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TESLA, Inc.
 Tesla, Inc.

Introduction
About Tesla:

Tesla, Inc. earlier known as Tesla Motors specializes in electric cars, Lithium-ion battery for
energy storage, and residential solar panels through their solar city subsidiary. Elon Musk,
JB Straubel, Martin Eberhard, Marc Tarpenning, and Ian Wright founded Tesla on July 1,
2003 and Elon Musk is currently Tesla’s Chairman, Product Architect and CEO. Tesla is
headquartered in Palo Alto, California with more than 30,000 employees and 212 stores
worldwide with many more on the way. Tesla went public in June 2010 and generated over
$226 million in its IPO.

In 2008, Tesla released its first electric vehicle, the

Tesla Roadster, and sold over 2,100 of them in 32 countries.
Tesla modeled the Roadster after the Lotus Elise by securing
a contract with Lotus for 2,500 Elise Gliders.

In the fall of 2012 Tesla released the Model S, the first fully electric, luxury, high
performance sedan. In March 2009, a prototype of the Model S was
released at a public exhibition. It was met with great
reviews and received over 8000 pre-orders for the vehicle.
With significantly greater manufacturing capabilities and a
price tag less than half that of the first electric sports
car Roadster, the Model S penetrated a larger share of the
market in 2013.

In 2012, when Tesla was about to launch the Model S, they

clearly stated their mission to be “a clean start, committed to electric
built around the driver, and sparking the evolution” the same as it is today.
Its aim was to constantly innovate and deliver the most
efficient and sustainable electric cars. Later Tesla
segmented their business into Electric car and other green
energy empowered subsidiaries.
In this study we are analyzing the journey of effectively
segmented, accurately targeted and well positioned Tesla
Model S electric car through various key concepts of
Principles of Marketing.

The Product: TESLA Model S

The goal of Tesla’s engineers was to produce the best high

performance luxury sedan on the market, regardless of its electric
capabilities. Tesla proudly states this is something it has
achieved. The Model S is composed of a perfect blend between
“exceptional performance, functionality, and attractive
styling. “With a rigid body structure, nearly 50/50 weight
distribution and a remarkably low center of gravity, Model S
offers the responsiveness and agility expected from world’s
best sports cars while providing the ride quality of a
sedan”. AMAZINGLY, its performance model can accelerate from
12-May-2017
 Tesla, Inc. 2

three battery pack options, 40kWH, 50kWH, and 85kWH, with a range of 160 miles, 230
miles, and 300 miles respectively, on a single charge. Using any normal outlet it
can be recharged at a rate of 62 miles per hour, and with a
Tesla Supercharger, in thirty minute, the vehicle can be
charged to 50 percent capacity. Both the charge time and
distance travelled per charge far exceed that of its
competitors. Without the need for gasoline, Tesla estimates
that the Model S will save consumers who drive comparable
premium internal combustion engine sedans approximately
$1,900 a year.

Beyond the performance, styling and energy efficiency of the

Model S, there are additional benefits that bring value to
the consumer. One of these is the exceptional customer
service and support that comes with being a Tesla owner.
Even though the company expected “the Model S will have
lower maintenance costs than comparable premium internal
combustion engine sedans due to few moving parts and the
absence of certain components, including oil, oil filters,
spark plugs, and engine valves”, if customer’s Model S
requires service, a Tesla technician will come to customer’s
home to make the necessary repairs. The battery also came
with an 8 year 100 mile warranty. There are also a number of
intangible benefits to being a Tesla owner. The Model S had
been designed to ensure a 5 star safety rating, giving its
drivers and their families’ piece of mind. There is also the
positive feeling the owner receives for being the driver of
a zero emissions car.

Tesla said, “We believe the intended combination of performance, styling, convenience and
energy efficiency of Model S will help position it as a compelling alternative to other vehicles
in the luxury and performance segment.”

Market Analysis before launch of Tesla Model S:

The market segment that was targeted had been identified as
primarily males ages 25-60.
They tended to have good jobs, are at a comfortable stage in
their lives, and have an annual household income of $100,000 or
more. They live in urban or urban fringe areas. Some of them can have
up to 2 hour commutes to work and want a luxury vehicle to make the long ride
enjoyable. Many of Tesla’s target consumers were parents. They
wanted a high performance luxury vehicle for themselves but
needed the room and the safety for their families as well.
In addition to being responsible for their family consumer
was environmentally responsible. It was analyzed that
Tesla’s consumers had a “West Coast” mentality concerning

12-May-2017
 Tesla, Inc. 3

Tesla Motors manufactured fully electric cars that did not depend on gasoline. Many
consumers viewed electric/hybrid cars as innovative and
environmentally friendly, but the cost for the vehicles far
outweighs the benefits. The consumer is also paying for a
car that is less stylish and much slower than a cheaper,
gasoline dependent, alternative. However, Tesla has
developed a line of luxurious electric vehicles that harbor
both performance and style, while still maintaining a
competitive price. Tesla’s Model S is designed to be the best performance sedan
on the market and is the most affordable to targeted market segment.

