Core Competence And Competitive Advantage Marketing Essay

Published Date: 23 Mar 2015

The paper should provide the necessary supporting assessment of the industry, competitors and the relevant trends in the industry. In addition, it should describe the current strategy of the firm and make clear recommendations that flow logically from the analyses that precede them. Recommendations must be implementable and supported by a detailed implementation plan, risk and financial analyses (including pro forma). The paper represents 35% of your grade.

Presentation

The content of your findings will be presented to the class. The presentation should be a polished presentation using PowerPoint as the designated slide program. The presentation should not exceed 25 minutes. A question and answer period is not included in this time limit.

In order to meet this time limit the group will be required to practice. It is not uncommon to find that the first run through of the material takes 50-60 minutes. The grading criteria is based on the criteria identified in the sample Group Presentation Evaluation Form that is shown below. Please submit your final version of the PowerPoint to me electronically BEFORE your presentation, as well as a color, hard copy. Please fill out the Presentation Evaluation Sheet showing the order of presentation speakers and topics. The full text file of the form is in Blackboard.

Each member of the group will be evaluated along each of these criteria. The group will receive a single overall grade, however. The presentation represents 20% of your grad

Class Notes for Project Overviews

Project Overview

Minimum Project Elements

Firm Overview and Current Strategy Analysis

Business Challenge/Problem Analysis

Analyses

Firm Level

Core competence

Financial Analysis

Competitor Level

Industry

Strategic Recommendation(s)

Implementation Plan (To-Do List)

Timeline (Chronological)

Implementation Risks

Risk Analysis

Pro Forma (including scenario analysis) How the market is, and how it will impact the market

Interim Deliverables (3-5 slides, 5 minute update from groups every week)

Mar 30 - Firm Overview, Problem Analysis and Research Strategy (Do Interviews)

Apr 06 - Initial Research Findings and Conclusion

Apr 13 - Strategic Recommendations and Pro Forma

Apr 20 - Report and Presentation Due

Research Expectations

Identify influencers in the problem

What are the problems

Problems need to link back through the characters, the problems and the solutions

Preliminary Information: Tesla Motors

Musk on TED

http://www.ted.com/talks/elon_musk_the_mind_behind_tesla_spacex_solarcity.html

Notes from class/calls

Research Strategy

Note: Figure out how to apply our resources that we have available to determine how we will do our analysis. What kind of things do we need in order to solve our problem.

What the current demand and backorders - current newspaper

Current satisfaction of product - news

Current manufacturing capabilities and operational capabilities - Annual reports

Feedback from professor and class (March 30, 2013)

What is the nature of the company's challenge?

- Personality driven company by Musk

* Mission & vision analysis

* Consistency of the company's activities to its mission and vision

- What level of production does Tesla want? How much is enough? What is the scale Tesla is looking for?

- Charging station

* Is it worth going into the fueling station for Tesla?

- Core competency

* Disruptive technology

* Should Tesla pursue for licensing business to large companies?

From Yasu

Does Tesla want global expansion? If yes, how?

From Glen

Should Tesla think of the acquisition by the other company?

How can Tesla get the production volume to meet demand?

Should the company need more investment on Mfg?

Preparations for April 6th Presentation

- Initial hypothesis of issues, 2012 results vs the market, 2013 Quarterly results, Initial Research Findings, Mission Vision and Strategy, Future

- Presenters for this week, Miki and Jeo

- Shift in focus of the issue from manufacturing/supply chain/ev market to short-mid-long term sustainability in market expansion and branding

- Through our initial findings, the company is getting on track with the issues which initially identified.

Feedback from Professor and Class (April 6, 2013)

Financial analysis

Apple to apple analysis should be done

BMW/Audi may be compared as a long term target, but not today.

Need to be compared with peer group

Start up like Tesla and matured companies (Toyota, GM) are different. We should compare a company having Tesla like characters (highend EV)

Market demand

What is the market demand?

How did Tesla meet the demand?

Action Items for Week of April 14th

Skype Calls

Monday April 15th

Chris and Ken to meet early to discuss process for solutions

Meeting @ 9:30pm on Skype for call to discuss process

Wednesday April 17th

Feedback on meeting with professor

Final confirmation of action items

Update on report write-up

View presentation draft

Friday April 19th

Practice presentation

Review final report

Meeting with Professor

Wednesday April 17th @ 7:30pm

Dress Code -

Black suit; Maroon ties: Ken/Alan/Jeo

N.Blue; Blue ties - Miki/Chris

White shirt : All

Black shoes/Black socks

Presentation Flow

Background 1 - Alan (3 minutes)

Introduction

Mission/Vision/Values

Core Competence/Strategy

Background 2 - Chris (5 minutes) (slides)

Issues

Partnerships

Industry

Finance - Jeo (7 minutes) (3 slides)

Capital Structure

Financial Performance/Health

Recommendations - Kentaro (10 minutes) (3 slides)

Recommendation 1

Recommendation 2

Recommendation 3

Pro Forma - Miki (5 minutes) (1 slides for models, 2nd for graph, 3rd NPV)

Battery Video (3 Minutes)

Q&A

Backup

Stakeholder Analysis

Joe's list of companies (public or private)

Ratio Analysis comparison to luxury automobile makers

Title Page

(Place holder for Title Page)

Report

Table of Contents (Chris/Ken)

Executive Summary

Company Overview

History

Company Mission and Strategy

Core Competence and Competitive Advantage

Strategic Partnerships

Management

Manufacturing Infrastructure (Should we add in charging stations and dealerships here?)

