Summer 2020 Session COB 300: Tesla Case Study

Team 4

Hunter Buchardt [email protected]

Elizabeth Dickinson [email protected]
Jennifer Faillace [email protected]
Gatlin Greenhalgh [email protected]
Noelle Harris [email protected]
Scott Weber [email protected]

1
 Executive Summary
Company Summary: Following the mass-market debut of electric vehicles (EVs),
manufacturing quickly ceased due to a lack of consumer demand that resulted from range
anxiety, lackluster performance compared to fuel-powered cars, and high purchase prices
(Okulski, 2011). The early collapse of the EV industry inspired two Silicon Valley engineers to
begin Tesla Motors, a car manufacturer specializing in luxury electric sports vehicles, in 2003
(Lee Thompson, 2020). The founders were determined to eliminate the stigmas surrounding EV
capabilities because they recognized the potential of combining lithium-ion battery technology
with the capacity capabilities created by operating under economies of scale. Elon Musk gained
control of the company in 2008 when Tesla began struggling financially, but his ambitious
mindset and strategic decisions have stabilized operations and led to notable environmentally
friendly milestones.
Since then, Tesla Motors has redefined the electric vehicle industry and presently offers
consumers a range of EV models, all holding top rankings in safety, performance, and efficiency
for vehicles in their class. Furthermore, Tesla’s overwhelmingly successful penetration into the
automobile industry has silenced the uncertainties regarding EV capabilities – ultimately,
prompting increased competition from interested manufacturers. Musk’s mission “to accelerate
the world’s transition to sustainable energy” has led Tesla to expand outside of the automobile
industry, inspiring household innovations that propel his vision of a greener planet (Ahmad &
Khan, 2019). As Tesla looks towards the future, they see many opportunities for expansion and
profitability.
Options:
1. Status Quo: Continue present operations and further penetrate their current markets
(United States of America, Europe, and China) using their existing product line (Model 3,
S, X), eventually releasing the Model Y and Cybertruck.
2. Model 3 Scale up: Discontinue production plans for the Model Y and shift company
resources towards further penetrating the European Market. This will be achieved by
pushing the Model 3 to consumers, requiring increased resources to be allocated to
production at the Berlin Gigafactory to support heightened demand requirements.
3. Cybertruck Re-design: Continue with current operations and focus additional resources
on engineering a second Cybertruck model that is designed to satisfy the unique needs of
the African and South American car market. This will require a new Gigafactory to be
established on either continent.
Conclusion: Following extensive research and collaboration between the four respective
disciplines, it is recommended that Tesla’s short-term strategic direction should most closely
resemble the Status Quo alternative. The cost implications of discontinuing the Model Y after
such a significant resource investment has already been made was deemed financially
irresponsible. Additionally, the calculated resource requirements considered necessary to
penetrate an entirely new market, design a new truck model, and construct a new Gigafactory did
not yield a payoff great enough to risk the company’s progress towards achieving financial
stability.

2
 Therefore, it has been concluded that Tesla Motors should adhere to their present
operational strategy, while also introducing a critical focus on improving their customer service
capabilities. Allocating resources towards customer service will allow Tesla to maintain their
strong market position as other, larger car manufacturers with extensively established service
networks begin to enter and occupy the EV segment.

Case Introduction
When our group first began working on the case many of us had no prior knowledge on

the operations of Tesla, beyond the eye-catching headlines seen over the years. Research on the

company was bizarre and jarring as we conducted fact-finding on “Tesla news.” Media reports

usually yielded one article announcing the company’s oncoming doom, while another would

applaud Elon Musk as a visionary; picking sources with an unbiased perspective felt extremely

difficult. Our group was attentive to the strengths and weaknesses of Tesla, which is still

classified as an upstart in the automotive industry. However, the threat of larger companies

catching up to Tesla, who presently holds a competitive advantage in the manufacturing of EV

batteries, appears to be delayed as these companies face the same problems that Tesla did at the

start of their venture.

As the team began discussing the case’s proposed alternatives, we quickly discovered our

desire to carve our own solution. Regarding Alternative 3, our group thought quickly came to the

consensus that expansion into developing countries would not be well-received because it would

involve establishing the infrastructure required to power the Cybertuck II. This upfront

investment would be a major block, in our perspective, which didn’t appear to be a profitable

venture. We briefly discussed the addition of solar panels onto truck as a continuous source of

power to combat the downfalls of Alternative 3. However, the energy collected from solar panels

does not currently supply enough power to support an electric vehicle - or at least to do so at a

convenient rate. Regarding competition that already exists in the South American and African

3
markets, Tesla cannot compete with other car manufacturers who avoid costs from less

environmental regulations and safety standards in developing countries. Conversely, the

Cybertruck II would not be able to eliminate those costs because it has zero emissions.

Additionally, incentives to own and operate a low-emissions vehicle in developing countries are

much smaller so we did not believe that Tesla could compete with other leading car

manufacturers that operate in South America and Africa.

Recent events and news progressively shaped our perspective on the case itself. Tesla had

early success and potential for rapid growth as 2020 began. The early delivery time for the

Model Y also quickly shaped our ideas on Alternative 2 because of the success on delivery

numbers. This ultimately deterred us from choosing this option because the group felt this

alternative was invalidated by a changing environment. Our assignments in Marketing further

influenced and shaped our opinions due to factors not initially considered, such as

cannibalization. Initially, our team had a pessimistic perspective on how we expected Tesla to

perform this year because of the economic impact of Covid-19. Our pessimistic view of the

company made our initial thoughts much more risk-averse due to an expected global recession in

the next five years. Expansion into markets like China and Europe were considered sunk costs

that the company could not recover, and an expansion into South America and Africa felt very

risky because of high upfront costs. Tesla has not faced difficulty raising capital through stock

issuance in recent years. The most recent profit from stocks in February 2020 ranged from $2-

2.32 billion. However, a risky additional expansion into a shrinking economy effected our

decisions from a long-term point of view.

Navigating the unforeseen challenges of teleworking was difficult, especially in the

beginning, but the project grew increasingly manageable as the team adjusted and developed a

4
commitment to understanding the case. We all feel that the Tesla case demonstrated the

integration of the four disciplines in a challenging manner, while also providing us with our first

long-term team project experience.

Management: Corporate Level Strategy

Corporate Level Strategy
As a company notorious for exoticism and continuous innovation, it is critical that Tesla’s
corporate-level strategy is aligned with the core functions and objectives of the firm. Tesla’s mission is
“to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to
market as soon as possible” (Tesla 2020). Fortunately for Tesla, they have chosen to implement a hybrid
strategy that emphasizes differentiation and focus in order to achieve their goals for the company. These
two factors are critical to distinguish the Tesla brand from other car manufacturers and position their
vehicles as superior to the competition.

Tesla’s Present Strategy:

Differentiation: Tesla does not simply differentiate themselves horizontally, but rather vertically.
They achieve vertical differentiation by utilizing rechargeable lithium-ion batteries and by offering a
superior quality product that customers immediately recognize and accept as better than their competitors’
offerings (CNBC 2020). Tesla harnesses their distinguished performance and brand to continue
expanding their competitive advantages by differentiation through their battery technology, speed, range,
appearance, safety, and branding (Dyer, 2015).
Focus: Unlike typical car manufacturers that pursue both the electric and fuel-powered markets,
Tesla is uninterested in exploring the fuel-powered segment of the car industry. Despite significant
opportunities for profit and growth, Tesla chooses to focus its resources on creating luxury electric
vehicles that outperform existing alternatives. This enables their technologies to pioneer the EV industry
and sustain their reputation as “the pre-eminent battery electric vehicle manufacturer in the world”
(Thomas, 2019).

Tesla’s Future Strategy: Stability Strategy

Differentiation: Tesla will continue differentiating themselves as they recently released the
Model Y and expect to release the Cybertruck in 202, increase customization options, and improve

5
vehicle performance. Tesla EVs will continue being recognized and admired by customers for their eye-
catching exterior designs, unique features, and uncommon accessories. Tesla’s differentiation strategy
will extend into our proposed unique marketing campaigns. Additionally, after customer service
improvements are implemented, the new Tesla App will distinguish Tesla from competitors lacking
comparable technology.

Focus: Tesla will remain focused on its mission to create sustainable electric cars for the mass-
market.