The Model S served and still serving both the consumer’s wants and needs. Consumers
wanted to stop paying for gasoline, especially if prices
continue to rise. There was also a trend with U.S. consumers
wanting to reduce their carbon footprint and live more eco-
friendly lives. Consumers also needed a reliable car that
can get them from point A to point B, with the versatility
and practicality to accommodate family, groceries, or golf
clubs.

The Model S offered a variety of features for the consumer.

First, it has the ability to travel 300 miles and more on a single charge. It can also do 0-60 in
5.6 seconds with a top speed of 125 mph. The convenience of being able to
plug the Model S into a 120 volt wall outlet was also proved
to be an attractive feature for the consumer. Despite the
various amenities of a premium luxury sedan, the Model S
boasts a 17’’ vertical LCD display that seamlessly controls
the entire vehicle with the touch of a finger. “The
touchscreen, digital instrument cluster, and steering wheel
controls seamlessly integrate media, navigation,
communications, cabin controls and vehicle data” to provide
luxury and comfort to consumers.

Based on the price range of competing luxury sedans, Tesla’s target consumers were willing
to pay upwards of $60,000 for style, performance, luxury, comfort, and safety. In 2013,
there was only 18 Tesla dealerships in North America, which
made it difficult for consumers to view and purchase the
product. However due to the limited number of models
available and the high demand for the product, Tesla had
successfully taken pre-orders online and directly delivered
the product to consumers’ homes. Demand was limited by the
number of cars that Tesla was able to produce, but at the
same time this helped to drive demand by provided a sense of
exclusivity to owners of a Tesla.

Business Orientation:
The demand for Gen3 Tesla cars are estimated based on the

12-May-2017
 Tesla, Inc. | 4

automobile market as well as the electric vehicle market.

The luxury automobile market defined by Bloomberg
BusinessWeek includes all vehicles that feature added
amenities at an additional cost. The category includes
luxury minivans, SUVs, convertibles, and sedans. The
electric vehicle industry will be defined as any vehicle
that utilizes electricity to supplement the use of gasoline.

Since there is little price sensitivity in the luxury car

market, companies must compete primarily on product
differentiation. The key success factors for the luxury car
industry are comfort, innovation, quality, and safety.
Consumers are willing to pay more for one luxury car over
another because of the perceived value and prestige of
owning a car with such attributes as the latest technology,
the most comfortable driving experience, the performance to
handle all conditions, and superior safety and crash test
ratings.

The key success factors for the electric vehicle industry are price, range, charging rates, and
total battery life. Oliver Wyman, a global consulting firm, stated
in its Comprehensive Study on innovation in the Automotive
Industry, “Most drivers want sound, reliable products at
affordable prices. The total cost of ownership will remain
the most important buying factor. To remain competitive in
the industry, firms need to ensure that the electric vehicle
technology they provide is still affordable to the U.S.
consumer. At the same time, consumers demand the latest
technology that increases the distance a vehicle can travel
on one charge. This is especially important with the limited
number of charging stations currently available in the U.S.
Also, with the limited number of charging stations available, comes the importance
of charging rates. Consumers want a product that is convenient and easy to use, that
charges both quickly and effectively. Battery lifespan is also an
important factor that consumers take into consideration.
Different companies use different batteries that influence
the overall product by either costing less or lasting
longer. Finding the right mix between price and durability
of the battery will determine a company’s success in this
category.

Competition:
For the purpose of this analysis we will consider Tesla
Motors’ direct competitors to be companies competing
exclusively in the luxury electric car market. Indirect
competitors will include companies who have offerings in the
luxury electric car market, but whose sole business does not
12-May-2017
 Tesla, Inc. 5

market share from Tesla’s Model S. Mercedes-Benz currently

has one hybrid available, the S400 that while not a
competitor to the Model S, will be a competitor to Tesla’s
other models at an MSRP of $91,850.Porsche is another
competitor to Tesla with its Panamera S Hybrid and its
Cayenne S Hybrid. While the Panamera S Hybrid has a MSRP of
$95,000, the Cayenne S Hybrid will compete directly with
Tesla’s Model S at a price point of $65,000.