Foreseeable Risks/Challenges

Industry Analysis

EV Market

Accounting and Finance (P:Jeo, S:Miki)

Accounting Practice (OK)

Capital Structure (OK)

Financial Performance

Financial Health

Company Strategy

Recommendations (Pro Forma) (P:Miki, S: Ken)

Strategic alliance with (Detroit Electric)/Tesla Sports car P2

Expand drivetrain volume (Leaf's and Volt's sales volume (Alan)( stagnant growth)

http://insideevs.com/monthly-plug-in-sales-scorecard/ <- monthly sales scorecard for relevant plugin EV (page 39)

Tech transfer consultations (Daimler)

Sell drivetrain (Toyota)

Export vehicles to importers P1

Appendices

Executive Summary

SWOT Analysis

Company Overview

Tesla Company History

Strategic Partnerships Daimler/Toyota(Alan) give/take details (page 40)

Tesla Executive Team

NUUMI Manufacturing Infrastructure - Not called Nuumi anymore

Value Chain Analysis

Industry Analysis

Competitor Analysis

Positioning

EV Market

Stakeholder Analysis

Five Forces

STEEP

Accounting and Finance

Historic Income Statement Information (OK)

Historic Balance Sheet Information (OK)

Historic Cash Flow Information (OK)

Comparable Companies Used in Financial Analysis (Daimler, BMW) (OK)

Ratio Analysis (OK)

Department of Energy (DOE) Loan Facility

ZEV Credits

Historical Stock Performance (OK)

Capital Structure Summary (OK)

Cost of Capital Calculations (OK)

Foreseeable Risks/Challenges

Fuel/Energy Costs/Mle of Luxury Sedans vs. Model S

Range, Battery Pack Costs, and Price/Mile for EVs

Battery Technology (Change to Tesla Proprietary Technology?)

Financial Statement (Pro Forma) Forecasts

Citations for Written Report

Executive Summary

Company Overview

History

Strategic Partnerships up to today:

Tesla Motors - http://www.teslamotors.com

Founded in 2003

Two teams funded: 1. Martin Eberhard, Marc Tarpenning and Ian Wright and 2. Musk and JB Straubel

2005?? Series A $7.5MM

2006?? Series B $13MM

2006 Third round $40MM

2007 Fourth round $45MM

2008 Fifth round $40MM

2009 Daimler AG $50MM

2009 Loan $465MM from U.S. Department of Energy

2009 Another round$82.5MM for the purpose of the retail expansion, Daimler joined.

http://en.wikipedia.org/wiki/Tesla_Motors#History_and_financing

First EV Roadster in 2008

Went public in 2010

By the end of 2011, sold only 2150 Roadsters.

Model S 2012

Model X 2014

3 Models - Roadster (Joint Venture with Lotus), Model S, Model X

Manufacturing is done in California, USA

Partnerships with Panasonic, Toyota, Daimler

Proprietary technology is made in California, Batteries from Japan and Korea

Final production is made in California (Silicon Valley is first manufacturing for Tesla)

Only one member of the board is from the auto industry

CEO is founder, and invested huge amount of his personal money.

Company Mission and Strategy

Mission/Vision

Create the most compelling car company of the 21st century by driving the world's transition to electric vehicles.MS

Tesla's mission, vision and value can be seen to be summarized into one statement, as seen on their website is to "create the most compelling car company of the 21st century by driving the world's transition to electric vehicles" XXXXXXX ADD RERERENCE XXXXXXX. As we have found in our research, this mission has been a pillar for the company's actions and has been observed to be consistent with the strategy and tactics that the company has focused on.

Tesla's company strategy streams down from this mission, and is addressed as "the secret plan" XXXXXX ADD REFERENCEXXXXXX by the CEO, Elon Musk. The secret plan is broken down into four sections.

The secret plan:

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

Source

http://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me

This is further broken down into ten performance achievements, which can be seen below.

Successful completion of the Model X Engineering Prototype (Alpha)

Successful completion of the Model X Vehicle Prototype (Beta)

Completion of the first Model X Production Vehicle;

Successful completion of the Gen III Engineering Prototype (Alpha)

Successful completion of the Gen III Vehicle Prototype (Beta)

Completion of the first Gen III production Vehicle

Gross margin of 30% or more for four consecutive quarters

Aggregate vehicle production of 100,000 vehicles

Aggregate vehicle production of 200,000 vehicles

Aggregate vehicle production of 300,000 vehicles

Core Competence and Competitive Advantage

Tesla's core competencies lie in two specific areas: the powertrain and vehicle engineering. XXXX ADD REFERENCE XXXX Tesla has identified that the technology and expertise required to drive the electric vehicle (hereafter referred to as EV) market is the electric powertrain, and has transferred their expertise from the technology designed in the Tesla Roadster (a joint partnership with Lotus), and use that in the Model S, Model X and other vehicles they plan to design in the future.

Core Competencies

Core Competency:

We believe the core competencies of our company are powertrain and vehicle engineering. Our core intellectual property is contained within our electric powertrain. This powertrain is fundamentally composed of five major elements: a modular battery pack, a power electronics module, a motor, a gearbox and the control software which enables the components to operate as a system. We designed each of these major elements for our Tesla Roadster and plan to use much of this technology in the Model S and our future electric vehicles. Our powertrain and battery pack have a modular design, enabling future generations of electric vehicles to incorporate a significant amount of this technology.

Further, our powertrain is very compact and contains far fewer moving parts than the internal combustion powertrain. These features enable us to adapt it for a variety of applications, including our future vehicles and any powertrain components we build for other manufacturers.

Strategic Partnerships

Partner

Partnership Type/Product

Daimler

EV Developments: Electric smart cars and potential Model S Sedan

Toyota

EV Developments: Rav4

Panasonic

EV Battery Development:

Wells Fargo and US Bank

Financial partnership: Financing product:

Lotus

Management

Manufacturing Infrastructure

Foreseeable Challenges

Problem Analysis

Problem Statement

Tesla's challenge is to sustain the growth of the company through its products and services while remaining the leader in the EV powertrain segment of the automotive technology

Core Issues/Risks

New competitor with similar entry plans to enter market in near future

EV automobile sales growth slowing down

Up to the end of 2012, Tesla faced several issues relating to their manufacturing and supply chain.

Industry Analysis

Plug-in EV Market

Accounting and Finance

Capital Structure

Financial Performance

Financial Health

Recommendations

Possible Solutions

EV Market Expansion (issues/risks seen with Nissan sales plateau from 2011-2012) so the EV market grows at a sustainable rate for the company

Defending against competition

Partnerships with Detroit Electric

Review Detroit Electric's company strategy/Current assumption is that DE is pursuing same strategy as Tesla.

Approach DE management for: supplying drive train or joint alliance to build up infrastructure in the market (i.e. get DE to join in on the supercharger network).

Ultimately by collaborating with DE, the hope is to expand the EV market faster than the current trajectory that Tesla is planning. i.e. EV market growth expansion and get the market to the point where long distance driving is possible with EV automobiles.

