American Automobile Market is one of the biggest market in the world due to the high purchasing power of households and its population.

Abdurrahman Mehmet Nalbantoglu

Tesla Case Outline

I. Automobile Industry

A. US Car Industry

i. US Market and its Characteristics

· American Automobile Market is one of the biggest market in the world due to the high purchasing power of households and its population.

· For more than half a century there is no entrance to market of mass produced car

· There is huge Concentration on market share among 3 companies with the %49 percent of the market

· On the 2009 Economic Crisis companies had bankrupt and there is a opportunity for Human Resources and Market share on The US Automobile industry

ii. Porter’s 5 Forces in Car Industry of US Market

-Threat of New Entrants:

A) In the US Car Industry it’s a low possibility threat because of the barriers to enter the industry such as very big amounts of establishing a plant and new brand.

B) Most of the International Car Manufacturer Companies currently established on the US market

C) As the US is the largest countries in the world, establishing the dealer network is harder than geographically concentrated countries such as Japan and Germany – Rivalry Among the Competitors

A) There is high Rivalry among the Competitors due to International Trade Laws which lowers the barriers of tariff in that industry and because of the various competitors with industry experience

iii. Electric Car Market

A) Electric Cars are famous phenomenon on the Car Industry due to the advancements on its technologies and investments of the sectoral giants such as Daimler AG , Nissan , Renault , BMW and Tesla.

B) On 2018 only statistics shows that only few electric cars sold , with this statistics electric cars have very few market share on general global car industry

C) Projections estimates that by the 2040 more than %15 of the cars will be electrically runs.

B. Tesla

i. Tesla’s Timeline and Position in the Market

-Tesla Motors founded on 2003 by Martin Eberhard and Marc Tarpenning. However today , Elon Musk is the companies face with his successful career.

– Tesla’s famous and successful models are Tesla Roadster , Model S And Model X,

– Tesla has the brand image of the most innovative Car Production company with their groundbreaking projects

– Tesla s Position on the market can be defined as “Focused Differentiation” Strategy

ii. Competitors of Tesla

-Competitors of the Tesla on the General Car Manufacturing business are , Ford Motor Company , Toyota ,Mercedes Benz and many others

– For the EV Industry, Main Competitors of the Tesla; Nissan with its model ‘Leaf’ , Kia Soul , and Bmw I3

iii. Tesla’s SWOT Analysis

A) Strengths

-Tesla has an innovative brand image on public with their groundbreaking technologies on EV industry

– Tesla has Charismatic Public Figure “Elon Musk” which affects its company image a lot.

– Tesla has domination on Luxury Long Range EV Industry.

· Even the sales are much more less than gasoline based vehicles, in EV market Tesla Motors sustain their growth averagely %20 percent since 2010.

B) Weaknesses

· Preferring in house production of some items rather than outsource it and having the benefits of economies of scale. Ex: Plastic Parts

· Lack of experience on car manufacturing compare to its competitors

· Even though innovations are improving the cars quality they bring cost disadvantage.

C) Opportunities

· Tesla EV has incentives on the Petroleum importer countries

· Natural Resources for the Petroleum and Gas is diminishing so fast.

· The Market Of EV rapidly growing industry

· Alliances with the Car Manufacturers which has more experience on Car Production and Marketing can improve the Tesla’s efficiency

D) Threats

· Lots of companies started to invest vast of their capitals on R&D departments in order to enter the EV market

· Discredit activities of Oil and Gas Lobbies all around the world

II. Tesla’s Strategy

A. Vision and Mission

-Tesla’s Mission Statement is “to accelerate the world’s transition to sustainable energy.”

– Tesla’s Vision Statement: to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.”

B. Product Strategy

i. Focused Differentiation

· Tesla puts too much effort on marketing, with the savings on the energy costs on the cars

· Customer Satisfaction on High Tech Product Using

·  Uniqueness of its products, but also focused mainly on early adopters in the high-end market for electric vehicles. 

ii. Product Features and Innovation

· Tesla uses Aluminum Structured Cars for make the cars lighter which effects the speed and performance of the car

· Recharging the battery from the Highways Static Energy Project is one of the important aim which Tesla is trying to achieve

· Tesla X achieves maximum range of 350 miles without charging

· SuperCharger which is Tesla Product can charge Tesla EV ‘s in 30 minutes

C. Sales and Marketing Strategy

i. Niche Marketing and Positioning

·  The typical customers of Tesla are executives and high income managers whose want to create a technology supportive image.

· Model x is preferred by young age, high income, well-educated customers

· Tesla dominates the its target market and position itself on luxury, long range, affordable, electrical and environment friendly

D. Strategical Issues

i. Defining Uncovered Problems

· Lack of Experience on Car Manufacturing creates technical problems on production of EV.

· OPEC and Oil companies like Exon announces have statistic to make propaganda for discourage the customers who is interested on EV.

· Although Elon Musk is very charismatic leader for public, Nowadays Tweets and posts of him confuses investors and customers. Moreover, Tesla Should pay significant fines because of the statements against the trade laws

ii. Developing New Strategies

· Strategic Alliances with other companies than Panasonic and Mercedes can improve the Engineering Resources and Marketing capabilities of the Tesla.

· As Petroleum importing burdens the economies of the Petroleum importer countries, Cooperation Agreements with that countries like Norway, Turkey and EU countries can create new market opportunities and international image support.

· Cooperation with the famous design companies like Gucci for interior design of the EV.