Tesla Motors’ advantages over its competitors revolve around

its core competency of creating entirely electric vehicles.
Fisker Automotive claims its Karma has a range of 300 miles
that would match the range on Tesla’s 85kwh battery option.
However, since the Karma operates on electricity or
gasoline, only 50 of the 300 miles can be attributed
directly to the electric driving range compared to its
indirect competitors, Tesla has the advantage of a strong
brand image. Tesla is known for its creation of luxury
electric vehicles, whereas its competitors’ offerings can be
lost in their company’s product mix.

Competitors in the industry rival Tesla through the strong

brand awareness already created through traditional markets.
This brand awareness is supported by a greater number of
dealerships throughout the United States; in 2012, Tesla
only had 18. Without a significant number of dealerships,
consumers cannot physically touch the car. Since the
electric vehicle technology is relatively new, the ability
to easily test drive cars is a major advantage for
competitors. These competitors also have the convenience of
a prior customer base from which to draw new hybrid users.
While this may help push a product to consumers, it could
also be a disadvantage for competitors if there has been any
negative publicity associated with the brand name prior to
the hybrid’s introduction. However, through the success of
their traditional cars, Tesla’s competitors have greater
profits to invest in marketing and advertising campaigns to
promote a positive image. Tesla was increasing its marketing
and advertising campaigns each year, but has limited funds
due to the intense amount of research and development the

12-May-2017
 Tesla, Inc.
6

Marketing Orientation:

Marketing Objectives:

The three marketing objectives for this campaign are:

1) To position the Model S as an affordable sedan in the

luxury market,

2) To raise awareness and educate consumers on the Model S

and Tesla Motors as a whole, and

3) To have new buyers as a significant portion of the

customer base.

Marketing Strategies:
The Model S rely on concentrated target marketing. While the
luxury electric and hybrid market is small, the Model S will
attempt to capture a large market share through its position
as an entirely electric sedan. This niche strategy will
allow Tesla to use value pricing to capture the consumers’
perceived worth of the car. At a $50,000 price point, the
target market for the Model S will be males ranging in age
from 25-60 years (with or without families), that have
household income of $100,000 or greater. To market itself,
Tesla has formerly relied upon word of mouth advertising and
the idea that, the owners are the ambassadors. To market the
Model S, the strategy will utilize this strength, but on a
grander scale.
The marketing strategy for the Model S will revolve around
the message, We don’t inherit the Earth from our ancestors,
we borrow it from our children.” The strategy will require
two integral parts. The first part involves strategically
placing ads in magazines and newspapers to target our
specific market. The second part of the strategy is to bring
the car to consumers on a documentary road-trip across the
United States. Unlike the first part of the campaign, this
part focuses on reach, introducing a product to a large
number of potential consumers. The integration of these two
parts will effectively market the brand and introduce a new
product to new consumers in a vast number of geographic
locations.

Mission, Vision and Core Values:

Mission:

12-May-2017
 Tesla, Inc.
7

Core Values:
> A clean start
> Committed to Electric
> Built around the driver
> Sparking the evolution

Current Target Market:

Target:

Tesla’s current customer is purchasing the Model S vehicle.

Most of the customers are successful business executives and
entrepreneurs, they are tech savvy and green friendly. These
are wealthy and early adopters whose income levels put them
in the upper-middle class segment.

Segment:

Tesla is targeting individuals who are upper middle class

baby boomers with typical incomes of over $100,000 which is
based on 77% of our buyers falling into this particular
segment. The majority of the segment is predominantly male.

Positioning

The Model S will be positioned as the image, product, and

service leader in the industry. The Model S will lead in
image as it will be the only entirely electric luxury sedan
in the marketplace. After a $7,500 federal tax credit, the
model S is set to be offered at a price point of $49,900 for
its 40kwh battery option. This price point positions the
model S at a lower price than its competition, even with the
Model S having comparable or greater features. Tesla’s
strong customer service is relayed to consumers by the
company’s willingness to send technicians directly to the
houses of owners. Combined, these three factors helped to
position Tesla as the leader of the market.

Current Customer Value:

Product Decisions

The Model S is a four door, five passenger luxury

performance sedan. It is an electric car with exceptional
style, performance and functionality. The Model S is
accelerate from 0 to 60 in under 6 seconds. Currently, the
estimated range is 160 miles to 300 miles on a single charge
based on battery options. The Model S will be available as a
standard edition and as a Signature series edition, which
12-May-2017
 Tesla, Inc.
8

out option at specialized battery exchange locations.

