2.
Executive Summary
Tesla has established themselves as one of the leaders in the Electronic Vehicle market and a
leader in innovations. In order to further their control of the EV market, we have developed a
strategy to produce an entry level, luxury electronic vehicle that maintains Tesla’s core values
which allows them to compete on a broader scale with electronic vehicles and hybrids.
After taking everything into consideration, we believe that our strategy will allow Tesla to gain
market share, gain brand awareness, generate brand loyalty and earn profits through our new
programs. We have developed the following plan for Tesla:
We will develop a brand new, entry level luxury sedan that is fully electric and named the Gen3.
It will still have the core components to a Tesla vehicle, but created with a budget in mind to
grow the potential target market. This will allow more customers to get their hands on a fully
electric vehicle at an affordable price, while still being able to grow the Tesla brand. We have
also introduced a variety of programs in order to improve brand loyalty as well as giving more
options for purchase, including Amplify Your Ride and the Test Drive America campaigns. We
will also launch an integrated marking campaign with advertisements in magazines and though
web sources.
The first car will ship in early 2015 and will be issued to those who reserved the vehicle in the
second half of 2014. We will host the Test Drive America campaign in the second half of the
year after the car has been fully announced. This will give potential drivers the chance to drive
the car and to place a reservation.
The demand for Gen 3 will be estimated based on the growing EV/Hybrid market over the next 5
years. We have to ability and resources to increase demand if the market grows beyond our
estimation. With the expansion of our Supercharger station that was previously in the works our
electric vehicles will be more appealing to the mass market. The strategy is proposed to grow
Tesla’s market share in the EV/Hybrid marketplace by 5% over the next five years and provides
a 20% ROI per year for the last three years, with no losses after the first year. The plan will bring
in a total of $7,816,354,565 over five years in revenue and a total of $1,605,493,432 will be
profited.
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3.
Current Standing
Before we continue, we must have an overview what Tesla is about to continue on the same path
in the future.
Vision Statement: At the core, Tesla Motors believes that electric cars should not be perceived
as a sacrificial mode of transportation. Tesla Motors has brought the best of both the automotive
and technological worlds together by permanently etching the image of electric cars being a step
backwards in performance, efficiency, and design. Tesla Motors key is the 100% electric power
terrain, which not only propels us in the present, but simultaneously establishes a strong
foundation for the future. They have set out to forever alter the current perceptions of electric
vehicles, as well as making electric cars a viable alternative. Tesla has produced a car that is,
finally, beautiful and exciting to drive along with being the most efficiently produced automobile
on the planet.
Core Value:
A Clean Start: A Silicon Valley approach means we move fast and constantly innovate.
Committed To Electric: Tesla makes the best electric cars and electric power trains in the world.
Tesla's technology offers the most efficient path to a sustainable energy future; No Hybrids, No
Hydrogen, No Hype.
Built Around The Driver: The driver, the car, and the environment connect in ways they’ve never
connected before.
Sparking The Evolution: Tesla’s goal is to accelerate the world’s transition to electric mobility
with a full range of increasingly affordable electric cars. We’re catalyzing change in the industry.
Master Plan:
1. Build a 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.
Mission Statement: Our intent is to offer a compelling customer experience while gathering
rapid customer feedback and achieving operating efficiencies, better control over the costs of
inventory, warranty service, pricing, and the development of the Tesla brand.
Tesla’s Principal Marketing Goals are to:
Generate demand for our vehicles and drive leads to our sales teams.
Build long-term brand awareness and manage corporate reputation.
Manage our existing customer base to create loyalty and customer referrals.
Enable customer input into the product development process.
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4.
Former Target Market (Roadster):
Target: The original target of the Tesla Roadster included the upper class business executives
and others who were looking for a high-end luxury car. The Tesla Roadster required a large
down payment and cost over $100,000, leading it to be unavailable to most consumers who were
looking at higher-end cars, or below.
Segment: The segment of the market focused on males who were looking for a luxury sports car
that also had an electric motor. The Tesla Roadster was not only efficient, it was also fast and
drove like a true sports car. The segment was dominated by males because of the sports car
aspect of the brand and the availability.
Positioning: The Tesla Roadster was marketed as a high-end luxury sports car that was fully
electric and able to compete with other high level luxury cars performance. While the price was
not cheap, it was cheaper than many other high-end sports cars that were on the market at that
time. It was not made to compete with the sedans, but with the two-seater car market. The all
electric vehicle also provided an incentive to environmental conservative drivers, allowing for
zero emissions as they drove.
Current Target Market:
Target:
The current customer of Tesla is purchasing the Model S vehicle that is priced at 70k. The
customers are successful business executives and entrepreneurs who are also city dwellers that
are tech savvy and green friendly. These are wealthy and early adopters whose income levels put
them in the upper-middle class segment.
