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Tesla Motors Strategy

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    Tesla motors is in the process of building supercharging stations to provide free travel in Canada and the United States. They are also providing a solar panel option so clients can charge their vehicles from home for free. The current fossil fuel vehicles take about 10 minutes to refuel and with the new electric vehicles the time is expected to double or triple to about 20 or 30 minutes at these stations. With the population increasing and some areas having extremely high population volumes this will not be feasible for long. Tesla has partnerships with apple for the computer systems and with Panasonic for their fuel cell technology. We are proposing two more partnerships to incorporate “WiTricity” into their future vehicle models. This follows the business model of Facebook, offer free service but make money off the add on’s, component parts, and usage convenience. WiTricity is fully explained following this link http://www.youtube.com/watch?v=L4UOLPZXQBI . WiTricity is a recently commercialized technology to provide wireless electricity similar to wireless internet. It runs on the basis of transferring energy through radio frequency. The second partnership is with google to come in on the ground level of project loon. Project loon is fully explained in the following link http://www.youtube.com/watch?v=iN3yT6ixoDk . Project loon is the idea of a sky network to provide worldwide coverage and access to the internet WIFI. Solar powered balloons are released into the atmosphere and travel using stratosphere winds to guide and maneuver them around the planet and are monitored by a ground team. We would like to incorporate these two technologies to be able to sell mobile charging with all of our future vehicle.

    A similar idea to mobile data for smartphones. When in WIFI range you do not pay for access to the internet, this would be their supercharging stations. When not in WIFI range people with smartphones have the option of paying for mobile data charged by their usage so they can stay connected. This idea of mobile charging through WiTricity and googles stratosphere balloons will progressively eliminate the need for charging at all and clients will be able to charge while they drive. This option could potentially create a new free market industry for mobile charging, allow Tesla to dissolve their partnership with Panasonic, and potentially give the electric cars away for free, similar to cell phones while entering into a two year contract for service, to help save world emissions and advance technology. Access to this option can be offered through the on board computer in the cars, similar to google play store for mobile devices. This can also solve many problems such as being stranded from running out of gas/energy, wait times at charging stations, and the need for batteries all together. Creating the partnership with Google could be beneficial for one other reason and that is their ground level technology for driverless cars, which have already been approved by western governments to operate on their roads and highways. The result: A future car which is driverless, electric, emission free, powered globally through WiTricity Loon Balloons, for free or a fraction of the cost of a current vehicle with mobile charging subscription, and available to all.

    Short Term 2014
    Approach both companies to create partnerships to incorporate both technologies into Tesla Vehicles Reinvest all profits from 2013 and 2014 vehicle sales to fund this new program to generate a continuous revenue stream for the future Participating in the research and development of the Loon Balloons Medium Term 2015 – 2017

    Begin prototype of WiTricity vehicles
    Create a Loon balloon network in which to being controlling and testing the technology Create an internet platform to sell mobile charging
    Testing of all technological components and vehicle response to the WiTricity systems Long Term 2017 +
    Implementing WiTricity Loon balloons to offer mobile charging options to the WiTricity capable vehicles Refining the technology to ensure worldwide coverage and reducing unforeseeable issues Sell new car models that are WiTricity capable

    Challenges

    Barriers to Market Entry
    Although the WiTricity technology is great, and the prodigy is an amazing device, the prodigy can only transfer electric energy within several meters. In order to charge tesla cars from distance, we need to invest in the device to improve the performance (“Prodigy F.A.Q.s”, 2013) The project loon has just started experimenting June, 2013. Thus the project is still an on-going process so it will take time to actually implement the distance charging system. (Project Loon, 2013) Cultural Aspects

    Resistance to change and learning new driving technology is a wide spread issue among people of older generations. Changing the method of transportation with the use of technology we expect to see the same resistance to change as when the first cars become available as opposed to horses for transportation. Our new car with WiTricity distant charging system will be different from our current line of products. The target will be relatively lower income people than our current customers. Therefore it will be necessary to use a different marketing strategy Legal Aspects

    This project will create a new trend in the car industry, it is predicted that some lobbying will be made by large petroleum companies. One of the examples of lobbying by oil and gas industries is the changed regulations on gas emission in Canada last year (McCarthy, 2013). There are some conferences being held for people with electromagnetic hypersensitivity (“Electromagnetic fields and public health”, 2012). There are some areas in the world where all radio transmissions are restricted (“National Radio Quiet Zone”, 2013). These organizations might be against the project loon in the United States in the future. Although project loon has already started launching balloons in the sky above 10-20 km high, the international laws for airspace allows a country to control its airspace within 100 km above from its land. Therefore, if there are some countries against the project loon, it will be hard to implement the WiTricity distant charge system.