Additionally, the Model S is designed to have a third row
seating with two additional child seats. Twenty-nine cubic
feet 20 storage will be available under the hood and the
tailgate compared to the fourteen cubic feet of competitors.
The Model S had a 17” driver interface touchscreen which
provides access to wireless connectivity, such as 4G,
infotainment options, and climate control options. To reduce
Tesla’s impact on the environment, the interior has been
designed and built out of banana leaf, carbon fiber, and
alcantara. The glass panoramic roof is constructed of safety
glass and provides protection from 93% of visible light and
79% of heat, which helps control the inside temperature. The
Model S key is innovative in itself as it is programmed to
the preference of the individual driver.
As the key approaches the vehicle the drivers’ preferences,
such as seat position, are loaded and the door unlocks and
then the car turns itself on once the driver’s side seat is
buckled. LED lights illuminate the door handles which
retract when not in use. To add to the features of the car,
the Model S’s music system can be connected to a streaming
radio station or to mobile devices. In addition to the Model
S, Tesla offers its roadster, Model X and Model III is
expected in 2018. The Roadster has raised awareness of Tesla
as a brand and its ability to develop cutting edge products.
To effectively market the Tesla brand, the overall campaign
is focused on the message, “we don’t inherit the earth from our ancestors, we
borrow it from our children. Tesla wants the Model S to be the car
that not only competes with the legacy carmakers, but that

12-May-2017
 Tesla, Inc.
9
H

Model S Above Product Life Cycle figure shows the product life cycle
in Russian market, where Tesla is going through Growth
Model X stage, after maturity the growth in market is expected to
decline.
H
- -
To control this decline, Tesla, Inc. has already planned to
Timeline for Adoption
Phase 4 (two decades)
100% autonomous
penetration, utopian
society

Phase 3 (2018 to 2022):

Complete autonomous
capability

Phase 2 2015 to
2019):
L-mited driver
substitution

Phase
1
Passi
(now dri
ve’
to vin
auton
2016)
omoug
Technology
Penetration s

Above figure estimated by Morgan Stanley Research predicts

that, Tesla will launch more advance and affordable products
to targeted segments to maintain the growth as the king of
the market.
Product Portfolio:

In Boston Consultancy Group Growth matrix, Tesla Model S and

X lies in Stars quadrant, since both products are
continuously growing by market share and market growth.

12-May-2017
 Tesla, Inc.
10

As per above figure and changing behavior in North American

Market, based on Tesla’s June 2015 report, Tesla Model S is
champion in the targeted segment. And Tesla Model X is also
doing well. As per the performance of launched products and
market response is more than expectation, which aligns Tesla
products in Star quadrant.

Pricing

The Model S is priced to maximize profit and demand by

utilizing a value pricing strategy. The Model S with a
current base ticket price of $65,400, allows the Model S to
compete with both the hybrid market and the luxury market.
The price variations are based on the battery size and
features. The second tier Model S has a battery of 60 KWH
and costs $67,400. The third tier Model S has a battery of
85 KWH, and is priced at $77,400. The Model S performance
model starts at $92,400 and includes an upgraded suspension
and interior. The Signature series costs $95,400 and is
available in signature red. The Signature performance costs
$105,400 and includes the performance upgrades and the
signature red color. U.S. Consumers will also qualify for a
tax rebate of up to $7,500 after purchasing the Model S as
Tesla sells and markets its cars directly to its end
consumers through its stores located throughout the world in
North America, Asia and Europe. The company currently has
several sales and service locations in the United States
ranging in areas from California to Illinois to Florida. The
first store was launched in 2008 in Los Angeles. Tesla
characterizes its stores as “highly visible, premium outlets

12-May-2017
 Tesla, Inc. 11

Tesla does not engage in distribution through franchises.

They “believe that by owning [their] sales and service
network [they] can offer a compelling customer experience
while achieving operating efficiencies and capturing sales
and services incumbent automobile manufacturers do not enjoy
in the traditional franchised distribution and service
model. In 2012, Tesla only had 18 sales and service
locations around the US, which has currently improved
significantly and while this may be suitable for the Tesla
Roadster who appeals to exotic, premium sports car buyers,
we believe that this distribution network needs to be
expanded for the more “mainstream” Model S. As much as we
would like Tesla to expand and build several more sales and
service locations in strategic cities around the world,
Tesla does that have the capital to do this. Therefore,
Tesla took advantage of their strategic partnership with
Mercedes.
Mercedes has hundreds of franchised dealerships around the
United States. Tesla used these dealerships to advertise,
sell, and market their new Model S to gain maximum coverage
and access to consumers. This enabled Tesla to expand its
distribution quickly without investing in major capital
assets. In the long run, when Tesla has the capital, Tesla
Integrated Marketing Communication:

As stated previously in the marketing strategy section, the

message of the marketing campaign is, we don’t inherit the Earth from
our ancestors, we borrow it from our children.” This aligns with the
company’s goals of creating a luxury performance sedan that
is both eco-friendly and family friendly.

