Tesla Consultomania

2. OBJECTIVE: TO DESIGN MARKET ENTRY STRATEGY FOR TESLA MOTORS IN INDIA
Political
• GOI's FAME scheme
• The government's aim of EV sales
penetration of 30% for private cars, 70% for
commercial cars, 40% for buses, and 80%
for two- and three-wheelers by 2030
• SDG targets of reducing Carbon footprint by
40%
Legal
• Regulations like "Pollution Under Control
(PUC)” certificate compliance
• BS VI norms for fuels
• EPA act of 1986 have shown the move
towards greener alternatives in vehicles.
Technological
• Sophisticated R&D in the efficiency,
Advanced AI-based interface
• Battery and charging
infrastructure development
Economical
• Up to 15% government subsidies
for EVs and components
• Growing middle and upper class
• CAGR of ~34% and rising
Social
• Societal benefits include reduced
healthcare costs, job creation
benefits, environmental benefits
& grid resources.
• Participant benefits: 43%
reduced Carbon footprint
and lesser maintenance cost.
Environmental
• India ranks a 168th on Env
performance index
• 6 out of top 10 most polluted
cities are from India.
• EVs are a necessity of the times.
Global Electric Vehicle business
The global electric vehicle market was valued at $162.34
billion in 2019, and is projected to reach $802.81 billion by
2027, registering a CAGR of 22.6%. Asia-Pacific was the
highest revenue contributor, accounting for $84.84 billion in
2019, and is estimated to reach $357.81 billion by 2027, with
a CAGR of 20.1%.
India’s Market scenario
The Indian electric car market size was valued at $71.1
million in 2017 and is projected to reach $707.4
million by 2025, witnessing a CAGR of 34.5% during
the forecast period.
From Porter’s model we can see that, major factor in
gaining market is buyer power, so the main focus to
gain foothold should be attracting customers via
incentives, cheaper price, customer service,
behavioural changes, etc.
Power of suppliers
• Most manufactures set
own plant in India due to
cheap labour & abundant
raw materials.
• High competition among
suppliers,
• Uniqueness: electric
premium sports/luxury
cars
Status: Low-Moderate
Competitors Threat of Substitute
Potential Entrant Power of buyers
• Current competitor from
Mahindra E20
• Fast growing industry with
~34% CAGR
• Target of 30% EVs
penetration by 2030
• Suitable policies and thrust
on renewable products
Status: High
• Toyota, & Chevrolet are
planning hybrid models to
India, 100% FDI
• High entry barrier due of
high fixed cost.
• Required EOS and strong
distribution network,
• Lack advance tech like
Tesla
Status: Moderate
• Price without government
subsidies will be a concern
• Due to no similar products
propensity to substitute is
less
• Low switching cost
• Brand loyalty towards
Tesla
Status: Moderate
• Relatively lower % of
buyers going for this niche
segment (40k luxury cars
were sold in 2018-19)
• Diesel/petrol cars are 75-
80% cheaper than electric
cars
• Consumers are highly
price sensitive
Status: High

3. Market Entry Strategy Analysis and Way Ahead
Marketing Mix
Market Entry Path
Establishing key tie ups across the Value
Chain
SWOT analysis:
Set clear goals
Business goals for expansion: To capture 25%
of the EV market in the next 3 years and an
average growth of 20% YoY thereafter.
Post setting up the manufacturing facilities and
establishing key vendor relationships.
Brand building Strategic Locations and Roll Out
Strengths: Key resources, assets and values
giving a competitive edge
Weakness: Lacking resources, assets and
values preventing further growth
Opportunities: Government push for EVs Threats: Contextual threats that can harm
growth
Strong Brand
Direct Distribution
Advance
Technology
Financially not
viable
Single sourced supply
chain
Push for EVs
New Competitors Market volatility
Reluctance to
adoption of EVs
Reliability
In US it fares bad ,
we can improve it
by improved
post-sales
services, and
providing
warranties esp.
on-air suspension,
touchscreen
controls, and
paint issues, .
Assurance Empathy
Tangibility
Responsive
ness
Focus on seamless
digital transition,
lesser Carbon
footprint, Stylish
sports car and the
entire customer
experience and
speedy customer
solutions
Battery supply
chain and super
charger network,
Ai-based software
and interface,
speed, style ,
luxury
Needs to listen to
its customer and
build an agile
more robust
supply chain for
timely delivery,
option to
customise , car
that suits Indian
needs
24*7 customer
support, timely
repair and
replacement of
products,
Domestic
manufacturing to
give immunity
from global
disruptions
Key Vendors
Charging infrastructure
Manufacturing
Digital Presence
Partnership in the Following segments
Identified locations for rolling-out:
1. Chennai
2. Gujrat
3. Manesar
Model Y
Model X
Mass production of Model Y
On Demand production of Model X
Gaining
public trust
then
capitalizing
further
Market & Competitive Analysis