    Current Performance Evaluation
    About
    Tesla Motors is a new automotive company which is specializing in electric transportation and solar charging. Our company was founded in 2003, is headquartered in Palo Alto, California, and currently employs more than 2000 people (“About Tesla”). The infrastructure of the company includes 31 stores and service locations and has accomplished putting vehicles on the road in 37 countries (“About Tesla”). Tesla began production of our signature roadster and the backbone of our master plan in 2008, have been selling these models since then, and we have no began production of the Model S in 2012 with an expected 21,000 deliveries for 2013(“Investors”). Deliveries for the Model X will begin in 2014(“Investors”). From a corporate perspective we are a very new organization and have just began operations and it will take some time to show returns on our investments. The Co-Founder & CEO of Tesla Motors Elon Musk made this statement in a 2006 blog post while still in the beginning stages of company development “My day job is running a space transportation company called SpaceX, but on the side I am the chairman of Tesla Motors and help formulate the business and product strategy with Martin and the rest of the team. I have also been Tesla Motor’s primary funding source from when the company was just three people and a business plan.” (Musk). In seven years our company has grown from three people to a new international standard in vehicles. The master plan that was birthed and overall strategic direction Tesla is aimed at is the follow: Our current master plan is:

    1. Build sports car
    2. Use that money to build an affordable car
    3. Use that money to build an even more affordable car
    4. While doing above, also provide zero emission electric power generation options (Musk)

    Current Objectives

    The following pictures are a series of easily to read information from our 2013 corporate presentation. They outline what Tesla is currently 100% focused in achieving at this time. The additional strategy of adding the mobile charging service will need to work around this already laid out plan of action.

    (“Autumn 2013 Corporate Presentation”)
    Retail Expansion Plan

    (“Autumn 2013 Corporate Presentation”)
    Service Center Expansion Plan

    (“Autumn 2013 Corporate Presentation”)
    Expand Free Charging Stations to Develop a Nationwide Supercharger Network

    (“Autumn 2013 Corporate Presentation”)
    Market

    Stock Information

    Tesla (NASDAQ: TSLA)
    4:00 PM ET on Nov 22, 2013
    Last Price
    Change
    Open
    Day High
    52-Week High
    121.38
    0.72 (0.590%)
    121.58
    122.75
    194.50

    Volume
    Previous Close
    Day Low
    52-Week Low

    11,084,200
    122.10
    117.93
    31.52
    (“Investors”)
    From the beginning of 2011 to the end of 2012, Tesla Motors stock price maintained a range of $25 – $35 US dollars. In 2013 Tesla experienced a stock price spike to nearly $200.00 in September 2013 which is now regressing.

    Competitors
    Since Tesla is fully electronic vehicle and has no emission, competition for Tesla is very unique. Tesla’s current target is medium to high income, and fond of clean energy. In general, competitors would be variety of cars sold in the market. First, we can segment cars into basically 3 competitors; normal gasoline cars, supercars (sports cars), and luxury hybrid cars. The reason of this segmentation is that Tesla offers sport type electric cars. Therefore, supercars and normal gasoline cars are not exactly in the same market, because they are either extremely expensive or cheap, and both release a lot of automobile emissions. Thus, the only direct competitors would be luxury hybrid cars release relatively less emissions, and the car prices are closer to Tesla cars than the other cars. (See the perception map below). Perception Map & Tesla’s Position in General Auto Industry Next, we analyzed the competition with luxury hybrid cars. There are many hybrid cars and we picked up 3 popular luxury hybrid cars. Porsche 918 has the highest price among the competitors, and it is $845,000 and the fuel efficiency rate is 78mpg (Porsche, 2013). BMW i8 has the second highest price, and its starting price is $135,925, and Fuel efficiency rating is 80mpg (BMW, 2013). Next, the last competitor would be the Lexus 2014 GS. The average car price is $55,000, and the fuel efficiency is 23mpg (Lexus, 2013) Compare to those competitors, the Tesla Model S is $77,800 and miles per gallon costs about $5*, and miles per $5 charge at home is 93miles (150 km), and 124miles (200 km) from high power wall connector. And, customers are free to charge at our supercharger stations. Therefore, the Tesla’s basic model is relatively more affordable than other competitors, and the running cost is far the lowest. (Tesla, 2013) *gas price is based on the average price of premium gasoline in California. Perception Map & Tesla’s Position in Green Energy Car Industry

    Financial Statement Analysis
    A full set of financial statement comparisons can be seen in the Appendix under exhibit #1 Income Statement
    Period Ending
    2012-12-31
    2011-12-31
    2010-12-31
    Total Revenue
    413,256
    204,242
    116,744

    Net Income Applicable To Common Shares
    (396,213)
    (254,411)
    (154,328)