Musk has stated that by 2020, 10,000 charging stations should be established in the United States alone, and within 20 years all cars could be electric.

http://www.google.com/imgres?imgurl=http://www.qld.gov.au/about/assets/images/photos/emblems/qld-state-colour.gif&imgrefurl=http://www.qld.gov.au/about/how-government-works/flags-emblems-icons/state-colour/&h=150&w=200&sz=1&tbnid=KOfeZmhBS2jUqM:&tbnh=85&tbnw=113&zoom=1&usg=__lFH1ovgsFu5p01ywXd1uQFXB5Jc=&docid=ixHxo_hklbAWZM&sa=X&ei=OQBsUe-yNYiIrAeJj4CYDA&ved=0CEUQ9QEwAw&dur=233

Also link from 10 questions from Elon Musk

If DE contributes to this growth, the potential for this time frame to shrink becomes much higher. *Refer to Gartner article to indicate that combustion engines faced similar issues before going mass market.

Lobbying or government actions can be considered with DE, but given the current actions which the U.S. government is already supporting the EV market, the likelihood of results with their collaboration at an upstream would seem less valuable. However, DE and Tesla can lobby together at state level to gain support from states for EV market support.

At the same time, DE and Tesla appeal to the luxury market, or is currently planning to, therefore the two companies collaborating to offer more variety of vehicles in the family or city vehicle segment also seems beyond their current strategy.

If both options for market expansion or collaboration fails, then Tesla could consider opportunities to re-enter the luxury sports vehicle market to secure a niche position (directly or indirectly against DE)

For Pro Forma, evalute cost of additional supercharger costs for 60kwh model, and apply that to Detroit Electric. Use 999 lotus vehicles, and similar trends for Tesla Model S sales.

Apply similar trends for Tesla super charger growth to DE for expansion of supercharger infrastructure.

Increase volume of powertrain sales, being the EV powertrain expert

D'aviny chart and positioning map for EV market to be used to analyze where powertrain expertise can be leveraged globally.

At a first glance, Family vehicles seem like an open segment, as well as family suv and truck market.

Find companies which are in this segment which can be leveraged for further powertrain engineering services.

Making distribution networks in countries Tesla do not have plans to enter (e.g. South Korea)

Locate metropolitan areas are available which are currently not on the expansion plans for Tesla (and possible will not be going forward).

Based on that information, locate importers, and sell vehicles at a limited amount.

How much volume to sell to those countries.

Service and warranties

Need to consider warranty and service framework considering that there is so much "electronic" behind the vehicle.

Risk assessment

Manufacturing capacity is maxed out, so additional sales on vehicles will most likely not be possible. However, importer premiums could be added on. 10% premium.

^

EV Market Growth

New Entrants

Appendices

SWOT Analysis

Tesla Company History

Strategic Partnerships

Tesla Executive Team

Name

Position

Background/Details

Elon Musk

Co-Founder, CEO and Product Architect

Elon Musk is the CEO and Product Architect of Tesla Motors and the CEO/CTO of Space Exploration Technologies (SpaceX).

At Tesla, Elon has overseen product development and design from the beginning, including the all-electric Tesla Roadster, Model S and Model X. Transitioning to a sustainable energy economy, in which electric vehicles play a pivotal role, has been one of his central interests for almost two decades, stemming from his time as a physics student working on ultracapacitors in Silicon Valley.

At SpaceX, Elon is the chief designer, overseeing development of rockets and spacecraft for missions to Earth orbit and ultimately to other planets. In 2008, SpaceX's Falcon 9 rocket and Dragon spacecraft won the NASA contract to provide a commercial replacement for the cargo transport function of the Space Shuttle, which retired in 2011. The SpaceX Falcon 1 was the first privately developed liquid fuel rocket to reach orbit. In 2010, SpaceX became the first commercial company to successfully recover a spacecraft from Earth orbit with its Dragon spacecraft. In 2012, SpaceX became the first commercial company to dock with the International Space Station and return cargo to Earth with the Dragon.

In addition, Elon is the non-executive chairman and principal shareholder of SolarCity, which he helped create. SolarCity is now the leading provider of solar power systems in the United States.

Prior to SpaceX, Elon co-founded PayPal, the world's leading Internet payment system, and served as the company's Chairman and CEO. Before PayPal, Mr. Musk co-founded Zip2, a provider of Internet software to the media industry.

He has a physics degree from the University of Pennsylvania and a business degree from Wharton.

JB Straubel

Chief Technical Officer

The story of JB's career started at a junkyard in Wisconsin, where, at the age of 14, he discovered a discarded electric golf cart and decided to rebuild it. Thus began a lifelong fascination with energy work and electric vehicles.

As a co-founder of Tesla, JB has overseen the technical and engineering design of the vehicles, focusing on the battery, motor, power electronics, and high-level software sub-systems. Additionally, he evaluates new technology, manages vehicle systems testing, and handles technical interface with key vendors.

Prior to Tesla, JB was the CTO and co-founder of the aerospace firm, Volacom, which designed a specialized high-altitude electric aircraft platform using a novel power plant. At Volacom, JB invented and patented a new long-endurance hybrid electric propulsion concept that was later licensed to Boeing. Before Volacom, JB worked at Rosen Motors as a propulsion engineer developing a new hybrid electric vehicle drivetrain based on a micro turbine and a high-speed flywheel. JB was also part of the early team at Pentadyne, where he designed and built a first-generation 150kW power inverter, motor-generator controls, and magnetic bearing systems.

Armed with a bachelor's in energy systems engineering and an master's in energy engineering from Stanford University, JB left the cold winters of Wisconsin for good. He now lives in Menlo Park, Calif., where he continues to indulge his passion for electric transportation: he built an electric Porsche 944 that held a world EV racing record, a custom electric bicycle, and a pioneering hybrid trailer system. JB is also an accomplished pilot.

Deepak Ahuja

Chief Financial Officer

Deepak brings more than 15 years of global automotive financial experience to the Tesla team. As Chief Financial Officer, Deepak brings invaluable insight of a well-versed industry veteran to help Tesla become a leading automobile company in the world.

