First in the market – Tesla Motors have the opportunity to strengthen their position as the ‘pioneer’ of electric cars as they are one of the first firms to cater for the premium electrified vehicles market. Foothold in China – Tesla and China Unicom has teamed up to build over 400 charging stations in 120 cities. China Unicom’s interest depicted through the corporation’s willingness to pay for all maintenance and electricity costs may be just the start of the partnership. (Sparks, 2014) Product – The electric car concept has not been able to reach its full potential as the technology and production costs have kept it from being fully commercial. As technologies improve, the performance of the vehicles (I.e. the range) will share a similar experience.
Theft Rates – Tesla experienced less than 0.15 thefts per 1000 vehicles produced as vehicles are equipped with technology to track and disable the vehicles if stolen. (Plummer, 2014) Association with Toyota – Tesla’s new brand is fragile, however financial backing by Toyota may create trust in the new brand. Consumers who are already familiar with Toyota will be influenced by cooperation between the two companies. Proud owners of Tesla – Many famous personalities have a Tesla car, they include Steve Wozniak, Ben Affleck and James Cameron. (Jain, 2014) Increasing cost of fuel – Many consumers around the world may be feeling the pressure of higher fuel costs. In the short term, the Ukrainian and Iraqi conflict may further elevate the price of petrol. (Johnson, 2014)
Expansion – Tesla has an ambitious growth plan to build a 5 Billion Dollar battery plant, this may burden the company in such a way sales do not grow exponentially by the end of the decade (Randall, 2014) Range of Vehicles – Tesla’s Model S range is still very limited compared to other vehicles. A BMW 535d sedan with a price tag of $68,1501 can drive approximately 7002 miles as opposed to 265 miles of the Model S of comparative prices. Charging Times – Tesla cars require up to 10 hours and 44 minutes3 to charge up through a household electricity outlet. Infrastructure – Tesla will have to build upon the small network of charging stations in their target markets
Low costs duplicates – Tesla may face increasing competition from the growing electric vehicle (EV) market Trends – Sale figures for electrified vehicles have slumped in recent times due to the unviability of nickel hydride batteries. Although nickel batteries are not used in Tesla products, the average consumers may not be able to identify the difference between lithium ion and nickel batteries. (Randall, 2014) Safety – Fears of fires and explosion from the battery may prove sufficient to disintegrate the brand image of Tesla’s products (Badkar, 2013)
Tesla has successfully navigated through the firm barriers to developing a new niche in the market. The company has established a firm strategy to develop into both the leading premium brand and the pioneer in the electrified car market. However, an ambitious high risk endeavor that may critically burden Tesla’s finances in an uncertain industry exists. Tesla has plans to build a $5 billion ‘giga’ factory to lower the costs of lithium ion cells for their vehicles. However as a relatively small firm, developing a huge factory may have opportunity costs greater than its yield. Tesla should re-investigate the strength and weaknesses of the ‘giga’ factory. Is it possible that currently available technology is too immature to be both useful and cost effective? The future of the electric vehicle is quite uncertain like the aviation industry throughout the 1970s.
Tesla vehicles still deter a large number of consumers because of the price, the driving range and charging times. Comparable vehicles lines from prestigious competitors like BMW start from around the same prices as Tesla but already have quality and product associated with their names. Tesla should explore the opportunities of advertisements that include famous products endorsers and that project the image of the strong relationship between Toyota and Tesla. These two examples may be the starting point of building the brand in Western markets. One threat in Western markets is the slowdown of Hybrid vehicle sales due to ineffective technology of substitute goods; It is vital that Tesla distinctly illustrates the use of lithium ion batteries as opposed to nickel batteries in most electric vehicles as the number of cycles that the battery may go through are vastly different. Low theft rates as a result of high security should also be publicized.
The industry breaking record for car theft that resulted from technologies integrated into the car making it a favorite for everyone ‘except thieves’ conveys quality and uniqueness. These features will help differentiate Tesla against other electrified vehicles. However, not all markets are the same and thus require a different strategy. In terms of Tesla’s expansion in China, it should be aware of the low cost duplicates that may present themselves to Tesla’s potential clients. Tesla is already heading in the right direction in positioning the brand as a premium brand, however, it needs to make sure that the level of marketing is consistent throughout the whole project, especially in the joint venture with China Unicom. The strong marketing has multiple purpose, to fend off inferior goods and build upon the head start in the Chinese Market, it serves to strengthen the image of the brand.
Starting with similarly stylized electric charging stations throughout the region, potential consumers may feel the pressure of the increased fuel price and become inclined to purchase an electric car, however the presence of the easily identifiable recharge stations may be the determining factor in the purchase of a new Tesla Vehicle. Tesla has limitless opportunities in ‘rapid recharging’ of vehicles as capital and technologically advanced, it may turn the lack of infrastructure into a rich opportunity. Tesla should examine the viability of cooperatively developing an ‘example city’ with the city council to showcase their products and look for potential large local firm in each region for financial backing to build a network of electric charging stations.
Tesla is in a strong position to consolidate the strengths of the brand. Advertising strong corporate fundamentals will craft the premium feel in the minds of consumers. Opportunities, such as current endorsements by celebrities, rising price of fuel and association with Toyota exists to be built into the foundation of a strong corporate image. The branding of Tesla will dictate whether the current threats including low cost duplicates, safety concerns and trends can affect the company or not. Marketing can also reaffirm to potential consumers that weaknesses such as range of vehicles and charging times will be addressed in the future. The building of the factory and the infrastructure, however should be studied for more choice of action. This should be the course of action for Tesla.
Badkar, M. (2013, November 7). Tesla Stock Is Tanking After A Third Model S In Two Months Catches Fire. Retrieved from Business Insider: http://www.businessinsider.com/third-tesla-model-s-catches-fire-2013-11 Jain, A. (2014, August 29). Celebrities that own a Tesla Motor inc Model S. Retrieved from Opp Trends: http://www.opptrends.com/2014/08/celebrities-that-own-a-tesla-motors-inc-model-s/ Johnson, K. (2014, September 11). Exploding World, Cheap Oil. Retrieved from Foreign Policy: http://www.foreignpolicy.com/articles/2014/09/11/exploding_world_cheap_oil_crude_prices_geopolitics_isis_opec Plummer, Q. (2014, September 1). Everyone loves Telsa motor S except thieves, Heres why. Retrieved from Tech Times: http://www.techtimes.com/articles/14537/20140901/everyone-loves-tesla-motor-s-except-thieves-heres-why.htm Randall, T. (2014, September 11). Why Musk is building batteries in a desert when no one is buying. Retrieved from Forbes: http://www.bloomberg.com/news/2014-09-11/why-musk-is-building-batteries-in-a-desert-when-no-one-is-buying.html Robinson, M. (2014, September 11). Tesla Motors Inc: A Better Path to Profits. Retrieved from ETF News Daily: http://etfdailynews.com/2014/09/11/tesla-motors-inc-tsla-a-better-path-to-profits/ Sparks, D. (2014, September 4). Tesla Motor Inc’s charging network in China could see explosive growth. Retrieved from The Motley Fool: http://www.fool.com/investing/general/2014/09/03/tesla-motors-incs-charging-network-in-china-could.aspx