Tesla project for my COMM402 class, it is not perfect so please don't solely rely on the info provided in this PPT

3. External
Analysis

4. External Analysis (Porter)
• Threat of substitute- high
• Threat of new entry-
• High for already car manufacturers to make electric cars
• Low for new car manufacturers
• Bargaining power of buyers- moderate
• Power of suppliers-
• Low (body parts)
• High for utility/infrastructure provider
• Rivalry among competitors- high

5. External Analysis( PESTEL)
• Political-
• Environmental protection laws to make more environmental cars to meet strict emission levels
• US government energy loan program for development and research
• Electric vehicles significantly cheaper to own and operate
• Economic-
• Cost of fuel is rising
• 2 percent annual rise in the general level of prices until 2017, diminish the population’s
purchasing power and thus damage the GDP
• US GDP is rising but compared to the rest of the worlds GDP it is rising at a slower rate.
• Social-
• Increasing environmental concern
• Electric car improves social status of consumer

6. External Analysis( PESTEL)
Technology-
Improving technology, rapid globalization
has major effect on automotive car industry
Environmental-
People are more aware of environmental effect
Legal-
Introducing energy loan program and putting stress on producing eco-
friendly vehicle, several national and local governments have established
tax credits, subsidies and other incentives.

7. Internal
Analysis

8. Resources:
• Knowledge of R & D team. VRINE
(Competitive Advantage)
• Technologies/expertise/experience that
even other large automotive companies
do not have. VRIE
• Batteries are becoming much better.
VRIE
• Experienced CEO, Elon Musk. V
• Great location near the best talents. VE
• US as a unique position towards special
knowledge set, federal government
support. VE

9. Capabilities
• Manufacture internally.
• Strong Brand Name Recognition
• Talented designs.
• The Tesla Stores are similar to the
Apple Stores and are an
innovative way to market the
Tesla cars.
• Unlike combustible engines,
electric engines have less moving
parts and are much cleaner to
work with.
• Large Production Capacity; Only
20 percent of Tesla Motors factory
is used to produce Model S.

10. Tesla Motors
Historical Events
and Emergent
Strategies

11. Transition from R&D to Production
• Numerous logistical issues in the Tesla Roadster’s production model pushed the
manufacturing cost to $200,000 while only able to sell for $100,000.
• Tesla’s CEO Martin Eberhard was subsequently blamed for this outcome and replaced by
CEO Michael Marks who had immense manufacturing experience.
• Fallout ensued between current CEO Elon Musk and Martin Eberhard, damaging Tesla’s
media reputation and creating a damaging legal battle
Tesla Roadster
Martin Eberhard with
Tesla Roadster

12. Strategy
Emergence
from Event
• Developed strategy of anticipating the shift in business
structure and pre-emptively reforming their corporate
structure to meet new demands
• An essential development in corporate strategy as
Tesla is now becoming a conglomerate company with
the acquisition of Solar City, and the production of
their own battery manufacturing facility.

13. Tesla Vehicle Fires
• During 2013 Tesla responded to 3 separate occasions of vehicle fires
• Two fires occurred in the USA when the Tesla ran over objects on the road and the battery was
punctured
• The third took place in Mexico when the Tesla caught fire after a high speed collision
• All vehicle occupants were able to exit the Tesla before the fire ensued
• Despite there being hundreds of thousands of vehicle fires world wide every year, Tesla received
substantially more media attention than any other reported vehicle fire
Tesla Model S on fire in Washington Aftermath of Model S collision and Fire in Mexico

14. Strategy
Emergence
from Event
• Tesla is a high profile company exposed to large
amounts of media coverage.
• Tesla has employed several tactics to manage their
sensitive public image
These Tactics include
1. Remote software updates
2. Policy of immediately responding to media and
significant events
3. Implementation and optional recall of hardware
updates, In this case titanium shields on
underbody

15. Autopilot Deaths
• Tesla’s release of their autopilot feature in summer
2016 was met with scepticism and fear from some
drivers
• First death occurred in June 2016 when a Tesla advocate
and video blogger collided with a tractor trailer making
a left turn on the highway
• Second death occurred in September 2016 when a Tesla
rear ended a street sweeper on a Chinese highway
• The father of deceased man in second incident filed a
lawsuit in order to raise awareness of the issue

16. Strategy
Emergence
from Event
• In order for Tesla to be able to competitive they must be
constantly innovative
• Tesla must continue to revolutionize the automobile industry
which means that they will need to take risks with new
technologies
• The event reinforces the need for Tesla to be constantly
remotely updating their software and making improvements
upon a released vehicle
• The event also demonstrates Tesla’s Public Relations
importance in maintain a desirable public image

17. Historical Perspective Concluding Comments
• Tesla’s business model requires that the corporation innovates and develops
constantly
• Tesla must constantly be re-evaluating their corporate structure
• Management of PR is essential to maintain public interest and faith in the company
Tesla CEO Elon Musk Tesla’s future battery manufacturing plant the “Gigafactory”

18. • Current business plan:
Financial Analysis

19. Financial Analysis
How does Tesla finance their company?
§ 2015 debt ratio 0.86 (total liabilities are 86% of
total assets)
§ May 2016: 6.8M shares sold for 1.4B to speed up
production of Model 3
§ Negative operating profit increases reliance on
external financing
• Large capital requirements for manufacturing
and R&D

20. Financial Analysis
How profitable is the company?
§ Negative operating profit
§ Return on assets average -6.3%
• Slow to convert investment into profit
§ Return on equity average -42%
• Favors growth over profitability in short-term

21. Financial Analysis
What is Tesla’s liquidity?
§ Negative times interest earned and quick ratio
• Assets tied up in R&D and large capital
expenditures
§ 2015 current ratio 0.99
• Liabilities slightly exceed assets
§ Long-term liquidity reliant on their ability to convert
high R&D costs and manufacturing assets into
profit

22. Alternatives
• Diversifying product line to reach
more consumers – develop SUVs,
pick-up truck,
• Increase variety of services
domestically:
• Introduction of advertising
campaign
• Expand domestically by
adding more services
domestically

23. Recommendation
• Increase variety of
services domestically

24. Implementation
• Implement service stations
• Increase charging stations
• Increase brand recognition
• Construction of brick and mortar in some major cities

25. Risks
• Additional expenditures in marketing and brick-and-mortar
stores financially risky
• Already highly leveraged
• Focusing a new target market
• Losing out on international expansion
• Additional outbound logistics from showrooms and in-person
ordering (shipping, extra costs)