Prior to joining Tesla Motors, Deepak was the Controller of Small Cars Product Development at Ford with the goal of bringing several exciting fuel efficient automobiles to the North American market. Previously, Deepak was CFO for Ford of Southern Africa, a $3 Billion subsidiary where he oversaw the finance, legal and IT functions. Prior to that, Deepak served as CFO for Auto Alliance International, a joint venture between Ford and Mazda with over $4 billion in revenue. His career at Ford included assignments in all aspects of the business, including Manufacturing, Marketing and Sales, Treasury, Acquisition and Divestitures.

Before joining Ford, Deepak worked as an engineer for Kennametal, Inc. near Pittsburgh, PA for almost 6 years and developed two new ceramic composites cutting tools for machining of aluminum alloys in aerospace and automotive industries.

Deepak, his wife and two daughters have moved from Michigan to Silicon Valley, where Deepak spearheads financial initiatives out of Tesla's Palo Alto headquarters. In his spare time Deepak enjoys biking, spending time with his kids, and hiking. He loves cooking Indian food on special occasions just to have fun with his friends and family.

Deepak holds bachelor's and master's degrees in materials engineering from Banaras Hindu University and Northwestern University, respectively and an MBA from Carnegie Mellon University. In 2010, following Tesla's successful IPO, Deepak was named Silicon Valley Business Journal's CFO of the Year.

Franz Von Holzhausen

Chief Designer

As Chief Designer, Franz is responsible for driving the overall design direction of Tesla, and is charged with establishing a world class design competency for all future Tesla design concepts and production vehicles.

Prior to joining Tesla, Franz was Director of Design at the Mazda North American Design Center. While at Mazda, Franz pioneered the Nagare surface language design philosophy. The word Nagare itself is but one of 150 different ways to describe motion in the Japanese language.

The Nagare and Furai concepts were the progenitors of The visual interpretation of what has become the new design language for the Mazda brand. These two initial concepts led to the development of the Ryuga, Hakaze and Taiki As well as the Kazemai - the latest concept unveiled in Moscow. Franz also led design of the Mazda RX-8, Tribute, and Mazda5 production vehicle facelifts, and was instrumental in the design development of the 2009 Mazda6 and Mazda3.

Before spearheading design at Mazda, Franz held the Design Director position at General Motors. The Pontiac Solstice, Saturn Sky, and Opel GT are all examples of Franz's efforts at GM. Franz began his career as Assistant Chief Designer at Volkswagen, where he was involved in projects from Concept One to the Microbus.

When not immersed in design, architecture, and fashion, Franz enjoys sailing, cycling, and snowboarding. Franz also revels in driving one of the cars in his modest collection, which ranges from American muscle to Italian finesse.

Franz began his studies at Syracuse University in the field of industrial design and graduated from Art Center College of Design in 1992 with a bachelor's degree in Transportation Design.

Jay Vijayan

Chief Information Officer

Jay Vijayan is the Chief Information Officer for Tesla Motors. Jay and his organization are responsible for business applications, infrastructure, network, security and systems operations for all of Tesla including the support of engineering, manufacturing, corporate business groups and the global sales, marketing and service business groups.

Jay champions IT as an enabler for Tesla and works with all the company's groups to identify opportunities, structure, develop and deliver systems and solutions. Jay brings more than 17 years of IT, Applications Development and Management experience. Before joining Tesla Jay was the Sr. Director, IT Business Applications for VMware. Jay was leading the Applications Development of all business applications for VMware during the extreme accelerated growth of the company from being 700 Million to close to 4 Billion annual revenue during the period 2007-2012. Jay's team developed and delivered/implemented almost all of the business applications including the web portal for VMware during this accelerated growth period. Prior to that Jay was in different Applications Management positions at Oracle. Jay is proven and specialized in efficiently operating and delivering sustainable IT solutions in an extremely faced paced, high growth organizations and in turning around large IT programs and organizations successfully.

Jay has a Master of Science degree from University of Madras (Now University of Chennai), Chennai, India. Jay also has several industry recognized technology certifications and patent for tech inventions.

George Blankenship

VP, Sales & Ownership Experience

George brings to Tesla three decades of retail and design experience at the world's hottest brands. Best known as the chief strategist behind Apple's revolutionary retail stores, he fundamentally changed how people shop for consumer electronics. George joined Tesla in 2010 and plans to do the same for the automotive industry.

As Apple's Vice President of Real Estate, George created one of the most successful, brand-bolstering retail growth plans in history. Taking what he calls a "Smart Growth HitList" approach to international markets, he spread Apple's influence across Asia, Europe and North America. Apple's retail savvy was repeatedly praised by Fortune Magazine, among others. His global growth experience is especially applicable as Tesla continues to open new, innovative stores around the world.

Prior to Apple, George served as Vice President, Retail Strategy for Gap Inc. He launched his career there as a store manager and over the course of his 20 year tenure held positions in Operations, Real Estate, Store Design, Construction and Strategy. During his time in Store Design and Construction he oversaw the opening of more than 250 stores per year. He also established an energy efficient and environmentally progressive retail growth strategy.

At Tesla, George's goal is to re-imagine the way people buy cars, forgoing the traditional dealership model in favor of stylish, consumer-focused showrooms. In his free time, he enjoys photography, golf, snowboarding, travel and spending time with his family.

Gillbert Passin

VP, Manufacturing

Gilbert brings 23 years of international automotive experience to Tesla. He has led some of the most high-profile divisions at Toyota, Volvo, Mack and Renault across North America and Europe.

Prior joining Tesla, Gilbert served as general manager of production engineering West Coast for Toyota North America and Chief Production Engineer for the future Corolla in North America.

Prior to Toyota West Coast, Gilbert was vice president of manufacturing at the award-winning TMMC Toyota plant of Cambridge, Ontario which produces over 350,000 vehicles per year. Gilbert launched the best-selling Lexus RX 350 luxury SUV at the award-winning plant which is the only Toyota site to produce a Lexus vehicle outside of Japan. He also launched the award-winning tenth generation Corolla, one of the most popular automotive models worldwide which is widely acknowledged as the global leader in its class for quality and durability.

Prior Toyota Lexus, as VP of Operations for Mack, Gilbert led the transfer of the Mack highway trucks production to Volvo's Virginia facility. At the Volvo facility, Gilbert successfully consolidated the production of Volvo and Mack trucks while increasing the production rate and improving quality and productivity.

