MOTORS
Submitted by GROUP 2:
Aditya Srinivasan
Ayushi Thakur
Karan Lalchandani
Kaushal Sood
Radhika Damani
Shiwami Sharma
EXECUTIVE SUMMARY
We have taken Tesla motors for this assignment to see its potential in India when the entire
country is riding high on the Swach Bharath mission with motos like clean India. We as a
group think its the ideal time for Tesla motors to set shop in India.
Tesla is a path breaking electric vehicle manufacturer which has taken the automobile world by a
storm. Breaking away from the century old gasoline powered cars it produced an electric car
which outpaced the traditional car in every aspect possible.
Tesla produces premium electric cars for the affluent, with India having the third largest number
of multi-millionaires in the world, Tesla cars have a promising market in India and hence we are
analyzing the true potential of the product and how Tesla as a brand has to promote itself in
India.
Tesla is not the present but its the future, we are looking at a brand which is going to be part of
our future and play a vital role in it.
It like our Jetsons (A famous Cartoon network show on the future) dream has finally come true.
The P85D pairs a high efficiency front motor with a performance rear motor for supercar
acceleration, achieving a 0 to 60 mph time of 3.2 seconds the fastest four-door production car
ever made.
Now with more than 50,000 vehicles on the road worldwide, Tesla is preparing to launch
Model X, a crossover vehicle that enters volume production in 2015.
Featuring exhilarating acceleration, falcon wing doors, and room for three rows of seating,
Model X defies categorization.
Tesla owners enjoy the benefit of charging at home so they never have to visit a gas
station or spend a cent on gasoline.
For long distance journeys, Teslas Supercharger network provides convenient and free
access to high speed charging, replenishing half a charge in as little as 20 minutes.
Superchargers now connect popular routes in North America, Europe, and Asia Pacific.
Teslas vehicles are produced at its factory in Fremont, California, previously home to New
United Motor Manufacturing Inc., a joint venture between Toyota and General Motors. The Tesla
Factory has returned thousands of jobs to the area and is capable of producing 1,000 cars a week.
The company is expanding its manufacturing footprint into other areas, including in Tilburg,
the Netherlands, where it has an assembly facility, and Lathrop, California, where it has a
specialized production plant.
To reduce the costs of lithium ion battery packs, Tesla and key strategic partners including
Panasonic have begun construction of a gigafactory in Nevada that will facilitate the production
of a mass-market affordable vehicle, Model 3.
By 2020, the gigafactory will produce more lithium ion cells than all of the worlds combined
output in 2013. The gigafactory will also produce battery packs intended for use in stationary
storage, helping to improve robustness of the electrical grid, reduce energy costs for businesses
and residences, and provide a backup supply of power.
Tesla is not just an automaker, but also a technology and design company with a focus on energy
innovation.
HISTORY:
Tesla Motors
was
incorporated in
July
2003
by Martin
Eberhard and
Marc
Tarpenning,
who financed
the company
until the Series
A
round of
funding.
Both
men
played active
development
Series A round
2004, joining
its Chairman.
commercialize
with
a
early adopters
as possible into
including
compacts
within
the
Roadster
level, but was
to-day business
acknowledged
who insisted
from the beginning on a carbon fiber body and he led design of components ranging from the
power electronics module to the headlamps and other styling.
In addition to his daily operational roles, Musk was the controlling investor in Tesla from the
first financing round, funding the large majority of the Series A capital investment round
of US$7.5 million with personal funds.
From the beginning, Musk consistently maintained that Tesla's long-term strategic goal was to
create affordable mass market electric vehicles. Musk received the Global Green 2006 product
design award for his design of the Tesla Roadster, presented by Mikhail Gorbachev, and he
received the 2007 Index Design award for his design of the Tesla Roadster.
Musk's Series A round included Compass Technology Partners and SDL Ventures, as well as
many private investors. Musk later led Tesla Motors' Series B, US$13 million, investment round
that added Valor Equity Partners to the funding team.
Musk co-led the third, US$40 million round in May 2006 along with Technology Partners.
Tesla's third round included investment from prominent entrepreneurs including Google cofounders Sergey Brin &Larry Page, former eBay President Jeff Skoll, Hyatt heir Nick
Pritzker and added the VC firms Draper Fisher Jurvetson Capricorn Management and The Bay
Area Equity Fund managed by JPMorgan Chase.