The plan has two integral parts:

1) The strategic placing of ads in magazines and newspapers
to target our specific market, and

2) A documentary road-trip across the United States that

brings the car to consumers to showcase its features and
design. In order to effectively implement this marketing
strategy for the Model S, and Model X Tesla utilized all
elements of the promotion mix.

Advertising:

To advertise the Model S successfully the entire advertising

budget will be directed towards magazine ads. We considered
print media to be more cost effective and more efficient
than alternative forms of advertising. Television ads reach
a large audience, however at this point in time Tesla’s is
not ready for mass marketing. Tesla has a specific target
12-May-2017
 Tesla, Inc. 12

Tesla brand are not familiar to most of the consumer public,

visuals are going to be imperative in its advertisements.
Newspaper advertisements were considered to complement the
magazine ads, but were not selected due to the fact that it
is highly unlikely that the newspaper will be shared with
more than one person, as well as the high costs associated
with an ad that will only appear one time.

To communicate the marketing message to consumers, Tesla

will advertise in Car and Driver, Wired, BusinessWeek, and
Forbes magazine. These print outlets were chosen based on
the target market’s values and lifestyle. Considering our
target market is 25 to 60 year old males that are making
$100,000 a year or greater, all four magazines cater to this
consumer. Car and driver has a total audience of nearly 9.75
million people, of which 90.8% are males. The magazine also
specifically targets our age range with nearly 5.4 million
users between the ages of 25 and 49. To further justify the
use of Car and Driver, over 3.4 million users have household
income of $100,000 or greater. The use of Car and Driver is
intended to specifically target the car enthusiasts in our
target market and generate buzz in the car community through
the strong word of mouth advertising that Tesla has formerly
enjoyed.

Wired magazine was chosen based on the fact that our target
market is in the innovators group; they are well informed
tech savvy consumers. This magazine attracts that type of
reader. The total audience for Wired is just over 3.2
million of which 75% are males. The median age for the
magazine is 34 years, and the median household income is
just shy of $86,000. This again is a very specific market,
but it follows the niche strategy of targeting a large
number of customers within a small market segment.

To broaden the company’s advertising reach the company will

also invest in ad space within Bloomberg’s BusinessWeek and
Forbes magazine. This will still target Tesla’s specific
target market but it will have a broader base than the
specific interests of Car and Driver and Wired. BusinessWeek
currently has a total audience of 4 million, of which 63%
are male. The median age is 46.3 years and the median
household income is $101,076. Forbes magazine boasts an
audience of 5.1 million people, of which nearly 3.5 million
are men. With a median age of 43.1 years and 2.3 million
users with household income of $100,000 or greater, Forbes
magazine not only reached Tesla’s target market but

12-May-2017
 Tesla, Inc.
13

Sales Promotion

Consumers who purchase luxury performance sedans are highly

price insensitive, purchasing cars more on the quality,
performance, and features rather than on a specific price
point. Based on this knowledge, sales promotion will not be
a significant factor in the promotional mix. However, since
Tesla has received strong support from the United States
government, the company will be able to stimulate demand for
the product by offering a $7,500 federal tax rebate on the
Model S. This will entice Tesla’s target market because they
represent a portion of the business community that will
appreciate the greater value achieved through the savings.

PR, Personal Selling, Direct Marketing, and Interactive

Marketing:

As aforementioned the second part of the campaign is to

document a “road-trip” across the United States. The road
trip will commence in Tesla’s home of San Francisco at the
beginning of August and drove in an S shape across America
finishing in New York at the end of the month.
There are three distinct benefits to this campaign. The
first is that it is highly interactive. There was a constant
communication between the campaign and Tesla’s potential
customers through social media platforms such as Facebook
and Twitter, allowing them to follow the Model S on its
Journey. As the car travels across the country, it will be
photographed with beloved American landmarks, such as the
Grand Canyon, Route 66, and the Space Needle. These photos
will be instantly uploaded to Tesla’s social media platforms
to juxtapose the Model S legacy against the monumental
legacies left by America’s history. In addition Tesla will
be employing a film crew to document the journey. The
documentary will be distributed through Tesla’s YouTube
platform. Beyond simply the entertainment value, the
documentary will highlight the many features of the Model S.
For a company that may not be in the financial position to
afford a television commercial, this comparably low
production cost video distributed through free media is a
great alternative (Exhibit 2).
The second benefit is that it puts the Model S in front of
the consuming public. Every stop along the way the team of
Tesla sales representatives will be setting up a showcase of
the Model S in a high traffic public area such as South
Beach in Miami, Navy Pier in Chicago, and Central Park in
New York City. It is important to get these vehicles in
front of the consumer, because even many of the well
12-May-2017
 Tesla, Inc.
14

Marketing Budget:

Tesla’s total marketing budget for all business components

in 2011, 2010, and 2009 has been $2.9 million, $3.1 million,
and $1.7 million, respectively. Media coverage and word of
mouth are Tesla’s primary marketing outlets; however, in
order for the Model S to gain widespread awareness, the
marketing budget for the Model S alone will be $2.48
million. As mentioned previously, ads will be placed in four
widely read magazines and journals which will cost
approximately $1.48 million (Exhibit 2). In addition, the
one month road trip will cost approximately $1 million
(Exhibit 2).
The timeline for the marketing activities begun in July 2012
and ended in June of 2013 (Exhibit
3) . Immediately, in July, Tesla announced its Road Trip
event on various social media platforms such as Facebook,
Twitter, and the company’s official YouTube channel. Also, a
press release was issued on the company website detailing
the Road Trip event. The Road Trip event took place in
August and last for 31 days. Tesla’s promotions staff was
actively informing followers through Twitter, Facebook, and
press releases. After the Road Trip event, documentaries and
user experiences was released through Tesla’s official
YouTube channel. In addition, the magazine and journal ad
campaign also started in July and run for one year. Each
month an ad was placed in one of the selected magazines. A
total of three ads placed in each of the selected magazines
and journals.

Measurement for Success:

With regards to the Model S, Tesla aimed to produce

approximately 20,000 of them annually starting in 2013. For
this campaign to be considered successful Tesla expected all
20,000 Model S’s to be sold in 2013, and for this rate of
sale to continue on an annual basis. However, with this
marketing campaign, specifically in regards to the Road Trip
Event, Tesla aimed to sell an additional 10, 00 Model S in
2013. The goal of the Road Trip Event is to gain brand
awareness and this was measured through viewership on
Tesla’s Facebook, Twitter, and YouTube accounts.
Since the Road Trip Event rely heavily on these three
channel’s Tesla expected their viewership to increase
dramatically. As of today, Tesla’s Facebook account has over
76,866,000 likes and 30000 people talking about Tesla
Motors. Tesla aimed for “likes” to increase by 40 percent by

12-May-2017
Year Annual Average Revenues COGS* Gross Profit Tesla, 15
Price Inc.
Report
Expected
Annual
Sales(Cars)

$59,900 $479,200,000 $333,560,784 $145,639,216

2012 8000
2013 $59,900 $1,198,000,000 $833,901,961 $364,098,039
20,000
Magazine Placements Per Issue Cost 3 Issues for year

Business week $156,000 $468,00

Wall Street Journal $132,000 $396,000

Car and Driver $90,000 $270,000

Wired $115,000 $345,000

Total $493,000 $1,479,000

Road trip - 1 month Cost

Film Exhibit2: $250,000

Labor Model S Marketing &50,000 $2,479,000

Budget
Permit Cost $6,000

Hotel $139,500

12-May-2017
Advertisement $50,000 Tesla, Inc.
16

Tour Bus $46,500

Food $19,530

Miscellaneous $438,470

Total $1,000,000

Activity July August September October November December

Road Road Trip

Trip
Exhibi$1,000,000
Magazin CARt 3 Business WIRED Forbes CAR Business Week
es DRIVER Week DRIVER
2012 $115,000 $135,00 $156,000
$90,000 $156,000 0 $90,000

Media/P Announce Actively Release Release Release

R document Increase:
Road trip documented docume documente d
on footage from nted footage from YouTube:
Road Trip on
facebook, road trip footage road trip
twitter, website, from road Subscribers+40
website and Twitter, and trip %
other Facebook
social Facebook: likes
media. +40%, people
talking + 80%.

Twitter:
followers +
40%.
Total $90,000 $1,156,000 $115,000 $135,00 $90,000 $156,000
Cost 0

January February March April May June Total

2013:

12-May-2017
 $1,000,000 Tesla, 17
Inc.
WIRED Forbes CAR Business WIRED Forbes $1,488,000
DRIVER Week
$115,000 $135,000 $115,000 $135,000
$90,000 $156,000

Overall
increase:

YouTube:
+60%

Facebook:
Likes+60%,
people talking
+100%

Twitter:
Followers
+70%

$115,000 $135,000 $90,000 $156,000 $115,000 $135,000 $2,488,000

Tesla's major competitive advantages:

Success story of any organization is additionally scrutinized
by market experts and the public. As per scrutiny at
different levels, it is indisputable that Tesla has offered a
next level solution for vehicle, consumers seeking an
alternative to traditional gas-powered options.

Tesla’s competitive advantages over competitors can be

clearly understood by following points where few points are
tangible in nature and few points are intangible.