Gilbert has a degree in Engineering from Ecole Centrale de Paris. Right after graduation, Gilbert became Lecturer in Engineering teaching Dynamics and 3D Mechanics in the School of Engineering at the University of Bath, U.K.

Diarmuid O'Connell

VP, Business Development

Diarmuid joined Tesla in 2006, and currently serves as the Vice President of Business Development in which capacity he manages commercial relationships and all aspects of government affairs. Before joining Tesla, Diarmuid served as Chief of Staff for Political Military Affairs at the US State Department, where he was involved in policy and operational support to the U.S military in various theaters of operation.

Before his tenure in Washington, Diarmuid worked in corporate strategy as a management consultant for Accenture, as a founder of educational software developer, Real Time Learning, and as a senior executive with both McCann Erickson Worldwide and Young and Rubicam. Over the course of his career, he has managed international operations, projects and marketing for such brands as Coca Cola, Gillette, and AT&T, among others.

Diarmuid has earned a bachelor's degree from Dartmouth College, a master's degree in Foreign Policy from the University of Virginia, and an MBA from Kellogg. He lives with his wife and two children in the Bay Area and escapes to the mountains whenever possible.

Arnnon Geshuri

VP, Human Resources

Arnnon Geshuri joined Tesla in November 2009 as the vice president of human resources and is responsible for driving HR operations and the global recruitment efforts. Previously, Arnnon was director of staffing operations for Google, where he designed the company's legendary recruitment organization and talent acquisition strategy.

Arnnon joined Google as chief staffing architect in late 2004, when the company just emerged from its IPO and employed around 2,500 people. While he oversaw all aspects of recruitment, Google evolved into a technology powerhouse with 20,000 employees - a workplace considered the premier destination for ambitious software engineers.

Before Google, Arnnon was vice president of human resources and director of global staffing for E*TRADE Financial, where he helped recruit more than 2,000 people in 18 months and oversaw the North America HR organization, global talent programs and HR information systems. He also founded a startup and worked at Applied Materials, where he built and managed corporate-wide staffing operations as it increased 7,000 employees within 2 years.

In the early 1990s, Arnnon was an organizational effectiveness consultant for New United Motors Manufacturing (NUMMI), the Fremont, Calif.-based joint venture of Toyota and General Motors. Arnnon has a bachelor's degree in psychology from the University of California at Irvine and a master's in industrial/organizational psychology from San Jose State University.

Peter Carlsson

VP, Supply Chain

Peter joined Tesla from NXP Semiconductors where he was responsible for purchasing and outsourcing. As CPO, he took the purchase organization from a tactical decentralized structure to a strategic global commodity organization.

Before starting at NXP, Peter was CPO at Sony Ericsson. Peter had a total of 13 years experience from different roles with Ericsson and Sony Ericsson in Sweden and the US. He led the team that built and implemented Ericsson's framework for Supplier Quality Assurance.

Peter has a Master’s degree with specialization in Production and Quality Control from Luleå Technical University in Sweden. In his spare time he enjoys running, mountain biking, golf, cooking and travel.

Jerome Guillen

Director of Model S Programs

As Director of Model S Programs, Jerome oversees all programs related to the development of the Model S, working with all functional groups across Tesla to bring the Model S to market.

Prior to joining Tesla, Jerome created and led the Business Innovation department at Daimler, reporting directly to the chairman of the board of management. As Director, Jerome generated growth for the group and fostered entrepreneurship through a variety of initiatives. Before creating the Business Innovation department, Jerome worked with Freightliner LLC as General Manager of the Cascadia program, responsible for the development and introduction of a new generation of Class 8 trucks. Jerome managed all aspects of the development of the product line, including engineering, marketing, finance, purchasing, manufacturing, and quality control.

Jerome holds a Ph. D. in Mechanical Engineering from University of Michigan, in addition to an M.S. in Energy Technologies from ETSII in Madrid, Spain and a B.S. in Mechanical Engineering from ENSTA in Paris.

NUUMI Manufacturing Infrastructure

The Model S

Value Chain Analysis

Competitor Analysis

Positioning

The EV and PHEV Market

EV Market

5,612 EV charging in the US (excluding private stations) (http://www.afdc.energy.gov/fuels/electricity_locations.html)

EV Infrastructure Development

(http://www.afdc.energy.gov/fuels/electricity_infrastructure.html)

Stakeholder Analysis

Five Forces

STEEP

Market Penetration Forecasts

Historic Income STatement Information

Historic Balance Sheet Information

Historic Cash Flow Information

Comparable Companies Used in Financial Analysis

Ratio Analysis

Department of Energy (DOE) Loan Facility

ZEV Credits

Future Contractual Obligations

Historical Stock Performance and Wall Street Analysis

Capital Structure Summary

Wall Street Consensus (Implied Cost of Equity)

Cost of Capital Calculations

Financial Statement Forecasts

Fuel/Energy Costs/Mile of Luxry Sedans vs. Roadster and Model S

Range, Battery Pack Costs, and Price/Mile for EVs

Tesla Store Locations

Model S Battery Technology

Citations

Cross SWOT

The Organization

Strengths (of Tesla)

Leadership in the EV field with patented technologies

Premium brand image

Unique leasing option

Strong partnerships

Short charge times with Supercharger stations

Unique positioning

Leadership experience of CEO

Direct sales to customers through company owned dealerships

Weaknesses (of Tesla)

Short track record

Single manufacturing site

Few supercharger stations available

Eccentric CEO

Opportunities (applying to the industry)

Partnership opportunities

Going green political supports

Standardizing charging methods

Selling ZEV credits

Need for a variety of drivetrain options in the automotive industry

Growing charging station infrastructure

Improvement to battery technology

Global demand for EV is increasing

SO Strategies

Sharing technology's with partners

Sell ZEV credits for cash

Sell powertrains to standardize EV market

Offer consultation services for EV powertrain development (vehicle engineering)

Sell supercharger grid use rights to other automotive players

Expand Tesla extensively to global market

WO Strategies

Partnerships for manufacturing infrastructure

Partnership to support the building of charging stations infrastructure

Threats (applying to the industry)

Companies that are investing and exploring in EV technologies

Lack of charging stations for long distance driving

Long charging times

Substitutes and/or new entrants

EV growth below expectations

ST Strategies

Sell powertrain to automotive companies

Sell super charger adapter to companies as they grow the EV market

Alliances with potential competitors in the EV market

defend against new entrants through introduction of new models

WT Strategies

Create more distant efficient car (i.e. more efficient powertrain or newer battery technology)

STEEP/PEST

Political

Global goverment initiative to go "electric":

http://www.reuters.com/article/2011/04/19/idUS180273867920110419

However, format of "going electric" is different e.g. Japan - Hybrid

Laws requiring new homes(Canada, BC) to have EV charging capaibility

http://www.ilsr.org/rule/plug-in-electric-vehicles/2943-2/

http://en.wikipedia.org/wiki/Plug-in_electric_vehicles_in_the_United_States

Governmental programs and incentives are ready for EVs.