Growth and Market Penetration: As Tesla begins to incorporate marketing into its business
strategy, the company will expand and begin reaching new customers. Right now, Tesla relies solely on
its strong “cult-like” following of previous Tesla buyers and “adoring fans” (Rutter, 2014). Adding
advertising and campaigns will increase the volume of impressions for Tesla’s products, thus facilitating
market penetration and subsequent increases in sales, customer volume, and profits. However, in order to
support this growth, Tesla must improve their lackluster customer service department capabilities to build
long-term and loyal customers.

Management: Porter’s 5 Forces

As Tesla’s management examines the three strategies proposed, it is crucial that they consider
their current position in the industry, as well as each alternatives’ ability to expand their existing market
share and improve the profitability of the firm. Tesla battles market threats, as all car manufacturers do,
but they have successfully established themselves at the top of the electric vehicle market (Cagle &
Musonera, 2019). This position provides them significant expansion opportunities to penetrate the overall
vehicle market and further differentiate themselves from other car manufacturers that release EV models,
as long as they work towards improving their customer service capabilities.
The following Forces were the most informative for guiding our recommendation:
i. Threat of New Entrants:
a. Barriers to Entry (LOW threat level): High research and design costs, combined with
significant knowledge and capital requirements deter new and existing car manufacturers
from significant expansion efforts into the EV market. However, this is expected to
change in the coming decades (Valdes-Dapena, 2019). Furthermore, other manufacturers
are unable to match the brand loyalty and aesthetic differentiation Tesla has achieved.
ii. Bargaining Power of Buyers:
a. Network Effect (MODERATE threat level): Tesla has a well-established, trans-
continental supercharging network, which minimizes the benefit generated by the
marginal buyer. However, more consumers will result in increased R&D capabilities,
potential for improved customer service, and more supercharging parking spots/stations,
all of which increase the value of Tesla cars.
iii. Threat of Substitute Products:
a. Availability of Substitute EVs (MODERATE & INCREASING threat level):
Substitute EVs are available and more car companies are beginning to develop EVs.
b. Propensity to Substitute an EV for a Fuel-Based Vehicle (LOW threat level): Once a
consumer purchases an EV they are unlikely to return to a fuel-based vehicle. (Edmonds,
2020)

6
 iv. Market Rivalry:
a. Economies of Scale (HIGH threat level): Tesla continually struggles with their customer
service performance, while other brands with a more diversified product line have
extensive networks designed to assist their consumers (Miller & Stringham, 2015)
While differentiation is critical to Tesla’s strategy, considerable value is created by dedicating
company resources towards customer service improvements. Their current client service deficiency is a
dimension of their business that severely threatens the future of Tesla’s industry position. Currently, Tesla
trails behind competitors in their ability to service and distribute vehicles. This is largely because they
lack comparable facilities when compared against other car manufacturers with greater levels of market
penetration in the tradition fuel-based market (Fisher & McCabe, 2019). This issue would only be
exacerbated if Tesla chose to develop and distribute a new model of the Cybertruck in Africa and South
America; however, the Model Y is expected to expand Tesla’s current industry position and its
production should continue. As more automobile manufacturers begin to enter the hybrid and EV market,
it is important that Tesla strengthens their customer’s loyalty and reputation as the premier electric
vehicle manufacturer to prevent more-established car manufacturers from pushing them out of the market
due to their poor customer service.

Management: Global Analysis

Just three short years after the birth of Tesla Inc., Elon Musk, co-founder and engineer of the
company, crafted a “secret” long-term plan that would shape Tesla into the brand it is today. Musk began
by building a sports car and he used its profits to build a more affordable vehicle. Then, he shifted
resources towards building a model for the mass markets, all whilst providing zero-emission electric
power generation options to consumers (Musk, 2006). Fourteen years later, the plan has grown more
specific, but one thing has remained constant – Tesla’s desire to accelerate the advent of sustainable
energy, not just in the U.S., but globally (Musk, 2016). In fact, the official mission statement of Tesla was
“to accelerate the world’s transition to sustainable energy.” Tesla has labeled themselves as an
international brand whose goal is to make the entire world a better place, not just one country.
International expansion is no easy feat, but by progressively opening manufacturing facilities around
the globe, Tesla minimizes risk as they enter new global markets. Opening manufacturing facilities in the
Netherlands in 2013, a Gigafactory in Shanghai in January of 2019, and with plans to begin operations in
Berlin in 2021, Tesla has been able to ramp up production and increase delivery capabilities in its two
most important international markets: China and Europe. These factories are critical to Tesla’s global
expansion because, aside from the U.S., the facilities are located two of the largest EV markets (IEA,
2019).
With Tesla’s current efforts and progressive expansion in consideration, it is recommended that Tesla
continues pursuing their existing operational strategy when forming their global roadmap. While this
option does not provide Tesla significant opportunities to expand into entirely new markets, such as South
America and Africa (as discussed in Alternative 3), it allows them to focus their resources on further
establishing their existing market presence globally, especially in Europe and China. Nonetheless,
company improvements are still necessary to ensure proper growth ensues. As aforementioned, Tesla’s
customer service does not meet industry standards. Their service capabilities perform poorly in the United
States, but the capability issues are further exacerbated globally. Consumers in Europe and Asia are

7
reported as less satisfied than Tesla owners in the United States (Randall, Halford, & Sam, 2019).
Therefore, it is necessary to overhaul their customer service efforts in order to efficiently meet global
demands.
A 2019 survey conducted by Bernstein, a research firm in New York, found that 42% of Tesla’s
customers felt their service center experience was “excellent,” which was down 15% from surveys
previously conducted. Their research agreed with Bloomberg’s findings (discussed in the previous
paragraph) that consumer’s service experience was especially weak outside of the U.S. (Salinas, 2019).
These findings are increasingly understood when, according to information on the Tesla website, only
approximately 166 service centers exist outside of the U.S., including those coming soon. Therefore, prior
to exploring new geographic regions, Tesla must implement customer service improvements in their
existing markets to prepare them for the remaining 95% of the global vehicle market. By focusing
financial resources on opening new service centers, rather than Gigafactories, international customers will
experience efficient and smooth service; this will alleviate prospective buyers’ fear that resources are
unavailable to support Tesla maintenance.
Advantages of the proposed recommended global strategy:
 Tesla will continue to reach the most relevant markets for buying and selling electric vehicles.
 Improvements in their current markets create long-run opportunities to expand in the future.
 In the second half of 201 9, Tesla has added 2,000 charging stations to their Supercharger
network. Continual improve of their network will help combat their customer service downfalls.
The disadvantages of continuing Status Quo operations:
 There will be no introduction into new markets, reducing the number of prospective new
customers.
 Tesla must spend money to build new service facilities around the world, rather than building
Gigafactories. This is a tradeoff that postpones immediate profitability but minimizes risk.
Finance: CFO Report
Executive Overview:
From a financial perspective, Tesla is rapidly approaching a historical change of making
a profit in the next few years. The company’s success in construction of factories in China and
Europe will generate large profits for the company in the international market. Many ICE
competitors are now breaking into these markets and are starting to produce competitive EVs
after facing difficulties that Tesla faced at its initial development of the Model S and Model X.
Financial Analysis:
Tesla’s financials leave something to be desired from a lack of profits but show all the
signs of a rapidly growing company. Major leaps and bounds in infrastructure development have
created a large demand for capital to fund projects like the Gigafactories. Thankfully, Tesla has
enjoyed large success in raising capital through issuing new stock repeatedly over the past few
years. Despite negative press of raising capital repeatedly, the value of Tesla stock has only gone
up since it announced its latest issuing of stock in February 2020. Tesla’s choice to continually
invest its profits back into the company has reinforced its ability to grow larger each year. Also,
Tesla is on track to become the most valuable automaker on the market in 2020 by market cap,
despite a smaller amount of total sales. It is projected that Tesla will continue moving closer and
closer towards making a profit while growing its operating revenue every year.
Benefits/Detriments:

8
 The first choice is continuing with current plans to introduce the Model Y and Cybertruck
into the market, along with continued production of the Models 3, S, and X. Gigafactories in
China (completed in December 2019) and Europe (slated for completion in July 2021) hold
promise for continued expansion for veteran models into markets outside of the United States.
There is confidence for a sharp increase in revenue following the introduction of these vehicles
onto the American market, while also breaking into new markets with the Model 3
Next is the option to drop the Model Y production plans in 2020 and to focus production
ramp up on the Model S and X. With this option Tesla may face a drop in sales, but increased
demand for existing other models. The Model 3 and Model Y share most of their parts, making
the production switch not overly laborious. the invested capital in tooling for a unique vehicle
Tesla may face some backlash for late cancellation of the Model Y and see a drop in capital from
returned pre-orders and a decrease in the value of their stock. This alternative also represents a
loss of investment on the Model Y research and development that would need to be recouped
from increased Model 3 sales.
Tesla’s last alternative is expanding into Africa or South America to introduce a second
Cybertruck model that is redesigned for unsurfaced roads. This expansion includes the
construction of a Gigafactory in one of the countries. A lack infrastructure that includes the
power grid needed to charge our models would be a large barrier to entry. While current
international expansion is deemed successful, penetration into these additional countries may
prove to be very costly due to the necessary investment in infrastructure.