    The end of fiscal 2012 shows a trend of decreasing net income. This company has yet to show returns in the last three years. They are in a state of constant losses. Revenues have increased in 2013 as opposed to 2012 from the recent sale of 21,000 vehicles this year of an approximate MSRP of $63,000 equaling 1.3B (“Autumn 2013 Corporate Presentation”). This can be seen in the investor’s presentation for autumn 2013

    Balance Sheet
    Period Ending
    Dec 31, 2012
    Dec 31, 2011
    Dec 31, 2010
    Total Current Assets
    524,768
    372,838
    235,886
    Total Assets
    1,114,190
    713,448
    386,082
    Total Current Liabilities
    539,108
    191,339
    85,565
    Total Liabilities
    989,490
    489,403
    179,034
    Net Tangible Assets
    124,700
    224,045
    207,048

    Debt to equity Ratio: Total Liabilities / Shareholders Equity = 989,490/124,700 = 7.935 Capital intensive operations such as those in the auto manufacturers industry, have debt to equity ratios from approximately 1 – 2 in a successful firm (“Debt to equity ratio by industries”). Operations such as Facebook have a relatively low debt to equity ratio of approximately 0.5 – 1. Tesla motors being a relatively new company has not had the added experience and years behind creating a stable system. Their current debt to equity ratio of 7.9, which in the auto motive industry is somewhat extreme, shows for every dollar of equity there is eight dollars of debt. Tesla is extremely debt leveraged due to our capital intensive business model. We are in need of a supplementary revenue stream to offset the debt and improve equity. Current Ratio: Current Assets/ Current Liabilities = 524,768/539,108 = 0.9734 For every current liability, Tesla has ($0.97) worth of current assets which could be liquidated to meet current obligations. A good ratio is $1.1 and above so Tesla has insufficient means to cover current obligations. Currently we cannot meet our upcoming payments and need additional revenue to continue operating. Return on Equity: Net Income/Shareholders Equity = (396,213)/124,700 = (3.18) Current investments from 2012 lost shareholder equity which means there were no relevant returns for the shareholders. Capital investments need to become more efficient. This figure may have changed for the 2013 period as in 2013 we have sold 21,000 vehicles.

    Cash flow
    Period Ending
    Dec 31, 2012
    Dec 31, 2011
    Dec 31, 2010
    Net Income
    (396,213)
    (254,411)
    (154,328)
    Total Cash Flow From Operating Activities
    (266,081)
    (128,034)
    (127,817)
    Capital Expenditures
    (239,228)
    (184,226)
    (40,203)
    Investments
    25,008
    (24,952)

    Other Cash flows from Investing Activities
    7,290
    46,920
    (140,094)

    Total Cash Flows From Investing Activities
    (206,930)
    (162,258)
    (180,297)

    Sale Purchase of Stock
    246,381
    241,993
    266,458
    Net Borrowings
    173,254
    204,007
    71,513

    Total Cash Flows From Financing Activities

    419,635

    446,000

    338,045

    Change In Cash and Cash Equivalents

    (53,376)

    155,708

    29,931

    We can see in the statement of cash flows that our 2012 sales of stock from financing activities did meet meet our capital investment needs, however this is the first year out of the comparison years that we have a negative cash flow. More money is exiting the company then being brought in, which is resulting in the current net borrowings of 173,254. The net borrowing requirement to meet capital needs for this business is not showing improvements which suggest the need for additional revenue streams to reduce volatility of the business model. Initial Investment

    Base team to bring technologies together
    Six specialists @ 80,000 – 100,000 annually
    One project manager @ 120,000 annually
    Total = $600,000 – $720,000 x 3 years =
    $1,800,000 – $2,160,000 Labor Cost Range
    *Under the assumption that we can incorporate this technology into vehicles in approximately three years. Materials Allowance request: minimum 500,000 annually to cover expenses such as patents and copyrights, information rights from partnership agreements, solar panels, and ground control hardware and software As this is new technology much of the initial investment is unknown at this time and preforming a cost benefit would not be possible. Instead of requesting a specific dollar amount, we are asking for a yearly allowance in which to conduct the team the resources will then be allocated to where they are needed. The allowance does not include labor. The idea is similar to cell phone providers selling mobile data service. This model has already proven successful. Product

    Planning
    The overall idea for the new service is to create a permanent supplemental revenue stream to improve organization feasibility and phase out the need for larger batteries and relying on partnership agreements with Panasonic. To incorporate WiTricity into future vehicle models, there is a few planning details to be segmented. The first product planning component is developing the technology of project loon with Google and work to make the technology multipurpose. Once the concept is developed to either use loon balloons as our own network with our own dedicated frequency or piggy back on Google WIFI loon balloons, WiTricity technology can be developed to reach longer distances to be considered efficient enough to be connected to the balloon network. The second component is creating a receiving component to be placed in the production line as part of the new vehicles. The original design will have to be augmented to be compatible to Tesla vehicles. The third component is creating a platform and distribution system to sell mobile charging and a network and method in which vehicles receive their services. A method of Specific ID will need to be employed for the charging to target and follow the correct vehicle Development

