Reference no: EM133084782
Tesla motors (Tesla), an American automotive company was ranked #1 on Forbes' fifth annual list of the world's most innovative companies 2015 ahead of Saleforce.com. Inc. for the first time in five years.
Tesla, whose prime focus was on energy innovation, was a technology and design company which had forayed into the automotive manufacturing business. It took on the traditional automotive industry with its innovations, competing to develop the best world class technology in electrical vehicles (EVs).
It disrupted the global automotive industry as a distinct player by focusing on innovation, Research & Development R&D), and the customer. Its innovations in design, the development process, product differentiation, and marketing strategy revolutionized the global automotive industry.
Tesla strategy has been to emulate typical technological-product life cycles and initially enter the automotive market with an expensive, high-end product targeted at affluent buyers. As the company, its products, and consumer acceptance matured, it is moving into larger, more competitive markets at lower price points. The battery and electric drive train technology for each model would be developed and paid for through sales of the former models.
Some of Tesla's stated goals are to increase the number and variety of electric vehicles (EVs) available to mainstream consumers by: Selling its own vehicles in company-owned showrooms and online. Selling power train components to outer automakers. Servicing as a catalyst and positive example to other automakers.
Tesla's strategy of direct customer sales and owning stores and service centers is different from the standard dealership model in the US vehicle marketplace. A Tesla motor is the only automaker that sells cars directly to consumers; all other automakers use independently owned dealerships.
Certified Pre-Owned Program
Under a buyback program called Certified Pre-Owned (CPO) available in 37 US states a Tesla Model S is sold with the right to return it to the company after three years for a reimbursement of 43% to 50 % of its initial price. This reimbursement matches the trade-in values of German luxury cars of that age. In addition to maintaining a high resale value of its cars, Tesla Motors hopes to secure a supply of used cars to refurbish and re-sell with warranty. According to Automotive News, the profit margin on used car sales in the USA is about triple that on new cars, and because Tesla sells directly to consumers, it would collect resale profits.
Technology
Tesla Motors builds electric power train components for vehicles from other automakers, including the lowest-priced car from Daimler, the Smart for Two electric drives, the Toyota RAV4 EV, and Freightliner's Custom Chassis Electric Van.
Batteries
Unlike other automakers, Tesla does not use single-purpose, large battery cells, but thousands of small, cylindrical, lithium-ion 18650-like commodity cells used in laptops and other consumer electronics devices. It uses a version of these cells that is designed to be cheaper to manufacture and lighter than standard cells by removing some safety features. According to Tesla, these features are redundant because of the advanced thermal management system and an intumes cent chemical in the battery to prevent fires. Panasonic is the only supplier of the battery cells for the car company and cooperates with Tesla in the
Giga factory.
1. Product Differentiation is a strategy which Tesla used. Discuss the term "Product Differentiation), and explain how did Tesla apply it?
2. Identify and discuss two different strategy choices Tesla adopted?
3. "Direct customer" is a strategy Tesla uses, explain how does this bring about competitive advantage to Tesla?