Competitive Analysis:
In the current industry Tesla is continually challenged by new competitors, but still
enjoys a considerable head start in the EV industry due to the competitive advantage created by
their lithium-ion battery technology. The vertically integrated manufacturing process is the
largest factor for Tesla’s head start over competitors trying to bring their own EVs to market. In
the United States, Tesla does not face as fierce competition with traditional ICE manufacturers
that are facing their own difficulties in developing EVs. However, in the Chinese and European
markets many manufacturers are starting to bring their own EV cars to the market. Tesla’s
Gigafactories in these markets will allow it to command a significant market share through
greater availability.
Tesla’s biggest weaknesses are seen in their operating cycle ratio because of a low
inventory turnover ratio. Its other weak ratios are also a sign of Tesla’s continued growth and
reinvestment in the company, which may spark concerns of sustainability and inability to pay off
debts in an oncoming recession. The construction of the Gigafactories are a large portion of
Tesla’s current capital asset investments and provide the firm with a substantial increase in their
production capabilities. Tesla’s entrance into the Chinese and European markets is filled with
varied and veteran competitors, but the geographical location of production will fuel sales and

9
drive down costs. The introduction of government subsidies for EVs in both regions is projected
to increase demand in these markets as well. While these subsidies don’t show on our financial
reports, they serve to drive down the price of our automobiles for customers. This would not
continue for the Model Y and Cybertruck because of a cutoff established on the prices for cars
eligible for such subsidies. These new models would support Tesla in fulfilling demand for more
models in the United States.
Another interesting factor for Tesla to consider as a pioneer for the EV industry was its
collection of Zero Emissions Vehicle (ZEV) program credits. Tesla gathers these credits (based
on each state’s specific law) from the emission-free vehicles they sell to consumers and
manufacturers. Companies that fail to hold a specific amount of credits are consequently fined.
This has led many outside firms to actively pay Tesla each quarter for its extra ZEV credits,
providing the company with an additional incentive to sell or manufacture EV cars in some
states. (Beresford 2020)
Recommendation:
It is recommended, based on financials, for Tesla is to continue with the Status Quo
strategy. The early introduction of the Model Y already shows promising sales and deliveries as
the demand in the U.S. for CUVs is quite large. There are significant costs associated with
abandoning the Model Y as the company inches closer towards making a profit, there is little
reason to believe that any short-term alternative will suddenly generate a more favorable profit in
the next three years. Furthermore, the initial investment required to produce cars in developing
countries with a limited power grid would be a large cut to demand. A lack of demand due to
difficulty in charging EVs would further exacerbate the barrier to entry for Tesla to expand into
these countries.

10
Marketing: Product Market Matrix

11
 Marketing: Sales Forecasting and Cannibalization Analysis

Scenario 1 Assumptions:
2020: The Model Y will not be released until a portion of 2020 has passed, which decreases the cannibalization
factor for that year, as the model Y will only be cannibalizing sales for part of the year.
2021: The full effects of Model Y's cannibalization will be felt by 2021, but a portion of Y's cannibalization will be
offset by the Model 3's low price point and the initial release of the Cybertruck I.
2022: Model Y's cannibalization will continue, but the overall factor will decrease in 2022 as the excitement that
comes with the release of a new model wears off. Also, the Cybertruck I dual motor option is released.
Additional Assumptions: The release of the Model Y is expected to cannibalize the Model X and Model 3 at the
greatest rate because they share a similar target market and have a similar structure. There is potential for the Model
3 to lessen the effects of Model Y's cannibalization because when customers are researching the Model Y some will
see that the Model 3 is cheaper and select the economical option instead. The Cybertruck I has potential to
cannibalize Model Y and Model X because of size similarity; additionally, when it releases it will be the newest
model on the market.

Scenario 2 Assumptions:
2020: In 2020, Tesla would have released their decision to cancel Model Y production, which decreases the overall
cannibalization factor for 2020. The Model 3 will be the main source of cannibalization, impacting both the Model S
and Model X; sales loss will be felt more by the Model S.
2021: Cybertruck I will cannibalize the Model X by a small portion because of segment and functionality overlap.
Model 3 will continue to impact the sales of the Model S and X.
2022: Cybertruck I will cannibalize the Model X at a slightly higher rate than 2021, as more motor options become
available in 2022. Model 3 will impact the sales of the Model S and X at a lower rate than 2021.

Scenario 3 Assumptions:
2020: Cybertruck II will not be released until 2022, so it is not yet necessary to consider when determining the
cannibalization factor since few consumers are expected to hold off purchases for the Cybertruck II's release. Also,
like Scenario 1, the Model Y will not be released until a portion of 2020 has passed, which lowers the
cannibalization factor for this year.
2021: A slight uptick in the cannibalization factor will occur this year because the Model Y will continue to
cannibalize other models, the Cybertruck I's initial release occurs, and the Cybertruck II release grows closer.
2022: In this year there will be new motor options released for Cybertruck I, which will cannibalize a portion of the
Model X and Model Y's sales. The Cybertruck II's release will only cannibalize Cybertruck I by a small factor
because of the lack of market overlap. This year and scenario combination offers the greatest variety of Models and
options for consumers, which is why the cannibalization factor is the largest.
Additional Assumptions: Cannibalization for Scenario #3 will grow from year to year as the release of Models Y,
Cybertruck I, and Cybertruck II occur. The Cybertruck II is unlikely to cannibalize a significant portion of sales for
any of the models (including the Cybertruck I) in existing markets because it is a vehicle targeted at demographics
that lack travel/highway infrastructure. The release of the Model Y is expected to cannibalize the Model X and
Model 3 at the greatest rate because they share a similar target market and have a similar structure.

12
General Assumption: Overall cannibalization rates for Scenario #1 and Scenario #3 will be larger than
Scenario #2 because they offer consumers the most vehicle options
Marketing: Competitive Pricing Analysis

13
Assumptions used to calculate the Price Adjustment Factor:
1. Gas savings are not included when calculating price ranges.
2. Charging station costs are not included when calculating price ranges.
3. Price calculations do not include government federal tax credits or incentives.
4. Market competitors do not need be electric vehicles or hybrids, they can be fuel-based.
5. All prices are calculated for new models.
6. All prices are converted to USD.
7. All price ranges are calculated using the most recently released prices.
8. Scenario #2 will require the least adjustment because Model Y is not released (Model Y requires
the greatest price adjustment).
9. In 2022, more motor options for the Cybertruck I will be released, which will require additional
price adjustments than the initial truck’s release.
10. Scenario #1’s adjustment factor is heavily influenced by the Model Y’s introduction to the market
and its cannibalization of existing sales.
11. Scenario #2’s adjustment factor is lower because the Model Y is not released.
v. Scenario #3’s adjustment factors are the largest because of the Model Y, Cybertruck I, and
Cybertruck II’s release; we are predicting the greatest levels of cannibalization for previous
models in this Scenario.

14
 Marketing: IMC Plan

Campaign #1 Message and Type of Appeal:

Dramatic and Attention-Seeking: Exclusive experience that remains on trend with the
exoticism consumers associate with Tesla's brand identity. Video generating excitement about the
Space X launch, includes attendees arriving in their Tesla vehicles. Helps build Tesla's consumer-
association with high-tech innovations.
Campaign #2 Message and Type of Appeal:
Reminder Institutional Ad: Tablets monitored by on-site Tesla representatives will be located
in the cities and pedestrians will have the opportunity to draw the Tesla logo on the tablet. The
drawing will be transferred to the digital billboard and the artist's face will be captured; the drawn
image will then morph into the real Tesla logo. This creates an interactive experience for
pedestrians and exposes a wide demographic to the Tesla brand. The campaign will spend one
week of December in Beijing, then Las Vegas, then London, then end in New York City.
Campaign #3 Message and Type of Appeal:
Endorsement Appeal: Serena Williams
Social and Potential Appeal: Women are inspired by Serena William's ability to break social
norms on the court and overall success. Seeing her in a Tesla will inspire female sales and men
will associate the car with strength and athleticism.
Campaign #4 Message and Type of Appeal:
Pathos and Logos Appeal: Clip begins with a dreary outdoor scene displaying dead trees, wilted
flowers, and the absence of life. Then transitions from greyscale into dramatized vibrant colors

15
 with thriving plant life after a Tesla Model Y drives across the frame. Slight fear is elicited from
the viewer, but the solution (Tesla EVs) mitigates concerns.
Operations: Exhibit 1
Company Name: Tesla, Inc.

