Tesla Motors

[pic 3]

[pic 4]

INDex

01 /        INTRODUCTION        

02 /        COMPETITOR ANALYSIS - TESLA        

A. TESLA BUSINESS MODEL        

B. AUTOMOTIVE INDUSTRY        

C. POWERTRAIN SUPPLIER        

03 /        RECOMMENDATION        

EXHIBIT 1 – Value Chain        

EXHIBIT 2 – Porter five forces – Automotive industry        

EXECUTIVE SUMMARY        

1. INTRODUCTION

Tesla has been agitating the automotive industry by introducing new elements that are changing the value chain (see exhibit 1). Tesla’s entrance has acted as a catalyst for reshaping the industry, but the question remains of whether or not Tesla can develop a sustainable competitive position for the future that will undermine established automakers like BMW.

1. COMPETITOR ANALYSIS - TESLA

A. TESLA BUSINESS MODEL

Tesla’s business model can be conceived to be a successful one. The degree of Tesla’s success can be framed within various perspectives: operational – to assemble the model S in-house, Tesla was able to set up a production plant by less than one third of the $1bln that it would normally cost^[1]; brand awareness & customer acceptance – Tesla received appraisal awards from the trade industry  - “2013 Car of the Year” - and consumers - “the highest rating that Consumer Reports ever gave to a car”; innovation – the powertrain represents Tesla’s competitive advantage in the Electric vehicles (EV) market together with a battery that has a lower cost per KWh ($250-$300 per kWh) and higher autonomy (250 miles) than Nissan Leaf (its main competitor within the EV); a “new” value chain – Tesla’s business model created new processes that add value to its customers (see exhibit 1); growth – Tesla’s yearly sales increased between 2010-2013 ($970million in 1st half of 2013)^[2]; and profitability – Tesla is not a profitable business yet but the trend is favorable -exhibited its 1st positive net income in the 1st half of 2013 ($49m)2.