Tesla: A Blue Ocean Marketing Strategy

With its innovative rechargeable batteries, which t using technology from Panasonic laptop batteries and are sourced by Toyota and Adair Wesley, and the Success Of its heighten, $1 KOOK+ Roadster, Tests has achieved margins TTL funding the search and development of a medicine electric vehicle, as well as a wide infrastructure of Supercharger stations that will eliminate the cost of fueling. Teasel’s products include a luxury Model S sedan priced at $ASK to $ASK, and a small crossover SSL Model X, which is expected to debut in late 2014 for $KICK.

Is medicine ($ASK to $40 d Generation, which will achieve 200 miles per charge, as well as the battery packs the hare these products. The electric car market is limited, but growing. In 2013, it held 38 pepper get share of the 15. 5 million vehicles sold in the United States. Rising environment rareness and encores with climate may well overcome consumer concerns with PRI. Romance, and styling, and Musk’s product addresses all of these. His goal is to develop streetcar product that will sell for under $ASK because a Navigate survey indicated that ; .

NET of consumers name that as their purchasing ceiling (Slipperiness).

US and Chinese govern- .NET incentives will further sweeten that price lure if social consciousness fails In its motivation. A PEST industry analysis addresses Teasel’s challenges. Political barriers include e a strong lobby of petroleum and auto man effectuates and distributorships, whose tax s currently support Tate governments. Forthright out of 52 US states ban auto sales outside of d stratospheric; Tests distribution eliminates that middleman.

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Exchange and import rates, as well as quantitative easing, may impact Teasel’s economic position.

In spite of these barriers, Tests enjoys green support and a technology advantage derived from its clean, efficient, compete dive product; its littérateur development; and its infrastructure and freewheeling vision. A arc view of Porter’s five forces indicates high buyer power, low supplier power, low threat of new entrants, high threat from substitutes, and high rivalry. A SOOT analysis suggests that the SSL renege of a willingness, safe, economically competitive product, complete with a welled beloved infrastructure, trumps political interference and an unusual distribution plan.

Tests is poised to offset anticipated rising gas prices and shortage of renewable energy and to t cake advantage of a potential supplier role and overseas expansion, in spite of competition from ( there manufacturers and threats from distributorship laws and lobbies. Teasel’s plan is to market its innovative, practicalities product, using a multi( Handel approach that is consistent with the brand’s message of transparency and vale e. Using mall kiosks and galleries, it will inform potential customers and transmit its brand. Sing online ordering, similar to that of heighten electronic distributorship, Teasel’s strategy will successfully transform the transportation industry. BUY. 450. 710. 52 – Tastes Blue ocean strategy – page 3 Currently Teasel’s targets include tech enthusiasts, environmentalists, luxury r drives, and sport car enthusiasts, and by the end Of 2014, it plans to roll out a car the t is accessible to the mainstream buyer. In this, we believe that Tests will become a successful for e to be reckoned with. Current Business Situation

Tests Motors, headquartered in Palo Alto, California, designs and manufacture battledores electric vehicles and electric vehicle perpetration component: The company was founded in 2003, and although there was some initial contention as to who c exactly could claim to be a expounder, a lawsuit settled in 2009 between current CEO Leon Musk an former CEO Martin Bernhard determined that in addition to the two aforementioned me JOB Statures, Marc Tarpapering, and Ian Wright could claim roles as expounders (Lamina, 2009 None of Teasel’s founders had a background in the car industry, nor did its original engineer g team (Van den

Steen, 2014) – they were simply passionate about creating an innovative, us enable form of transportation. Worldwide Tests currently employees more than 2,000 people , operates 31 sales and service centers, and is “on the road” in 37 counties (Tests. Com, 2014). Billionaire and entrepreneur Leon Musk, who had previously founded Zip AR expounded Papal, became Chairman of the Board in 2004 when he invested $6. 3 million of his own personal funds in the first round Of Teasel’s capital investment (Davis, 20 0).

Musk immediately zeroed in on Teasel’s overall business strategy, which aimed to port his vision of overhauling the current global transportation infrastructure by developing a d manufacturing electric cars that would perform as well as or better than their superpowers c underpants. Although Musk did not assume the role of CEO and product architect at Test until 2008 (Morrison, 2008), he shared his business plan for Tests via the company’s bloc in 2006.

Wired Magazine summed his “audacious” threes business plan: “First, develop a heighten, historiographer sports car to prove that electric vehicles were both cool and feasible. Second, roll out a luxury sedan that would compete with heighten brands like BMW an Mercedes. Third, produce hundreds of thousands of lowest electric vehicles for the mass sees,” (Davis, 2010).

