As the company prepares to start producing high volume of Model X, and Model 3 vehicles, the supply for batteries will be crucial for the growth of the company and the growth if its market share. The company has responded to this problem by starting the construction of its own battery production plant, the “Gigafactory”, to be located near Reno, Nevada. This plant is expected to start producing batteries in 2016 (Tesla Motors). By producing its own batteries, Tesla will depend less from other independent suppliers, at the same time the company will reduce its cost of production and will guarantee the quality of its products and the preservation of the brand’s prestige. Exclusive focus on electric vehicles and electric vehicle components, as well as its history of vehicles development and production, however, “are the basis on which we can compete in the global automotive market in spite of the challenges posed by our competitors” (Tesla Motors,
The buildings are leased, but all the stores are entirely owned and operated by Tesla. The retail locations double as service centres, where customers can get maintenance and repairs done. Moreover, the company operates a network of 11 of its proprietary superchargers that allow Tesla car owners to quickly charge their vehicles. To further expand its charging network, Tesla has partnered with local companies to offer additional chargers at select commercial locations. 3.
This uncertainty will lead to consumers spending decrease, reduce investor confidence enter to the market and so on. Although Tesla posted profits for the first time since the first quarter of 2013, it remains to face the challenges of finance in the future. Such as raising cash to fund construction of battery factory to scale up the company’s network of charging stations and the movement of Tesla’s stock price. As a leader in emerging technology industry, high expense of its operation, marketing, research and development occupy 40% of the total revenue. Tesla uses the online sales model coupled with company-owned stores to sell its cars that is the big challenge of capital for a company in setting up its own distribution
Regional divisions use to the local market better, so some of the operation decision such as marketing campaign or sales service can be made by the regional divisions. (Dyer & Gregersen,2016) Furthermore, Tesla need to control every steps in the product chain by central headquarter to reduce the cost and have better management on the product deliver, so that Tesla can have more efficiency performance to meet the market needs. (Dyer &
Tesla has not historically employed a cost leadership strategy; one can observe that their plans are to become one broad cost leader in the entire Electric passenger vehicle segment targeting Middle class rather the premium luxury segment. The focus is all shifted from A Niche differentiator to a Broad cost Leadership strategy. Fostering an Ecosystem around Electric Vehicles would help only Tesla. More the Suppliers lower the cost would be and more widespread the technology with diminishing incentives for innovators. So Tesla needs to see the right time to Milk the EV Cars as being a first entrant before the market becomes total oligopoly in
Tesla motors, therefore, recognize the problem and then understand these consumers’ attitudes. They then look into the problem and find an alternative evaluation. This is followed by product choice and purchase evaluation. Tesla motors then release their final product in the market for purchase. This way, Tesla Motor’s sales may increase.
This is a complete shift from the policy adopted by company in safeguarding and patenting its technical know-how for competitive advantage. As per the company, to advance its objective of providing sustainable transport, it is best suited to open up its know-how to other manufacturers so that massive adoption of electric vehicles as a substitute for gasoline powered vehicles takes place. The company hopes that it will create a fast growing and bigger market for electric vehicles, thorough which Tesla Motors will also eventually benefit. The company also believes that technology leadership is not defined by patents, but its ability to attract the most talented engineers.  Competitor Analysis Tesla Motor is simply the leader in the product range of Electric Vehicle.
The California-based automotive company manufactures and sells nearly zero-emissions cars, that cause less hurt to the surroundings than gas-powered vehicles, thereby creating it a "socially responsible" company. Tesla's chief Elon Musk, started the energy unit maker with one goal in mind to assist finish the world's dependence on oil. Moreover, Musk says the "overarching purpose" of Tesla Motors is "to facilitate expedite the move from a mine-and-burn organic compound economy toward a star electrical economy, that he feel to be the first, however not exclusive. That's beyond any doubt a noble and socially
In order to turn profitable, Tesla will have to increase volumes and drive down per unit cost. Once its Gigafactory is launched in FY17, the company will be able to manufacture 500,000 cars, which will lower its EV’s price by 30 %. Some analysts believe that such mass production would bring down the price by up to 70 %. Therefore Tesla will have to accept that at present Model X is not going to help it achieve its sales targets. But going forward only as it would put competitive prices to its cars and also launch the mass market Model 3, Tesla will see its efforts bearing fruits in China
They are amazed how the small start of California, run by people who do not know about the car business, have such success. To enable a quick charge for the new Model S, Tesla started building a fast charging station network, which distributed in full to enable customers to be convenient and efficient to charge for long travel. Business goes smoothly, Tesla has a lot of cooperation with other car makers such as Mercedes, Smart, Toyota and decided to provide all their patents. The reasons stated for this stand include attracting and motivating talented workers, as well as accelerating the mass market development of electric cars for sustainable transport. In the same year, Musk reduced his salary to one dollar.