Market Research Report for Tesla
Executive Summary
Tesla is currently considered as one of the global leaders when it comes to innovations and the production of electronic vehicles. Some of its famed products include the Tesla Roadster, Model S, Model X, and Model 3. The company under the leadership of Elon Husk, the CEO, ventures into external markets with the aim of maximizing profits. China has been one of the target markets that Tesla has already explored and now aims at ensuring that the company gains a competitive advantage over the existing electronic vehicle companies. This is after China was predicted to offer the biggest electric market in the world. Tesla is, therefore, trying its best to improve its market strategy with the aim of acquiring as many customers as possible. Past records show that Tesla has been making profits regarding revenue in most of its markets.
Market Research Report for Tesla
Tesla is an American Car Company that designs, manufactures and sells electric powertrain components, electric cars, and battery products. It was established in 2003, by Martin Eberhard. All the initial financing was done by Mark Tarpenning, who also played an important role in the initial development of Tesla Motors. The company acquired its name from Nikola Tesla, who was a physicist and electrical engineer. The company depends on frames that are lightweight to maintain its credibility (White, 2016). The main intention of starting the company was to prove that electric cars would be way better than those cars that were powered by gasoline, as they caused less air pollution. The vehicles are produced in Fremont California, therefore, creating more than a thousand jobs in the specific region.
As per July 15, 2016, Tesla had a market capitalization of $29.52 billion (“Tesla Motors Market CAP”, 2016) though its average cap lies at $ 30.17 billion. The company has been recording nothing but profits since 2013, with its stock trading at $220.40 billion (Tesla Motors, Inc. (TSLA), 2016). The company is a part of the consumer goods sector (“Tesla Motors, Inc. Common Stock(TSLA) Historical Data and Prices”), with its share trading at $255 as per August 2015, although this share price has been volatile (Hara, 2015). Despite the claim of only making profits, the company’s automaker established that the company had losses that added up to $230 million (“TSLA Market Research & Analysis Report, 2015”).
Tesla’s Products
The first car, Tesla Roadster, was engineered designed and launched in 2008 (“Tesla’s mission is to accelerate the world’s transition to sustainable energy”, n.d). This sports car set the new standard for electric cars mobility, as it accelerated from “0 to 60 mph in 3.7 seconds and achieving a range of 245 miles per change of its lithium ion battery” (“Tesla’s mission is to accelerate the world’s transition to sustainable energy”, n.d). 2400 Roadsters have been sold in more than 30 countries.
Model S was yet another electric car that redefined the concept of the four-door car. Due to its design, it can play the role of a family car accommodating up to seven passengers and a sports car due to its high acceleration. In 2013, the car was named as the “motor trend’s car of the year”, while at the same time receiving a 5-star rating. As of 2015, Tesla had created more than 50,000 cars worldwide. The company has other footprints in the Netherlands and Tilburg, where production takes place. Other electric cars produced by Tesla include Model X and Model 3.
Potential Analysis for the China’s Market
Tesla has faced a lot of challenges in its efforts to penetrate the Chinese Market. Despite this, it is finally gaining momentum, and it is getting its strategy right in the Far East region. By the third quarter of 2015, Tesla had sold around 1345 vehicles, a number that is 50% higher when compared to that of the second quarter in the same financial year (Adrade, Holloway, Payne, Roy, & Sheffield, 2013).
In terms of global deliveries, China “accounted for nearly 11% of the company’s global deliveries in Q3 2015” (“Can China be a Key Market for Tesla Motors”, 2016). This success may be attributed to the new government policies, which seem to promote electric vehicles. The market trend is, therefore, favorable for the electric cars, and if Tesla keeps setting right strategies, it will gain a competitive advantage over other local players in the Chinese market, who seem to be offering stiff competition.
The China Association of Automobiles released research showing that the sale of electric motor vehicles was increasing over the years, reaching 600,000 in 2015. Among this, 220,000-250,000 vehicles were found in China, making it have the highest number of electronic vehicles in the world, a figure that is higher than that of the United States.
