Marketing Strategies of Tesla Inc.
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Tesla, Inc. is an American electric vehicle and clean energy company, renowned for its eco-friendly electric cars and various sustainable technologies. Founded in 2003, it has grown significantly under Elon Musk's leadership, focusing on innovation and a direct-to-consumer sales model without traditional advertising. Tesla aims to accelerate the transition to sustainable energy while facing challenges from competition, production constraints, and market adaptation.
Marketing Strategies of Tesla Inc.
- 1. Tesla, Inc. Presented by :- Swayam (18BC071)
- 2. About Tesla, Inc. (formerly Tesla Motors, Inc.) is an American electric vehicle and clean energy company based in Palo Alto, California. Tesla, Inc. is a leader in manufacturing premium eco-friendly & battery powered electric cars. Although the major product manufactured by Tesla is electric sedans, it also produces other sustainable energy technologies like solar panels, Tesla batteries, Tesla Supercharging Stations and much more.
- 3. Elon Musk ● Born on June 28, 1971 in Pretoria, South Africa ● At 12, he sold his first software: a game he created called Blastar ● Musk launched his first company, Zip2 Corporation, in 1995 with his brother and sold it for $341 millions to Compaq Computers ● In 1999, Musk co-founded PayPal and sold some part to ebay for $1.5 billion ● Bet all his money on Tesla and SpaceX ● World’s 3rd richest man
- 4. Timeline 2003 Tesla Motors founded by Martin Eberhard and Marc Tarpenning 2004 Elon Musk invests $30 million and joins Tesla as the Chairman of its Board of Directors 2006 Tesla showcases the prototype for its first car, the all-electric Roadster
- 5. 2008 The Roadster enters production. Elon Musk receives the first vehicle produced 2008 Ze'ev Drori resigns as Tesla's CEO. He was replaced by Elon Musk 2010 Tesla goes public, raising $226 million in its IPO 2013 Tesla posts its first quarterly profit
- 6. 2015 The company enters the solar power market 2018 The SEC charges Musk. Musk pays $20 million and steps down as the Chairman of Tesla's Board of Directors 2019 Musk and Tesla unveil the "Cybertruck," an electric six-seater pickup truck. 2020 Strong fiscal quarter and analyst upgrades, Tesla stock surges, eventually reaching over $900.
- 7. Tesla’s mission: “to accelerate the world’s transition to sustainable energy” Tesla’s vision: “to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles”
- 8. Tesla, the world’s most valuable car company has a $0 marketing budget “Tesla Motors has no advertising, no ad agency, no CMO, no dealer network. And that’s no problem.” – AdvertisingAge
- 10. Product Tesla is an independent automaker that offers a wide range of products made from the latest technology. It adheres to a B2B model which encourages partnership with other companies by supplying products as well as services and also the B2C model by offering luxury, family and mass market vehicles. It is a well-known distributor, manufacturer, developer and designer of eco-friendly products and also offers related services to other automotive companies. Major product manufactured by Tesla is electric-sedan powered by the battery.