The fourth round in May 2007 added another US$45 million and brought the total investments
to over US$105 million through private financing.
In December 2007, Ze'ev Drori became CEO and President. In January 2008, Tesla fired several
key personnel who had been involved from the inception after a performance review by the new
CEO. According to Musk, Tesla was forced to reduce the company workforce by about 10% to
lower its burn rate, which was out of control in 2007.
The fifth round in February 2008 added another US$40 million. Musk had contributed US$70
million of his own money to the company by this time. In October 2008, Musk succeeded Drori
as CEO. Drori became Vice Chairman, but then left the company in December.
By January 2009, Tesla had raised US$187 million and delivered 147 cars. On May 19, 2009,
Germany's Daimler AG, maker of Mercedes-Benz, acquired an equity stake of less than 10% of
Tesla for a reported US$50 million. In July 2009, Daimler announced that Abu Dhabi's Aabar
Investments bought 40% of Daimler's interest in Tesla.
In June 2009 Tesla was approved to receive US$465 million in interest-bearing loans from
the United States Department of Energy. The funding, part of the US$8 billion Advanced
Technology Vehicles Manufacturing Loan Program, supports engineering and production of the
Model S sedan, as well as the development of commercial powertrain technology.
The low-interest loans are not related to the "bailout" funds that GM and Chrysler received, nor
are they related to the 2009 economic stimulus package. The loan program was created in 2007
during the George W. Bush administration. Tesla repaid the loan in May 2013.
Tesla was the first car company
while Ford, Nissan and Fisker had not.
to
have
fully
repaid
the
government,
The company announced in early August 2009 that it had achieved overall corporate
profitability for the month of July 2009. The company said it earned approximately US$1
million on revenue of US$20 million. Profitability arose primarily from improved gross margin
on the 2010 Roadster, the second iteration of Teslas award-winning sports car. Tesla, which like
all automakers records revenue when products are delivered, shipped a record 109 vehicles in
July and reported a surge in new Roadster purchases.
In September 2009, Tesla announced an US$82.5 million round to accelerate Tesla's retail
expansion. Daimler participated in the round to maintain equity ownership from its initial
investment.
Tesla Motors signed a production contract on July 11, 2005, with Group Lotus to produce
"gliders" (complete cars minus powertrain). The contract ran through March 2011, but the two
automakers extended the deal to keep the electric Roadster in production through December
2011 with a minimum number of 2,400 units, when production ended, mostly because of tooling
changes orchestrated by one of its suppliers. In June 2010, it was reported that Tesla sold a total
of US$12.2 million zero emission vehicle credits to other automakers, including Honda, up to
March 31, 2010.
In October 2014, both Daimler and Toyota sold their holdings of Tesla shares.
TESLA MOTORS
Parent Company
Tesla Motors
Category
Electric Vehicles
Sector
Automobile
Tagline/ Slogan
USP
STP
Segment
Target Group
Positioning
COMPETITION
Chevrolet Volt
Toyota Prius
Smart Car
PENETRATION STRATEGY:
Aiming premium products at affluent "thought leaders" is a very well-known business strategy in
Silicon Valley and the global technology industry, where prices for the first versions of, for
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example, cellular phones, laptop computers, and flat-screen televisions start high but drop with
subsequent products as the technology matures and production volumes increase.
[
According to a blog post by Musk, "New technology in any field takes a few versions to
optimize before reaching the mass market and in this case it is competing with 150 years and
trillions of dollars spent on gasoline cars."
CORPORATE EXECUTIVES
CAR BUFFS
CELEBRITIES
ENVIRONMENTALLY SUSTAINABLE
ORGANIZATIONS
KEY MESSAGES
about
the
SWOT
1.They developed 1st fully electric sports car The
Roadster
STRENGTH
3.Strong
4.Ability to
1.Since
WEAKNESS
OPPORTUNITY
THREATS
10
2.
3.
They
technology
years i.e.
technology
of masses
We have identified India is one of the potential markets in Asia to have a local assembly
plant, but we need a definite policy from the government to support electric vehicles in the
future,"- Vijayan, CIO at Tesla Motors.
