Tesla Motors Presentation

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)


J. VijayanCIO

JB. StraubelCTO



COO(New Position)

NEW CHAIRMAN

23


• 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)


J. VijayanCIO

JB. StraubelCTO



COO(New Position)

ELON MUSKProduct Architect,

Chairman & Board of Director

25


• 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.

Tesla Motors Presentation

Documents

Transcript of Tesla Motors Presentation