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Tesla Motors - India Launch
Tesla Motors - India Launch2015Ashish Kumar [G15072]Gaurav Sahai [G15079]Jyoti Gupta [G15085]Nitish Bhardwaj [G15095]Pranav Mehrotra [G15099]XLRI9/25/2015
Contents1.Define the product/competitor41.1Product41.2Competitors42. Analysis of Category52.1Aggregate Market factors52.2Category Factors72.3Environmental Factors82.3.1Technological82.3.2Political92.3.3Economic92.3.4Social92.3.5Legal103.Company and Competitor Analysis103.1 Product Features Mix103.2Objective123.3Strategies123.4Marketing Mix Analysis133.5Value Proposition144.Customer Analysis164.1Survey Questions164.1Segmentation:184.2Targeting:184.3Positioning:195.Assumptions in planning process205.1Market Potential205.2Forecast Assumptions205.3Other Assumptions:206. Objectives21i.Corporate Objectives (If appropriate)21ii.Divisional Objectives (If appropriate)21iii.Marketing Objectives211.Volumes & Profits212.Time Frame213.Customer Retention214.Intermediary Retention227.Strategy - Product23i.Customer Targets23ii.Competitor Targets23iii.Product / Service Features24iv.Core Strategy27Value Proposition27Product Positioning298.Strategy - Marketing Programmes31i.Integrated Marketing Communications Programs31ii.Pricing Strategy32iii.Channel Strategy33iv.Customer Market Strategy33v.Research348.Controls34i.Financial markets34ii.Marketing Metrics359.Contingency Plans368.Exhibit 137
1.Define the product/competitor1.1ProductTesla Motors, Inc.is an Americanautomotiveandenergy storagecompanythatdesigns, manufactures, and sellselectric cars,electric vehiclepowertraincomponents, andbattery products.Tesla first gained widespread attention following their production of theTesla Roadster, the first fully electricsports car.The company's next two launches were theModel S, a fully electricluxury sedan, and ModelX. With India's proposed spending of $2-$2.3 billion for the development of electric charging infrastructure throughout the country over the next five years and Indian governments plan to start National Electric Mobility Mission Plan to sell 6-7 million of electric vehicles in the country by 2020, India is seen as a potential emerging market for electric cars. Hence Tesla Motors Inc has decided to enter into the Indian Car Market through its model Tesla Model 3.
1.2CompetitorsSince the Electric cars have not gained much acceptance in India so far, so conventionally only Bangalore based Reva, which is now part of Mahindra and Mahindra should have been the major competitor of Tesla Motor 3. However, Tesla Motor 3 would have to compete with not just Reva, but also with the conventional fuel powered cars in India. The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model. Having said that Tesla Motor, with debut launch in India, is positioning itself on: 1.Brand 2. Luxury car 3.High-end motoring experience. Therefore major competitors for Tesla Motor3 would be BMW X1, Mercedes A class and Audi A3.
BMW X131.6 lakhs
Mercedes A-Class29.2 lakhs
Audi A325.3 lakhs
TeslaModel 324 lakhs
2. Analysis of Category
2.1Aggregate Market factors1. Market Size: India is yet to take to electric / hybrid cars, probably because they are considered to be not only expensive to buy, but also to maintain. And when it comes to alternate fuels, customers have relied more on LPG and CNG instead of electric energy. However, that hasn't dampened the car manufacturers' hopes in India, as they have anyway gone ahead and introduced vehicles which are clean and green.2. Growth: India's luxury car market has grown eight times in the last seven years from 4,000 units in 2007 to 33,000 units in 2014. The number is expected to hit 100,000 units by 2020.
