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Business Model Project Presentation

On
Tesla Motors

Sairam: PGP/01/017
Himshikha: PGP/01/022
Shiva: PGP/01/023

Elon Musk -Elon Musk | CEO and Chief Architect

Product Profile

Tesla decided it would produce an electric car and target


luxury and exotic sport car market
Tesla Roadster

Introduced in 2008
0 60 in 3.9 seconds
$100,000 - (Federal Tax Rebate)
200 miles on one charge
0 emissions
Target market The Environmentally friendly CEO
You dont have to go slow to go
green

Tesla Motors Total Revenues vs. Total Cost of


Revenues per Quarter

Supercharging Growth

Supercharging Growth

Supercharging Growth

Tesla Strategy
1. Develop a high-end, high performance sports car to prove that electric vehicles are
both stylish and efficient. Use the sports car to develop core intellectual property and
patents.
2. Introduce a premium sedan that competes with brands like BMW, Mercedes and Audi
3. Produce hundreds of thousands of low cost premium electric vehicles for mass
adoption

Tesla Product Strategy

Competitors

Main competitor is Fisker

Karma starts at $96,000


Repeated troubles safetywise

Chevy and Nissan both have EVs,


but neither are sports cars

Sales of both are down

Business Model Canvas - Tesla


Key Partners

Tesla has more than 150

suppliers all over the world

who supply more than 2000


different parts.

Key Activities

Chei Mei Opto Electronics


Displays in car, GARMIN

navigation systems, Google


Earth map overlays, NVIDIA
TEGRA 3 processor to run the
electronics on the car, 3G

modems from Sierra Wireless


that runs broadband on the AT
& T net work. Panasonic is a
strategic partner for
developing battery packs.

Electronic
manufacturing
ser vices model of production
Designs and builds bulk of the PCB
assemblies in the car.
Manage its own chain of car
dealerships all throughout the
world
Developing charging stations
Gigafactory batte ry plant in
Nevada in partnership with
Panasonic
Key Resources
innovated powertrain design
Co-located with Apple, Google,
NVIDIA, ORACLE, CISCO and HP in
the San Francisco San Jose
technology corridor, which speeds
up the pace of innovation.
Excellent top management team
hired from top manufacturing
and technology companies, led by
CEO Elon Musk

Value Propositions
High end electric car

Customer
Relationships

Self driven car with auto


drive facility

Highest safety features.


safest car in the world

Over The Air sof tware updates


for vehicle recalls, which is free
and standard for all Model S
owners.
Set up charging stations all
over the world for customers
having a concern of range on
the battery

Free charge that makes


customer does not have to
spend any money on fuel
Dynamics of a sporst car
Accelerates 0-60 mph in
5.6 seconds

Cost Structure
Manufacturing plant costs are the largest overhead for Tesla.
Federal Loans for environmentally friendly designs help fund significant part of
the operations. $189 million in Federal loans were outstanding in February 2012.
Governments in most countries give subsidies to electric car manufacturers as
their environmental foot print is very low or 0.
Batteries are significant part of the cost of the car.

Channels

Tesla sells its car in malls not


through the traditional model

Direct sales through Teslas


net work of self-owned car
dealerships all over the world

Customer Segments

High
end,
environment
conscious, luxury and sports
car segment is the primary
target of Tesla

Tesla also plans to sell battery


packs independently to home
users for domestic use

The customers are primarily


from the upper middle class at
this point of time. Tesla has a
plan to introduce low priced
cars at around $30,000 in the
next 5 years to target the
lower income segments as well

Revenue Streams
Licensing agreements with Toyota and Mercedes for Electric Power Train
Designs
Sales of electric sports utility vehicles and luxury cars through its dealership
net work
Tesla intends to sell its OEM batteries for non-automotive applications, which
will enable it to increase production volume and reduce unit cost

Various External Factors

SWOT Analysis
Strengths
High Demand for
Tesla Products
Niche Market where
it is only firm
Innovation
Brand Image
Good PR
Excellent vehicle
design
Only all Electric
commercial
luxury/sports car

Weakness
Tech still needs
development
Low Brand
Awareness
Uncertain Resale
Value
Low amount of
Tesla service
departments
Few consumers
distinguish between
a hybrid and
electric
No economies of
scale

Opportunity
Dominate a niche market
Build enough brand
loyalty to lock
competitors out
Use momentum to
leverage into more
markets
Growing market
Increasing oil & gas
prices
Rising consumers
sentiment
Government support
Young industry with no
set standards
Large International
market potential
Increasing awareness and
support for
environmentalist

Threats
Competing firms
have lots of capital
to develop tech
Other Automakers
have better brand
awareness
Deep Pocket
Competition: BMW,
Acura, Mercedes,
Porsche, Lexus
Decreased
consumer spending
Loss of govt.
subsidies

Analogs
Power charging stations

Leaps of Faith
Technologically savvy and
environmentally conscious
car buyers will go electric
if given proper
infrastructure

Value Chain: Primary Activities


Inbound logistics: TESLAs most essential components is that they manufacture internally. The firm takes control on every aspect from designing to tooling and
therefore they have an efficient system of processes initiated in their single plant. Because of this, the firm reduces waiting time and they improve production
efficiency.