The most interesting thing about Tesla the niche luxury electric car maker is the role of
marketing in selling electric cars that cost $100,000 or more. Many people have tried to change
the auto industry over the last 40 years and none have succeeded. The process of buying a car is
essentially the same as it was a generation ago. And the process has remained unpopular for
decades: the typical car dealer receives just 2 or 3 stars on Yelp.
Tesla Model S and Tesla Roadster: Tesla has figured out how to market an electric car
Tesla is creatively using marketing to upend the auto industry business model:
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In many parts of the country, you cant see or drive the car before you buy even if you
place a deposit
You have to wait in line for months or years to get a car
While Tesla is starting with expensive vehicles, they clearly have mainstream ambitions. They
are investing to build a big car company. How hard is it to build and sell cars in the USA? Look
at it this way: Tesla is the second oldest publicly traded auto company in the United States
behind Ford. GM went bankrupt and went public four months after Tesla. Chrysler remains
private following its own reorganization.
While Tesla has a long way to go to be profitable, producing cars in volume, and moving
towards the mainstream, their first home-built product the Model S is a success. They have
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10,000 20,000 orders and have swept the auto industry awards, winning the most recent round
of Motor Trend, Automobile, and Yahoo Autos awards for car of the year. Tesla is the first startup
car company, and the Model S is the first electric car, to win these awards.
(1) Start with a great product Tesla would be dead today if they didnt build the best car
available today. There are too many obstacles range, lack of road trips, and buyer confusion to
name a few. Tesla used electric technology to build a car that cant be reproduced with a
combustion engine. Its as fast as a Porsche and gets the equivalent of 100 miles per gallon. It
has very few moving parts. It is the most aerodynamic car made and has the most cargo space of
any car in its class. Its a sports car that seats seven.
(2) Start high and work your way down its a lot easier to build a lust-inducing $100,000
car than a cheaper model. Tesla started with the $100K plus roadster built on a modified Lotus
platform. With the Model S, they started with production of $100K vehicles and are working
their way towards the $60K entry-luxury models. By starting high, Tesla is letting early adopters
fund technology development. As volume increases, prices are coming down. The early super
cars are media darlings endlessly discussed in waves of free Tesla publicity.
(3) Turn auto industry strengths into weaknesses historically, luxury cars have been sold
and justified based on the quality of their engineering. Most luxury automobile companies tout
performance through engineering as the one thing that makes them special and desirable. Tesla
marketing focuses on performance through technology while touting the simplicity of the
platform. The Tesla Model S pitch reframes the auto industry strength as a weakness. Through
the highly-effective Tesla marketing lens, traditional gas cars are dirty, complex, unreliable, and
difficult to maintain. In a bold marketing move, Tesla service centers are designed with white
floors to reinforce that electric cars dont have oil and other dirty fluids that leak on the floor.
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Traditional luxury auto makers focus on engineering Through the Tesla marketing lens,
educated viewers see complexity, maintenance, and antiquated technology
Tesla Service centers have impractical white floors to highlight that the cars run clean without
messy oil and fluids
(4) Create a new multi-channel model: Tesla decided not to build a traditional car dealer
network. Nobody likes car dealers: even buying and servicing a high-end car like a Porsche is a
dreadful experience. Tesla looked at the car buying process and optimized its sales model to fit
the way people buy cars today. Since people start online, Tesla designed their process around
online information, commerce, and community. Their site is unusually clear, clean, and effective.
For people who want to see the car, they are building kiosk stores in malls with Tesla experts
who cant sell cars and who arent commissioned. When a buyer is ready, they place a refundable
deposit online. If they want to drive a car, they can arrange a test drive after theyve placed a
deposit. Essentially, Tesla is selling cars the same way Apple sells the iPhone.
(5) Build the community & focus on the experience: From the beginning, Tesla has made user
forums and user community a key part of the online experience. Tesla marketing highlights the
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unique Tesla buying and ownership experience and encourages owners to interact with the
company and each other in full public view on the Tesla site. This provides a rich base of content
and owner passion on view for prospective buyers.
