Tesla Motors Case Study

Contents

Question 1        3

1.0 Introduction        3

1.1 Company Background        3

2.0 Market Positioning and Brand Management        4

2.1 Market Positioning        4

2.2 Launch Activities        10

2.3 Brand Management Strategy        11

Question 2        14

3.0 S.W.O.T        14

3.1 Strengths        14

3.2 Weaknesses        15

3.3 Opportunities        15

3.4 Threats        15

4.0 Ansoff Matrix        16

4.1 Market Penetration        16

4.2 Product Development        16

4.3 Market Development        16

4.4 Diversification        17

Conclusion        17

References        18

Question 1

1.0 Introduction

1.1 Company Background

In the automotive industry, few innovations have had a profound effect on the society in close comparison to the invention of the early automobiles. What started as symbol of status for the rich, has revolutionized into a factor that contributes to society in both positive and negative ways. Despite all its contributions, the core of a car is still the same internal combustion engine that was pioneered in the late 1800s (Nandi, 2013). At the dawn of what Matthias Holweg (2008) defines as the second automotive century, production of automobiles have adopted a more stable portfolio in relation to manufacturing concepts which are based on mass and lean production paradigms, which simply leads to regional market comparisons being based on complexities such as plethora of international collaborations and diverse ownership structure (Holweg, 2008).

Tesla Motors is a company that was founded in 2003 in Silicon Valley by a profound group of engineers (Martin Eberhard, Elon Musk and Marc Tarpenning) with the motive of proving the advantage that electric cars could bring, in comparison to gas powered cars. Tesla Motors was inspired by the inventor Nicolas Tesla whose 1888 patent was the center of the first AC induction motor created by the company. The idea of Tesla products focus on instant torque, incredible power with almost no emission. As a standard, with each generation of a new product release from Tesla Motors shall come higher affordability which shall play a vital role in aiding the company fulfill its objective of accelerating the world’s transition into a more sustainable transport system (GlobalCarBrands.com, 2015; TeslaMotors.com, 2016).

Electrical vehicles represent a technical expression of the belief in the atmosphere being egalitarian in impulse. Tesla Model X P90D Ludicrous (Tesla Model X in short) is a luxury SUV that was introduced into the car market in late 2015 by Tesla Motors Chairman and CEO Elon Musk. The model X is a luxury car designed for family movement with the option of five, six or seven passenger seat option which is built into the car. The car is also designed with a front and rear trunk to allow families to store access baggage when required (Neil, 2016). Some of the most distinct features hosted by Model X is the electronic door opening which utilizes the falcon door design, an all-electric wheel system that comprises of four pole AC induction motors with a liquid cooled lithium ion battery (90 kWh nominal), acceleration of 0 to 60 mph in 3.2 seconds, and the aerodynamic design that supports the acceleration. Model X is also supported with regularly updated safety and navigation features, auto-pilot with GPS Homelink and supercharger expansion network. A major added advantage for the Model X also comes in the form of an 8 year warranty (TeslaMotors.com, 2016).

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Figure 1: Tesla model X Falcon wing design (TeslaMotors.com, 2016)

Tesla’s Model X sprung into the market about a year after the release of the Model S which was launched in 2014. The model X looked toward accomplishing the company’s goal as the first SUV (Sport Utility Vehicle) that could go electric and still act up as a highly sustainable transport (TeslaMotors.com, 2016). This goal of the company acted in line with their main goal of creating vehicles which could run entirely on electricity.

2.0 Market Positioning and Brand Management

2.1 Market Positioning

Market positioning is simply a concept that looks into assessing what a business does to position the brand in the minds of its consumers (Hooley et al, 2008; Sengupta, 2005). The main concern in positioning is what image of the product is created for the intended audience (Lauren, 2016). When assessing the degree of strategic marketing strategy that is applied in with the brand of Tesla, Pittam et al. (2013) of UC Berkeley defines it as a high end green electric car company in a luxury market which offers unique customer experience (Maioli, 2013). Tesla is a representative of new energy efficient automobiles that changes the negative perception of electric cars through such a strategy (Villacrez, 2014). Through such a view Tesla has even been noted by IdeaWorks CEO Jon Bird as an ‘Apple’ in the electric car industry (Bird, 2013).

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Figure 2 Depicted from Strategic Marketing for Tesla Motors (Pittam et al, 2013) {Modified}

Figure 2 illustrates a comparison between tesla motors and some of its competitors in the automobile industries. Through scrutinizing the comparison factors it is found that Tesla falls under being a luxury car, which runs on electricity (Maioli, 2013). On the other hand, Mercedes Benz, falls under the category of fuel efficient cars that offer high luxury as defined by Executive Vice President of sales and marketing Dr. Joachim Schmidt (Schmidt, 2012). Volkswagen however, is illustrated as an automobile that is both fuel efficient and valuable (Andrew et al, 2011) and BMW and General Motors (GM) have been known to be competitors to Tesla as it also offers electric cars but further diversified onto valuable cars which have been found in their subcompact vehicles (Fuente, 2013). Despite the positioning that Tesla has adopted as a brand to the eyes of its consumers, several of the competitor companies have been trying to drill through and dominate over what Tesla has brought forward.one of the major threats is GM who have set themselves in the eyes of the consumers as a car that is also both a luxury car and an electric one too. Conversely, Tesla have utilized a structure of differentiation within the technology used in terms of the higher quality which gives them a significant edge over the competition (Fuente, 2013).