Tesla Motors, Inc.

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University of Oregon Investment Group Business Growth Strategies April 18, 2013 Tesla plans to grow organically in the future through expanding its product offering, making its products more affordable, creating more attractive products, and expanding globally. Tesla has produced two products over its lifetime, the Tesla Roadster and the Model S. Tesla plans to begin production of the Model X, an electric cross-over, in 2014 and to bring it to the market by 2015. Furthermore, Tesla management has mentioned that they intend to bring a much cheaper version of the Model S to the market. This will allow the company to gain greater market share in all geographic regions. Going forward, the firm will need to continue to bring innovative products to the market. Model X Tesla is a leader in bringing innovative products to the car market. Outside of the fact that they have created an all-electric car which accelerates from 0-60 in 4.2 seconds, the technology inside the car is spectacular. In the future the company plans to continue to improve their product offering by creating innovative cars that incrementally change the automobile industry. One such change will be to increase the range that their cars can go in a single charge. In 2013 Tesla plans to open stores in Europe and Asia/Pacific. Expanding the business overseas will increase business significantly. Currently the firm does not have any Model S cars displayed in any stores overseas, yet 25% of reservations for Model S’ are from outside of North America. Industry Overview Tesla falls into Car & Automobile Manufacturing Industry. The industry overall generated $87 billion revenue and $2.1 billion profit in the last year. IBIS World projects an industry annual growth rate of 3.5% for the years 2013 to 2018. The major market share holders are Toyota Motor Corporation (15.6%), General Motors Corporation (15.3%), Ford Motor Company (12.0%), Hyundai- Kia Automotive Group (11.4%) and Honda Motor Co. Ltd. (8.5%). As the chart on the left shows, midsize and full-size sedans are the most popular car segmentation, which holds 44.1% of the total market, followed by compact and subcompact cars, which holds 36.2% of the total market. Competition Petroleum is still the dominant energy source in the U.S. and it has significant implications for the economy, environment and energy security. We are in demand of advantaged technologies that can help us reduce our reliance on petroleum and cut emissions. UOIG 4
University of Oregon Investment Group April 18, 2013 In today’s market, auto manufactures offer hundreds of vehicles models that using alternative fuels and other advantaged technologies. These light-duty vehicles exist for the purpose of helping drivers and fleets reduce petroleum use, cut emissions, and save money on fuel costs. In 2013, many vehicles set to arrive including Compressed Natural Gas Vehicles, Propane Vehicles, Allelectric Vehicles, Plug-In Hybrid Electric Vehicles, Hybrid Electric Vehicles, Ethanol Flex-Fuel Vehicles and Biodiesel Vehicles. Next, we will briefly discuss the advantages and disadvantages of each group of vehicles. Compressed Natural Gas Vehicles The same fuel used for cooking and heating in many homes powers compressed Natural Gas (CNG) Vehicles. In the U.S., we have plenty natural gas supplies and we are currently developing more ways to generate natural gas. For example, some producers capture renewable natural gas from landfills, sewage treatment facilities, or agricultural waste. Thus, CNG costs less than gasoline in most cases and the resulting savings can offset the higher purchase price of CNG Vehicles. Honda Civic Natural Gas In 2013, three dedicated CNG Vehicles are available, including Honda Civic Natural Gas, the natural gas General Motors Chevrolet Express/ GMC Savana, and the Vehicle Production Group (VPG) MV-1. Two CNG-gasoline hybrid vehicles, including GMC Sierra 2500 HD and the Ram 2500 CNG, that can operate on natural gas and then switch to gasoline operation when the CNG cylinders are empty. CNG Vehicles drivers need to consider fueling infrastructure. Up until February 2013, there were 500 publicly accessible CNG fueling stations across the country., while there were 121446 (June 2012 data) gasoline stations in the U.S. Propane Vehicles Ford Super Duty F-250 Propane, also known as liquefied petroleum gas, which is a clean-burning gaseous fuel that’s been used in transportation for decades. Propane is the most commonly used alternative motor fuel in the world and it is nontoxic, safe to handle and presents no threat to soil, groundwater, or surface water when spilled or leaked. There were 2500 stations that serve propane throughout the country. Almost all the Propane Vehicles are heavy-duty pickups or vans. Plug-In Hybrid Electric Vehicles Plug-In Hybrid Electric Vehicles (PHEVs) use batteries to power an electric motor and use another fuel to power an internal combustion engine. Normally, the other fuel can be gasoline or diesel. The batteries can be charged from an off-board electrical power source, through regenerative braking, or by the internal combustion engine. PHEVS can be fueled solely with gasoline, so they don’t have to be plugged in before driving. However, they will not achieve maximum fuel economy without charging. Toyota Prius Plug-In Hybrid UOIG 5
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