(6) Leverage the media and traditional press: While much is new about the Tesla Model S and
the accompanying sales and marketing model, one thing is not: the dependence on traditional
media. Tesla has been a master at driving press coverage, reviews, and awards for its cars. Its
clear that the company has worked hard to position the brand with the media and to make sure
the right messages come through. The companys #1 message is that they are trying to build the
best car ever made and not just the best electric car. This message is frequently repeated by the
press.
ADVERTISING STRATEGY:
Tesla does not spend millions of dollars in a traditional ad campaign. They let you and I discuss
it, rave about it, hate on it, or rejoice in the spirit of going electric in a Tesla, be the catalyst to a
viral and brilliant marketing campaign. At the end of the day, Tesla advertising is free.
Although Tesla Motors has no advertising department, nor an ad team, and certainly, no Chief
Marketing Officer (CMO), spokeswoman Alexis Georgeson, who is the closest to a PR person in
the company says:
Right now, the stores are our advertising. Were very confident we can sell 20,000-plus cars a
yearwithout paid advertising. It may be something well do years down the road. But its
certainly not something we feel is crucial for sales right now.
According to Ad Age:
Tesla has no plans to hire agencies or run ads in the near future. The in-house marketing
team has only seven staffers and an internal team runs the website, where customers order
directly. By contrast, Nissan spent $25 million advertising its Leaf EV in 2012.
Its true that Nissan, GM, Toyota, and Ford have deep marketing budgets that allow them to run
some of the most creative advertising campaigns to date. However, Tesla Motors doesnt have
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that luxury, yet. Teslas capital investment is used to lay down the foundation for tomorrows
success.
One thing Tesla does well with a minimum cash flow is to create a buzz. Without spending any
money on direct advertising campaigns, Elon Musk and the creative minds behind the company
know how to generate buzz, and in this modern age, that means using social media.
The first ad says: Press to hear the motor start, the other: Lift to feel the weight of the tank, and
finally, our favorite: Scratch and smell the smell of exhaust.
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Tesla Motors has no advertising, no ad agency, no CMO, no dealer network. And that's no
problem.
The electric-vehicle company, co-founded by tech billionaire Elon Musk, is the buzz of the auto
industry and Wall Street, where its stock has tripled so far this year.
The Palo Alto, Calif., company is breaking all the rules of automotive marketing, eschewing
dealers in favor of selling through "stores" in upscale shopping malls and the internet.
Tesla has 35 stores across the U.S., Europe and Asia and plans to expand to 50 over the next
few years, according to an SEC filing.
At Tesla's store in the swanky Mall at Short Hills in New Jersey, Model S owner Connie
Charney says people lean out their car windows to take pictures with iPhonesas did two men
in a Bentley convertible recently.
"That's how cool this car is," said Ms. Charney, a greeting-card company owner from
Morristown, N.J. "You feel like you're part of something bigger, a new age of motor vehicles. ...
Elon Musk is my hero."
The high-tech stores provide a setting for customers to ask questions without high-pressure sales
tactics, said spokeswoman Alexis Georgeson.
Tesla has no plans to hire agencies or run ads in the near future, she said. The in-house
marketing team has only seven staffers and an internal team runs the website, where customers
order directly. By contrast, Nissan spent $25 million advertising its Leaf EV in 2012, according
to Kantar Media.
"Right now, the stores are our advertising. We're very confident we can sell 20,000-plus cars a
yearwithout paid advertising," Ms. Georgeson said. "It may be something we'll do years down
the road. But it's certainly not something we feel is crucial for sales right now."
Still, the company warned that it may "incur substantial marketing costs" through the use of
"traditional media" in the future rather than relying on its current "unconventional" strategies.
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Service coverage
Unlike other electric cars like the Chevy Volt, Tesla has no dealer network and doesnt
engage in any traditional advertising. The company has no CMO and only a small
marketing team.
Despite the fact that a handful of states, including Texas and Virginia, have recently
banned Tesla sales via traditional channels, the sleek electric cars are popping up on
roadways all over the country. The music-cum-boomtown of Austin, Texas sees hundreds
of Teslas on its streets, despite the statewide ban on their sale.
Thirty-five high-tech storefronts across the US, Asia and Europe, do some of Teslas
advertising for them. Theyre set up like Apple Stores, in upscale shopping malls and on
strategic urban thoroughfares. Curious passersby slow down to take pictures on their
smartphones and post them on social media.