Regulations on safety and emission are different from country to country.

Lobbying

Favoritism to local company

Economical

Overall cost savings for EV is still unclear

Manufacturing costs still high

Increase EV market

Affordable or free charging (Superchargers) if have better availability, is a big advantage

Household income in the U.S. dropped after the financial crisis

http://en.wikipedia.org/wiki/Household_income_in_the_United_States

So are other developed countries.

Tax rate for owning cars …. To be researched. Any incentive to own an EV?

Social

"Coolness" factor of having an EV

40% of Americans view capitalism negatively, page 39 of the following slide:

http://www.slideshare.net/fullscreen/kleinerperkins/usa-inc-key-points/5

Requirements for EV is different from country to country. (e.g. US - drive highway, Asia - town.)

Insecurity with distance or "refueling" of EVs

Increase refuelling stations

Technological

State of the art technology already used in Tesla EV, but infrastructure technology(for charging) is still lacking.

Build more chargers quickly

Battery technologies depending on Panasonic and LG.

Plug-in Hybrid Vehicles and Hybrid Electric Vehicles still a major technology. (Chevrolet Volt, Toyota Prius) Annual report 2012, page 25)

Tesla's proprietary technology are protected by its strong patent portfolio.( Ditto, page 6)

Ecological

With past histories of oil spills and global warming reports, EV is viewed to be one of the more desirable options

Developed countries are trying to get rid of nuclear power plants.

Developing countries have serious air pollution.

Battery recycling is uneconomical

Competitors

Plug-in EV Market

Competition - Fisker, GM Volt, Nissan Leaf, Toyota Prius, Ford Fusion

Detroit Electric

Segmentation/Targeting

Tesla targets the eco-friendly, but luxury car buyers. They have significantly slashed their prices this year releasing a $50,000 base model all electric car. This will help them segment their customers just like Mercedes Benz based on pricing.

http://pgm510.blogspot.jp/2013/01/examples-of-companies-that-have.html#!/2013/01/examples-of-companies-that-have.html

Interview - Miki

Industry experts candidate list

Former car designer for Honda racing team

Hayashi san 2014

Value Chain Analysis (<=Alan)

Upstream:

Owned factory

Patent Protected proprietary(for tesla powertrain)

Designs and build own cars

Unique chassis from Lotus

Cutting edge EV technologies

Partnership with leading battery product (Panasonic)

Strong partnerships with current auto industry by sharing technology

Product

Luxury car

High performance

Largest automotive touch screen in the world whose features and capabilities updatable over the air

Zero emissions

Charges overnight over stand power

Marketing/Promotions/Sales

High foot traffic store locations

EV Product Specialists (non-commissioned)

Word of mouth

Visual awareness of product

Support:

19 Stores, 3 Galleries and 26 Service Centers

85% of all Model S reservation holders in North America will be within 50 miles of a Tesla Service Center. 92% will be within 100 miles.

Free supercharge

Finance options (no down payment, < $500/month effective costs)

Option to sell your Model S to Tesla for the same residual value percentage as the iconic Mercedes S Class after 36 months

source:

http://www.teslamotors.com/blog/tesla-approach-distributing-and-servicing-cars

http://www.teslamotors.com/about/press/releases/tesla-unveils-revolutionary-new-finance-product

Culture (<=MIKI)

Positives

Encourage taking calculated risks

a new way of thinking, looking, selling and acting with the goal of challenging an establishment and winning market share.

source: http://www.teslamotors.com/nl_NL/forum/forums/tesla-next-apple

Exciting place to work, Innovation, group of smart people

source: http://www.glassdoor.com/Reviews/Tesla-Motors-Reviews-E43129.htm

Led by Musk's charisma.

source: http://www.ted.com/talks/elon_musk_the_mind_behind_tesla_spacex_solarcity.html

Negatives

Hard work

Lot's of overtime

Processes not matured (structure and organization)

Stakeholders

Identify who

- Who might be concerned in any way

- Who hold an influential position, or

- Who is affected by the problems addressed in the project

Investigate

- Power

- Legitimacy

- Urgency

Assess

- Relative influence

- Informational requirements

Stakeholders

Weight

Shareholders

5

Customers

- US Customer

7

- Outside US Customer

5

Executives

Elon Musk

Co-Founder, CEO and Product Architect

100

JB Straubel

Chief Technical Officer

8

Deepak Ahuja

Chief Financial Officer

4

Franz Von Holzhausen

Chief Designer

5

Jay Vijayan

Chief Information Officer

3

George Blankenship

VP, Sales & Ownership Experience

7

Gilbert Passin

VP, Manufacturing

4

Diarmud O'Connell

VP, Business Development

7

Arnnon Geshuri

VP, Human Resources

4

Peter Carisson

VP, Supply Chain

4

Jerome Guillen

Director of Model S Programs

6

Employees

3

Suppliers

4

Market Players

-

Nissan

4

Detroit Electric

7

GM

3

Partners

Toyota

4

Daimler

6

Environmental Groups

1

Governments

U.S. Government

4

Competitive Advantage (<=CHRIS)

Five Forces (for Tesla)

Bargaining power of customers (power to Tesla)

Pricing. Most customers prefer less expensive cars. But, some prefer luxury cars such as BMW 5.

Delivery. Want to receive the EVon time.

Needs for going "green", Image

Good fuel efficiency preferred

Easy to fuel

Fuel station accessible

Bargaining power of suppliers (power to suppliers atm)

Major parts are sole sourced from a specific supplier.