Self-reliance on core competencies: TESLA is focused on their

mission and vision and since battery is big part of Tesla’s
advantage so that rather than depending on some other vendors
they are building their own battery supply chain (and may be
for some loyal friends such as Mercedes)

> Battery packs of Tesla are cheaper than other EV

batteries available in the market
> Tesla has approach to continuously improve the
efficiency of batteries and its production unit
Gigafactory is focused on scaling up production of

12-May-2017
 Tesla, Inc. 18

It has wonderful Supercharger Network:

> Tesla has built Its own Supercharger Network [or

networks]

> They are providing ubiquitous fast-charging

stations.

Software that is several leagues above the competition

> Tesla approach to software is much above the

competition.

> Tesla’s software package is able to handle

o Core Focus and Tesla DNA o Battery

Voltage Management o Motor Control o

Diagnostics o Touchscreen o Mobile App

o Traction and Stability Control o

Complete over the air updates and so

on.
> Tesla’s cars are described as big machines with
small computers in them, since, in future computer for
different components are imagined, and Tesla is leading
us there.

> Tesla’s software team rolls out over-the-air

updates like we get on our smartphone, tablets,
computers, continuously improving owner vehicles.

> As per Tesla’s presentation, Even “recall” can be

done virtually.

A reputation for building superb products that “WOW” people.

> Tesla has developed reputation for producing

superb products.
> The Tesla Roadster transformed the image of
electric cars from small, slow vehicles to blindingly
fast vehicle of desire.

12-May-2017
 US Norway Switzerland The Netherlands China and HK Tesla, 19
Lower annual fee; higher milage Depending on Exclusion of vehicle tax Inc.
allowance writedown; exemption canton (county) until 2015; NoBPM (private
Taxes Customer
> from congestion charge, initialis redfocus:
uction/no Tesla
motor has
vehicle tax) until shown
Up to $9 800repeatedly
tax
$7,500 Federal carfax and annual road tax 2017; 4% Bijtelling (tax credit (China);
tax credit
that it cares more aboutcredit)
VAT ('$97,000): 50% discount on
providing
for
the customer with
registration tax
goodcompanyservice,
car tax a good product, 5 years and honesty
waived (HK) than making
Subsidies
little more money off of them.
Various purchase Free vehicle licence
subsisies/rebat worth up to $14,000
es for Evs > Goodwill for integrity and morality.
(China)
Parking
incentives for Free access to some parking
Parking Microe spots
Evs
nviron
Bus lanes ment
Access to H OV Bus lane access
lanes
Affect • Political: Governmental norms has been working
positive for Tesla in majority of the countries.
ing other Free pass in toll roads energy being the main goal has been the
Several
Other incentives forSustainable
Tesla
EV owners key factor in attracting the Political conditions of a
: country. Government is also issuing incentives for the
purchase of Electric Vehicles (EV) keeping in mind the

Fig. EV Incentives in Tesla’s Main Markets

12-May-2017
 Tesla, Inc.
20

• Economic Factors:
One of Tesla’s goal is to sell EV at a much
lower price compared to any other automotive
counterpart. This factor has largely
attracted mass- market buyers and governments
to provide incentives focusing on a clean and
sustainable environment. PESTLE analysis is

Sales Growth (%) Vs GDP

■ Expected Sales Growth:

12-May-2017
 Tesla, Inc.
21

• Social Factors:

■ Low-carbon emissions is one Strength of

Tesla, with the entire world trying to adapt
to Renewable energy. PESTEL Analysis sees
this as an Opportunity and Growth factor
where they can Harvest. With Strength and
Opportunity going hand-in-hand
Capitalisation would be a wiser decision to

Expected crude oil prices upto 2025

o Technology:With the rate of growth of technology

every second this seems to be a threat for Tesla.
Until the competitors in market don’t find an
alternative resourse that could outstand the
performance of Tesla, they are on the safer side.
With Strength and Threat taking upper hand ,Tesla

12-May-2017
 Tesla, Inc.
22

Increased battery production in GigaFactory upto 2020 after

Tesla Model S &X
• Environmental Factors:
Creating awareness among public is one key factor
in which Tesla can increase their opportunity to
sales. Waste disposal standards can easily
convince the government thereby promoting sales.
PESTEL analysis concludes Environmental factors to
be Opportunity for Tesla.
• Legal:
Expanding international patent protection, energy
consumption and dealership sales regulation are
the factors that affect Tesla legally. Though
expanding boundries and energy consumption can
Micro Environment:
The factors that affect the Micro environment according
to the Poster’s analysis is as follows: (5 force
analysis)
1. Strong competitors
2. Bargaining power of Customer
3. Bargaining power of supplier
4. Growth of technology leading to substitute for
alternative energy
5. Less experienced