After coffining Tests, Musk went on to found the private space trans operation company Spaces, and became the largest shareholder and chairman of Solar City, a provider of solar power systems (Van den Steen, 2014). Product Information In line with Musk’s strategy, Tests focused first on the heighten market where t he greatest profit margin could be attained while working to perfect the product. Tastes Tests Motors first product, launched in 2006, was the Roadster, a small, highlighter menace sports car hat was 100 percent powered by a rechargeable, electric Lithium battery.

Tests designed and produced the car’s perpetration in-house in California, and joined with Lotus to design the body and framework, and the vehicle was assembled by Lotus in the U. K. (Van den Steen, 2014). The Roadster not only accelerated from O to 60 MPH in less than four seconds, who ICC was on par with many modern Ferreira models (Van den Steen, 2014), it could be recharged in f our hours by a 220V01t outlet and had a range Of 240 miles on a single charge (Foes, 2012). BUY 450. 710. 2 – Teasel’s Blue Ocean Strategy – Page 4 Unlike many other car manufactures who were developing rechargeable elect rice batteries from scratch, Tests “assembled its rechargeable battery pack from slightly MO deified industrialized commodity Lithium batteries in the 1 8650 form factor,” who ICC was commonly used for laptops, and supplied by Panasonic (Van den Steen, 2014) . “Tests and Panasonic cooperated to modify the design for car usage, paying particular at tension to safety and the risk of overheating and fire.

Tests also designed a liquid cooling system m to keep the batteries on the optimal temperature. The perpetration design was proprietary ND Tests did not reveal much about it” (Van den Steen, 2014). According to the Harvard Business School case, “Plugging In” the Consumer: The Adoption of Electrically Powered Vehicles in the U. S. , Tests delivered 500 Roadsters to the U. S. Market in 2009 at a starting price of $109,000.

The Roadster was not mass m reeked, although it did receive a great deal of press coverage, including Time Magazine’s dubious “Best Inventions of 2006” award in the Transportation category. The positive buzz generated h eloped Tests craft their image and gain brand awareness. Furthermore, the press potentially chi engaged how people thought about electric cars by using expressions like “headhunter,” “gastropod ere,” “future of the automobile,” and comparing its performance to a Ferreira or Borsch, rather TTT an focusing on Teasel’s environmental benefits (Van den Steen, 2014).

In January 2010, Tests a announced at that it had sold its one thousandth Roaster at the Detroit Auto Show (Foes, 2012), and when it produced its 2,500 Roadster in 2012, thus fulfilling its contract with Lotus, Test a discontinued the model. By targeting early adopters who were willing to not only pay a premium for TTL- e newest, cost innovative product, but were willing to accept the risk of glitches in order r to have it, Tests was able to generate revenue from investors, including Panasonic Corp.. , Dad miler GAG, and Toyota Motor Corp.. For additional research and development to finitude the r technology. Tests Motors began focusing on its second phase of its business strategy with the unveiling of its Model S sedan in March 2009, which was designed to seat five to seven people e, depending on the package purchased, and cover between 160300 miles on a single charge, depending on which battery pack was chosen. With a base listing price of $57,400 (which fed rail tax credits of $7,500 reduced to just below $ask), the Model S helped shift Tests away from its niche, boutique status and into a broader marketplace (McKenna, 2009).

However, with most accustomed Model G’s pricing out between $70,000 and $90,000, depending on the various features chosen, it was still primarily positioned to compete in the luxury seed n market, against vehicles like the Mercedes S class, Audio 6, and BMW 7 series. In 2010, Tests launched its PIP and became a publicly traded company within the United States, a move that generated enough funding for Tests to purchase a factory and begin building TTS Model S sedan (Australia, 2010).

Furthermore, Tests leveraged its power, reliability, and reputation amongst its peers and competitors to form numerous alliances to manufacture and sell electric drive motors to Toyota (Lexus) and Demolisher’s (Mercedes and S mart Car) (Mueller, 2013). By 2011, although Tests had yet to report an annual profit, it w as poised to become the first profitable maker of battledores electric vehicles. In late 201 1, before the first Model S was actually produced, Tests announced that it had sold out of it s 2012 production BUY . 450. 710. 2 – Teasel’s Blue Ocean Strategy – Page 5 opacity, with orders for more than 6,500 vehicles – of which most were new buyers, with only about 600 being original Roadster owners (Manson, 201 1). In 2012, Tests AC hived positive cash flow, and its stock has since catapulted 1,000 percent (Musk, 2012). The Model S sedan has become one of the bestselling luxury sedans within the e United States and has outsold most rivals each quarter since it began production in 2 012 (Validates, 2013). Teasel’s global sales were estimated to be in excess of 2 5,000 units by the end of 2013 (Shaman, 2014).