    Once the product has been tested and incorporated into our future vehicles the focus will turn to supplemental revenue stream support. Promoting our service of mobile charging will be essential to making the service mainstream. The full potential of the WiTricity and loon balloon network can be reached by providing a near free solution to power through solar means. This network can be developed over time to support a range of technology by exploiting a partnership with Prodigy for the WiTricity technology. People

    Human Resource Management
    The management of the Base team to bring this technology to Tesla’s vehicles will be handled by a project manager who reports to the CFO. They report to the CFO as their highest authority due to the mobile charging option is meant to create the new revenue stream. This is an important project for the continued viability of the organization in terms of success and offsetting current debt. Besides reporting the team will be essentially self-managed due to the high skill and technical nature of the research and development being performed. The duty of the project manager is to ensure results and aim to remain on a timeline. Training and Development

    Extensive training and development will need to take place between partnerships to incorporate and develop the service and network. Information sharing will be a key component to the success of creating and distributing charging and producing a new line of vehicles. New training will be needed from each different company for each different component including 1) Loon balloon technology 2) WiTricity transmission and capabilities 3) Network solutions. These three training components are then developed and applied to bring the technologies together to create the mobile charging service option. The team requirement will consist of six specialists, two for each component, to develop the base for operations and implementation. Organizational Behavior

    The behavior of Tesla employees is expected to align itself with corporate mission and vision. This is the overall goal and the status of organization behavior following the mission and vision is necessary to ensure the efficiency and orientation of the company. Having a clear mission and vision also reduces agency issues and aids in fostering a team environment. Mission

    “To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.” (“The Mission of Tesla”) Vision
    Create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles. (Beerhorst) Market
    Trends
    Young people in the United States and some other developed countries are losing interests in car ownership and the car sales have decreased by almost 20% after the recession in 2007 (Timothy Chain, 2012). However, the car sales in developing countries such as in BRICs countries are increasing every year (Snyder). One of the reasons would be that majority of people have been experiencing financial hard times. In that case, our new affordable cars will attract those people. Even without the supercharger station service, charging at home costs much less than gasoline. For BRICs countries, we have already expanded into China, and are planning to have two retail stores and three service centers by the end of year 2015. The affordable model will help company to reach wider range of potential customers in China.

    Target Market & Marketing Plan

    Our current target market is high income people who concern about global environment. Tesla has been offering luxury sport-type cars that priced from $77,800 to 103,300. Our new target market with WiTricity cars will be relatively lower income people than our current customers. Therefore, we will be implementing two-tiered marketing plan by offering two different packages. Thus our customers will choose from two options either the current car option with free supercharging station service or the new affordable car option with WiTricity energy purchase plan. 1. Luxury Car with supercharger station

    a. Tesla will be continue offering luxury sport cars with free supercharge options at the supercharge stations. By implementing the WiTricity energy purchase plan for medium income customers, those customers who are choosing luxury car option will have benefit of less waiting time at supercharge stations. This market segmentation will separate customer flow of charging energy. 2. Affordable Car with WiTricity charge option

    a. Our marketing plan for new target market, medium income customers, will offer more affordable cars, price range of $15,000 dollars, with WiTricity charging plan. Customers can charge electric energy anywhere in the country through the WiTricity device installed in the car. Customers will be charged fee per kilometer.

    Customers have basically two types of packages. The package A plan is intended continue attracting current target market, and we plan to attract medium income customers with B package. In order to enter into mass auto market and take first mover advantage, our marketing plan for promotion is to offer free WiTricity charging for first 6 months for customers purchasing the WiTricity cars (Package B). Key Success Factors

    Key External Factors
    Impact Weight
    (a)
    Response
    Rating
    (b)
    Weighted Score
    (c)
    Rationale for Each Factor
    Continued Expansion to International Markets
    0.2
    3.5
    0.7
    Essential to enter international markets with emerging economies and growing middle class to capture market share and avoid additional barriers to entry. Distant Electricity Charging
    0.3
    5
    1.5
    The development of distance on the WiTricity will be the determinant in this strategy New Product Lines
    0.15
    3.5
    0.525
    Continuous improvement among product offerings is key to keeping up with client satisfaction and incorporating latest technologies Overcoming the challenges of Potential Partners
    0.2
    4
    0.8
    Communication and work relationships are essential when developing cross company technologies Service availability
    0.15
    4.5
    0.675
    Lost charging due to service failures will be a large issue. Service availability is key to the success of the platform TOTAL SCORES
    1.0

