Overview Of Tesla Motor Inc In The Australian Market

Executive Summary

Describe about the “Tesla Motor Inc”.
 

The company Tesla has established itself as the leader of the Electric Vehicles (EV) in the market. It is also a leader in the innovation. The company to control the EV market would be developing a strategy to produce the vehicles of the luxury electronic vehicles that would help the company Tesla to maintain the core values, which would be helping it to compete in a larger scale with the hybrids, and the electronic vehicles. The company Tesla with their strategy will help them to gather a large market share, gaining loyalty of the brand and earning profit through the new program in Australia. The plan of the company is to develop a new brand and entry-level luxury car sedan (Model 3) that is fully powered by electricity and this would be for the younger generation of Australia in the year 2016-2017. This would be involving the core components of Tesla but this done keeping the budget in mind for the target market. This would be helping the customers to get more number of customers who would be able to afford the electric vehicles. A variety of programs has been introduced so that the brand loyalty can be increased. This will be helpful in giving more purchase options through the Test Drive Campaigns and Amplify you Ride. The marketing campaign has been done in the advertising in the web sources, public relations, magazines and through the direct marketing. The demand for the Model 3 will be estimated to grow in the electric vehicle market over the half decade. The company has the ability to grow and has the resources to increase the level of demand when there is a rise in the market above the estimation. Tesla wants to earn the maximum level of profit in the year 2016-2017 in the Australian market. 

About Tesla Motors:

In the year 2003, Martin Eberhard and Marc Tarpenning founded the company Tesla. The company there after is seen to expand. After the company, Tesla went public in the year 2010, then the revenue of Tesla increased by 2.44 billion dollars where the gross profit is 456.26 million dollars. The company name pays homage to the inventor Nikola Tesla, the one who has created the alternating current power and induction motor. The company would not be able to bring quality products without the brilliance and vision of Nikola Tesla. The company believes in the eco friendly, performance driven and stylish transportation that is accessible to the customers (Tesla Motors, 2016).

Background of the Company

Tesla sells some premium models under their brand name. The top selling car of Tesla is the Model S.  The other models of Tesla that is much in demand is the Model X and Roadster. The company is planning to come out with the fourth vehicle i.e. Model 3 which mainly for the mass market and for retail in the late 2017. 

Figure: Electric Vehicle by Tesla (Model 3)

The company Tesla Motors believes that the use of the electric cars must not be treated as the sacrificial mode of transport. The company has able to bring the technological and automotive worlds together by describing the image of the car as being a step towards design efficiency and performance. The vision of Tesla motors is aiming of 100% electric power terrain, which will not only reflect the present but also helps in establishing a strong future. They are trying to set out the perception that the electric cars are the best viable alternative (Tesla Motors, 2016).

The company Tesla has the mission that they want to offer the most compelling experience to the customers while they try to gather the feedback of the customers and achieves efficiency in the operation, better control of the cost of inventory, pricing, warranty services and brand development of Tesla.

The following are the marketing objectives of Tesla Motors:

• The company Tesla wants to generate a greater demand for the vehicles and tends to drive leads for the sales teams
• The company wants to build a brand image and make the brand aware among the people
• Management of the customer base through the referral by the customers and the loyalty
• Encouraging the input of the customers in the development of the products (Tesla Motors, 2016)

Market Demography and Demand Analysis:

The demand for the Tesla products is more by the male than by the female population. The model Roadster of Tesla is demanded by the business executives of the upper class and the ones who are looking for the luxury type of cars. The down payment for such car is about 100000 dollars, which makes it unaffordable to the common person (Weinstein 2014). The marketing manager has realised that there is a huge demand for the eco friendly cars in Australia so they entered the market. The company has quoted the price of the Model 3 at 70k dollars.  The customers are the entrepreneurs who are tech savvy and prefer eco friendly products. They are the early adopters and have higher levels of income (Kotler & Keller, 2012).

Strength	Weakness
The secondary component outsourcing will be helpful in keeping the cost low and focusing on the technological advancement. This will help in developing a strong R and D department. The company follows a lean management system where the workers they work together in the small and cheaply decorated offices. This would help in simplifying the decision making and  building a trust between the manager and the employees The company has built a strategic relationship with the companies like Toyota Motors, Panasonic and Daimler this would be providing benefit to either of the parties.	Tesla has the problem of liquidity. Though there has been a huge sales of the Model S in the year 2013 still is has lost 70 million dollars due to large amount of debt , slow demand by the client and failure to control the costs. The manufacturing capacity of the company is very limited, which could be a reason that it would not be able to meet the demand of the customers in future. There is a shortage lithium battery cells (Zimmerman & Blythe, 2013) The operation of the company Tesla does not hold a strong history , brand recognition and expertise like that of the companies like that of GM or Ford (Paliwoda, Andrews, & Chen, 2013).
Opportunities	Threats
The most significant change is the increasing awareness of the benefits of the electric cars and raises the concerns related to the environment (Mullins & Walker, 2013). The subsidy program by the government will help in getting additional investment, which would be helping the company to grow.	There are a large number of competitors in the market who would be able to provide more efficient cars at a much lower price The competitors are seen to take the advantage by providing a major breakthrough like the hydrogen powered vehicles (Lee & Carter, 2012).