Automotive veteran companies - Know the market requirement well

Threat of new entrants (power to Tesla)

Disruptive technology (for vehicle and charging system) could change the EV market? Monitor continuously.

(So far Tesla IS the company that change the market.)

incumbents

Threat of substitute products (power to substitutes)

Hybrids

Hydrogen

Low-end EVs

More efficient combustion engines

Diesel Engines

Competitive rivalry (power to competitors)

Size of other auto companies - Huge

Have longstanding relationship with suppliers

Globally known brands

Higher Manufacturing capacity at competitors

Distribution network is netted all over the world

Five Forces (for PHEV or EV industry)

Bargaining power of customers (low)

Price is driven by industry or companies

Needs for going "green", Image

Good fuel efficiency preferred

Easy to fuel

Fuel station accessible

Bargaining power of suppliers (medium)

Major parts are sole sourced from a specific supplier or from existing suppliers used in manufacturing.

Automotive veteran companies - Know the market requirement well

Threat of new entrants (low)

Disruptive technology (for vehicle and charging system) could change the EV market? Monitor continuously.

Many barriers to entry

incumbents

Threat of substitute products (Med)

Hybrids

Hydrogen

Low-end EVs

More efficient combustion engines

Diesel Engines

Competitive rivalry (High)

Size of other auto companies - Huge

Have longstanding relationship with suppliers

Globally known brands

Higher Manufacturing capacity at competitors

Distribution network is netted all over the world

Industry Attractiveness => 3

Industry Shift => Efficiency of mileage/charge (range) and charging times

Three implications for Tesa =>

Increased infrastructure needs (superchargers)

Increased need for support and services (dealer network)

Patent protected and standardize the powertrain across models

Suppliers (<=Remove?)

Manufacturing

Tesla manufactures Model S in Fremont, California, former NUMMI factory.

Capacity: 20,000 cars of Model S in 2013.

Possible to increase the annual production beyond 20,000 by additional capital spending, changing operating patterns and adding additional shifts.

The two points above is on page 13, 10-K, 2013.

Powertrain component at Tesla facility in Palo Alto.

Driving Forces

Product Life Cycle Analysis

Financial Ratios and Statement Analysis - Jeo

Review ratios and numbers, and focus on where money is being borrowed, as well as numbers as a result of where our issues are.

FRSA

Overview

The objective of the financial ratio and statement analysis for Tesla is to present and examine key measures to assess growth based from its historical and current financial position, performance evaluation against main competitors, and benchmark its overall financial achievement within the available industry standard. This will support determination of Tesla's financial strength and weaknesses, growth opportunities, and overall performance established on publicly available accounting data.

Efficiency Ratio Analysis

Inventory Ratios

Tesla presents a three year low inventory turnover ratio and one of the highest inventory days compared to its main competitors and within the industry average. This could mean that the company is continuously inefficient in the assembly line production and needs further improvement in managing its inventory properly to maintain a more stable inventory distribution.

Accounts Receivable Ratios

Liquidity Ratio Analysis

Current Ratio

The year 2012 is where the current ratio for Tesla falls below 1 and below the industry average and one of the lowest against its competitors. There is a potential short-term financial obligation issue with Tesla for 2012 and this can result to defaulting to some of its creditor demands assuming if creditors are looking into an annual/yearly(short term) payment.

Quick Ratio

This year is also where the quick ratio for Tesla falls below 1 and below the industry average. There could be potential issues with Tesla to meet its short-term obligation and it will have very high dependency on its conversion of inventory and accounts receivable to cash.

Cash Ratio

This year is also where the quick ratio for Tesla falls below 1 and below the industry average. There could be potential issues with Tesla to meet its short-term obligation and it will have very high dependency on its conversion of inventory and accounts receivable to cash.

Working Capital

This year 2012 they are short -14M to support their current liabilities thus they may not be able to pay their creditors in the short-term, or worse bankruptcy.

Profitability Ratios

Return on Assets - Negative millions

Return on Equity- Negative millions

Images

Figure 1(Liquidity Ratio)

Figure 2 (Growth Ratio)

Figure 3 (Inventory Ratio)

Figure 4 (Profitability Ratio)

Figure 5 (Other Efficiency Ratio)

Consolidated Statements of Cash Flows (in thousands)

Tesla Motors, Inc.

Consolidated Statements of Cash Flows

(in thousands)

Year Ended December 31,

2012

2011

2010

Cash Flows From Operating Activities

Net loss

$(396,213)

$ (254,411)