    4.2
    Weighted score indicates response performance to external factors, firms generally average approximately 3.0.

    Feasible Alternatives
    Remain Status Quo
    Tesla has been enjoying its sales increase every year, and is investing on expanding into other countries such as China, Australia, Japan and many European countries. The expansion plan projects in total of 75 service stations in the world and building many supercharger stations throughout the United States. Tesla is also developing new models with more affordable price, around $35,000, to get into the mass auto industry. (Adam Vaughn, 2013) Focus efforts into stronger battery technology

    Tesla can also continue improving battery technology. Currently the fast charge capability at the supercharger stations is up to 150 miles in 20 minutes. If Tesla can develop the performance of the battery technology even more, future customers will have no wait at stations, and will enjoy fast, smooth and emission free travel around the country. Create public transportation vehicles and/or the truck models Tesla motor’s no emission engine can be applied to public transportations. No emission buses are already used in many cities and countries around the world, such as the Trans Link Trolley bus in Vancouver. Although they run by electronic power, buses have to be connected to electronic wires. Wires limits the routes and the movements of buses and once electronic wires are built with routes, it is difficult to change routes. Another problem is that buses completely stop easily when wires are out of the place. Tesla’s electronic engine can be solution for those problems. Tesla can create the truck models especially not only for family use, but commercial purposes as well. In order to create those new vehicles, Tesla will need to invest in making powerful batteries for heavy vehicles. (Trans Link, 2013)

    Control and Feedback
    The project has a designated project organizer which sole purpose is reporting to the CFO and keeping the self-managed team on track. He/She will be there to ensure progress and proper use of funding. All the technologies have already been created or are in the process of being developed but have already been proven feasible so the project manager is of good purpose to acting as a control for results and documentation. Control of the mobile charging network will remain with Tesla so we can incorporate the sale of mobile charging into our revenue stream. The platform for selling/distributing the mobile charging option will facilitate the majority of services so it takes little human interaction. Controls will be implemented and corrective action applied as new problems arise. Mostly in the form of electricity theft, which has already shown itself to be quite a problem even with hard line connections. Feedback will be gained through testing and documentation of the research and trials of the new service network. Success in the trials is key to being able to fully market this service. Feedback can also be gained while in operations from online statistics collected about usage of the service.

    Conclusion/Recommendations
    Having Tesla create the additional partnerships needed to make this feasible is key. By creating a secondary and supplemental revenue stream Tesla can help guard against the auto industry’s volatility. Many problems have been in the auto manufacturing industry in recent years and Tesla is not meeting their current obligations. Besides selling the vehicles, they have not secured any other sort of stabilizer revenue stream. The ability to exploit the technology to fit these needs will take time as neither are ready for market in the context of which we need them to be used. The time frame has been stretched to accommodate for this and to accommodate for the time needed to complete our current strategic plan which goes until 2017. WiTricity technology will gradually reduce the dependency our vehicles have on batteries and provide us options for new product ideas and augmentations. This will also reduce dependency on Panasonic as our sole provider of the batteries we are currently using. Developing WiTricity to become Loon Balloon compatible and reach farther distances, while creating a sky network with Google, to gain the ability to sell mobile charging is the Tesla vehicle of the future. When purchasing mobile charging becomes common place among our vehicles, the main source of revenue for our company will change to be the mobile charging and the vehicles will no longer be our main source.

    Appendix
    Exhibit #1 Financial Statements

    Income Statement
    Period Ending
    2012-12-31
    2011-12-31
    2010-12-31
    Total Revenue
    413,256
    204,242
    116,744
    Cost of Revenue
    383,189
    142,647
    86,013

    Gross Profit
    30,067
    61,595
    30,731

    Operating Expenses

    Research Development
    273,978
    208,981
    92,996

    Selling General and Administrative
    150,372
    104,102
    84,573

    Non Recurring


    Others


    Total Operating Expenses


    Operating Income or Loss
    (394,283)
    (251,488)
    (146,838)

    Income from Continuing Operations

    Total Other Income/Expenses Net
    (1,540)
    (2,391)
    (6,325)

    Earnings Before Interest And Taxes
    (395,823)
    (253,879)
    (153,163)

    Interest Expense
    254
    43
    992

    Income Before Tax
    (396,077)
    (253,922)
    (154,155)

    Income Tax Expense
    136
    489
    173

    Minority Interest


    Net Income From Continuing Ops
    (396,213)
    (254,411)
    (154,328)

    Non-recurring Events

    Discontinued Operations


    Extraordinary Items


    Effect Of Accounting Changes


    Other Items


    Net Income
    (396,213)
    (254,411)
    (154,328)