The company has four competitors in the Australian market as explained in the table:

General Motors	Toyota
There is a significant threat to Tesla from the company General Motors. The company Tesla has planned to enter the small premium market at a price point of 30000 dollars The GM has built the model Volt that is not a true electric car but the company is interested in entering the electric car market The design of the car would include 40 miles of the battery powered driving before there is recharge of the battery by the 1.0L turbo gas charged engine. This will extend the range of Volt to 640 miles in the highway.	There is a longstanding hybrid technology for the entry into the fully electric car market and the plug in hybrid. The company has its base in Japan and has entered into the Australian to make the hybrid market prevalent The company Toyota offers a larger battery pack and home charging station for Prius. Toyota offers full electric version of the Prius  The above cut would lead to Tesla offering a electric sedan at the different prices
BMW	Daimler AD
The potential competitor of Tesla  involves BMW towards the continuous effect into entering luxury , high performance , low consumption and low emission in auto market There will be availability of the electric sales in the coming year at much competitive rate  The i3 version of the product would be involving the first line of the EVs so that there is individual mobility  The design and the structure of BMW would be involving their own type of electric motors for the models	The company has brought in the market Mercedes Benz B class that is going to be on sale soon in the Australian market. The systems that run and charge the B class will be shared by SLS AMG Coupe E cell. The electric vehicles of the Mercedes Benz travels to a longer distances and there is no need  to pay a cost for petroleum and gas The company has powered with Tesla for their battery technology and electric motor.

Figure: Competitive Analysis by Company

Types of Marketing	Amount devoted for marketing (total 1 billion USD)
Advertising	20,00,00,000 USD
Sales Promotion	20,00,00,000 USD
Public Relations	30,00,00,000USD
Direct Marketing	30,00,00,000USD

As per evobesession.com, there was an increase in the sales of the electric care from 100% to almost 360% in the last year. With the development of technology, there are better batteries developed and there are more charging stations (Kratsch & Skelly, 2013).  This was due to the rise in the price of gas and petroleum, which has driven the people towards consumption of environmental friendly products. Due to the greater demand for the electric products, the company needs to distinguish itself from the competitors (George & Mitchell, 2012). The cars do not appeal the people as the electric cars they tend to give poor performance. The following figure shows the market trends of the total vehicle sales, hybrid car sales and the electric car sales in the market.

Products of Tesla Motors

Figure: Total Sale of Vehicles

Figure: Sales of Hybrid and Electric cars

In order to keep the Tesla marketing grow now and in the near future it is going to expand in the target market Australia so that it can reach more number of customers. The main target market is the younger generation of Australia i.e. from the mid 20s to that of early 40’s, the adults who are working and belong to the middle class (Peñaloza, Toulouse, & Visconti, 2012). Through the increase in the production, the company is able to increase their facility. The target market will reflect the young professional who is looking for luxury cars for the entry levels. As per the NADA Data, the selling price of the new cars is averaged around 30000 dollars, which reflects that there are number of customers who are not willing to spend on cars (Pasquier & Villeneuve, 2012). 

The company is trying to position the car models for the entry-level luxury car that would also be providing added benefit through the providing of the added benefit of being fully electric while not losing the performance. The electric cars are seen to be unattractive by the young buyers of the cars, as there is lack of performance and design. Through the entry of the Tesla Cars in Australia, the main motive is to change their image towards the technology and design (Peter & Donnelly, 2013). The company is trying to fix the price of the luxury cars at the range of 30000 dollar range that would be developed with the advantage of being fully electric which will be attracting more number of buyers who are looking for the luxury cars of the entry level or electric cars. The main reason for increased demand is due to the zero emissions.  This will entitle the consumers to save more money than the traditional type of the luxury products.