Also, the figure represents a number that is higher than all the cars produced by Tesla, since its inception. It is, however, important to note that despite the predictions, the market of Tesla electric vehicles remains small in China, with a sale of 1345 cars out of 11,500 cars sold worldwide.
There are some factors that have contributed towards the low sale of electric vehicles in China. The issue of local competitors is the main headache. Besides this, there is the lack of enough charging stations in China. This technology is incompatible with the one that the Chinese government initiated. Therefore, the company has to work extra hard to modify the cars so that they can meet the standards of the government and also expand its network in the region rapidly. This project comes at a time when the Chinese government is trying to roll out a system that will help solve the issue of pollution within the cities and congestion.
Although Tesla is hopeful that it will gain a good market for its products, it is obvious that it overestimated the number of vehicles in demand during the launch of the product. The company is therefore required to adjust its preferred model for the Chinese market so as to develop an edge over the rest of the competitors.
There is yet another challenge that Tesla failed to realize. Most of the customers in China are the wealthy who expect to be chauffeured around, while they are seated at their backseats and not in bench-like configurations, which is designed for the standard Model S. To deal with this issue, Tesla has introduced an alternative model, which fits the Chinese market as the vehicles have executive rare seats which are leather wrapped.
The car also has heaters that are two-zoned such that the occupants can use their smartphones to control climate, media, and the roof settings. It is, therefore, obvious that the best way in which Tesla can attract and keep the Chinese market is through localizing the electric cars in such a way that they meet the taste of the Chinese people.
References
TSLA Market Research & Analysis Report. (2015, December 6). Retrieved July 18, 2016, from Trade Spoon: http://www.tradespoon.com/market-research/stock-analysis/TSLA
Can China be a Key Market for Tesla Motors. (2016, February 8). Retrieved July 18, 2016, from Forbes: http://www.forbes.com/sites/greatspeculations/2016/02/08/can-china-be-a-key-market-for-tesla-motors/#1ec10cbda691http://www.forbes.com/sites/greatspeculations/2016/02/08/can-china-be-a-key-market-for-tesla-motors/#1ec10cbda691
Tesla Motors Market CAP. (2016, July 15). Retrieved July 18, 2016, from YCHARTS: https://ycharts.com/companies/TSLA/market_cap
Tesla Motors, Inc. (TSLA). (2016, July 15). Retrieved July 18, 2016, from YAHOO! Finance: https://ycharts.com/companies/TSLA/market_cap
Adrade, F., Holloway, J., Payne, J., Roy, C., & Sheffield, B. (2013, December 2). Tesla Motors. Retrieved July 18, 2016, from Slideshare: http://www.slideshare.net/dpayne05/tesla-marketing-plan
Bloomberg News. (2015, March 15). Musk Reboots Tesla's Chinese Strategy. Retrieved July 18, 2016, from Bloomberg: http://www.bloomberg.com/news/articles/2015-03-29/musk-reboots-tesla-china-strategy-as-range-anxiety-crimps-sales
Hara, M. O. (2015, August 31). An Investor's Guide to Tesla Motors. Retrieved July 18, 2016, from Market Realist: http://marketrealist.com/2015/08/investors-guide-tesla-motors/
Tesla Motors, Inc. Common Stock(TSLA) Historical Data and Prices. (n.d.). Retrieved July 18, 2016, from NASDAQ: http://www.nasdaq.com/symbol/tsla/historical
Tesla’s mission is to accelerate the world’s transition to sustainable energy. (n.d.). Retrieved July 18, 2016, from About Tesla: https://www.tesla.com/about
White, C. (2016, May 25). New Market Report Calls Tesla A ‘Ponzi Scheme’ Similar To Enron. Retrieved July 18, 2016, from Daily Caller: http://dailycaller.com/2016/05/25/new-market-report-calls-tesla-a-ponzi-scheme-similar-to-enron/
