Electric Vehicle Industry

Strategy Development at Tesla Motors The hybrid and all-electric vehicle market is growing rapidly, and some industry analysts suggest that the future of personal transportation is in the hands of these manufacturers. One company that is in the vanguard of this industry is Tesla Motors, named for famed inventor Nikolai Tesla. The purpose of this capstone project is to provide an industry analysis to develop a strategy for the CEO of Tesla Motors to help shape the company's future.

Review and Analysis Define strategy and examine how the definition of strategy fits Tesla Motors and its situation Although a number of different definitions have been advanced over the years, a useful definition in an organization context states that “strategy determines the direction and scope of an organization over the long term, and it should determine how resources should be configured to meet the needs of markets and stakeholders” (Three levels of strategy, 2018, para. 4).

Applied to Tesla Motors (hereinafter alternatively “Tesla” or “the company”), this definition of strategy refers to the manner in which the company intends to achieve its corporate objectives over the short- and long-term and how it will allocate the organizational resources needed for these purposes. This definition is also congruent with the strategic approach that the company has used over the past decade as discussed further below.

Summary of the main strategies that Tesla's management took leading up to this company's recent development Since the company’s founding in 2008, Tesla has used a luxury marketing strategy that has focused on the most affluent consumers who are interested in cutting-edge technologies that have the potential to replace fossil fuels. In this regard, Uggla (2016) reports that, “In general, a luxury brand has a deeper and richer extended brand identity as compared to more mundane brands.

It also has a more subtle brand personality and stronger brand credibility and brand integrity” (p. 35). Although the company has most recently focused on developing all-electric vehicles to the exclusive of hybrids, its strategy remains focused on a luxury marketing strategy that appeals to its target market. This approach has also been used in varying degrees by the company’s main competitors as discussed below.

Identification of Tesla Motors’ industry and its main competitors and their respective strategies While a number of major vehicle manufacturers are either planning on introducing their own hybrid or all-electric vehicles or have already done so, Tesla Motors’ current major competitors include those set forth in Table 1 below which lists their corresponding corporate strategies.

Table 1 Tesla Motors’ major competitors and their respective strategies Competitor Description of strategies Effectiveness of strategy Ford Motor Company Transition from existing internal combustion engines to hybrid or all-electric by 2022, including 40 all-electric vehicles as well as some mid-range priced vehicle models (Carey & White, 2018). This strategy requires the reallocation of scarce organizational resources away from Ford’s existing models which will likely erode consumer confidence and their marketability until the new product launches.

General Motors Focus on low-cost, flexible vehicle designs with proven efficiency with high volume production in China to appeal to mid- and upper-end consumers (Lienert & White, 2018). These strategies will help reduce the price of ell-electric vehicles but their point of origin may become a politically charged region in the foreseeable future, disrupting both manufacturing and marketing planning. Honda Motor Company Development of an affordable all-electric vehicle by early 2019 by drawing on its current Urban EV Concept (Honda Urban EV Concept, 2018).

These strategies will limit Honda’s short-term ability to innovate in an industry where innovation is the key to long-term success. Toyota Motor Corp. Widely regarded as Tesla’s primary competitor, Toyota plans to offer all-electric versions of its current models by 2025, with the goal of selling at least 5.5 million all-electric vehicles by 2030 (LeSage, 2017). These strategies represent a viable approach to transitioning from existing internal combustion models to all-electric versions while retaining the basic features that have made Toyota’s vehicles enormously popular over the years.

Hybrid and electric vehicle industry analysis Although electric vehicles have been around for at least a century and a half (The history of the electric car, 2018), the electric vehicle industry today remains in a relatively early phase in its development (Todd & Thorstensen, 2013).

The major early entrants into this market, including most especially Tesla, Ford and Toyota, are expected to enjoy a competitive advantage until newer entrants, capitalizing on existing innovations in electric vehicle technologies, will be able to gain market share by focusing on niche markets within this industry, including the budget-conscious sector (Todd & Thorstensen, 2013).

Overall, though, the hybrid and electric vehicle industry is expected to experience substantial growth over the next 20 years as the infrastructure that is required to support these vehicles is deployed nationwide and the efforts to transition from fossil fuels continue to redefine the transportation industry in general (Todd & Thorstensen, 2013). Three performance goals for Tesla for the next one (1) and five (5) year period, respectively Three performance goals for the next year: 1. Determine viability of continuing the Model S. 2.

Determine the most popular features of the Model X to apply to other models. 3. Identify new markets for the lower-cost Model 3. Although the Model S is the best all-electric vehicle in the world at present, it is based on dated technologies that will become obsolete within the foreseeable future. The Model X has been widely acclaimed as a superior vehicle based on several attributes that can be applied to future models.

The lower-cost Model 3 has widespread appeal based on its projections of saving owners $200,000 in fuel costs over a million miles of driving (About us, 2018). Three performance goals for the next 5 years: 1. Identify the optimal location(s) for manufacturing all-electric vehicles in terms of cost and supply chain management. 2. Increase the performance of existing battery storage technologies to extend the range of its all-electric vehicles. 3. Identify opportunities for expanding the company’s market share in other countries.

At present, the majority of the components for all Tesla vehicles are manufactured in Fremont,.