tesla motors presentation
TRANSCRIPT
Business PolicyUniversity of Guelph-Humber
BADM 4000
Charles Janthur
Mark
Bilhete
Timothy
Brilhante
Narinder
Dhaliwal
Savanna
Fernandes
Jelisaveta
Knezevic
Karen
Macwan
Presentation Date
July 27, 2015
2
ROADMAP
1
2
3
Tracking Tesla
Situation Analysis
Industry Analysis
5
4
Strategic Recommendations
Problem Analysis
6Synthesis/Q&A
3
TESLA MOTORS
• Founded in 2003 by engineers in Silicon Valley
• Electric car with instant torque, incredible power, and zero emissions
• Accelerate the world’s transition to sustainable transport
4
1888 2003 2008 2010 2012
TRACKING TESLA
Nikola Tesla
patents
powertrain
design built
around AC
induction motor
Tesla Motors
incorporated
Tesla Roadster
launched with
0-60 mph
acceleration in
3.7 seconds and
245 miles per
charge on a
lithium-ion
battery
IPO raised US
$226M
(NASDAQ:TSLA)
at $17/share
and closed at
$23.89
(+40.5%)
The world’s first
premium electric
sedan is launched
– Model S
5
2013 2014
TRACKING TESLA
Model S named
Motor Trend’s
Car of the Year
and achieved 5-
star rating from
the U.S. National
Highway Traffic
Safety
Administration
CEO Elon Musk
unveils two dual
motor all-wheel
drive
configurations of
Model S that
further improve
the vehicle’s
handling and
performance
Announcement of
Battery Swap
Pilot Program
Nevada selected
as site for
Panasonic and
Tesla’s new
battery
Gigafactory
Tesla shares some
of its patents to
promote open
source
development of
electric cars
6
TRACKING TESLA
2015
Tesla prepares to
launch its new
crossover vehicle
– Model X
Tesla will unveil
plans for its
future mass
market electric
vehicle
– Model 3
2016
7
SITUATION ANALYSIS
$294Mfrom
$74M
BOTTOM LINE
54%Decline in
Model S
SALES
$262NASDAQ:
TSLA
SHARE PRICE TODAY
30New Service
Locations
in EU
EXPANSION
8
INDUSTRY ANALYSIS
• Adoption of electric vehicles slow
• Tesla Model S $70K+ and X $80K+
• Tesla Model 3 $35K+ in future
SSOCIAL
• Tax credits and incentives
• $7,500 income tax credit across US
• $8,500 rebate + carpool access in ON
PPOLITICAL
• Demand for lithium-ion batteries
• New $5B ‘Gigafactory’ will provide competitive advantage for Tesla
TTECHNOLOGICAL
• Emission regulations and penalties
• NADA prevents Tesla from selling directly to consumers in some states
LLEGAL
• Low oil prices (WTI NYMEX $48-60)
• 1.2 million EV’s by end of 2015 (0.5% of total global vehicle sales)
EECONOMIC
EETHICAL
• Global warming and climate change
• G7 goal to eliminate carbon and greenhouse gas emissions by 2100
EENVIRONMENTAL
• Higher female employment (47.5% of US workforce in 2013)
• Smaller households (smaller cars)
DDEMOGRAPHIC
• Exporting US jobs and manufacturing
• Tesla sharing patents to encourage development of electric vehicle market
9
PORTER’S 5 FORCES MODEL
UNDERSTANDING THE COMPETITIVE LANDSCAPE
Barriers to Entry
Power of Buyers
Power of Suppliers
Threat of Substitutes
Industry Rivalry
HIGH
HIGH
MO
DER
ATE
HIG
H
HIGH
10
PROBLEM 1 – PRODUCTION CAPACITYK
EY
ISSU
EPROBLEM ANALYSIS
• Single assembly line causes significant delays and extremely long wait times for consumers
• Reliance on few suppliers can threaten production
• Unable to generate positive cash flow for the past 5 years
Tesla’s vehicle production
capacity is low and depends on
one manufacturing plant located in
Fremont, CA
11
FIRST QUARTER 2015
10,045
delivered
11,160
produced
VEHICLES
12
EXHIBIT 1.1 – GROSS PROFIT
$294M$0.4
$2.0
$3.1
$0.3
$1.5
$2.3
2012 2013 2014
Gross Profit in Billions ($US)
Total Revenues Total Cost of Revenues
13
EXHIBIT 1.2 – NET LOSS
$294M
$154
$254
$396
$74
$294
2010 2011 2012 2013 2014
Net Loss in Millions ($US)
14
PROBLEM 1 – RECOMMENDATION
JOINT
VENTURE
STRATEGIC
ALLIANCE
COOPERATIVE
STRATEGY
15
JOINT VENTURE WITH BOEING
• Boeing is the largest aerospace company and leading manufacturer of airplane parts and aircrafts
• Long tradition of aerospace leadership and innovation
• Share similar values of innovation, environmental protection, and inclusive corporate culture – groundwork for strong synergistic strategic alliance
16
ADVANTAGES FOR TESLA
• Leverage Boeing’s suppliers, distribution network, production facilities and TQM systems
• Maintain centralization in California, but can move production to other areas of the country
• Can use Boeing’s large capital structure to purchase a production facility and the necessary equipment to start producing vehicles outside of California