Name and Description of Product(s):

I. Model S: 4-door sedan, 210-330 miles per charge, initial base price: $73,500
II. Model X: Crossover between SUV and a family van, 250-330 miles per charge, initial base price: $80,000
III. Model 3: Mass-market vehicle, compact luxury sedan, 250-mile range per charge, initial base price:
$35,000
IV. Model Y: Compact luxury sedan, smaller than Model X, 230-miles per charge, initial base price: $39,000
V. Cybertruck I: Truck with ultra-hard stainless-steel exoskeleton, 250-mile range, initial base price: $40,000

Company’s Business Model:

I. Highly vertically integrated manufacturing.
II. Direct-to-Consumer Sales: gallery style showrooms and online purchasing (E-commerce).

Goals:
I. Accelerate the world’s transition towards sustainability.
II. Increase production, sales volume, and profits - while also driving down price.

Order Qualifiers:
I. Safety and performance standards.
II. Efficiency and environmental sustainability.
III. Customization options.
IV. Sufficient single-charge range capabilities.

Order Winners:
I. Self-driving capability.
II. Superior electric engine technology.
III. Delivery is specific to each customer's needs (scheduling and location for drop off).
IV. Advanced and continually updated interface software.
V. Vehicle speed and acceleration abilities.

Competitive Advantage(s):
I. Tesla’s Lithium Ion Battery Technology and manufacturing capabilities
II. Transcontinental (USA) supercharging network, exclusive accessible by Tesla vehicles.
III. Brand loyalty

Organizational Strategy: Differentiation & Focus

Operations Strategy:
Lean manufacturing allows Tesla to reduce the production time required to manufacture their vehicles,
which increases their agility and ability to respond to disruptions, get their product to the market quickly,
and lower costs. Additionally, vertical integration allows Tesla to retain control over the quality of their
vehicle’s inputs, which is critical to satisfy their customers’ demands for a high-performance vehicle.

Does the company’s operation strategy align well with their organizational strategy?
Tesla’s operational strategy facilitates progress towards their mission to improve the population’s overall

16
sustainability by lowering costs and improving quality. Aligning these strategies with their mission, they
will see increases in production, quality, customer satisfaction, and sales. Additionally, providing cheaper
options for electric vehicles increases consumers’ tendency and ability to transition away from fuel-based
vehicles.
Operations: Exhibit 2
Is the company making a product or delivering a service? Product Service Both
Does study of Complexity and Divergence apply to this company? Yes No
Core Competencies:
 Tesla’s lithium-ion battery technology and its superior power-storage capabilities
 Tesla’s hard-to-replicate brand loyalty, exoticism, and innovative reputation
 Vehicle interface technology, self-driving features, and software capabilities

1. Provides access to a wide variety of markets: Assuming a Tesla buyer has access to a
supercharger, Tesla vehicles are equally drivable compared to their competitors. This capability is
strengthened by Tesla’s well-established, trans-continental supercharging network and long-range
mileage capabilities from a single charge, thus making their vehicles suitable for all drivers.
However, the segment market that Tesla targets is demographically wealthier than the average
car-buyer, which eliminates lower-income buyers.
2. It increases perceived customer benefits: Consumers value the eliminated gas and maintenance
expense created by Tesla’s electric vehicle capabilities. They also perceive environmental
sustainability, trendiness, and the luxury features of Tesla models as superior to other alternative
transportation methods. These benefits often outweigh the higher price tag for many buyers.
3. It is hard for competitors to imitate: While Tesla’s lithium-ion battery technology is available
to the public for “open-source” usage (because of Elon Musk’s sustainability mission), they are
currently the only car manufacturer utilizing the knowledge on a grand scale.
Tesla’s Process:
Tesla’s central focus is on electric vehicle manufacturing; therefore, the process most suited for their
company goals is the complex systems process. Making electric vehicles is a complicated process that
requires many different subsystems, components, and phases to simultaneously interact with one another.
For Tesla’s vehicle manufacturing process, it is necessary to break the system down into subsystems and
then divide processes further into components. Components are then analyzed, developed, and integrated
together to form the whole; this process is only available through the complex systems process.
Customer Wants Technical Characteristics How are these technical characteristics
and Needs attained?
Provide users with the Provide users with personal charging cables
Ability to charge technology necessary to charge and continuously improve charging speeds
the vehicle their vehicles at home, as well as and battery-life longevity. Tesla must
on-the-go at a Supercharging maintain and expand their Supercharging
Stations. Network.
Equip EVs with electric battery Using lithium-ion battery technology, Tesla
Environmental technology that reduces the eliminates the burning of fossil fuels. Tesla
Sustainability vehicle’s carbon footprint. must conduct scientific analysis to test
emissions.

Maintenance/ Provide maintenance and Provide owners access to technicians who will

17
 Inspection inspection services to customers travel to users’ homes. These professionals
Services after the purchase of a product. will maintain, inspect, and fix the users’
vehicles.
The vehicle should have reliable Perform tests/trials to create a safe and
Safety seatbelts, airbags, anti-lock reliable vehicle. Implement the successful
brakes, and significant crumple technologies discovered from testing into
zones. (“Cars with Advanced,” Tesla models.
2020)

Operations: Exhibit 3
Indicate the Dimensions of Quality on which the company is focused.

Dimension Why is this dimension important, given their industry & target market?
Performance Tesla’s design standards enable unmatched acceleration and handling performance within their competitive
vehicle class, while adhering to consumers’ price ranges. The electric-only vehicle is easy to charge and
achieves unmatched range capabilities compared to past and existing competitors (Siddiqui, 2020).
Aesthetic Sleek and futuristic designs are a dominant characteristic of Tesla products. Luxury car buyers care about what
their cars look like, including shape, color and interior appearance.
Features Tesla’s innovative interface and driving technology is a critical factor that separates them from their
competition. Features and efficiency can be updated remotely through software, which enables Tesla to make
continuous improvements. This is important to satisfy ease-of-use demands from consumers.
Reliability Tesla vehicles are method of transportation, and potentially a consumer’s only option to travel efficiently
within reason. If the product fails to perform effectively, drivers are inconvenienced and must contact a Tesla
Service Center. Repairs can be expensive, even with insurance; therefore, they must be minimized with quality
production.
Does the company have any proactive quality assurance plans?
Tesla has quality inspectors at every plant and conducts an inspection on products before they
are shipped to consumers. Tesla’s lackluster proactive quality assurance is below industry
standard. Tesla does not have visible quality assurance plans but has widely reported failings due
to QA problems. Emphasis on quantity over quality to meet company quotas.

Does the company have reactive quality assurance plans? Does that include a recovery
plan should a customer receive poor quality goods and/or services?
Tesla offers an eight-year (or threshold for miles from 100,000-150,000) insurance package on
all models. They also offer driver pickup if needed and have Service Centers for any
maintenance or repairs that are necessary. Unfortunately, customer service for Tesla owners is
below industry standards because service centers are sparse - improvement is recommended.
Does the company utilize a quality/process improvement methodology, indicate which:
☐ NA ☐ TQM ☑ Six Sigma ☐ ISO ☐ Benchmarking ☐ Other
Provide a specific explanation of how the specific quality methodology relates to the
company’s business and how they implement it.
Tesla is installing production robots at factories to increase production and improve their
vehicle output rates. This is Six Sigma, because they are improving the processing time
while also decreasing the opportunity for human error. This strategy also reduces waste and
improves product lead time.
How has quality assurance (or lack thereof) affected the company’s success?

18
Tesla’s lack of substantial quality assurance has been reported by many sources (Morris, 2020;
Wayland 2020; Randall, Halford & Sam, 2019), but it notably has not significantly affected
sales. However, if improvement steps are not implemented the company will soon begin to feel
the impact of their poor-quality assurance infrastructure soon. The company’s focus on meeting
quotas ultimately trumps effective quality control in the factory. Without sufficient and proactive
quality assurance plans, many external failures are witnessed by the customer following an initial
period of ownership. While only a small portion of owners may be affected by Tesla’s common
quality problems, it may become a significant factor in competition between newer EV cars.
Operations: Exhibit 4
Describe the company’s supply chain from supplier selection to distribution of final product(s).