- 11. Products offered by Tesla Motors ● Induction motor ● Magnet motor Autopilot ● Lane-departure warning ● Adaptive cruise control ● Autosteer ● Emergency Braking ● Autopark Batteries ● Lithium-ion battery Glass ● Roof glass ● Roof tiles with the solar collector Battery products ● Powerwall
- 12. Vehicle models Roadster Model X Cybertruck Model 3 Model S Model Y 2006 2012 2015 2017 2019 2019
- 13. Place ● Tesla Motors caters to a worldwide audience via its headquarters based in Palo Alto in the United States. ● It has a wide sales and distribution network of its own that includes stores in Asia, Europe, Australia, South Korea, Dubai and North America ● One of the largest markets of Tesla for electric vehicles is in China ● Tesla currently operate one factory in Fremont and three Gigafactories in Nevada, New York and Shanghai. They are also planning to open 2 more Gigafactory in Texas and Germany by 2021 ● The company has followed a direct-to-consumer sales approach ● The company’s goal is to minimize inventory costs and make each car when the customer orders it ● They use stores, galleries and online website to sell their products ● Inspections and services are offered at their own service stations ● One of its important R&D department is at Athens in Greece
- 14. Elon Musk says Tesla is launching in India 'next year for sure'
- 15. Price ● Tesla Motors initially decided to target wealthy buyers making a conscious decision to capture larger markets later on with lower-pricings. Hence at its onset, it adopted a premium pricing strategy and maintained high prices for its premium products. This was for a niche market that was more interested in high-quality products with the latest technology irrespective of its price range because they could easily afford such products. ● Later on, the company launched affordable products keeping in mind the mid-scale general consumers. It wanted to capture a large part of the consumer market and hence adopted a reasonable pricing strategy. This was a huge success as it was able to sell a greater number of products and this resulted in higher profit margins and greater revenues. ● Tesla follows No-Negotiation Policy
- 17. Promotion ● In order to create mass awareness, Tesla has taken the help of social platform. ● It always creates a viral buzz at the launch of any new product ● More than 232 videos are uploaded on its official channel via YouTube with nearly 1.56 Million subs showing great features of their vehicles ● Latest information along with features, specifications, safety measures, warranty, new software is updated at regular intervals on its official website ● Discussions are held periodically on social media about various products and technology ● Elon Musk is the public face of the company and he actively participates in several interviews and talk shows. This helps in gaining positive visibility and recall value of the brand name
- 18. ● Tesla Motors has absolutely zero marketing budget. It has no advertising commercial or billboards, no ad agency, and no CMO ● One of the many reasons for this unique strategy is that Tesla has more number of orders for cars than they can actually manufacture ● Its surcharging stations on highways and charging ports at malls, hotels, and restaurants have brand name Tesla written over them ● Tesla recently announced that Tesla’s research will be publicly available and giving up patents. This helped company gain a lot of positive public image and position itself as a do-gooder brand for the humanity
- 19. SWOT Analysis
- 20. Strengths ● Technology: Tesla has always been associated with cutting-edge technologies and many companies have adopted the technologies introduced by Tesla. Some examples of top brands which have used Tesla technologies include Daimler which uses Tesla’s battery packs; Mercedes-Benz a user of Tesla powertrain; Toyota with Tesla motor. In fact, pioneers like GE have set up trackers which keep track of Tesla’s innovations. ● Distribution channel: Tesla understand how critical distribution may be for the business and this makes Tesla own their own distribution channel.
- 21. ● Political and government support: The company has ample support from the government. The company had obtained a USD 465 billion for energy management projects under the US Department of Energy. ● Monopoly: Tesla Motors started off targeting a very niche segment which was electric and alternative energy cars. The strategy was to move deeper into the existing segment and it would not be wrong to say that the company operates in a monopoly market. ● Great leadership and team spirit: Elon Musk is extremely passionate about engineering and an astute salesman. The CEO is backed by a team that is highly spirited and as passionate about the cause as their leader.
- 22. Weaknesses ● Poor liquidity: In comparison to competitors like Ford which has USD 20 billion, General Motors with USD 25 billion or Fiat Chrysler Automobiles USD 40 billion which are cash rich from years and years of operations. In comparison to this Tesla has only USD 8 billion which will not be sufficient for it to survive. ● Lack of High Volume Production: There is no doubt that Tesla is the pioneer of actual energy-saving cars. But it has failed to produce high volumes of automobiles for any of its models. Even now, as the company plans to manufacture Model 3 vehicles at high volume, it faces issues in terms of production cost and management resources and space expansion in Gigafactory 1. ● Poor customer awareness: Tesla makes very specialized products which are essential for the environment because of their sustainability angle. But these products are highly futuristic and most customers are still not sure about whether or not they need to invest in these technologies which are expensive as well.
- 23. Opportunities ● Sales expansion in untapped Market: The most significant opportunity for the company right now is the Asian market, which is still unsaturated in the field of automotive and renewable energy markets. Especially in the situation where Tesla needs to expand its global market to increase its financial stability and stronger market presences. ● Less Expensive Car: Tesla is expensive due to its unconventional reliance on innovation, which requires maximum financial support to entertain new technology. Recently, Tesla has launched Model 3, which is a more affordable version of Model S with less range, power, and fewer features. However, it is an excellent opportunity for Tesla to expand the size of their audience market.
- 24. ● Bringing battery production technology in-house: Tesla intends to make its own battery cells. The move can be a big game-changer as it will help the company to increase its manufacturing rate while reducing its production cost. Currently, Panasonic is their primary supplier of battery. ● Market Confidence in Tesla: The stock market has shown confidence in Tesla after seeing two consecutive profitable quarters. The price of Tesla stock has doubled since the start of this year.