    Preferred Stock And Other Adjustments


    Net Income Applicable To Common Shares
    (396,213)
    (254,411)
    (154,328)

    (“Tesla Motors, Inc. (TSLA)”)

    Balance Sheet
    Period Ending
    Dec 31, 2012
    Dec 31, 2011
    Dec 31, 2010

    Assets
    Current Assets

    Cash And Cash Equivalents
    220,984
    278,742
    173,155

    Short Term Investments

    25,061

    Net Receivables
    26,842
    9,539
    6,710

    Inventory
    268,504
    50,082
    45,182

    Other Current Assets
    8,438
    9,414
    10,839

    Total Current Assets
    524,768
    372,838
    235,886
    Long Term Investments



    Property Plant and Equipment
    562,300
    310,171
    122,599
    Goodwill



    Intangible Assets



    Accumulated Amortization



    Other Assets
    27,122
    30,439
    27,597
    Deferred Long Term Asset Charges


    Total Assets
    1,114,190
    713,448
    386,082

    Liabilities
    Current Liabilities

    Accounts Payable
    343,180
    88,250
    49,896

    Short/Current Long Term Debt
    55,206
    8,983
    279

    Other Current Liabilities
    140,722
    94,106
    35,390

    Total Current Liabilities
    539,108
    191,339
    85,565
    Long Term Debt
    411,460
    271,165
    72,324
    Other Liabilities
    35,862
    23,753
    18,362
    Deferred Long Term Liability Charges
    3,060
    3,146
    2,783
    Minority Interest



    Negative Goodwill


    Total Liabilities
    989,490
    489,403
    179,034

    Stockholders’ Equity
    Misc Stocks Options Warrants



    Redeemable Preferred Stock



    Preferred Stock



    Common Stock
    115
    104
    95
    Retained Earnings
    (1,065,606)
    (669,392)
    (414,982)
    Treasury Stock



    Capital Surplus
    1,190,191
    893,336
    621,935
    Other Stockholder Equity

    (3)

    Total Stockholder Equity
    124,700
    224,045
    207,048

    Net Tangible Assets
    124,700
    224,045
    207,048

    (“Tesla Motors, Inc. (TSLA)”)
    Cash Flow Statement
    Period Ending
    Dec 31, 2012
    Dec 31, 2011
    Dec 31, 2010
    Net Income
    (396,213)
    (254,411)
    (154,328)

    Operating Activities, Cash Flows Provided By or Used In
    Depreciation
    28,825
    16,919
    10,623
    Adjustments To Net Income
    58,488
    34,230
    27,063
    Changes In Accounts Receivables
    (17,303)
    (2,829)
    (3,222)
    Changes In Liabilities
    207,153
    31,225
    21,449
    Changes In Inventories
    (194,726)
    (13,638)
    (28,513)
    Changes In Other Operating Activities
    47,695
    60,470
    (889)

    Total Cash Flow From Operating Activities
    (266,081)
    (128,034)
    (127,817)

    Investing Activities, Cash Flows Provided By or Used In
    Capital Expenditures
    (239,228)
    (184,226)
    (40,203)
    Investments
    25,008
    (24,952)

    Other Cash flows from Investing Activities
    7,290
    46,920
    (140,094)

    Total Cash Flows From Investing Activities
    (206,930)
    (162,258)
    (180,297)

    Financing Activities, Cash Flows Provided By or Used In
    Dividends Paid



    Sale Purchase of Stock
    246,381
    241,993
    266,458
    Net Borrowings
    173,254
    204,007
    71,513
    Other Cash Flows from Financing Activities


    Total Cash Flows From Financing Activities
    419,635
    446,000
    338,045
    Effect Of Exchange Rate Changes


    Change In Cash and Cash Equivalents
    (53,376)
    155,708
    29,931

    (“Tesla Motors, Inc. (TSLA)”)

    Exhibit # 2 SFAS/SWOT
    SFAS (Strategic Factor Analysis Summary)
    Key Strategic Factors
    Impact Weight
    (a)
    Response
    Rating
    (b)
    Weighted Score
    (c)
    Duration
    Rationale for Each Factor

    S/T
    M/T
    L/T

    Opportunities

    International Expansion
    0.1
    3
    0.3
    X
    x
    x
    2 retail stores & 3 service stations in China by 2015
    Distant Electricity Charging
    0.15
    5
    0.75

    x
    x
    Combined Technology of WiTricity & Project loon
    Sales Increase of Luxury Cars
    0.1
    3
    0.3
    x

    By 13% increase from the previous year in 2012
    New Product Lines
    0.15
    4
    0.6

    x
    New technology selection to compete with new competitors.
    Threats

    Competition
    0.08
    2
    0.16
    x
    x
    x
    Hybrid Cars
    Missed Market Opportunity
    0.12
    3
    0.36
    x
    x

