The document provides a presentation on Tesla Motors that includes:
1) An overview and history of Tesla Motors and its electric vehicles.
2) A situation analysis of Tesla's declining sales and share price.
3) An industry analysis identifying challenges around adoption rates, regulations and competition.
4) Two problems are analyzed around Tesla's low production capacity and corporate leadership structure. Strategic recommendations are made to form a joint venture with Boeing and revise Tesla's corporate structure.
MGT 401 SEU Tesla Motors Inc and Yahoo Questions.docx
Tesla Motors Presentation
1. Business Policy
University of Guelph-Humber
BADM 4000
Charles Janthur
Mark
Bilhete
Timothy
Brilhante
Narinder
Dhaliwal
Savanna
Fernandes
Jelisaveta
Knezevic
Karen
Macwan
Presentation Date
July 27, 2015
3. 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. 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. 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. 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
8. 8
INDUSTRY ANALYSIS
• Adoption of electric vehicles slow
• Tesla Model S $70K+ and X $80K+
• Tesla Model 3 $35K+ in future
S
SOCIAL
• Tax credits and incentives
• $7,500 income tax credit across US
• $8,500 rebate + carpool access in ON
P
POLITICAL
• 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
L
LEGAL
• Low oil prices (WTI NYMEX $48-60)
• 1.2 million EV’s by end of 2015
(0.5% of total global vehicle sales)
E
ECONOMIC
E
ETHICAL
• 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. 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
MODERATE
HIGH
HIGH
10. 10
PROBLEM 1 – PRODUCTION CAPACITY
KEYISSUE
PROBLEM 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
15. 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. 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
18. 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. 19
PROBLEM 2 – CORPORATE LEADERSHIP
KEYISSUE
PROBLEM 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
21. 21
EXHIBIT 2.1 – CURRENT CORPORATE STRUCTURE
Elon Musk
CEO, Product Architect, Chairman & Board of Director
D. Ahuja
CFO (Retiring)
J. Vijayan
CIO
JB. Straubel
CTO
D. O’Connell
VP Business Development
P. Carlsson
VP Supply Chain
J. Guillen
VP WW Sales
Shareholders
Board of Directors
22. 22
EXHIBIT 2.2 – REVISED CORPORATE STRUCTURE A
Elon Musk
CEO, Product Architect & Board of Director
Shareholders
Board of Directors
President & Board of Director
(New Position – Managerial Leader)
D. Ahuja
CFO (Retiring)
J. Vijayan
CIO
JB. Straubel
CTO
D. O’Connell
VP Business Development
P. Carlsson
VP Supply Chain
COO
(New Position)
NEW CHAIRMAN
23. 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. 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. Ahuja
CFO (Retiring)
J. Vijayan
CIO
JB. Straubel
CTO
D. O’Connell
VP Business Development
P. Carlsson
VP Supply Chain
COO
(New Position)
ELON MUSK
Product Architect,
Chairman & Board of Director
25. 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. 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
28. 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=15645
90-15-1031&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.