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The rest of Teslas advertising is done by curious journalists and online commerce.
With less than 10,000 cars sold worldwide, the Tesla nameand its stock pricecarries
more buzz than revenue (the company only recently posted its first quarterly profit).
But journalists love to cover the story of the technology and the bullish entrepreneur
behind it. In fact, because its relatively difficult to buy a Tesla (its $70,000 entry-level
price tag notwithstanding), theres a certain appeal of going rogue.
Since state governments arent able to effectively ban online sales, Tesla enthusiasts can
customize their rides, pay their deposits and wait 90 days for a delivery.
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Teslas brand strategy is to Build a brand without spending much on advertising. The CEO
of the company tweets about new advancements, people pay online and practically a lot of things
are done on social media. Tesla Motors does not have a conventional marketing and branding
strategy. The company has several applications on devices like iPhones. The most unique being
controlling the car through a watch. Tesla is highly active in the social media world. Be it
mobile applications or Twitter.
In the advertisement gallons of light Tesla motors points out to the viewers, the joys of no
longer taking from the earth but accepting from the sun. By driving the Tesla car, a family
contributes so much to the environment. All of Teslas ads have highlighted this one thing.
To counteract the price issue, the car company is working on a smaller, affordable sedan codenamed Tesla Model 3 for emerging markets, according to the Economic Times.
Teslas Model S can cost over Rs6,100,000 ($100,000), but the company is looking to go for a
cheaper price tag of Rs1,800,000 ($30,000) to Rs2,400,000 ($40,000) in India. It plans to build
an assembly plant here as well.
Cause of concern:
The electricity shortage and the infrastructure problems are going to much tougher to crack
Despite healthy growth in passenger vehicles, the electric vehicle (EV) sector in India,
however, continues to struggle, according to India Auto Report.
The idea of going electric remains a hard one to sell to an average Joe in India, it adds.
India has one of the highest import duty in the world in excess of 100% that goes
against our principal of importing car directly from our plants at Freemont in the US and given
the strict rules/ policies there are very less chances of setting up a plant.
Reva, Indias first commercial electric car that has been around for over a decade, didnt find
many takers, selling fewer than 500 cars a year. We are struggling to maintain a healthy sales
traction Concerns over battery and the higher price compared to petrol or diesel vehicles have
also worked against customer acceptance, said Chetan Maini, CEO of Mahindra Reva told The
Economic Times.
The Indian government is trying to promote the use of electric vehicles with its National
Electric Mobility Mission Plan 2020 (PDF), under which it plans to invest Rs14,000 crore ($2.25
billion) to build the infrastructure required for electric vehicles. But progress has been very
slow so far and India far lags the rest of the world in overall electric vehicle purchases.
Teslas balance sheet is impressive and the company has racked up steady sales increases over
the last six quarters, partly because there is an appetite for electric and hybrid cars in the US and
Europetwo of its biggest market. The company is built on a willingness to invest without
hoping for immediate profits, and theyve spent months trying to woo China.
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But even the cheaper Tesla Model 3 is going to have a limited pool of buyers in Indiathe tiny
group of millionaires trying to project themselves as environmentally conscious, said Deepesh
Rathore, managing director of Emerging Markets Automotive Advisers, a consultancy.
It will be good as an image builder but it in most cases it will be a second car, he added.
TESLA MOTORS in India could target the higher income customers who have environmental
concerns and would like to get associated with such cause related products. In this way the Tesla
motors could bag a place in their garage as the second car.
CBBE MODEL:
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REFERENCES:
http://www.topspeed.com/cars/tesla/index423.html
http://scienceofrevenue.com/tag/tesla-marketing-strategy/
http://qz.com/299714/why-selling-cars-in-india-may-be-teslas-toughest-challenge-yet/
http://economictimes.indiatimes.com/industry/auto/news/passenger-vehicle/cars/tesla-to-enter-indiawith-new-sedan-at-attractive-price/articleshow/45210985.cms
http://www.business-standard.com/article/pti-stories/keen-to-enter-in-india-but-high-import-duty-aroadblock-tesla-114111901004_1.html
http://www.teslamotors.com/about
http://intercaresolutions.com/wp-content/uploads/2013/06/BreakoutSessionDesigningWellnessProgramsForYourCulture.pdf
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