According to Bloomberg, Teasel’s sales in 2014 are estimated to exceed 35,000 units, as it expands into China (Manson, 2014). The impressive e sales of the Model S have been undoubtedly spurred by its numerous accolades. Motor Try end awarded the Model S with the “Motor Trend Car of the Year” award in 201 3 and Consumer Reports awarded the car with their top ranking two years in a row for 2013 and 2014 stating “the e Model S [is] the best car it had ever tested ” giving it almost a perfect score (CNN Money, 2014).

In late 2012, Tests Motors used its blob to unveil the Model X, a small crossover ere sport utility vehicle (SLID) with seating for seven passengers and optional allele d rive (Tests Motors, 2012). Production on this model was supposed to begin in 2013, but Tests later decided to focus on profitability and production of the Model S, so production was PU shed back to late 2014. Pricing will most likely be around SSL 00,000 and will compete with the hi Ghent Subs offered by BMW and Mercedes (Barman, 2013).

The vehicle will feature unique e “fallowing” doors that open upward, rather than outward, and it is expected to achieve 2 67 miles per charge and O to 60 miles per hour in 4. 4 seconds. John Gather of Pike Research states “[a]s the first electrified models in the SSW crossover category, the Tests Model X along with the Scam Energy have a chance to win over customers who, while generally not being as attuned to the environmental benefits of Eves, are also less price sensitive” (Motivational 2012). To support its continued growth, Tests has begun investing heavily in its infra structure.

As a free service to its customers, Tests provides free charging services via their “Supercharger stations located in major cities and along highways throughout the United Sat test and in some European countries. Musk has stated that the use of Tests Superchargers, who ICC can supply a car with 150 miles of range on a minute charge and 200 miles on a minute c hang, will be ere to Tests customers forever (Motivational, 2012). Tests plans to invest addition anal capital to expand the network’s reach.

Teasel’s innovative, hightail product, sound business strategy, and strategic partnerships have paved the way for Tests to move full speed ahead into phi SE three of its business strategy. Appendix A, Figure 1, shows Teasel’s products to date. As Et Sal anticipates launching new products geared towards additional market segments with high her volume and lower margins, namely production of a mass market electric car by approximant tally 2017, the company is currently building out its supercharger network, and investing in f story space for manufacturing, and expanding its sales and services centers in both in the . ND abroad. Market BUY. 450. 710. 52 – Teasel’s Blue Ocean Strategy – Page 6 The market for plugging electric vehicles (Pees), of which there are three main TTY pees that use an electric motor (either alone or in combination with a gas engine) and a battery that must be replenished by plugging the vehicle in to an external power source and el citric motor, is currently growing, as evidenced by Appendix A. Relative to the overall industry y, however, the total electric drive market share, which also includes Hybrids, is very limited making up only about 3. Recent, or roughly 592,000, electrified vehicles against a 15. 5 mil ion in total vehicle sales within the United States, as shown in Appendix B (Electric Drive 1 remonstration Association, 2014). Experts believe that the growth of this market is stifled beck cause the total cost of these vehicles still substantially exceeds that of their superpowers counters arts, as shown in Appendix C. The high cost of Eves is driven by the electric battery.

Teasel’s skew h battery pack was estimated to cost about US $15,000 – 18,000, although battery costs have decreased by about ten percent per year between 2009 and 201 2 (Van den Steen, 2014). Ad additionally, some consumers still believe that they must compromise overall performance or SST yelling in order to drive an electric vehicle. To further the advancement of these vehicles the U. S. Government begun pro viding tax incentives of up to $7,500 for those who purchased Eves after 2010 to offset SC me of the cost premium. Depending on the make and model, these incentives can bring Eves down to around $25,000.

The $25,000 number is key with Teasel’s third generation car because “findings from Navigates recent consumer survey showed that 71 percent of nectar buyers don’t want to spend ore than $25,000 on their next vehicle” (Slipperiness, 2014). After the tax cry edits are applied, the Ionians Leaf is priced at about $22,300, which is within the price range of a approximately 75 percent of US car buyers, but removing the credits eliminates half of these buy years, and only about 37 percent can afford the purchase (Slipperiness, 2014).