    Competitors are noticing first mover advantage in many international markets. Large Oil Companies
    0.1
    2
    0.2
    x
    x
    x
    Lobbying activities
    Challenges of Potential Partners
    0.2
    5
    1

    x
    x
    Many challenges for launching the distance charging system
    Total Scores
    1

    3.67

    Strengths

    Customer Satisfaction
    0.1
    3
    0.3

    x
    99% customer satisfaction
    Unique Products
    0.2
    4
    0.8

    x
    No emission cars
    Supercharger Stations
    0.2
    4
    0.8

    x
    x
    Free energy charge service with super-fast speed
    Low Running Cost
    0.1
    4
    0.4
    x
    x
    x
    Save the average of $261 per month (15,000mile driving yearly + 3 year usage) Weaknesses

    Battery Troubles
    0.1
    2
    0.2
    x
    x

    Three cased reported in 2013
    High Prices
    0.1
    3
    0.3
    x

    $68,000 to $87,000
    Dependant on stationary charging units
    0.1
    3
    0.3
    x
    x

    Home charging and Supercharger stations
    Long Wait Times/Trouble Meeting Demand
    0.1
    3
    0.3
    x
    x
    x
    Times are not so long as to discourage purchasing so far, but could use improvement. TOTAL SCORES
    1

    3.4

    Weighted score indicates response performance to external factors, firms generally average approximately 3.0.

    Exhibit # 3 PESTLE

    Political
    Washington DC is the capital of The United States which is comprised of 50 states and is the third largest country next to Russia and Canada. The current population of the United Stated is 317,150,000 by the time this report is read (“U.S. and World Population Clock”). The most current issue in the United States is their recent government shut down. Approximately 800,000 employees were told to not come in to work as there would be no paycheck. This problem was caused by political differences between parties about raising the debt ceiling which is now being strained by Obama care. Obama care is the other most recent event in the United States structure which is a public health care option similar to what is enjoyed by Canadians. Components of Population Change

    One birth every 8 seconds

    One death every 12 seconds

    One international migrant (net) every 44 seconds

    Net gain of one person every 14 seconds

    (“U.S. and World Population Clock”)
    Top 10 Most Populous Countries
    1. China
    1,349,585,838
    6. Pakistan
    193,238,868
    2. India
    1,220,800,359
    7. Nigeria
    174,507,539
    3. United States
    316,668,567
    8. Bangladesh
    163,654,860
    4. Indonesia
    251,160,124
    9. Russia
    142,500,482
    5. Brazil
    201,009,622
    10. Japan
    127,253,075

    (“U.S. and World Population Clock”)
    Economic
    GDP
    A strong consumer oriented economy is resulting from this constant growth of GDP. United States GDP, representing approximately 25% of the world economy (“United States GDP”). The World Bank Group is the organization that reports this information. Also, the US GDP has been climbing steadily, experiencing only one small short fall when the recession hit. Inflation Rate

    The U.S. Bureau of Labor Statistics is responsible for reporting the inflation rate in the United States (“United States Inflation Rate”). In September 2013, it was recorded at 1.2%.

    Interest Rate

    In the US, interest rates are reported by the Federal Reserve which holds the countries real wealth in the gold standard. The United States uses a benchmark interest rate of .25%. Overall authority for interest rate decisions in the US is divided between the Board of Governors of the Federal Reserve and the Federal Open Market Committee (“United States Interest Rate”).

    Social
    Religion

    (Cheney)
    The United States does not have any large percentage of religions which do not approve of technology or motor vehicles such as Amish. There is however a range of religious memberships which see value in environmental responsibility such as Buddhist and Hindu.

    Education Breakdown

    Most post-secondary students in the United States obtain their education through public institutions. Most talent for future human capital can be found in these two segments. Any recruitment and selection or marketing for future human investment should be mainly focused in these segments. Income Distribution and Class System

    (Aravosis)
    The class system in the United States relies heavily on income range. Citizen can move through classes with one of the only requirements being money. Looking at the actual distribution, the top 20% of Americans are holding a disproportionate piece of the pie therefore shrinking the middle class. This means there a fewer and fewer people the income of the country is held by which means there will be less and less people with the income required to purchase vehicles. Technological

    ICT
    The United States department of commerce posted this statement: The 2012 Information and Communication Technology (ICT) Survey was suspended in May 2013 due to budgetary constraints (“Information and Communication Technology Survey”). Recent information of ICT technology is not available through government means. This could be due to the recent government shut down. Automotive

