What’s the Buzz with Tesla?

When most people think of electric cars they don’t think of high power. According to some reports the newly advertised Tesla Model 3 can accelerate from 0 – 60 in under 6 seconds. I don’t know about you but reading that surprised me! The current Tesla Model S can run more than 200 miles on a single charged battery. Why is this important you might ask?

Where’s the competition?

If you look at the mission statement below you can see that they have positioned themselves by using keywords. “Accelerate”, which highlights the performance and “Sustainable”, which highlights the driving distance available per charge as well as the zero emissions.

tesla-motors-company-2-638

Besides the fact that Tesla is the only long range electric vehicle (EV) in the market, making this market segment virtually untapped before their rise to fame, they have positioned themselves rather cleverly. Tesla’s competition is not other low range EV’s as you may think but high-end internal combustion cars (ICE cars). Almost all the car companies will get the majority of the profits from high-end ice cars, which makes entering the luxury long range EV market not desirable as this could lead to cannibalization of their current sales. From a bottom up approach targeting this segment wouldn’t make much sense for other car companies.

2017-Tesla-Model-3-Interior-635x397

 

Musk Wants Competition

It might be surprising to note that Elon Musk has provided the Tesla’s patents free and offered the use of their supercharges.  VP of business development Diarmuid O’Connel says “It would be a fulfilment of our mission if the biggest manufacturer in the US put a mass-market EV on the road”. He is obviously a huge advocate for fully electric cars and what they stand for but there is another strategy beneath this. Consider what would happen if other car company’s enter the market? There would be a lot more awareness and interest for this particular market and obviously Elon backs his company to win over the potential consumers.

Risks

The only concerns that seems to be raised is around the fact that the automobile has not actually been constructed yet. There have already been 325,000 ordered within a week. Analyst are concerned that Tesla might not be able to turn into a large scale manufacturer. Although this may seem like a tough task ahead for Elon Musk, I’m sure entering the marketing and building this company from the ground up was no small feat either. They already have planned by 2020 to be making more battery cells than all the lithium-ion battery makes combined in 2013.  One thing is for sure, this company will be making front page news for some time to come.

jachri9731

jachri@deakin.edu.au

student no: 212249729

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