Tesla has a vertically integrated supply chain, leading them to produce many of their inputs and supply
themselves with the raw materials and inputs necessary to manufacture their vehicles; they also make
efforts to buy their suppliers and negotiate exclusivity contracts. Tesla’s internally produced
components include the battery, chassis, and self-driving program. However, Tesla does have a few
suppliers who provide them various parts, including Brembo for breaks or AGC Automotive for
windshields (Maverick, 2019). Tesla’s highly vertical supply chain enables the company to, unlike
other car manufacturers, limit the number of suppliers involved in their production process; this
strategic decision allows Tesla to retain control of key quality measures and ensure premium inputs are
being put in their vehicles. Additionally, integrating their supply chain minimizes the external forces
that often slow down production for typical car manufacturers, thus facilitating agile and responsive
manufacturing capabilities. Vehicle parts are quickly and efficiently delivered to manufacturing plants
because internally produced inputs are often made near the Gigafactories to reduce costs. The vehicles
are then assembled, inspected, and shipped to consumers. The cars are distributed directly to consumers
and do not pass through dealerships. Tesla relies on third party transport services to ship their products
across the nation (Tesla); Elon Musk has mentioned that he plans to create his own auto transport
trailers to expedite distribution and reduce Tesla’s dependence on external delivery companies
(Cosgrove, 2018). While it sounds like a nimble system, Tesla has experienced several problems over
the past few years. Some of their suppliers have gone bankrupt, and others have been late with their
shipments (Cosgrove, 2018). This inefficiency has resulted in longer lead times for end-customer’s
orders (Supply Chain Game Changer, 2020).
What implications does each alternative solution have on capacity level, type of resources and
costs?

Alternative 1: Capacity levels, resources, and costs stay as presently projected with minor adjustments
to account for unassignable variation.
Alternative 2: Scrap or deliver Model Ys that are already finished and redirect Model Y materials
towards Model 3 production. The capacity levels for other models is expected to increase with a one-
time expense for switching the manufacturing equipment away from Model Y processes. Supplier
reductions will be made based off the eliminated model Y’s parts, but mostly remain the same. Costs
should see an overall decline in the long run. Profit can be made in the selloff of Model Y tooling that
is no longer needed.
Alternative 3: Other models capacity levels drop to make room for Cybertruck II production. Tesla
will need cheaper materials, and therefore new suppliers, for Cybertruck II. They will dedicate
materials and invest in a charging network for the South American and African market. Costs and
production levels are expected to see a significant uptick.
What implications does each solution alternative have on inventory level and type, as well as cost of
inventory?

19
 Alternative 1: Inventory levels and costs remain at predicted levels, with minor adjustments to account
for unassignable variation.
Alternative 2: Inventory space is freed up for other models to expand into. Existing Model Ys are
stored for scrap, resulting in a cost increase until scrapping process concludes; this will result in a
decrease in Finished Goods Inventory and an increase in Raw Materials and WIP Inventory from the
model Y liquidation. Tooling can be sold to offset some of these costs as a reduction of PPE. Costs will
increase in short run and then decrease until stabilized.
Alternative 3: Costs increase and Finished Goods Inventory levels grow to prepare for the release of
the Cybertruck II. A potential flux may take place in Cybertruck II’s initial inventory level depending
on demand and lead times, while increasing Raw materials and WIP Inventory.

Operations: Exhibit 5 Final Comparisons

List the main points under each category. What would you recommend? Explain why.
Status Quo Solution 1 (Model Y) Solution 2 (Cybertruck II)

Operations Strategy Lean Manufacturing Lean Manufacturing Lean Manufacturing

Differentiation Differentiation Differentiation
Focus Focus Focus
Product/Service Design Wide variety Narrower variety (-1 Model) Wider variety (+1 Model)
Hard to replicate battery and Hard to replicate battery and Hard to replicate battery and
loyalty loyalty loyalty
Covers key customer Covers key customer Covers key customer
Needs/Wants Needs/Wants Needs/Wants
Quality Bare minimum quality control Bare minimum quality control Bare minimum quality control
Mostly reactive quality Mostly reactive quality Mostly reactive quality
assurance assurance assurance
Has not affected sales Has not affected sales Has not affected sales
Capacity Same as predicted Raw materials redirected to Other model capacity drops to
Minor adjustments other models make room for Cybertruck II
Potential increase in capacity Dedicate time, money and labor
for other models to SuperCharger network in
South America/Africa
Inventory Same as predicted Increase in finished products Flux in initial inventory level of
Minor adjustments inventory level for other Cybertruck II, based on number
models of orders and delivery speed
Costs associated with Increase in finished products,
temporarily storing finished raw materials, in-transit, and
Model Ys unfinished products inventories
Decrease in raw materials, in-
transit, and unfinished products
inventories
Distribution Same as before Delivery of pre-ordered Model New distribution network and
Potential Tesla brand auto Ys, then a cease of Model Y methods for South
transport trailers to speed up distribution America/Africa
distribution Potential Tesla brand auto Potential Tesla brand auto
Delays for various reasons transport trailers to speed up transport trailers to speed up
distribution distribution
Delays for various reasons Delays for various reasons
Procurement Same as before Supplier cuts based on model- New suppliers for cheaper
specific parts materials for Cybertruck II

-Recommendation:

20
 We recommend Status Quo with an additional emphasis on quality control and distribution. This company
only lacks two things from an operations’ perspective: logistics and quality control. Tesla needs to find a specialist
to help them with their distribution and other struggling areas within their supply chain. They face constant delays,
both when delivering to customers and when receiving deliveries from suppliers. Although their lackluster quality
control has not affected sales, this will change if issues persist. Solution 2 might have been considered if the Covid-
19 pandemic had not occurred. However, because the world is at risk of another depression it does not make sense to
risk tens of millions of dollars, time, and resources towards penetrating the African and South American market,
especially because Tesla would first have to develop themselves operationally in the new markets. Although Covid-
19 has yet to affect Tesla’s sales and stock price, there is potential for a second wave that could make financial
situations worse and riskier for everyone. While Solution 2 in our opinion is unfavorable, Solution 1 also has a few
problems. Solution 1 would come with wasted raw materials that cannot be used for other models due to Model Y
specific parts. Until a decision is made on what to do with the already finished and in-process Model Ys, there
would be a cost for storing them. Some assembly lines may need to be redesigned for other models and model
specific tools would have to be disposed of or converted into working tools for other models. Therefore, the Status
Quo is the most intuitive recommendation.

Conclusion: Final Recommendation

Still relatively new to the automobile industry, it is crucial for Tesla Motors to continue

building the company’s foundation before taking any major strategic leaps. Therefore, it is

recommended that operations persist as planned to avoid any unnecessary financial stress.

However, improvement is a continuous process and there is always space for incremental

adjustments to assist the company’s progression towards mass-market establishment and control.

Consequently, it is recommended that Tesla’s customer service capabilities become a focal point

of company’s short-term strategic direction.

As a luxury car brand, it is critical to appease

disgruntled customer complaints in an efficient manner

to foster and maintain customer loyalty (Lapham, 2005).

Successful customer Service Centers enable Tesla to

build a positive reputation. However, the company is

currently failing to provide many of their clients with

attentive customer service. Recent customers felt Tesla’s

21
problem resolution was “excellent,” which is down from previous reporting’s of 57% (Salinas,

2019). Additionally, customer wait times have climbed to new highs, often exceeding 10 days to

schedule a preliminary appointment (Randall, Halford, & Sam, 2019). If these issues persists,

other car manufacturers with established repair networks (notably BMW and Mercedes) will

capitalize on Tesla’s long wait times, poor rates of problem resolution, and low levels of service

satisfaction, ultimately pushing Tesla out of the EV segment (Darrow, 2017).

Recent publications released by Tesla, show the company is making efforts to improve

their service network’s shortcomings. However, performance for many customers is still

suboptimal, inconsistent, and weak in comparison to competitors. Efforts to launch service

scheduling and delivery tracking from a mobile app yielded limited success, with many

consumers reporting significant capability and functionality failures, poor delivery processing,

and repeated ‘error, try again later’ messages (Randall, Halford, & Sam, 2019). Tesla has also

taken steps to reduce the wait time on vehicle parts necessary to perform repairs, which was

proven to be effective. However, successful replacement part distribution has a marginally

insignificant benefit to the consumer if they are still waiting significant periods of time to be

serviced by a technician (see figure).