Stage in Product Life Cycle: Tesla Motors, the world's most successful electric car maker, plans to enter the Indian market with its upcoming sedan that will be priced at less than half of its existing model. The product is expected to be launched in first quarter 2016.The product is still in Introduction Phase
3. Profits: Tesla Motors Historical Gross Profit Margin (Quarterly) Data [in US Market]. The company is expected to follow the same profit margin in India.Data for this date rangeProfit Margin (in %)
Sept 30, 201429.57%
June 30. 201427.69%
March 31, 201425.00%
Dec 31, 201425.45%
The Indian government is planning to start National Electric Mobility Mission Plan, where it plans to sell 6-7 million of electric vehicles in the country by 2020. It is aimed at providing incentives to the tune of about Rs 14,000 crore for promotion of cleaner electric vehicle technologies with the aim of saving 2.2-2.5 million tons of fuel by the end of this decade. The policy is yet to be approved and implemented. India has one of the highest import duties in the world - in excess of 100%. This might be a reason for decline in profit margins.2.2Category Factors
Porter Five Forces analysis for Tesla Motors is as follows:1. Threat of New Entrants : LOW2. Bargaining Power of Buyers : LOW3. Bargaining Power of Suppliers : MEDIUM4. Pressures from Substitutes : MEDIUM5. Current rivalry in category : LOWCategory Capacity: The target customers are between 30 and 50 years of age that are considered financially well off. Tesla uses advanced technology in making its electric vehicles. This technologyCauses the vehicles more expensive than regular gas powered vehicles.Please refer to the Porter Five Forces analysis for more details
Threat of New Entrants : LOWHigh Entry Barriers : Capital IntensiveAuto OEM working with conventional technologiesCompetitive Rivalry: LOWNiche sectorHigh Entry BarrierNo electric Vehicle in luxury category
Bargaining Power of Suppliers : MEDIUMSelf-reliant in Engine, Chassis, transmission &EngineeringSupplier Dependency : Li-on CellsCompetitive Rivalry within industry : LOWBargaining Power of Buyers : LOWGeographically dispersed customersNot many alternatives available in the segment
Threat of Substitution: MEDIUMFuel Technology : Clean Diesel, Fuel Cell, Bio-Cell, HydrogenCan be easily substituted with diesel engine
Tesla Motors key technology is the 100% electric power train. They developed 1st fully electric sports car The Roadster Drive innovation in battery technology. Ability to develop vehicles completely in house. Lead in development of infrastructure of electric vehicle (EVs) and license it to other play. Strong technological expertise in the area of electric transmissions. Also a strong supplier to other manufacturers like Toyota
Reva, Indias first commercial electric car that has been around for over a decade, didnt find many takers, selling fewer than 500 cars a year. Indian market presents its own inherent problems for Tesla, including an unreliable electrical infrastructure, a small fraction of the charging stations, and a population that by and large cant even afford the cheapest car. To facilitate growth, The Indian government is trying to promote the use of electric vehicles with its National Electric Mobility Mission Plan 2020, under which it plans to invest Rs14,000 crore ($2.25 billion) to build the infrastructure required for electric vehicles. A key metric would be how customers adopt to this product initially in India given its high entry cost between $30,000 to $40,000. Large International market potential given its eco-friendly products.
Tesla is a high-end luxury car so demand might be somewhat constrained initially and be similar to other luxury cars. Price of the traditional lead-acid batteries in India is around Rs 5,000 per kWh. Recently launched Tesla Powerwall, a lithium-ion energy storage system for the residential market, according to a rough calculation would work out to Rs 22,000 per kWh.2.3.4Social
As fuel prices remain high and there is greater concern for the environment, more energy efficient cars are increasing in demand. Increase in environmental consciousness of consumers (green/eco) products. Tesla vehicles produce zero emission.2.3.5Legal
India has one of the highest import duty in the world in excess of 100% that goes against Tesla principal of importing car directly from its plants at Freemont in the US or the assembly unit in Netherlands Promotion of new technologies and changes in energy policies by Indian Government.Tesla Motors Product Portfolio
The Roadster was Teslas first model and was sold before 2012.
Model-X deliveries are expected to begin later this year.Model-S deliveries began in 2012.
3.Company and Competitor Analysis3.1 Product Features MixCharging
Free long distance travel using Teslas Supercharger network Mobile connector with 110 volt, 240 volt, and J1772 adaptersInterior 17 capacitive touch screen with digital instrument cluster Onboard maps and navigation with free updates for 7 years Automatic keyless entry Wi-Fi and Internet connectivity Mobile app remote control Automatic Xenon headlights Retracting door handles One touch power windows High definition backup camera Rain sensing automatic windshield wipers GPS enabled Home link Hands free talking with Bluetooth Voice activated controls AM, FM, and Internet streaming radio Available Ultra High Fidelity Sound package with XM radio support Electro chromatic mirrors Power folding, heated side mirrors with memory Two USB ports for media and power 12 volt power outlet Twelve way power adjustable, heated front seats with memory and driver profile Available subzero weather package with heated