The company Tesla wants to increase the market share of Electronic Vehicles in the market of Australia in the coming 2016-2017. The objective of the company is to increase the market share by more than 20%. The company want to make the brand aware among the young generation of Australia. This would help in creating brand loyalty (Tesar & Bodin, 2013).  Tesla wants to build a more targeted segment than that is there currently. With the primary and secondary researches , the company has concluded that this vehicle would be a solution to the demand of the young professional looking for an affordable luxury car (Homburg, Krohmer, & Kuester, 2013). The survey has shown that the price would be quoted at 40000 dollars with a rebate tax, which would reduce the cost to around 32500 dollars. The consumers will be able save a lot on their fuel cost with this purchase.

Vision and Mission of Tesla Motors

Loyalty Programs:

The company Tesla Motors wants its customers to be safe and comfortable in their vehicles. The aim of the company is to provide a safe and comfortable driving through the reliable vehicle. The loyalty program of the company Tesla will make the customers family to enjoy the added bonus while being the customer of Tesla. With the special promotion of the product, the customers who already own a car under Tesla will be buying another one for the family so that it can receive an instant off 2000 dollars in a car, a year of free service, which also includes the unlimited service ranger appointments. This promotion will be applicable with a four-year program, which would be applicable after the end of the first year, which would be giving a coverage of 5 years (Green, 2012).

Test Drive Campaigns:

Test Drive Campaigns will help the company to spread the brand awareness and gives the opportunity to the drivers to test the car. A test drive campaign will be launched in selected cities in Australia. The cities that would be targeted are Queensland, Brisbane, Perth and Melbourne. The sales will be almost 50% in these selected cities as there is a heavy demand for the electric vehicles. There would be Street Teams that would be promoting the vehicles in the cities. The company would be bearing the expense of food and lodging throughout the campaign.

Website and Social Media:

The company Tesla Motors uses its website for any type of advertisements and announcement. All the details about the new car, promotion through the campaign is given through the websites. The social media would be used for any type of events taking place. The advertisements would be displayed in the home page of the website, which would be giving a maximum exposure (Belch & Belch, 2012).

Figure: Promotion through Website

Google Advertising:

For the promotion of Tesla in Australia, there would be use of the advertising through the Google Ad words.  There is targeted advertising which will be focusing on the hybrid and the electric vehicles (Clow & Baack, 2012). The company advertises online through the pay per click model.

Media budget:

The site traffic can be increased through the newspaper through the targeting of the specific demographic area. The newspapers like the Sydney Morning Herald, The Australian and The Guardian will be used for promotion. The focus would be on the college graduates and the income of the household being 70000 dollars. A one-page advertisement in the magazine would be costing around 53455 dollars. Black and white ads would be costing 117465 dollars and 219297 dollars for the coloured ads.

Marketing Objectives of Tesla Motors

Figure: Promotion through online news websites of Australia 

2016 Cost		2016 Revenue		2016 Profit
Test Drive Campaign	$           3,00,000.00	40 kWh	$    7313,21,625.00	Total Revenue	1561006008
Communication	$           9,94,552.00	60 kWh	$    8227,36,828.00	Total Cost	1244926975
Loyalty Program	$        73,13,216.00	Loyalty Program	$        69,47,555.00
Total expenses from the building of the cars:
40 kWh Car	$    5733,56,154.00	Total Revenue	$ 15610,06,008.00	Profit=	316079033
60 kWh Car	$    6629,43,053.00
				ROI	10%
Total Cost	$ 12449,06,975.00

2017 Costs		2017 Revenue		2017 Profit
Test Drive Campaign	$            3,00,000.00	40 kWh	$ 11048,35,228.00	Total Revenue	$ 23582,70,794.00
Communication	$            9,94,552.00	60 kWh	$ 12429,39,632.00	Total Cost	$ 18419,50,042.00
Loyalty Program	$       110,48,352.00	Loyalty Program	$      104,95,934.00
Total expenses from the building of the cars:
40 kWh Car	$     8485,13,455.00	Total Revenue	$ 23582,70,794.00	Profit=	$    5163,20,752.00
60 kWh Car	$     9810,93,683.00
Total Cost	$  18419,50,042.00			ROI	22%

Conclusion:

Thus, the company Tesla Motors sees that there is a highly competitive market in Australia as there are a large number of sellers of the electric vehicles. Ford, BMW, Mercedes and General Motors dominate the market for the electric vehicles. The company is a successful company as start up with the leading high tech company due to the leadership and the innovation ideas in the manufacturing car industry. The company has realised that the renewable energy is scarce and there is a need for the protection of the environment. These issues are solved through their high tech technology. The company through the strategy to promote the cars among the younger population of Australia would be successful due to the way they market it and quoting the price in such a way so that it is affordable to the customers. The internal and the external environment make it a very condition for the growth of Tesla in future in Australia. It could come out as one of the leading auto manufacturing company with the best design and technology at the affordable cost.  

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