- 25. Threats ● Extensive Competition: Tesla faces aggressive competition from both alternative fuel vehicles and self-driving technology. Many automotive brands in the luxury segment like Mercedes, BMW, Audi, Lexus and in the economy segment like Toyota, Ford, Volvo, General Motors are getting ready for a fierce competition. Many brands are not only launching or planning to launch their environment-friendly/ self-driving technology but also, they are offering them at a comparably lower price. ● Product Defects: Due to highly complex engineering for innovative vehicles, Tesla’s cars and other energy products have exhibited major flaws in many cases. The defective products often have weaknesses in design, manufacturing, and other features which can harm the company’s image permanently. VS
- 26. ● Disruption of Supply Due to Shortage of Materials: Tesla can face major suspensions in the supply of manufacturing materials due to the increased prices. The company uses aluminum, steel, lithium, nickel, copper, and cobalt, as well as lithium-ion cells from suppliers. All these materials have volatile prices, which can affect the company’s production line severely in the future. ● Customer Adaptation: Any business run along the lines of customer’s acceptance. If the public is ready to adapt change, companies benefit from the innovative range of products. However, it can be a slow, unforgiving process, producing new challenges for companies like Tesla. The organization highly depends upon customers willingness to adopt electric vehicles. ● Self-Driving Cars Are Still a Concern for Pedestrians: In a survey from YouGov, US adults still feel unsafe, to walk around self driving cars. Especially, people above the age of 55 are the most afraid to be around self-driving vehicles.
- 28. Competitive Rivalry (Strong Force) ● Small number of firms (weak force) ● High aggressiveness of firms (strong force) ● Low switching costs (strong force) There are only a small number of firms operating in the automotive market. In Porter’s Five Forces analysis framework, this external factor limits the effect of competition on companies like Tesla, Inc. However, these firms are generally aggressive in innovating and promoting their products. Large automotive companies have aggressive marketing campaigns which strengthens the effects of competitors against the business.
- 29. Bargaining Power of Buyers (Moderate Force) ● Low switching costs (strong force) ● Moderate substitute availability (moderate force) ● Low volume of purchases (weak force) Low switching costs reduce barriers for Tesla customers to purchase cars from other providers. However, the availability of substitutes is only moderate in many cases, thereby limiting customers’ bargaining power against Tesla Inc.
- 30. Bargaining Power of Suppliers (Moderate Force) ● Low forward integration (moderate force) ● Moderate size of suppliers (moderate force) ● Moderate supply level (moderate force) Tesla’s suppliers have a low level of forward integration. This external factor refers to suppliers’ limited control in the distribution and sale of their products. For example, some suppliers use third parties to sell their materials to Tesla, while others directly transact with the company. In addition, most of these suppliers are moderately sized, thereby having limited influence on the automotive industry environment. Another external factor is the moderate level of supply, which empowers suppliers to affect Tesla, but only to a limited degree.
- 31. Threat of Substitutes (Moderate Force) ● Low switching costs (strong force) ● Moderate substitute availability (moderate force) ● Moderate performance of substitutes (moderate force) The low switching costs enable substitutes, such as public transportation, to easily attract customers. However, the moderate availability of substitutes limits such influence of suppliers. In relation, many substitutes have only a moderate level of performance in satisfying customers’ practical needs. For instance, public transportation is not as versatile as a private car.
- 32. Threat of New Entrants (Weak Force) ● High cost of brand development (weak force) ● High cost of doing business (weak force) ● High economies of scale (weak force) Tesla’s business is difficult to compete with, especially because of the high cost of brand development, along with the popularity of Elon Musk. In addition, automobile manufacturing has high costs, which impose a barrier to new firms. Also, established players like Tesla benefit from increasing economies of scale, which new entrants can only achieve upon exceeding a production threshold.
- 33. BCG Matrix Market Share MarketGrowth Solar Roof Cybertruck Model S Model 3 Question Mark Star Dog Cash Cow
- 34. References ● www.tesla.com ● www.thestreet.com ● www.marketing91.com ● www.wikipedia.org ● www.marketingexamples.com ● www.google.co.in