$(154,328)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

28,825

16,919

10,623

Change in fair value of warrant liabilities

1,854

2,750

5,022

Discounts and premiums on short-term marketable securities

56

-112

-

Stock-based compensation

50,145

29,419

21,156

Excess tax benefits from stock-based compensation

-

-

-74

Loss on abandonment of fixed assets

1,504

345

8

Inventory write-downs

4,929

1,828

951

Changes in operating assets and liabilities

Accounts receivable

-17,303

-2,829

-3,222

Inventories and operating lease vehicles

-194,726

-13,638

-28,513

Prepaid expenses and other current assets

1,121

-248

-4,977

Other assets

-482

-288

-463

Accounts payable

187,821

19,891

-212

Accrued liabilities

9,603

10,620

13,345

Deferred development compensation

-

-

-156

Deferred revenue

-526

-1,927

4,801

Reservation payments

47,056

61,006

4,707

Other long-term liabilities

10,255

2,641

3,515

Net cash used in operating activities

-266,081

-128,034

-127,817

Cash Flows From Investing Activities

Purchases of marketable securities

-14,992

-64,952

-

Maturities of short-term marketable securities

40,000

40,000

-

Payments related to acquisition of Fremont

manufacturing facility and related assets

-

-

-65,210

Purchases of property and equipment excluding

capital leases

-239,228

-184,226

-40,203

Withdrawals out of (transfers into) our

dedicated Department of Energy account, net

8,620

50,121

-73,597

Increase in other restricted cash

-1,330

-3,201

-1,287

Net cash used in investing activities

-206,930

-162,258

-180,297

Cash Flows From Financing Activities

Proceeds from issuance of common stock in public offerings, net

221,496

172,410

188,842

Proceeds from issuance of common stock in private placements

-

59,058

80,000

Principal payments on capital leases and other debt

-2,832

-416

-315

Proceeds from long-term debt and other long-term liabilities

188,796

204,423

71,828

Principal payments on long-term debt

-12,710

-

-

Proceeds from exercise of stock options and other stock issuances

24,885

10,525

1,350

Excess tax benefits from stock-based compensation

-

-

74

Deferred common stock and loan facility issuance costs

-

-

-3,734

Net cash provided by financing activities

419,635

446,000

338,045

Net increase (decrease) in cash and cash equivalents

-53,376

155,708

29,931

Cash and cash equivalents at beginning of period

255,266

99,558

69,627

Cash and cash equivalents at end of period

$201,890

$255,266

$99,558

Supplemental Disclosures

Interest paid

$6,938

$3,472

$ 1,138

Income taxes paid

117

282

9

Supplemental noncash investing and financing activities

Conversion of preferred stock to common stock

-

-

319,225

Issuance of common stock upon net exercise of warrants

-

-

6,962

Issuance of convertible preferred stock warrant

-

-

6,294

Issuance of common stock warrant

-

-

1,701

Acquisition of property and equipment

44,890

15,592

4,482

Consolidated Balance Sheet (in thousands, except share and per share data)

Tesla Motors, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

December 31,

December 31,

2012

2011

Assets

Current assets

Cash and cash equivalents

$201,890

$255,266

Short-term marketable securities

-

25,061

Restricted cash

19,094

23,476

Accounts receivable

26,842

9,539

Inventory

268,504

50,082

Prepaid expenses and other current assets

8,438

9,414

Total current assets

524,768

372,838

Operating lease vehicles, net

10,071

11,757

Property, plant and equipment, net

552,229

298,414

Restricted cash

5,159

8,068

Other assets

21,963

22,371

Total assets

$1,114,190

$713,448

Liabilities and Stockholders' Equity

Current liabilities

Accounts payable

$303,382

$56,141

Accrued liabilities

39,798

32,109

Deferred revenue

1,905

2,345

Capital lease obligations, current portion

4,365

1,067

Reservation payments

138,817

91,761

Long-term debt, current portion

50,841

7,916

Total current liabilities

539,108

191,339

Common stock warrant liability

10,692

8,838

Capital lease obligations, less current portion

9,965

2,830

Deferred revenue, less current portion

3,060

3,146

Long-term debt, less current portion

401,495

268,335

Other long-term liabilities

25,170

14,915

Total liabilities

989,490

489,403

Commitments and contingencies (Note 14)

Stockholders' equity: Preferred stock; $0.001 par value; 100,000,000 shares authorized; no shares issued and outstanding

-

-

Common stock; $0.001 par value; 2,000,000,000 shares authorized as of December 31, 2012 and 2011, respectively; 114,214,274 and 104,530,305 shares issued and outstanding as of December 31, 2012 and 2011, respectively

115

104

Additional paid-in capital

1,190,191

893,336

Accumulated other comprehensive loss

-

-3

Accumulated deficit

-1,065,606

-669,392

Total stockholders' equity

124,700

224,045

Total liabilities and stockholders' equity

$1,114,190

$713,448

Consolidated Statements of Operations (Income) (In thousands, except share and per share data)

Tesla Motors, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)

Year Ended December 31,

2012

2011

2010

Revenues

Automotive sales

$385,699

$148,568

$97,078

Development services

27,557

55,674

19,666

Total revenues

413,256

204,242

116,744

Cost of revenues

Automotive sales

371,658

115,482

79,982

Development services

11,531

27,165

6,031

Total cost of revenues

383,189

142,647

86,013

Gross profit

30,067

61,595

30,731

Operating expenses

Research and development

273,978

208,981

92,996

Selling, general and administrative

150,372

104,102

84,573

Total operating expenses

424,350

313,083

177,569

Loss from operations

-394,283

-251,488

-146,838

Interest income

288

255

258

Interest expense

-254

-43

-992

Other expense, net

-1,828

-2,646

-6,583

Loss before income taxes

-396,077

-253,922

-154,155

Provision for income taxes

136

489

173

Net loss

$(396,213)

$(254,411)

$(154,328)

Net loss per share of common stock, basic and diluted

$(3.69)

$(2.53)

$(3.04)

Weighted average shares used in computing net loss per share of common stock, basic and diluted

107,349,188

100,388,815

50,718,302

5. Foreseeable Risks/Challenges:

EV Market Growth:

AutoblogGreen reports that "US public and private entities are adding publicly accessible electric-vehicle charging stations at a clip of about 180 units a month, which would put the country's total at about 7,400 by year end, according to US Department of Energy figures."

http://evobsession.com/180-more-ev-charging-stations-each-month-in-us-other-ev-charging-station-news/

http://www.digitaltrends.com/cars/chargepoint-will-add-80-new-york-charging-stations/

http://insideevs.com/public-ev-charge-stations-surpass-gas-stations-in-five-years/

Pivot chart of New Ev stations since 2011:

The biggest surge occurred on Q1 2012. Compared to this, 2013 Q1 seems to be slowing down.

Data source: http://www.afdc.energy.gov/locator/stations/#results?utf8=%E2%9C%93&location=&filtered=true&fuel=ELEC&owner=all&payment=all&ev_level1=true&ev_level2=true&ev_dc_fast=true&radius_miles=5

Leaf sales:

http://en.wikipedia.org/wiki/Nissan_Leaf#Markets_and_sales

Record breaking sales for March 2013

http://insideevs.com/nissan-leaf-shatters-sales-record-in-march-2013-propels-industry-to-all-time-high/

http://insideevs.com/nissan-leaf-sales-skyrocket-to-record-high-in-canada-in-march/

http://www.csmonitor.com/Environment/Energy-Voices/2013/0402/Nissan-Leaf-sales-soar-in-record-month-for-plug-in-cars

http://www.thedetroitbureau.com/2013/03/ghosn-predicts-milestone-year-for-nissan-leaf/

Monthly Plugin EV scorecard

Partnerships Summary:

Daimler:

Daimler AG has acquired an equity stake of nearly 10 percent of Tesla Motors Inc. As part of the collaboration, Prof. Herbert Kohler, Vice President E-Drive and Future Mobility at Daimler AG, will take a seat on Tesla's board of directors.

As a result of that partnership, Tesla Motors supplies battery packs and other techn