Tesla needs to take the following steps to improve the customer service
dissatisfaction existing within their service infrastructure:

1. Stabilize Tesla’s mobile application and eliminate existing software bugs.

a. Publicly relaunch the app before 2020 concludes to generate positive publicity.
2. Increase worldwide Service Center presence 35% by the start of 2024 and implement
semi-annual customer-relations training for on-site technicians and service staff.
a. The US currently has 114 service centers open or opening soon, this goal would
require 40 more centers to be opened by 2024, in the US alone.

22
 3. Monitor, analyze, and continuously adjust strategies based off client and employee
feedback (see a. and b.) at semi-annual executive meetings.
a. Implement program that conducts customer satisfaction surveys 2 years after the
customer’s vehicle purchase date.
b. Gauge the internal perspective of company performance by interviewing lower-
level employees (i.e. technician staff).

In achieving the recommended customer service improvements, Tesla Inc. is expected to

exhaust significant energy, time, and resources pursuing the strategies above. Continuing

forward with current operations (“Status Quo”) is expected to provide the funding necessary to

accomplish the customer service-related objectives set above, while also providing the funding

necessary to implement the four marketing campaigns. These steps are not expected to

overextend management or operations’ capabilities.

Team Biography
My name is Hunter Buchardt I am a Computer
Information Systems Major at James Madison
University from Chesapeake, Virginia. I am the
Vice President of the JMU Clay Target Team, a
team that competes against other colleges in clay
target shooting events like trap and skeet. I am
also a Wellness Instructor at UREC that teaches
cooking classes for student and faculty
My name is Elizabeth Dickinson and I am a
Junior at James Madison University from Owings,
Maryland. I am studying Marketing with minors
in Honors Interdisciplinary Studies and
Entrepreneurship. I am a member of the College
of Business Student Advisory Council, JMU Club
Cross Country, and the Vice President of
Recruitment for Phi Chi Theta.
My name is Jennifer Faillace and I am from
Richmond, VA. I am currently a Marketing
Major in the College of Business at James
Madison University. I am a part of Madison
Dance Club at JMU and I also work as a dance
teacher in Harrisonburg. I enjoy reading, baking,
hiking, and being with family and friends in my
free time.

23
 My name is Gatlin Greenhalgh. I am a Computer
Information Systems major with a minor in Music
from Virginia Beach, VA. I am a cheerleader at
JMU. Outside of school, I enjoy being with
friends, playing music, and hiking.

My name is Noelle Harris. I am from a small town

outside of Princeton, New Jersey. I am a rising
junior at James Madison University and I’m
studying Marketing in the College of Business; I
plan to enter the fashion or cosmetics industry. I
am also a member of Alpha Phi Sorority on
campus and hold a position underneath our
Community Relations department.
My name is Scott Weber. I am a Computer
Information Systems major. I am a rising senior,
from Harrisburg Pennsylvania. In my spare time I
enjoy spending time with my dog and playing
video games with my friends.

References
17 Best Electric Cars Of 2020: Top Luxury EVs To Drive Into The Future. (2020, June 07).
Retrieved July 10, 2020, from https://luxe.digital/lifestyle/cars/best-electric-cars/

2020 Tesla Model Y Review, Pricing, and Specs. (2020, June 26). Retrieved July 10, 2020, from
https://www.caranddriver.com/tesla/model-y

Ahmad, S., & Khan, M. A. (2019). Tesla: Disruptor or Sustaining Innovator. Journal of Case
Research, 10(1), 12–24. Retrieved June 17, 2020, from
https://xub.edu.in/jcr/cases/Case02-June2019.pdf

Anonymous. (2020, January 23). Best pickup trucks. Retrieved June 16, 2020, from
https://www.carbuyer.co.uk/reviews/recommended/best-pickup-trucks.

Anonymous. Please Enable Cookies. New & Used Cars from Bidvest McCarthy |
McCarthy.co.za. https://www.mccarthy.co.za/new/compare-price/series/isuzu/d-
max/6675.

24
Atiyeh, C. (2020, June 28). 2017 Trumpchi GS4: The Budget SUV You've Been Waiting For?
Retrieved July 10, 2020, from https://www.caranddriver.com/news/a15355689/30-
percent-off-is-that-enough-to-get-you-to-buy-a-chinese-suv/

Beresford, Colin. (2020, July 7). Other Automakers Paid Tesla a Record $428 Million Last
Quarter, 22 July 2020, www.msn.com/en-us/autos/news/other-automakers-paid-tesla-a-
record-dollar428-million-last-quarter/ar-BB13vsBY.

Borak, M. (2020, June 29). Buyers can finally drive China's rival to the Tesla Model 3. Retrieved
July 10, 2020, from https://www.scmp.com/abacus/tech/article/3091000/xpeng-finally-
shipping-p7-chinas-tesla-model-3-rival

Brandt, E. (2017, May 04). Tesla Model 3 Might Already be Cannibalizing Model S Sales.
Retrieved July 20, 2020, from https://www.thedrive.com/article/9963/tesla-model-3-
might-already-be-cannibalizing-model-s

Branman, M. (2015, October 05). Tesla Top Model S Competitors. Retrieved July 10, 2020,
from https://www.digitaltrends.com/cars/tesla-top-model-s-competitors/

Build Your Own Toyota: Toyota Configurator. (n.d.). Retrieved July 10, 2020, from
https://www.toyota.com/configurator/build/step/model/year/2020/series/rav4

Carlo. (2020, May 28). Africa best selling Cars 2019 - The top in 2019. Retrieved July 10, 2020,
from https://www.focus2move.com/africa-best-selling-cars/

Cars With Advanced Safety Systems. (202, May 8). Retrieved July 08, 2020, from
https://www.consumerreports.org/car-safety/cars-with-advanced-safety-systems/

Chang, B. (2019, August 23). Tesla rivals Jaguar I-Pace and Audi e-tron are struggling to
compete - here's how the cars actually compare to the Model X. Retrieved July 22, 2020,
from https://www.businessinsider.com/tesla-rivals-jaguar-i-pace-audi-etron-vs-model-x-
2019-8

25
Chibber, K. (2014, November 15). After 24 years, a chance to advertise in London's Piccadilly
Circus. Retrieved July 20, 2020, from https://qz.com/297133/after-24-years-a-chance-to-
advertise-in-londons-piccadilly-circus/

China, A. (2018, March 27). SAIC-GM-Wuling's Baojun 510 becomes China's top-selling
crossover. Retrieved July 10, 2020, from https://www.autonews.com/china/saic-gm-
wulings-baojun-510-becomes-chinas-top-selling-crossover

CNBC. (2020, February 15). Which Automakers Can Seriously Challenge Tesla?[Video].
YouTube. https://www.youtube.com/watch?v=Rk5LdBbneZQ

Cosgrove, E. (2018, December 21). Tesla had quite a year in 2018. Retrieved July 20, 2020,
from https://www.supplychaindive.com/news/tesla-supply-chain-roundup-2018/544688/

Darrow, B. (2017). Tesla Must Fix its Customer Service Problems, Says Star Analyst.
Fortune.Com, 42. Retrieved July 3, 2020, from https://fortune.com/2017/05/19/tesla-
service-problems/

Delivery Options. (2020, June 24). Retrieved July 22, 2020, from
https://www.tesla.com/support/delivery-options

Demandt, B. (2020, May 13). European sales 2020-Q1 compact crossovers. Retrieved July 10,
2020, from https://carsalesbase.com/european-sales-2020-q1-compact-crossovers/

Dyer, J., Gregersen, H., & Furr, N. (2015). Tesla’s Secret Formula. (cover story). Forbes, 196(3),
90–118. Retrieved July 7, 2020, from
https://www.forbes.com/sites/innovatorsdna/2015/08/19/teslas-secret-
formula/#16e64820653c

Edmonds, E. (2020, January 21). AAA:  Owning an Electric Vehicle is the Cure for Most
Consumer Concerns  . Retrieved June 17, 2020, from
https://newsroom.aaa.com/2020/01/aaa-owning-an-electric-vehicle-is-the-cure-for-most-
consumer-concerns/

26
Evans, S. (2020, June 04). Tesla Model X Specs vs. Tesla Model Y Specs. Retrieved July 20,
2020, from https://www.motortrend.com/cars/tesla/model-y/2020/tesla-model-x-specs-
tesla-model-y-specs/

Federal Reserve Bank of St. Louis. (2018, January 08). Income and Living Standards across
China. Retrieved July 22, 2020, from https://www.stlouisfed.org/on-the-
economy/2018/january/income-living-standards-china

Feijter, A. T. de. (2017, October 9). New JMC Tiger Pickup Truck Launched In China.
CarNewsChina.com. https://carnewschina.com/2017/10/09/new-jmc-tiger-pickup-truck-
launched-china/.

