Tesla Motors Inc. was founded in 2003 with its headquarters
in Palo Alto, California. The company designs and manufactures electrical vehicles
as well as EV power train components. Tesla Motors factory is located in
Fremont, California while its design and advanced engineering facilities are
located in Hawthorne, California.
The company is presently mass producing the Model S. It is the only fully electric vehicle in the
planet and is capable of going from 0-100 in 5.6 s which is faster than Porsche
Panamera and can travel approximately 320 miles in a single battery charge
while providing almost noise free and carbon free emissions.
Tesla Motors have their own sales automobiles showrooms
accompanying direct sales to consumers unlike other automakers who work through
a third party. Tesla consists of 100 plus retail stores and R&D facilities
in over 31 locations worldwide and currently employs over 6000 specialists. The
company’s target market is the elite environment conscious customer segment.
An analysis of the Porter’s five forces in relation to the
company shows:
Barriers to entry for the electric cars market is quite high
since Tesla has already achieved economies of scale with its Roadster model and
the Model S. It experiences high revenue volatility due to its continued
development in the tech department and research while the company suffers from
low sales volume. The capital intensity is a major factor due to this industry
requiring a large investment for manufacturing plants as well as the infrastructure
needed for electric vehicles charging and maintenance. Tesla has achieved technical expertise,
skilled human resources and brand recognition through years of R&D and
training. Logistics and the evolving EV infrastructure also play an important
role in this sector.
Supplier bargaining power is low since there is an abundance
of suppliers as well as low switching costs. The in-house engine research and development,
in house chassis R&D and in house transmission also further contributes to
this factor. However the end of the contract with lotus for their Lotus Gliders
which were an essential part of the Roadster model lead to the termination of
the model’s production. Currently Tesla is sourcing battery cells from Samsung
and it also has outsourcing relationships with Daimler and Toyota.
Threat of Substitutes is low due to the other possible
substitutes to electric motors being hybrids, flex fuels, hydrogen, diesel,
natural gas, mass transportation. All of these still require some amounts of
fossil fuels or they lack in performance. Additionally hydrogen and natural gas
vehicles require a new complex infrastructure whereas Tesla vehicles are being
integrated into the smart grid.
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Bargaining power of Buyers is low since Tesla motors offers differentiated
offerings which combine prestige, Eco consciousness, luxury and performance. Tesla
motors Inc. enjoys low competition in the field of electric vehicle
manufacturers, their only other competitors being Toyota Prius, Chevrolet Volt
and Nissan Leaf. The substitutes available do not contain all the attributes
that Tesla vehicles offer especially due to its current target market being the
high income customers. Tesla Motors has retained brand loyalty by providing
value added services. Additionally, many government incentives give potential customers tax credit deduction for usage of environmentally safe vehicles.
Therefore the rivalry among the existing competitors is
high due to Tesla Motors’ continuous growth over the years which pose a threat
to the existing automakers such as Nissan and BMW. Along with Tesla, the two
automakers previously mentioned are dominating 80% of the EV automobiles market
share with the models Nissan Leaf and FRA:BMW.
Bibliography:
Model S. (N/A). Retrieved on 21-11-2014 from http://www.teslamotors.com/models/specs
Tesla Motors. (N/A). Retrieved on 21-11-2014 from http://en.wikipedia.org/wiki/Tesla_Motors
