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SM: Final Group Project

Tesla Motors
Presented by:
Group 4
Kajal Patil (PGP09192)
Navneet Singh (PGP09207)
Margesh Patel (PGP09216)
Anup Sharma (PGP09233)
Vishnu (PGP09244)

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Introduction
Founded by Martin Eberhard & Marc Tarpenning & Elon
musk joined Tesla’s board of director as Chairman in feb
2004

Mission • Tesla’s mission is to accelerate the world’s


transition to sustainable energy

• To create most compelling car company of


Vision 21st century by driving world’s transition to
electric vehicles

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Why Tesla? CEO: Elon Musk:
Tesla being at • Running 2 multi billion
crossroads right now: Dollar businesses parallely, is

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a celebrated iconic persona
• Introduced 1st mass
• His ability to tell story of his
production EV
company & get people
• Diversifying product excited about their product
categories with Solar city as with maintaining a loyal
Tesla Home & Batteries customer base is very
important

Innovative &
Competitive landscape

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• Competing in highly
matured industry of
automobile but challenges
established producers by
being 1st to produce Electric
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Auto Vehicles
External Analysis - PESTLE
Legal Environmental
Social Technological
Political Economic
Politicians Priced in Increased brand Advanced Government All products &
reluctant on premium loyalty, people’s engineers providing huge services of Tesla
increasing segment for environmental selected by Tesla subsidies & tax thrive to provide
threshold earlier models & awareness & along with high benefits on EV’s, environmetal
production limit favoured by favoritism importance on free municipal sustainable
for tax benefits people with towards digital platform parkings & solutions
on EV’s environmental innovative & from start, interest in
concerns, sustainable advantages of ELectric filling
moreover its solutions talent pool from stations
prices of are rocket scientists
higher than the from Spacex &
available models use of AI
to which they
compare

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Industry & Company Life Cycle
More than 100,000 EV’s
sold in year 2018 &
2017 - $11 Billion in
BMW, Volkswagen 15 year old company
sales
introducing their electric
vehicles

Valued at $65 Billion in


2018 - $18 Billion in More than 37,000 full
both 2017 & 2018 at
sales time employees
different moments

Having necessary
dimensions &
Negative cash flows
infrastructure setting up
in places

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External Analysis - Porter’s 6 Forces
• A vertically integrated producer with most processes carried out in-house
• Relying on suppliers for components & raw supply elements being easier to replace than
Moderate
Bargaining power of Suppliers(
whole outsourced tech Threat of
Low ) :
• With good performance & achieved targets of model X & model 3, suppliers willing to
substitute
be associated more

• High sales & customer base achieved in year 2017 & 18


Bargaining power of • BMW & Volkswagen coming up with their own EV models present competitive
Low
Buyers(Moderate): landscape Strong Moderate
Bargaining • Future thrive of entering a B - B market
Competitive Threat of new
Power of • Substitute of Fossil fuel cars
Threat of
Rivalry entrants
Suppliers • New industry of cab sharing coming up, require to not own any vehicle
substitute(Moderate)
• Other automobiles entering in EV segment

Threat of new entrants • Tesla made its patents public, established automobiles entering EV segment
(Moderate) • More no of companies willing to enter due to rising green movement
Strong Moderate
• Small no of firms Bargaining
Strength
Competition:(strong) of • High aggressiveness of firms of
Power
complements• Low switching costs
buyers
Strength of • Use of present talent pool from existing engineers of Spacex, AI tech & brand value
complements;(strong) • Solar city complementing mission of Tesla with sustainable solutions 6
Internal & External Analysis - SWOT Analysis
•First mover in fully electric sports car
•Supplier to other automakers like toyota •Higher prices than similar
•Strong tech expertise in the area electric combustion engine powered
cars
Strengths transmissions and drive train
•Ability to develop vehicles completely in
Weakness •Dependence on continuing
house innovation
•Current platform developed for Model S •Less awareness as compared
can be used for future crossover model to Audi, Toyota or Mercedes

•Growing support by
•Competition from large auto companies in governments in the form of
electric and alternative fuels exemptions from duties
•Selling to average public seems difficult to •Increasing oil and gas prices
Threats achieve
•The strategy for price skimming has not
Opportunities •Large international market
potential
been used in the auto industry •Increasing support and
•Increasing IC engine efficiency awareness for green
automotives
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VRIO Framework
Resources Value Rare Imitable Organization
Access to Critical Raw Material Yes Yes, as competitors Can be imitated by Yes
have to come to competitors
agree

Opportunities for Brand Yes, new niches are No, most of Yes can be imitated by the Yes can be imitated by the
Extensions emerging in the competitors competitors competitors
market targeting niche

Track Record of Leadership Yes Yes Can't be imitated by Yes


Team at company competitors

Ability to Attract Talent Yes, Tesla strategy Yes, as talent is Difficult to imitate To a large extent yes
built on innovation critical to firm's
growth

Vision of the Leadership for Yes No Can't be imitated by Cant be said


Next Set of Challenges competitors

Brand Positioning compared Yes No Imitable by competitors Yes, firm positioned on


