Competitive Analysis of Tesla

Motors

Outline
1. Introduction
2. Case for the Electric Car

Outline

3. Internal Rivalry

4. Barriers to entry
5. Substitutes and complements
6. Supplier Power
7. Buyer Power
8. Strategy

Tesla Motors
Tesla Motors
California based start-up company
Developed a high performance electric
sports car
Initial funding ($60m) provided by PayPal,
eBay and Google Founders
Car does 0-60 mph in about 4 seconds
Car can travel 250 miles between charges
First 100 vehicles have been sold at the
asking price of $100k

Industry
Industry Facts
Facts Transportation accounts for 63% of Oil
Demand

Industry Facts

Industry Facts

Industry
Facts

Industry Facts
US Automobile Industry represents 5% of
Private sector GDP
76% of the market is made up of Ford, GM
and Chrysler
18% of sales are from Japanese car makers
6.6m 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
Definition
Case 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.

Efficiency vs.
Performance Tesla

Motors

Internal
Rivalry
Internal Rivalry
A 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 Vehicles

Internal
Rivalry
GM EV1 Early
Electric

Internal
Rivalry
Honda Insight Early
Hybrid

Internal
Rivalry
Toyota Prius - Hybrid

Internal
Rivalry
Tesla Roadster Electric

Internal
Rivalry
Venturi Fetish Electric

Barriers to Entry
Economies of Scale
Regulation Issues

Entry
Technological Innovations

Brand Loyalty
Infrastructure

Substitutes
Substitutes
Hybrids
Flex Fuel
Hydrogen
Diesel
Compressed Natural Gas
Mass Transportation

Energy Energy
Efficiency

Efficiency

Energy Efficiency

Energy
Efficiency

Complements
Complements
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
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

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

Buyer Power
Buyer Power
Implementation Phase
Vehicle Technology Market

Penetration

Major

Total Time

Competiti

across new

Penetration

for impact

ve vehicle

vehicle
production

Turbocharged

5 years

10 years

10 years

20 years

5 years

15 years

10-15 years

30 years

Gasoline Hybrid

5 years

20 years

10-15 years

35 years

Hydrogen Cell

15 years

25 years

20 years

55 years

Gasoline Engines
Low Emission
Diesel

Hybrid

Conclusion
Conclusion
Short to medium term strategy
Sell 100 Roadsters
Create recognizable product
Self funding of future expansion
plans
Change opinion of electric vehicles

Conclusion
Conclusion
Long term strategy
Focus on brand recognition
Cost optimization
Compete in mass market
Build infrastructure

Conclusion
Martin Eberhard,
CEO

There 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.