1. Strong Competitors: Tesla has small no.of firms

comparing to anyother automotive counterpart.
Eventhough this seems to be a threat this can be
overcome if those firms are aggressive in production.
With Tesla providing a very low cost, this possess as a
strong competition for other automotive companies.
2. Bargaining power of Customer : Tesla’s marketing

12-May-2017
 Strengths: Opportunity: Tesla, Inc.
23

• Ability to3.R&DBargaining
vehicle and • supplier
power of Growing support of Govt
: With for cost,
low
manufacture therenewable
vehicles withinfuel
the Tesla has attracted both
clean energy.
company. Environmentalists and Government. Government having
incentives issued for • Tesla’s Growingproduct
gas prices. is a positive
• Supplies factor.
other organizations with
parts. 4. Growth of Technology • :Innovative
Keen eyes of all the
Technology
Automotive counterparts on Tesla Motors pose a threat
• iftheTesla
Developed first full doesn’t
electric work on its technology. It would be
car. easy for its counterparts to overtake it in such a
case.GigaFactory being a good initiative, Tesla has
• uppersuperior
Technologically hand. in drive
5. Less experienced
train, transmission, and electrical
: With not much experience in the
Weaknesses: Threats:
• Higher cost with innovative
technology • Current business model Tesla can only
produce a limited amount of vehicles
• High price due to low demand for increasing the chance of competitor
electric car. stealing market share.
• Small segment to target including
early • Competing against strong competitors
adopters.
• Lower priced vehicle

Strengths: Opportunity:

• Innovative culture • New full electric car segment

• Financial Strength • International expansion

SWOT: External Analysis

12-May-2017
• Innovation in technology • Innovative New products Tesla, Inc.
24

• Customer Loyalty • Growth of economy

• Brand awareness • Demand increase of luxury

vehicles.

Weaknesses: Threats:

• Weak customer service • Intense competition

• High cost of production • Gas prices

• Change in taste

• Increase in cost of raw materials

• Technology problems

Summary:

Tesla Motors, Inc. is a unique and innovation based

automotive company founded by Elon Musk. Tesla is responsible
for changing the world’s perception of electric vehicles.
Through innovation, Tesla has proven that one can create a
vehicle that encompasses speed, luxury, and eco-friendly attributes, while still
maintaining an affordable price. Tesla’s Model S and X are the answer to
how the world will drive sustainable energy and innovation
into the future.
The purpose of this study was to understand the emergence of
TESLA and its products, the organization’s current
orientation, its competitive advantages, marketing mix

12-May-2017
 Tesla, Inc.
25

Tesla’s vehicles are a fully electric high performance

luxury sedan. What sets it apart from its predecessor is a
base price of less than half. At an affordable $68,400 to
$135,500 in luxury car segment for the Model S and X which
can be marketed to a larger target market than ever before.
The target market was identified to be primarily males ages
25-60 living in urban areas with an annual household income
of over $100,000. Additionally they are tech savvy and
environmentally conscious. It was chosen to target this
segment through use Tesla’s first paid advertising campaign
as well as a variety of promotional techniques.

The very strong message used in promoting the Model S was

“We do not inherit the earth from our ancestors; we borrow it from our children.”
This message was chosen for its emotional and moral appeal
to the target market. The message was relayed through the
use of print media because was seen as the best way to
target the chosen market as well as being cost effective in
comparison to alternative modes of advertising. Car and
Driver, Wired, Business Week, and Forbes magazines were
chosen because their readers reflect the target segment of
the Model S. To ensure that the Model S has an advertising
12-May-2017
 Tesla, Inc.
26

the public. The second is the interactivity possible by

documenting the road trip on social media and YouTube. The
third advantage is the level of publicity an electric car
driving across the county will generate.

The success of the strategy was measured on three metrics.

The first being the number of consumer inquiries about the
vehicle. The second consist of the number of consumers
coming into Tesla Dealerships to test drive the Model S and
X. The third was the amount of vehicles sold during the time
period of the ad campaign launch, and also the 12 months

Bibliography / References

[1] https://www.tesla.com

[2] https://gpwrite.wordpress.com/2016/03/31/number-of-tesla-stores/

[3] https://en.wikipedia.org/wiki/Tesla. Inc.

[4] https: //www .slideshare.net/dpayne05/tesla-marketing-plan

[5] http://studenttheses.cbs.dk/bitstream/handle/10417/4841/

nicoline eeg praem.pdf

r61http://panmore.com/tesla-motors-inc-pestel-pestle-

analvsis-recommendations

[7]https://www.sec.gov/Archives/edgar/data/

1318605/000156459016013195/tsla-

10k 20151231.htm#Item 1A

18lhttp://panmorc.com/tcsla-motors-inc-fivc-forccs-analvsis-

12-May-2017

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