Boeing FacilityEverett, WA
Tesla FactoryFremont, CA
New JV FacilityDetroit, MI
18
BOEING PARTNERSHIP
• Would allow Tesla to pursue their differentiation strategy
• Partnering with a company in a related industry also creates diversification advantage and increases Tesla’s market share
• Tesla’s overall returns would increase as they would be able to better meet customer demand
19
PROBLEM 2 – CORPORATE LEADERSHIPK
EY
ISSU
EPROBLEM ANALYSIS
• Overdependence on CEO Elon Musk for strategic direction
• Role duality within corporate structure hindering effective decision-making
• Need for leadership balance between vision and management
• CFO Deepak Ahuja’s retirement
Tesla’s performance has
been slow to improve due to
the current corporate leadership approach
20
PROBLEM 2 – RECOMMENDATION
REVISE
CORPORATE
STRUCTURE
CORPORATE
GOVERNANCE
STRATEGIC
LEADERSHIP
21
EXHIBIT 2.1 – CURRENT CORPORATE STRUCTURE
Elon MuskCEO, Product Architect, Chairman & Board of Director
D. AhujaCFO (Retiring)
J. VijayanCIO
JB. StraubelCTO
D. O’ConnellVP Business Development
P. CarlssonVP Supply Chain
J. GuillenVP WW Sales
Shareholders
Board of Directors
22
EXHIBIT 2.2 – REVISED CORPORATE STRUCTURE A
Elon MuskCEO, Product Architect & Board of Director
Shareholders
Board of Directors
President & Board of Director(New Position – Managerial Leader)
D. AhujaCFO (Retiring)
J. VijayanCIO
JB. StraubelCTO
D. O’ConnellVP Business Development
P. CarlssonVP Supply Chain
COO(New Position)
NEW CHAIRMAN
23
ADVANTAGES FOR TESLA
• Elon Musk can focus entirely on leading Tesla as CEO
• President can help achieve synergy between vision and management
• Tesla’s corporate governance will be more effective in terms of accountability and transparency
• Better performance, decision-making, and response to change
24
EXHIBIT 2.3 – REVISED CORPORATE STRUCTURE B
Chief Executive Officer(New Strategic Leader / Vision + Management)
Shareholders
Board of Directors
President & Board of Director(New Position – Managerial Leader)
D. AhujaCFO (Retiring)
J. VijayanCIO
JB. StraubelCTO
D. O’ConnellVP Business Development
P. CarlssonVP Supply Chain
COO(New Position)
ELON MUSKProduct Architect,
Chairman & Board of Director
25
ADVANTAGES FOR TESLA
• Elon Musk is also the CEO of SpaceX and Chairman of SolarCity
• Appointing a new CEO will allow Elon Musk to focus on multiple responsibilities more efficiently, while remaining Chairman of Tesla
• Tesla will benefit from strategic leadership with both vision and management effectiveness
• Potential candidate: Calin Rovinescu, CEO of Air Canada
• Helped Air Canada through bankruptcy and returned it to profitability in 2014 with a 4% profit margin
26
SYNTHESIS
Tesla must address its production capacity and corporate leadership issues
Strategic recommendations include a new JV and revised corporate structure
Ultimately lead to improvements in Tesla’s performance and strategic direction
STEERING TESLA IN THE RIGHT DIRECTION
Thank You
28
REFERENCES
Boeing. (2015, July 20). Our Company. Retrieved from Boeing: http://www.boeing.com/company/
Euromonitor International. (2015, July 20). Automotive Industry Analysis. Retrieved from Euromonitor International: http://www.portal.euromonitor.com.rap.ocls.ca/portal
Hason, S. (2015, June 19). Tesla Motors Inc Secures $15M In Tax Credits In California. Retrieved from Business Finance News: http://www.businessfinancenews.com/22742-tesla-motors-inc-secures-15m-in-tax-credits-in-california/
Hitt, M. A., Ireland, R. D., Hoskisson, R. E., Rowe, W. G., & Sheppard, J. P. (2009). Strategic Management: Competitiveness and Globalization Concepts (3rd ed.). Toronto, ON, Canada: Nelson Education.
Nasdaq. (2015, July 20). Crude Oil WTI (NYMEX) Price. Retrieved from Nasdaq:
http://www.nasdaq.com/markets/crude-oil.aspx?timeframe=5y
Tesla Motors. (2014, December 31). Annual Report. Retrieved from Tesla Motors: http://ir.teslamotors.com/secfiling.cfm?filingID=1564590-15-1031&CIK=1318605
Tesla Motors. (2015, July 20). About Tesla. Retrieved from Tesla Motors: http://www.teslamotors.com/about
Tesla Motors. (2015, July 20). Blog. Retrieved from Tesla Motors: http://www.teslamotors.com/blog
Tesla Motors. (2015, July 20). Forums. Retrieved from Tesla Motors: http://my.teslamotors.com/forum/forums/tesla-timeline-0
All images sourced from Tesla and Boeing websites.