Fisher, M., & McCabe, M. B. (2019). Tesla: Accelerating to Market. Journal of Strategic
Management Education, 15, 1–16. Retrieved June 10, 2020, from
https://mattfisher76.files.wordpress.com/2018/06/tesla-accelerating-to-market.pdf

Fogelson, J. (n.d.). 10 Tesla Model 3 Competitors to Consider. Retrieved July 09, 2020, from
https://www.autobytel.com/electric-cars/car-buying-guides/10-tesla-model-3-
competitors-to-consider-132967/

Fortuna, C. (2019, June 01). What Do We Know About Tesla Owners? Retrieved July 20, 2020,
from https://cleantechnica.com/2019/06/01/what-do-we-know-about-tesla-owners/

Frost & Sullivan. (2018, June 28). Millennials to Become Primary Target Segment of
Subcompact SUV & Crossover Market. Retrieved July 20, 2020, from
https://www.prnewswire.com/news-releases/millennials-to-become-primary-target-
segment-of-subcompact-suv--crossover-market-300130287.html

HAVAL H6 - Build & Price: HAVAL Motors Australia. (2020, June 30). Retrieved July 10,
2020, from https://www.haval.com.au/build-and-price-h6/

Heyden, T. (2014, November 19). Where is the world's best billboard site? Retrieved July 22,
2020, from https://www.bbc.com/news/magazine-30113027

27
How Much Does it Cost to Advertise on Instagram? (2020, February 1). Retrieved July 22, 2020,
from https://www.webfx.com/social-media/how-much-does-it-cost-to-advertise-on-
instagram.html

How the cars actually compare to the Model X. Retrieved July 10, 2020, from
https://www.businessinsider.com/tesla-rivals-jaguar-i-pace-audi-etron-vs-model-x-2019-
8

Iea. (2019). Global EV Outlook 2019 – Analysis. Retrieved July 20, 2020, from
https://www.iea.org/reports/global-ev-outlook-2019

Inman, P. (2020, May 26). The Cost of Billboard Advertising (2020 Rental Prices Revealed).
Retrieved July 22, 2020, from https://75media.co.uk/blog/billboard-costs/

J. (2014, May 1). London Places: 10 Facts and Figures About Piccadilly Circus in London That
You Probably Didn't Know. Retrieved July 20, 2020, from https://londontopia.net/site-
news/featured/london-places-10-facts-figures-piccadilly-circus-london-probably-didnt-
know/

Kamkoum, Cedric. (2018). TESLA International Business Strategies.

10.13140/RG.2.2.29070.66880. Retrieved July 10, 2020, from
https://www.researchgate.net/publication/322750674_TESLA_International_Business_St
rategies

Kharinta, M. (2020, April 5). Is the New Tesla Model Y Ready for the Growing Competition it's
up Against? Retrieved July 10, 2020, from https://www.futurecar.com/3871/Is-the-New-
Tesla-Model-Y-Ready-for-the-Growing-Competition-its-up-Against

Lambert, F. (2020, May 20). Tesla installs more production robots at Fremont factory. Retrieved
July 16, 2020, from https://electrek.co/2020/05/20/tesla-installs-production-robots-
fremont-factory/

Lapham, E. (2005). Luxury treatment. Automotive News Europe, 10(16), 10. Retrieved July 20,
2020, from https://www.autonews.com/article/20051024/SUB/510240812/edward-
lapham-commentary-10-25-2005-chinese-suv-has-europeans-looking-at-cost-vs-safety

28
Las Vegas, Nevada. (2016). Retrieved July 22, 2020, from https://fliphound.com/billboard-
advertising/Nevada/Las-Vegas

Las Vegas, NV. (2020). Retrieved July 22, 2020, from https://datausa.io/profile/geo/las-vegas-
nv/

Luebke, C. (2020, April 20). Motor Mondays: Tesla Model 3 remains a cut above the
competition, but more rivals coming. Retrieved July 10, 2020, from
https://www.bizjournals.com/phoenix/news/2020/04/19/motor-mondays-tesla-model-3-
remains-a-cut-above.html

Luebke, C. (2020, April 20). Motor Mondays: Tesla Model 3 remains a cut above the
competition, but more rivals coming. Retrieved July 10, 2020, from
https://www.bizjournals.com/phoenix/news/2020/04/19/motor-mondays-tesla-model-3-
remains-a-cut-above.html

Martinez, M. (2018, October 22). Ford Ranger won't cannibalize F-150 sales, Hinrichs says.
Retrieved July 20, 2020, from
https://www.autonews.com/article/20181022/RETAIL/181029914/ford-ranger-won-t-
cannibalize-f-150-sales-hinrichs-says

Matousek, M. (2019, January 17). Almost half of the Model 3s registered in the US during the
first 10 months of 2018 came from California, but experts say it won't hurt Tesla's future.
Retrieved July 20, 2020, from https://www.businessinsider.com/california-tesla-
model-3-registrations-high-percentage-2019-1

Maverick, J. (2020, May 08). Who Are Tesla's (TSLA) Main Suppliers? Retrieved July 20, 2020,
from https://www.investopedia.com/ask/answers/052815/who-are-teslas-tsla-main-
suppliers.asp

Middleton, A. (2018). 23 Types of Advertising Appeals Most Commonly Used by Brands.

Retrieved July 20, 2020, from https://visme.co/blog/types-of-advertising-appeals/

29
Miller, M. (2019, August 30). King of the Road: Breaking Down the Popularity of Pickup
Trucks. Retrieved July 20, 2020, from
https://www.experian.com/blogs/insights/2019/08/king-road-breaking-popularity-pickup-
trucks/

Mitchell, A. (2020, June 04). Tesla Model 3 is the top-selling car in the U.K. for a second month
but as showrooms reopen it could be overtaken. Retrieved July 20, 2020, from
https://www.marketwatch.com/story/tesla-model-3-is-the-top-selling-car-in-the-uk-for-a-
second-month-but-as-showrooms-reopen-it-could-be-overtaken-2020-06-04

Model 3. (n.d.). Retrieved July 20, 2020, from https://www.tesla.com/model3

Model S. (n.d.). Retrieved July 20, 2020, from https://www.tesla.com/models

Model X. (n.d.). Retrieved July 20, 2020, from https://www.tesla.com/modelx

Montgomery, O. (2019, September 23). What Tesla's Elon Musk Can Teach You About Supply
Chains. Retrieved July 20, 2020, from https://www.softwareadvice.com/resources/elon-
musk-tesla-supply-chain-lessons/

Morris, J. (2020, June 26). Can Tesla Be Beaten... By Its Own Quality Control?
https://www.forbes.com/sites/jamesmorris/2020/06/27/can-tesla-be-beaten-by-its-own-
quality-control/.

Musaev, I. (2020, June 15). Facebook advertising costs (updated June 2020). Retrieved July 20,
2020, from https://revealbot.com/blog/facebook-advertising-costs/

Musk, E. (2012, June 29). The Secret Tesla Motors Master Plan (just between you and me).
Retrieved July 20, 2020, from https://www.tesla.com/blog/secret-tesla-motors-master-
plan-just-between-you-and-me

Musk, E. (2016, July 21). Master Plan, Part Deux. Retrieved July 20, 2020, from
https://www.tesla.com/blog/master-plan-part-deux

30
Musonera, E., & Cagle, C. (2019). Electric Car Brand Positioning in the Automotive Industry:
Recommendations for Sustainable and Innovative Marketing Strategies. Journal of
Strategic Innovation & Sustainability, 14(1), 120–133.
https://search.ebscohost.com/login.aspx?
direct=true&AuthType=cookie,ip,athens,shib&db=bth&AN=136451182&site=ehost-
live&scope=site

New Cars, Used Cars, Car Reviews and Pricing. (n.d.). Retrieved July 10, 2020, from
https://www.edmunds.com/

O'Kane, S. (2020, March 16). Tesla Model Y deliveries begin in the US. Retrieved July 20,
2020, from https://www.theverge.com/2020/3/16/21182033/tesla-model-y-suv-us-
deliveries-begin-price-range

Pontes, J. (2020, May 25). BYD Qin = China's Best Selling Electric Vehicle In April (China EV
Sales Report). Retrieved July 10, 2020, from https://cleantechnica.com/2020/05/24/byd-
qin-chinas-best-selling-electric-vehicle-in-april-china-ev-sales-report/

Pontes, J. (2020, May 25). BYD Qin = China's Best Selling Electric Vehicle In April (China EV
Sales Report). Retrieved July 10, 2020, from https://cleantechnica.com/2020/05/24/byd-
qin-chinas-best-selling-electric-vehicle-in-april-china-ev-sales-report/

PRIZM® PREMIER. (n.d.). Retrieved July 20, 2020, from

https://claritas360.claritas.com/mybestsegments/

Queiroz, R. (2020, June 10). How Much Do Billboard Advertisements Cost? 2020 Updated
Pricing. Retrieved July 22, 2020, from https://dashtwo.com/blog/how-much-does-
billboard-advertising-cost/

R/redditads - Have a question about cost per thousand impressions. (2018). Retrieved July 20,
2020, from
https://www.reddit.com/r/redditads/comments/b69evi/have_a_question_about_cost_per_t
housand/

31
Randall, T., Halford, D., & Sam, C. (2019, October 29). Tesla Model 3 Survey: What Owners
Think About the Electric Car. Bloomberg.com.
https://www.bloomberg.com/graphics/2019-tesla-model-3-survey/.

