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Situation Analysis ___________________________________

Tesla Motors, Inc. Situation Analysis 2

Contents

Situation Analysis

o Company Analysis…………………………………………..…………… 3

o Consumer Analysis……………………………..…………………… 3

o Marketing Analysis……………………..…………………… 4-‐8

o Product Analysis…………………………………………… 8

o Competitive Analysis………………………..………………………….……….. 9-‐10

References……………………………..………………………………… 11-‐12


Company Analysis

Tesla Motors, Inc. was founded in 2003 in the Silicon Valley area. Silicon Valley engineers

grouped together to prove that electric vehicles could change the world. Martin Eberhard and Marc

Tarpenning founded Tesla Motors, however current CEO Elon Musk led the first investment round in

2004. The company remained in stealth mode until July of 2006. During 2006, Tesla revealed its first

production car, the Roadster. Tesla Motors is an American company that designs, constructs and sells

electric cars.

Consumer Analysis

Tesla Motors won a, near, perfect score in an annual owner-satisfaction survey for its

Model S. A year after Tesla Model S was introduced; it got the highest marks in owner

satisfaction in latest annual auto survey. Last spring, the Model S earned a road-test score of 99

on their 100-point scale, making it the highest-rated car they’ve tested in the last five years.

“Tesla has helped transform the popular image of electric cars… to something that can be

fun and luxurious and packed with cutting-edge technology,” (Garthwaite, 2013). There is plenty

of buzz in the media concerning the Model X, high expectations have been set for the new

product and must live up to the expectations. “This is the car to get Tesla off government life

support and marketplace profitability, for a couple of very simple reasons: It was built on the

Model S sedan platform, it’s a seven-passenger SUV that doesn’t look like one and has genuine

eco-cred,” (Motavalli, 2012).


Marketing Analysis

Market Segmentation

Demographics

According to the United States Environment Protection Agency, the consumer

segmentation based on demographics included the following attributes: higher-than-average-

income ($114k), Urban or suburban residence, private garage with electric power, low weekly

mileage (100 miles), environmental sensitivity, concern about dependence on foreign oil,

political activity, and willingness to pay for convenience. In addition to the EPA’s consumer

profile, the U.S. Department of Energy also collected data that considerably resembles the

demographics from EPA research. The DOE info graphic below illustrates the some the income

aspect of EV owners. According to this data, the basic Tesla market segmentation should consist

of; 40-60 and preferably have an income of more than $100,000.


Geographic

In terms of EV geographic information, the Seattle Times has reported top markets for

EV sales from largest to smallest are as follows; San Francisco, Los Angeles, Seattle, New York,

and Atlanta. Together these metros comprise fifty-two percent of the U.S. EV market. As the

figure below suggest, the target consumer is more likely to come from an urban area or large

city.


Psychographic

With the demographic profile of EV owners, probable Tesla consumers could be identified as:

Early Adopters/Tech Savvy Individuals

• Similar to early hybrid owners

• Those interested is environmental best practices

• Educated; four-year degree or higher

• Value conscious; owners of EV’s want an EV that can compete with gas-powered

competition on price, quality, and performance. Interested in an EV that can go long

distance with proficient performance.

Market Needs

The main problems within the Tesla Motor consumer market, revolves around showing

the general public that EV’s are more valuable than gas-powered vehicles. In concern to EV

competition, the Tesla Model S, will out-accelerate any electric powered vehicle. In 2013,

Technology Review reported that the Tesla Model S has been outselling both Nissan Leaf and

the GM Volt- regardless of the fact that it cost twice as much. This leads to the Market Growth

According to market information from WSJ Market Watch, Tesla Motors will

successfully grow into a mass producer of EV’s by 2020. The image below is a NASDAQ

Analyst Forecast of Tesla Motor, Inc

• Obvious underlying need of lower production cost so that Tesla motors can compete with

EV market prices.


Market Growth

According to market information from WSJ Market Watch, Tesla Motors will

successfully grow into a mass producer of EV’s by 2020. The image below is a NASDAQ

Analyst Forecast of Tesla Motor, Inc.

Market Competition

In 2013, the WSJ reported that top competitors that Tesla Motors will face including the

following: BMW, Cadillac, Volkswagen, Porsche, and Audi.


Market Trends

According to the blog, Scientific American, Motor Trend named the Tesla Model S the

2013 car of the year. The first time an EV has ever won. Overall, current EV market trends

evident through research only benefit Tesla. Although the company faces competition, they are

at an advantage from production and sales of power trains and battery packs to other auto

manufactures.

Product Analysis

The Tesla Model X not only sports luxury, but also utility and efficiency. This SUV has

the lowest center of gravity allowing it to switch lanes, turn and make sudden moves safely and

securely with all seven passengers in the car. The Model X is built with duel motor all-wheel

drive, upping the torque to 50 percent, and enabling the car to reach 0 to 60 miles per hour in five

seconds. The ability to maneuver safely, quickly, efficiently and in style appeals to men and

women between the ages of 30 and 45 years old, with children, looking to protect their wallet as

well as the environment.

Though style typically ranks lower when considering safety, the Model X sports both

style and performance well. The falcon wing doors will not only turn heads, but are also perfect

for the tightest of spots. These doors open up and out of the way, providing better parking

options and an easily accessible entry into the car. The ability to slide the second row of seating

also helps passengers enter the vehicle. Small children and adults will no longer need to climb

into the car or fight over the passenger’s seat because the second and third rows are just as

comfortable and accessible as the front.


The Tesla Model X comes complete with a futuristic Tesla Touch screen allowing drivers

to access any information or entertainment needs on the road. The Model X is perfect for

consumers dreaming of owning an SUV due to the money they will save at the pump. The Model

X does not use any gasoline, and is powered by a 60 or 85 kWh battery. Consumers will save

money in the long wrong when switching to Tesla.

Competitive Analysis

2014 will be a breakthrough year for Tesla Motors. Currently, Tesla vehicles can be

found in small numbers throughout the major American markets, and some overseas particularly

in China. Tesla Co-Founder and CEO, Elon Musk, has launched Tesla gaining spectacular media

coverage and notice from a specific clientele. So far, Tesla hasn't been able to break through to

the mainstream American masses. As the Tesla Supercharger network expands from its current

number of 100, Tesla hopes to launch Model X in 2014 to great demand.

Since the Model X has not yet been released, consumers and the media are only left to

speculate on the qualifications of the new model. However, other car companies are beginning to

offer their version of the luxury electric SUV. The most direct competitors of the Model X are:

• Audi Q-8 E-tron: This is the car that will most directly compete with the Model X,

although it is to be released in 2015.

• Other hybrid models from Toyota and Honda: the fact that many other automakers create

hybrid models of sedans and SUVs is limiting Tesla and holding them back.


As we begin the Model X campaign, we need to distance Tesla and find the sole factor that

separates it from it's lesser priced, more generic counterparts. Although Tesla already has a

dedicated "niche" following, for the Model X to be successful it needs to gain more widespread

appeal through an integrated campaign.

Tesla Motors (Model X) Competitors: Luxury models that are NOT electric

• Chevrolet Corvette Stingray

• Mercedes-Benz S Class

• Jeep Cherokee

• Lexus RX 350

• Cadillac CTS


Works Cited

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