Operations: All the cars are manufactured in Northern California with all the operations. Their manufacturing process is very highly automated with multifunctional robots that can generate more than 83 cars every day. As mentioned before, TESLA design and produce their own cars and they have control over the
quality and development.

Outbound logistics: TeslaMotors have their own stores across 18 countries where consumers can easily access and take benefit of the electric cars. They
manufacture vehicles based in the demand, and the orders personalized online. This only works because of their approach to the industry and customers are willing to
wait.

Marketing and Sales: TESLA does not employ any advertising agency and also doesnt spend on traditional marketing. However, the firm develop they own network
by their own stores that are located in high and wealthy districts so that they can interact brand awareness. This created a lot of customer awareness.

Service: TESLA also own their own service centers in Europe, North America, and Asia. To enhance the value of their product, TESLA has built and has expanded their
free super-fast charging station networks for their consumers cars. Furthermore, the firm also offer their consumers 50,000 mile warranty policy to grow
consumer confidence in their products.

Value Chain: Support Activities

Infrastructure: TESLA Motors has a horizontal organisational structure. The firm has the advantage from this horizontal organisational
structure because of faster decision making and the better communication process, which reduces delays. Furthermore, this structure has a
small management team and has strong leadership.

Human Resource Management: TESLA uses High Street Performance for hiring and employing the talented workforce because of the
growing fast on the global market. Moreover, the firm provides their employees with company shares, which motivates managers so that they
adopt strategies that will grow the share price of TESLA.

Technology Development: TESLA is a firm which is mainly based on the operation and development of the advanced technology. The firm
trusts on those innovations and only employs them through the development, customer-facing processes, and manufacturing. Every aspect of
innovation and creativity is essential at the firm and it plays an important role in the long term and advanced development of TESLA.

Procurement: TESLA has been developing good partnership with strategic suppliers such as with Panasonic which allows each party to take
advantage of the information and allows the firm to make short term agreements with other suppliers in case of any failure in providing the
right components.

Marketing Mix and Five Force Analysis

Product Strategy

Promotion

Green Alternative to normal


cars
Sports car
High -end electric car
Innovative product
Great aerody namics
Customized

Pull advertising strategy


Rely on media vehicles such as
social media, blog forums, and
word of mouth to promote
USP: Zero emission sports car
Creative & interactive website
No sales promotion
Social media

Distribution

Price

No dealer net work


Sh owrooms in sh opping mall
Th rough websites
Trained specialist in each store

Packages are selected in th e


customizing process by th e buyer
Federal tax credit

VRIO Framework
V
R
I

(Valuable)

(Rare)

(Costly to imitate)

(Organized to

capture value)

Massive car manufacturers like Toyota and Daimler are buying the powertrain
components from Tesla to use on their vehicles.

Tesla cars are the only ones that have a range of 300 miles on a single charge because
of this particular powertrain technology.

All big car manufacturers have created pure electric powered models but none can
match the performance and efficiency of Teslas cars

Tesla consistently seeks product improvements through appreciating and exploiting


the many breakthrough innovations discovered among engineers, electricians,
physicists, and business professionals.
Tesla partners and contracts with numerous individuals and organizations to further
research and develop improvements.

Key dimensions of EV business model innovation

Value Proposition

Innovation towards Vehicle

Innovation towards battery

Innovation towards Infrastructure

High performance regarding to range

Innovati ve management of batter y

High performance recharging station

and vehicle performance; innovati ve

packs enables high capacity and low

with highly developed recharging

connecti ve ser vices and intelligent

cost; connecti ve ser vice enable

station network; connecti ve ser vice

ser vices

interact with user; new product

enable interact with user;

towards stationar y batter y market


Customer Segment

Innovati vely starting with high-end

Corresponding to the vehicle

Corresponding o the vehicle

market; and moving to mass market


Distribution Channel

Innovati ve multi-channel model,

Together with vehicle, replace possible Public network deployed by Tesla

involving high integration of IT;

Motor only

Vertical Integration on selling


Revenue Model

Ownership-as-usually;

purchase with vehicle or separate


purchase when update

Free to Tesla user

THANK YOU!