The overall electric vehicle industry has grown significantly in the last five years. One of many reasons for that was the introduction of Tesla`s first electric vehicle in 2009 with a strong differentiation strategy. Tesla is now focused on its entry into the mass automotive market. To achieve that, the company is committed to invest heavily in its production capacity and model line-up, most recently with the introduction of Model 3.
Tesla’s competitive advantages for this strategic goal include a superior electric vehicle technology and recharging infrastructure, brand recognition, a first mover market position, and a strong network of strategic partnerships. However, since the company entered the industry in the premium sport and luxury sedan vehicle niche segment, it has a resource disadvantage in regards to know-how, large-scale manufacturing processes and model line-up when it comes to the mass automotive market. Additionally, the company is relying on an overall growth of the EV demand, technological improvements and a high number of customer referrals in the near future.
There is a large number of existing premium manufacturers in this space, several of which already enjoy major manufacturing and economies of scale advantages that will make this endeavor highly costly and risky. However, the combination of Tesla’s competitive advantages and aggressive marketing could result in the capture and sustainment of a significant percentage of market shares in the mass automotive segment.
Table of Contents
- Summary of Analysis
- Porter's four corner Analysis
- Current Strategies
Objectives and Key Themes
The main objective of this analysis is to assess Tesla Motors Inc.'s competitive position and strategic moves as it aims to enter the mass automotive market. The analysis uses Porter's four corners framework to evaluate Tesla's strengths, weaknesses, opportunities, and threats.
- Tesla's differentiation strategy and its impact on brand recognition.
- Challenges and opportunities in scaling production for the mass market.
- Tesla's reliance on technological innovation and customer referrals.
- Competitive landscape and the actions of established automotive manufacturers.
- The role of the Model 3 in Tesla's mass-market strategy.
Chapter Summaries
Summary of Analysis: This section provides an overview of the electric vehicle industry's growth and Tesla's role in it. It highlights Tesla's strategic focus on entering the mass market, leveraging its technological advantages (superior electric vehicle technology and recharging infrastructure), brand recognition, and first-mover advantage. However, it also acknowledges Tesla's resource disadvantages in mass production compared to established automakers, emphasizing the risk and cost involved in this endeavor. The summary underscores Tesla's reliance on future EV demand growth, technological advancements, and customer referrals for success.
Porter's four corner Analysis: This chapter uses Porter's four corners framework to analyze Tesla's competitive position. It examines the drivers (establishing a presence in the mass electric vehicle market and creating global brand recognition), Tesla's current strategies (differentiation), and the competitive responses anticipated from established manufacturers. It also assesses Tesla's management assumptions (high future demand for electric vehicles, continued technological innovation, and a high number of customer referrals) and capabilities (strong strategic partnerships, extensive showroom network, supercharging infrastructure, but lacking mass-market production capability). The analysis provides a comprehensive overview of Tesla's strengths and weaknesses in the context of its strategic goals.
Current Strategies: This section delves into Tesla's current differentiation strategy. It discusses the company's initial focus on high-priced premium electric sedans (Model S) to establish brand recognition and generate high margins. The chapter details how Tesla is leveraging this success to enter the mass market with the Model 3, maintaining a differentiation strategy (large range, luxury design, etc.) but at a more affordable price point. The section emphasizes Tesla's commitment to increasing production capacity to meet its ambitious goals and achieve high market penetration in the mainstream market, highlighting the role of the Gigafactory in this strategy.
Keywords
Tesla Motors, electric vehicles (EVs), mass market, differentiation strategy, brand recognition, production scalability, Model 3, competitive landscape, technological innovation, customer referrals, Gigafactory.
Tesla Motors Inc. Competitive Analysis: Frequently Asked Questions
What is the purpose of this analysis?
This analysis assesses Tesla Motors Inc.'s competitive position and strategic moves as it aims to enter the mass automotive market. It uses Porter's four corners framework to evaluate Tesla's strengths, weaknesses, opportunities, and threats.
What are the key themes explored in this analysis?
Key themes include Tesla's differentiation strategy and its impact on brand recognition; challenges and opportunities in scaling production for the mass market; Tesla's reliance on technological innovation and customer referrals; the competitive landscape and actions of established automotive manufacturers; and the role of the Model 3 in Tesla's mass-market strategy.
What is the summary of the overall analysis?
The analysis highlights Tesla's strategic focus on entering the mass market, leveraging technological advantages, brand recognition, and first-mover advantage. However, it also acknowledges Tesla's resource disadvantages in mass production compared to established automakers. The summary underscores Tesla's reliance on future EV demand growth, technological advancements, and customer referrals for success.
How does Porter's Four Corners framework apply to Tesla?
This framework analyzes Tesla's competitive position by examining drivers (establishing a mass market presence and global brand recognition), current strategies (differentiation), anticipated competitive responses, management assumptions (high future EV demand, continued innovation, high customer referrals), and capabilities (strong partnerships, showroom network, supercharging infrastructure, but lacking mass-market production capability).
What are Tesla's current strategies?
Tesla's current strategy is differentiation. Initially focusing on high-priced premium electric sedans (Model S) to establish brand recognition and generate high margins, Tesla is leveraging this success to enter the mass market with the Model 3 while maintaining a differentiation strategy at a more affordable price point. Increasing production capacity to meet ambitious goals is a key aspect of this strategy, with the Gigafactory playing a crucial role.
What are the key takeaways from the chapter summaries?
The analysis emphasizes the complexities of Tesla's ambition to enter the mass market, balancing its strengths (brand, technology) against weaknesses (mass production capabilities). It highlights the importance of continued technological innovation, strong customer loyalty, and successful scaling of production for future success.
What are the key words associated with this analysis?
Tesla Motors, electric vehicles (EVs), mass market, differentiation strategy, brand recognition, production scalability, Model 3, competitive landscape, technological innovation, customer referrals, Gigafactory.
- Quote paper
- Dennis Schindeldecker (Author), 2016, Competitor Assessment. The electric vehicle industry. Tesla's strategic focus lies on establishing its brand in the mass automotive market, Munich, GRIN Verlag, https://www.grin.com/document/368184