    An aluminum pretreatment process, developed by Alcoa, called Alcoa 951, has been considered a major automotive breakthrough. It is produced using organic and environmentally friendly materials as opposed to commercially available coatings which are harmful. The results of this pretreatment process results in an enhanced adhesive bonding durability and overcomes previous challenges with joining aluminum to itself or other materials (“Alcoa’s Breakthrough Automotive Bonding Technology Named Aluminum Industry’s Best”) . This technology has be proven to be nine times more durable than previously used Titanium zirconium. This technology has received positive responses from current auto manufacturers and have decided to make this technology available to all aluminum suppliers in the industry. Alcoa is investing approximately $575 million to expand its current operation in the auto sheet business in the United States (“Alcoa’s Breakthrough Automotive Bonding Technology Named Aluminum Industry’s Best”) Legal

    In the United States the legal system is divided into two governing bodies 1) State Law and 2) Federal law. State law allows for each state to act independent of each other and has their own state constitution and Federal law is the law which all states must abide by, which has a country constitution. When it comes to electric cars the United States has one main requirement, to make noise. This requirement comes from a relevant safety issue for pedestrians. The National Highway Traffic Safety Administration estimates that incorporating a noise that are signature to different types of vehicles would prevent 2,800 pedestrian and cyclist injuries over the life of each model year of electric vans, trucks and cars (“US to require electric cars to make noise”).

    Environmental
    The Environmental Protection Agency or EPA governs the United States environment. This agency was created with the mission to protect the environment and human health through the use and enforcement of laws and regulations passed by Congress (“Learn the Issues”).

    Environment America also does their part to help the natural environment. They participate in eight (8) broad issues which aim to improve and create a sustainable environment. These issues have been developed into programs which address each one and are as follows: Wind power for America, Stopping Global Warming, Stop Fracking Our Future, Repower America, Protect America’s Waters, Let’s Get Off Oil, Conservation America, and Clean Air, Healthy Families (“All Issues”).

    Exhibit # 4 – Motor Intelligence
    (“MotorIntelligence”)
    Works Cited
    “Prodigy F.A.Q.s.” WiTricity. WiTricity Corporation. Web. 26 Nov 2013. . McCarthy, Shawn. “Oil industry successfully lobbied Ottawa to delay climate regulations, e-mails show .” The Globe and Mail. The Globe and Mail, 08 Nov 2013. Web. 26 Nov 2013. . “Electromagnetic fields and public health.” Electromagnetic fields (EMF) . World Health Organization, n.d. Web. 26 Nov 2013. . “National Radio Quiet Zone.” . The National Radio Astronomy Observatory, 12 Aug 2013. Web. 26 Nov 2013. . “About Tesla.” Tesla Motors. Tesla Motors, Inc.. Web. 26 Nov 2013. . “Investors.” Tesla Motors. Tesla Motors Inc. Web. 26 Nov 2013. . Musk, Elon. ” Blog Join The Community RegisterLogin.” Tesla Motors. Tesla Motors Inc., 02 Aug 2006. Web. 26 Nov 2013. . “Autumn 2013 Corporate Presentation.” . Tesla Motors Inc, n.d. Web. 26 Nov 2013. . Adam Vaughan. (2013). Elon musk: Oil campaign against electric cars is like big tobacco lobbying. Retrieved Nov 25, 2013, fromhttp://www.theguardian.com/environment/2013/oct/24/elon-musk-oil-electric-cars-tobacco-tesla Alexander MacLennan. (2013). Examining tesla’s competition, part 1: Model S competitors. Retrieved Nov 25, 2013, from http://www.fool.com/investing/general/2013/09/29/examining-teslas-competition-part-1-model-s-compet.aspx Bayerische Motoren Werke AG. (2013). BMW i8 official website. Retrieved Nov 25, 2013, from http://www.bmw.com/com/en/newvehicles/i/i8/2013/showroom/index.html DEREK THOMPSON. (2012). The end of car ownership (in the developed world, at least). Retrieved Nov 25, 2013, from http://www.theatlanticcities.com/commute/2012/10/end-car-ownership-developed-world-least/3452/ Porsche. (2013). Porsche official website. Retrieved Nov 25, 2013, from http://www.porsche.com/ Tanya Snyder. (2013). Car ownership may be down in the U.S., but It’s soaring globally . Retrieved Nov 25, 2013, from http://dc.streetsblog.org/2013/07/05/car-ownership-may-be-down-in-the-u-s-but-its-soaring-globally/ Timothy Cain. (2012). Overall U.S. auto industry sales figures – monthly and yearly. Retrieved Nov 25, 2013, from http://www.goodcarbadcar.net/2012/10/usa-auto-industry-total-sales-figures.html Toyota Motors. (2013). Lexus official website. Retrieved Nov 25, 2013, from http://www.lexus.com/ Trans Link. (2013). Trans link official website. Retrieved Nov 25, 2013, from http://www.translink.ca/ “The Mission

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