSITY OF THE PHILIPPINESPROF. MITA ANGELA M. DIMALANTA
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2013
• 4500-PERSO COMPANY• CREATED 2 REMARKABLE CARS• POSTED ITS 1ST QUARTERLY PROFIT• REPAID ITS GOVERNMENT LOANS• LOOKED LIKE IT MIGHT SURVIVE• BENEFITED FROM ENTHUSIASM OF “ECO-WEALTHY”
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HISTORY
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HISTORY
• MARTIN ERBERHERD• ENGINEER LOOKING FOR HIS NEXT BIG PROJECT• SERIAL ENTREPRENEUR WHO LAUNCHED A NUMBER OF START-UPS• HAD CONCERNS FOR GLOBAL WARMING & USA’S DEPENDENCE ON THE
MIDDLE EAST FOR OIL• LOOKED FOR A SPORTS CAR THAT WAS ENVIRONMENTALLY FRIENDLY
“IT WAS CLEAR THAT PEOPLE WEREN’T BUYING A PRIUS TO SAVE MONEY ON GAS – GAS WAS SELLING CLOSE TO INFLATION – ADJUSTED ALL TIME LOWS. THEY WERE
BUYING THEM TO MAKE A STATEMENT ABOUT THE ENVIRONMENT.”
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HISTORY
• ALTERNATIVE FUEL OPTIONS:• HYDROGEN FUEL CELLS• NATURAL GAS• DIESEL• ELECTRICITY
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HISTORY
• AL COCCONI, FOUNDER OF AC PROPULSION & PRODUCER OF TZERO• TZERO
• COULD GO FROM 0-60 MILES/HOUR IN 4.1 SECONDS• POWERED WITH EXTREMELY HEAVY LEAD-ACID BATTERIES
• EBERHARD APPROACHED COCCONI WITH IDEA OF USING LIGHTER LITHIUM ION BATTERIES
• HE LICENSED ELECTRIC-DRIVE-TRAIN TECHNOLOGY FROM AC PROPULSION & ESTABLISHED HIS COMPANY, TESLA MOTORS
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HISTORY
ELON MUSK• FOUNDED PAYPAL BUT SOLD IT TO EBAY FOR $1.5 BILLION• STARTED SPACEX• ONE OF THE INSPIRATIONS FOR TONY STARK IN IRON MAN SERIES OF
MOVIES• APPROACHED EBERHARD ABOUT BUYING TZERO BUT LATER ON
AGREED TO JUST FINANCE PLAN WITH $6.3 MILLION
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HISTORY
ROADSTER• FIRST TESLA PROTOTYPE• FEATURES: 400 VOLTS OF ELECTRIC POTENTIAL, LIQUID-
COOLED LITHIUM ION BATTERIES, AND A SERIES OF SILICON TRANSISTORS• GIVE CAR ACCELERATION SO POWERFUL, DRIVER WOULD BE
PRESSED BACK AGAINST THEIR SEAT
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PERSONALITY CLASHES: EBERHARD VS. MUSK
BOTH WERE TECHNICALLY SAVVY & VIGOROUSLY ADDRESSING PROBLEMS WITHIN TESLAEBERHARD: “JUST BRILLIANT, AND HE HAS THIS TENACITY THAT IS UNBELIEVABLE. . . HE IS THE GUY YOU WANT AROUND IN THOSE EARLY DAYS WHEN YOU HAVE NAYSAYERS ALL AROUND.” BUT ABRASIVE & CRITICAL
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PERSONALITY CLASHES: EBERHARD VS. MUSK
AT ODDS OVER DECISIONS OF:BODY PANELS
MARKETING
Use lighter, stronger – and more expensive – carbon fiber
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PERSONALITY CLASHES: EBERHARD VS. MUSK
CHASSIS
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PERSONALITY CLASHES: EBERHARD VS. MUSKMUSK’S PREFERENCE PREVAILED EVERY TIMEMUSK’S INSISTENCE ON BEST MATERIALS&PARTS +EBERHARD’S INEXPERIENCE AS MANAGER OF A MAJOR FIRM = DELAYS AND RUNAWAY COSTSEBERHARD: CEO TO PRESIDENT OF TECHNOLOGY TO NOTHINGMICHAEL MARKS, TEMPORARY CEO FOCUSED ON ROADSTERALL-TIME LOW TO ALL-STAR CELEBRITY STATUSTESLA ANNOUNCED MODEL S - A HIGH PERFORMANCEALL-ELECTRIC SEDAN
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OBSTACLES TO ADOPTION OF ELECTRIC
VEHICLES
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PRICE
E-VEHICLES ARE MORE EXPENSIVE
TESLA’S RESPONSEA. SUPER CHARGER NETWORK
- FREE- 6 STATIONS IN THE WORLD AS OF 2013
B. GUARANTEES- FREE REPAIRS & FREE CAR REPLACEMENT WHILE
CAR IS UNDER REPAIR
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LIMITED RANGE & ASSOCIATED “RANGE ANXIETY”
PEOPLE ARE CONCERNED ABOUT DRIVING TO PLACES WHERE CHARGING STATIONS ARE UNAVAILABLE
TESLA’S RESPONSEA. NOT A BIG ISSUE FOR TESLA’S CARS DUE TO ITS LONG RANGE CAPACITY
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COMPETITION IN THE ELECTRIC VEHICLE
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HYBRID ELECTRIC VEHICLESTOYOTA PRIUS, 2000
REQUIRE NO CHANGE IN TYPICAL CONSUMER USAGE HABITSHAVE EXTREMELY LIMITED ELECTRIC RANGE
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ALL-ELECTRIC VEHICLES/PLUG-IN ELECTRIC VEHICLES
Nissan Leaf Chevy Volt
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TESLA’S STRATEGY
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STRATEGIES
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LOOKING TO THE FUTURE
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NOT OUT OF THE WOODS YET
TESLA’S SUCCESS• REVENUE OF $562 MILLION & PROFIT OF $11.2 MILLION• MODEL S EARNED CONSUMER REPORT’S HIGHEST RATING• MAY 2013: COMPANY RAISED $1 BILLION BY ISSUING NEW SHARES• PAID BACK GOVERNMENT LOAN WITH $679 MILLION CASH STILL AVAILABLE• SURVIVED INFANCY, APPEARED TO BE SOLVENT, & WAS MEETING SALES
OBJECTIVES
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NOT OUT OF THE WOODS YET
INVESTMENT ANALYSTS SAY• 2013 PROFITS INCLUDE STOCK WARRANT PROFITS & ZEV CREDIT SALES
• WARRANT REVENUES WOULD NOT BE REPEATED• NO FORECAST FOR YEARLY DEMAND OF ZEV CREDITS• NO ONE KNOWS WHETHER REVENUES WERE SUSTAINABLE
• INCREASING COMPETITION • WHAT’S MARKET SIZE FOR ELECTRIC VEHICLES & WHAT PORTION OF MARKET WOULD
PAY HIGHER PRICE OF A TESLA?• POSSIBILITY OF TESLA’S STOCK PRICE TO BE AN OVERINFLATED BUBBLE
REFERENCE : HILL, C. & JONES, G. (2013). STRATEGIC MANAGEMENT: AN INTEGRATED APPROACH (11TH ED., PP. C-201-C-210). STAMFORD, CT: CENGAGE LEARNING.