Competitors but require big budget consumer behavior

Customer Network and Loyalty Yes, 23% customers Yes, firm invested to Tried by competitors. Company leveraging on
contribute more than build customer None successful customer loyalty
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84% revenue loyalty
Internal Analysis - Core competencies
First mover advantage in the EV industry
Unique direct-to-customer selling model
DEVELOPMENT OF ‘GIGAFACTORY’: ramped up production to 5000 per week
Highly cohesive ecosystem
Large network of supercharger stations
In house software development: autopilot data - machine learning
•Business of “doing good” ; principle of reciprocity
Branding and marketing •3rd highest mentions (among automobile companies) across social media
•CEO is a mainstream personality

Customer loyalty
Operates their own chain of stores
Cross fertilization of knowledge: Amalgamation of tesla & Spacex employees 9
Competitive Landscape - Financials
2014 2015 2016 2017 2018
($ in million) Compare
Act Act Act Act Act

2014 2015 2016 2017 2018


Revenues Vehicle
3,198 4,046 7,000 11,759 17,988 Act Act Act Act Act

Gross profit 882 924 1,599 2,222 3,097 Tesla Model


- - - 1,764 1,30,620
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Net Income (294) (889) (675) (1,961) (2,711)
Tesla Model
33,600 50,580 76,230 1,01,312 1,00,000
DSO 25.5 15.0 25.7 15.8 19.2 21.1 S and X

DIO 148.2 147.3 137.8 85.4 122.6 41.4 Total 33,600 50,580 76,230 1,03,076 2,30,620

DPO 120.9 105.6 124.0 90.2 105.4 69.0

Net trade cycle 52.8 56.7 39.5 11.0 36.4 (6.43)


Deliveries comparables

Overall GP% 28% 23% 23% 19% 15% 15%/40%


GM 96,00,340

EBIT % -6% -18% -10% -14% -16% Ford 66,07,000

ROA -5% -11% -3% -7% -5% Fiat Chrysler 47,40,000

ROE -32% -82% -14% -46% -32%


BMW 24,60,000

Debt ratio 1.19 1.16 1.32 1.22 1.23


Volkswagen 1,07,00,000
Unlevered CashFlow (1,830) (7,147) (4,753) (1,964)
Average 68,21,468
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Net Cash Flow (709) 2,196 (25) 310
Tesla Model 3 vs Traditional IC Engine Cars

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Marketing & Sales
Strong brand value

•Business of “doing good”


•The image of the company is that it wishes to build a sustainable future
•The principle of reciprocity creates loyal customers
•According to Nomura, Tesla has a brand following second to apple only
•Made all patents public

Strong presence on social media

•3rd highest mentions across social media (among auto companies)


•Elon Musk interacts with users on twitter, answers questions about the company's future and shares stories (Rockstar
CEO)

Unique marketing campaigns

•Launched a roadster into space

Aesthetically pleasing products

Differentiation Strategy

Marcandise sold
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Contd…
● Personal Branding
○ Never be too busy for media

○ Be a good story teller

■ Start with a bold claim

■ Clear structure throughout

■ Simplification

■ An antagonist

■ Exaggerations

■ Catchy ideas

○ Sharing successes & failures both with audiences (Real & Relatable)

■ Buying 1 million sports car, totaling it into the wall, without even having insurance

■ An idea he later called dumb saying he will take Tesla private add $420 per share via Twitter in September 2018 and then getting fined
$40 billion

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Contd…
● Dream Big & Focus on the future, not present

○ Accelerate the transition to electric vehicles.

○ Solve the problem of city traffic

○ Safeguard humankind from malicious artificial intelligence

○ Colonize Mars make humans a multiplanetary species but none of these goals seem impossible.
● Don't make profit your no.1 priority

○ Idealistic goals (During financial crisis put his own money into Tesla)

○ A quest for immeasurable riches can be repulsive


● Leverage social media & keep people updated

○ Frequent witty updates and jokes

○ Conversation with the public

○ Engage in social dialogue (Public debate)

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Contd..
● Introduce audience to your persona and business

○ Potential new audience & customers (Win-win for both sides)


● Show off your personality where it’s not about your business

○ Cameos (Big bang theory, Soft park, Ironman), reveal true personality (Vintage personal branding)
● Being involved in multiple businesses and continue to amaze people

○ Consistency is greatly valued and preferred by society

○ Success & bold dreams

○ SpaceX, Boring company, Nueralink, OpenAI

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Future Plans
Abandon physical retailing locations
and move to online-only sales.
•Lower the company’s operating expenses
•According to Elon Musk, online-only sales will
reduce price of all models by 6%.

Model Y hatchback, changes to the


Return a car within 7 days or 1,000
Semi truck, and "full self-driving
miles for a full refund
features" with Autopilot 2.0

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Recommendations

• Franchise Laws
• state and local regulations that create a regulatory moat
around online vehicle sales
• the mainstream new car buyer is not ready for online-only
Not go forward with vehicle sales
online only sales
• the ability to view and test drive a vehicle
• the complexity of financing options and credit approval
• Creation of new costs
• model is not viable for a mass-produced vehicle

• Attracts chronic abuse from non-buyers


7 day free trial
• Sales tax as well as the vehicle depreciation

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Referrences
● https://www.energy.gov/eere/electricvehicles/electric-vehicles-tax-credits-and-other-
incentives
● https://cleantechnica.com/2019/01/15/breaking-trump-changes-his-mind-on-electric-vehicles-
now-evs-are-a-big-win/

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Thank you

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