4. Market and competitor analysis:
The electric vehicle (EV) market in India is
expected to hit over 63 lakh unit mark per
annum by 2027, according to a report by India
Energy Storage Alliance (IESA).
In the base case scenario, the EV market is expected to grow at CAGR of 44 percent between
2020-2027 & is expected to hit 6.34-million-unit annual sales by 2027," the IESA report said.
"The estimated battery market potential
is USD 580 million in 2019 and is
forecasted to grow to USD 14.9 billion by
2027," it noted. Tesla's Largest Competitive Advantage:
Competitor Analysis:
Market Entry Strategy Analysis and Way Ahead
Marketing Mix
Market & Competitive Analysis
Tesla is making an entry in the high end EV segment in India, the industry
itself is at a nascent stage but it has some competition there.
Innovations & Patents
Brand Recognition
Battery Life
Self-Driving Cars
Competitive factors to also consider:
Manufacturing Setup
Lead Time to entry
Location
Partnership
Micro Analysis of Indian Market:
• Indian Automobile Sector especially the
EV segment of Indian Economy was the
worst hit in the world due to COVID-19
pandemic.
• As a matter of fact, Indian Automobile
sector production has dropped by 15%
whilst registering as drop of 18% in the
domestic sales in FY 2019-20.
Indian Economy is facing an economy slowdown and it grew at a rate of approximately
5% in first Quarter of 2019
Reduced availability of credit for both consumers and the suppliers in the market and
hence it took a toll on the consumer demands and producer incentive to produce.
GOI is looking for schemes such as FAME & FAME-II launched in 2019, for adoption of
EVs, it also brought negative sentiments for the existing conventional vehicles.
Huge surge in fuel prices over last five years has decreased the perceived value of
Conventional Vehicles in the eyes of the customers.

5. Segmentation
Geographic
Tier-1, tier-2 cities, semi-urban
areas, rural areas
Socio-economic
Urban rich and middle class, salaried
person, businessmen, rural rich,
celebrities, politicians
Psychographic and Behavioural
Sports car lovers those who love
style and innovation, people who
like trophy-products,
environmentalists
Targeting Positioning
Geographical:
Tier-1 and Tier-2 cities with charging
infrastructure
Socio-economic:
• Upper business class executives
• Celebrities,
• HNW individuals,
• People who fancy status symbol
Psychographic:
• Sports car lovers,
• People affinity for latest tech,
• Eco-friendly and luxury car lovers
Functional:
• Performance, Safety , style
Competitive differentiation:
• Luxurious and Long-Range Electric
automobile
• Innovation
EV ecosystem
Branding:
Personality of Elon Musk
Exclusivity, synonymous with innovation
Purpose like “Transition to Sustainable
energy” “Only stylish car that goes 0-100 in 3
sec”
Market Entry Strategy Analysis and Way Ahead
Marketing Mix
Market & Competitive Analysis
1. Company databases 2. Utility Bill payments 3. Recreational Clubs
4. Platforms like VISA,
Mastercard, Amex
5. Cars owned and thus
through dealers,
franchisee's
6. By the basis of
financial investments
made by various people
Based on type of membership
(Elite membership)
Based on Salaries Based on average bill
payments in a year
Based on type of card the
individual is using Based on model/brand of
car that they are using
Based on amount of investment
Identifying High End Possible Customers:
The customer looks for Innovation and Technological
Advancement for Tesla:
Leader in manufacturing
premium eco-friendly
Model S
Model 3
Model X
Leading Project
in each
category.
Tesla batteries and Tesla
Supercharging Stations
D2C sales approach via its
service centers and stores
Developing a preliminary
distribution network
Market the vehicles through online
portals and via company showrooms
Adopting a premium
pricing strategy.
Initially launching value for money
product Model Y then capitalizing.
After capitalizing a fair market
share rolling out premium models
and capturing Mid scale and Top
Niche markets
Experiential Marketing
Viral Marketing by capitalising the
popularity of Elon Musk to generate
the necessary hype for launch.
AutoExpo India
Using platforms such as IPL and GP to
promote

6. Break Even Analysis (NPV and IRR)
Market Entry Strategy Analysis and Way Ahead
Marketing Mix
Market & Competitive Analysis
As per the plans of TESLA, they are looking forward for an initial
investment of 5 bn Dollars, for EV segment the infrastructure discount
rate can be assumed as 8%.
Financial and Operational Feasibility
At the end of 2030 according to the above calculations:
A Net Profit of 34 BN USD can be attained at NPV.
An IRR of 9% is achieved.
Setting Up and Moving Ahead:
Identified locations for rolling-out:
1. Chennai
2. Gujrat
3. Manesar
Key Factors for selections:
 Access to ports
 Government Policies
 Labour Availability
 Affinity to Auto Industry
 Vendor Availability
 Electric & Road Infra
Way Ahead:
Invest in Charging Infrastructure:
Especially in Metros and major NH, build super charger network of 480 V DC charging station
Setting up Li battery plants
Aligning with SDGs:
SDG7: by giving and alt to fuel-based automobiles
SDG 9: by fostering a culture of innovation and sustainable growth model
SDG 12:by reducing overall carbon footprint and increasing recyclable products
Leveraging Indian conditions:
6/10 most polluted cities in India, can promote a culture of sustainability by behavioural change
Leveraging government policies like fame, e-mobility mission, Make in India, etc
Rising upper class with 7.5 lakh millionaires and growing aspirations to own exclusive products
Operation and supply chain efficiency:
Bring in SC innovations like Multichannel distribution management system
Reduced lead time and increased credit cycle
Integrate its Gigafactory and manufacturing plants with suppliers and customers
Verticalization and integration
Provision for speedy customized product delivered directly to customers
Launch:Proposed to Launch with:
Model Y
Mass production of Model Y : Rs 50 Lakhs in India Expected
 Suitable for Indian Roads
 Hatch Back
 350-400KM at single charge
 Value for Money
On Demand production of Model X: Rs 1-1.5 CR in India Expected
 High Performance Model
 Sports Car
 450KM at single charge
 Super Charge Facility
Model X