Roberson, B. (2019, March 17). It's The Tesla Model Y Versus The Competition - Now That
There Actually Is Some, Finally. Retrieved July 09, 2020, from
https://www.forbes.com/sites/billroberson/2019/03/17/its-the-tesla-model-y-versus-the-
competition-now-that-there-actually-is-some-finally/

Roberts, D. (2020, February 22). The Race for the Best Electric SUV. Retrieved July 10, 2020,
from https://industryeurope.com/sectors/automotive-maritime-transport/the-race-for-the-
best-electric-suv/

Ross, S. (2020, May 08). How Much Money Do You Need to Live in London? Retrieved July
22, 2020, from https://www.investopedia.com/articles/personal-finance/091415/how-
much-money-do-you-need-live-london.asp

Rutter, T. (2014, September 06). Why Tesla has the most loyal customers. Retrieved July 23,
2020, from https://www.usatoday.com/story/money/cars/2014/09/06/why-tesla-has-the-
most-loyal-customers/15139377/

Salinas, S. (2019, March 11). Tesla's biggest problem is its customer service, according to a new
Bernstein survey. Retrieved July 19, 2020, from
https://www.cnbc.com/2019/03/11/teslas-biggest-problem-is-customer-service-new-
bernstein-survey.html

Schmidt, B. (2019, January 31). Musk predicts demand for Model Y could be double that of
Model 3. Retrieved July 20, 2020, from https://thedriven.io/2019/01/31/musk-predicts-
demand-for-model-y-could-be-double-that-of-model-3/

Service. (n.d.). Retrieved July 08, 2020, from https://www.tesla.com/service

Shipley, L. (2020, February 28). How Tesla Sets Itself Apart. Retrieved July 20, 2020, from
https://hbr.org/2020/02/how-tesla-sets-itself-apart

32
Siddiquie, F. (2020, January 10). Teslas still go much farther on a single charge than their
competitors. But the strategy carries risks. Retrieved July 23, 2020, from
https://www.washingtonpost.com/technology/2020/01/10/tesla-battery-range/

Stringham, E. P., Miller, J. K., & Clark, J. R. (2015). Overcoming Barriers to Entry in an
Established Industry: TESLA MOTORS. California Management Review, 57(4), 85–103.
https://search.ebscohost.com/login.aspx?
direct=true&AuthType=cookie,ip,athens,shib&db=bth&AN=109928656&site=ehost-
live&scope=site

Sun, Y. (2019, March 27). Great Wall, Ford hitch up to burgeoning Chinese demand for pickup
trucks. https://www.reuters.com/article/us-china-trucks-pickup/great-wall-ford-hitch-up-
to-burgeoning-chinese-demand-for-pickup-trucks-idUSKCN1R80AS.

[email protected]. (2020, July 10). Tesla Supply Chain Issues and Lessons!
Retrieved July 20, 2020, from https://supplychaingamechanger.com/drawing-lessons-
from-teslas-supply-chain-issues/

Taylor, D. (2020, January 31). Toyota Corolla Quest (2020) Specs & Price. Retrieved July
10, 2020, from https://www.cars.co.za/motoring_news/toyota-corolla-quest-2020-specs--
price/48117/

Tesla is Lean Six Sigma at Its Finest. (2020, April 20). Retrieved July 16, 2020, from
https://www.6sigma.us/kaizen/tesla-is-lean-six-sigma-at-its-finest/

Tesla Model 3 Demographics: Who Buys Model 3s by Age, Income:. (2020, May 01). Retrieved
July 20, 2020, from https://hedgescompany.com/blog/2019/03/tesla-model-3-
demographics-income/

Tesla Motors Opens Assembly Plant in Tilburg, Netherlands. (2014, October 07). Retrieved July
20, 2020, from https://www.tesla.com/blog/tesla-motors-opens-assembly-plant-tilburg-
netherlands

33
Tesla Owner Demographics by Age, Income, Gender, Home Value. (2020, June 19). Retrieved
July 20, 2020, from https://hedgescompany.com/blog/2018/11/tesla-owner-
demographics/

Thomas, V. J., & Maine, E. (2019). Market entry strategies for electric vehicle start-ups in the
automotive industry – Lessons from Tesla Motors. Journal of Cleaner Production, 235,
653–663. https://doi.org/10.1016/j.jclepro.2019.06.284

U.S. Census Bureau QuickFacts: New York city, New York. (2019). Retrieved July 22, 2020,
from https://www.census.gov/quickfacts/fact/table/newyorkcitynewyork/PST040219

Ungarino, R. (2019, March 15). Wall Street is warning Tesla's new SUV could 'cannibalize' its
Model 3. Here's what analysts are saying about the Model Y. | Markets Insider. Retrieved
July 20, 2020, from https://markets.businessinsider.com/news/stocks/tesla-stock-price-
model-ys-impact-on-model-3-according-to-analysts-2019-3-1028034239

Urbano, M. (2020, July 14). 2020 Tesla Model Y Review, Pricing, and Specs. Retrieved July 20,
2020, from https://www.caranddriver.com/tesla/model-y

Valdes-Dapena, P. (2019, September 06). By 2040, more than half of new cars will be electric.
Retrieved July 09, 2020, from https://www.cnn.com/2019/05/15/business/electric-car-
outlook-bloomberg/index.html

Wagner, I. (2020, March 11). Electric vehicle market share in selected markets. Retrieved July
20, 2020, from https://www.statista.com/statistics/267162/world-plug-in-hybrid-vehicle-
sales-by-region/

Wayland, M. (2020, June 24). Tesla lags auto industry in quality, finds new J.D. Power study.
https://www.cnbc.com/2020/06/24/tesla-lags-auto-industry-in-quality-finds-new-jd-
power-study.html.

Wong, S. (2020, March 12). China: Most-sold SUV models by sales volume 2018. Retrieved
July 10, 2020, from https://www.statista.com/statistics/375804/china-leading-suv-
models-by-sales-volume/

34
Writer, S. (2019, September 07). These are South Africa's best-selling cars of 2019 so far.
Retrieved July 10, 2020, from https://businesstech.co.za/news/motoring/339213/these-
are-south-africas-best- selling-cars-of-2019-so-far/

Writer, S. (2019, September 11). These are South Africa's best cars in 13 major categories.
Retrieved July 10, 2020, from https://businesstech.co.za/news/motoring/340347/these-
are-south-africas-best- cars-in-13-major-categories/

Yalcinkaya, G. (2017, November 10). Piccadilly Circus billboard uses recognition technology to
deliver targeted adverts. Retrieved July 20, 2020, from
https://www.dezeen.com/2017/11/10/piccadilly-circus-digital-billboard-screen-targeted-
advertisements-algorithm-news-technology/

Young, L., & Wu, A. (2019, September 26). Tesla Model 3 ‒ An Electric Car for the Masses or
Still the Select Few? Retrieved July 20, 2020, from
https://www.quantcast.com/blog/tesla-model-3%E2%80%92-an-electric-car-for-the-
masses-or-still-the-select-few/

Zucchi, K. (2020, May 27). What Drives Consumer Demand for Tesla? Retrieved July 20, 2020,
from https://www.investopedia.com/articles/personal-finance/021715/what-drives-
consumer-demand-tesla.asp

Appendix:
Alternative 1 Income Statement

35
Alternative 2 Income Statement

36
Alternative 3 Income Statement

37
38