Segment:
The segment of the market is individuals looking for a premium luxury car with the added
benefit of being fully electric. Tesla is targeting individuals who are upper-middle class baby
boomers with typical incomes of over $100,000 which is based on 77% of our buyers falling into
this particular segment. Ideally, more males are inclined to purchase our vehicles, so when we
market our strategies, we want to keep this in mind when addressing the audience. The majority
of the segment is dominantly male.
Positioning:
The Model S is posting as a luxury car with great performance that simply has the added benefit
of being a fully electric vehicle without sacrificing style and performance. This high-end luxury
car is not missing anything from a traditionally European luxury car and that’s how Tesla wants
concept to be. They do not want to convey that it is primarily an electric car because at the
moment, electric cars do not have a sexy or glamorous reputation because of the cars they call
"hybrids" that have horrible performance and style.
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5.
New Target Market:
Target:
In order for Tesla Motors to keep growing now and into the future, it is going to be important to
expand their target market to reach more consumers. Expanding our target market to the
generation Y, mid 20’s to early 40’s, middle class working adults, Tesla will be able to utilize
their facility while increasing production. This target market will be pinpointing the young
professionals that are looking for an entry level luxury car. According to NADA DATA, the
average selling price for a new car in 2011 was around $30,000 which shows that the majority of
the consumers are not spending a lot of money on cars.
Segments:
We are going to segment the market for our new targets in three categories; eco friendly
consumers, tech savvy and entry level luxury cars. For the eco-friendly consumers, we will be
able to reach them by offering a fully electric car that not only has more than double the driving
range of the electric competitors, but also has the style and performance that Tesla is known for.
For the tech savvy segment, we can reach them because the fully electric car is a growing
technology which most consumers are not currently utilizing. Not only will the car itself be new
technology, the interior of the car will really attract the tech savvy consumer with the basic
options, as well as the add-ons, that will attract them as well. The entry level luxury car segment
will attract the young professionals that are in the early stages of their careers and who will want
to drive a luxury car. By having an entry level price, we will be able to attract more customers
which will lead to future sales and brand loyalty.
Positioning:
We are going to position this car for the entry level luxury car that also has the added benefit of
being fully electric while not losing any performance. Most electric cars are viewed as
"unattractive" to younger buyers through lack of design and performance. By creating an entry
level Tesla car, we can use our design and technology to change that image. By having an entry
level luxury car that is in the $30,000 price range, that also has the benefit of being fully electric,
will attract more buyers that are currently looking for electric cars or entry level luxury cars
because of the added value of zero emissions, and by having this added value, it will position our
brand to save consumers more money than the traditional entry level luxury cars.
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6.
Survey Questions
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29.
Gender
Age
Personal Income
Work Status
Education
Ethnicity
State/Country
What type of community do you live in?
How did you purchase your current vehicle?
What brand of vehicle do you currently own?
How many miles do you currently drive daily?
How much do you currently spend on gas a week?
Have you previously or currently owned a hybrid vehicle?
Have you previously or currently owned an electric vehicle?
Scale the factors which would influence your purchasing decision?
What are you currently looking for in a vehicle?
What features impact your purchasing decisions the most?
Rate according to your engine preference.
How Influential are/would the following factors be on your purchasing decision of an
electric vehicle?
Do you think electric cars are a good return on investment?
How much would you be prepared to pay for a new/used NON-electric vehicle?
How much would you be prepared to pay for a similar model but electric vehicle?
Are you environmentally conscious?
What do you think are the benefits of owning an electric vehicle?
For you, what are the drawbacks of an electric vehicle?
Do you plan on buying an electric vehicle in the future?
If so, how long until you plan to purchase an electric car?
If the following vehicles were available as electric vehicles, what type of vehicle would you
most likely buy?
Do you think it is too early for electric cars, considering they may not be reliable enough
and would you prefer buying a hybrid car? (Using both fuel and electricity)
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14.
Summary of Findings
According to the survey we have found that consumers are thinking about purchasing an electric
car in the future. The majority of the respondents, 62%, chose “maybe” when asked if they
would buy an electric car in the future while 28% said “yes”. The majority of these people
planned to purchase an electric car in 1 to 4 years. We found what consumers looked for in their
cars and the drawbacks in buying an electric car. These findings will enable us to make a car that
is suitable for the consumers and also convert them into emission free driving. Not many people
actually owned an electric car before. The majority, 74%, answered "no" when asked if it was
too early for electric vehicles. This information lets us know that there is a demand in the
consumers mind and that it is a good idea to have electric cars at this time.
From our primary research we have also found out that brand image was a strong factor in
purchasing a vehicle and what people were looking for. This makes it very important for us to
continue to improve our brand image so that it will be appealing to all consumers. "After sale
service" was picked the most as having the strongest influence on purchasing decision. This is
why we will need to improve our service plans for our customers and also for new customers.
Having a solid service plan that the customers like will just add to the value of owning a Tesla.
The influential factors on purchasing an electric vehicle were mileage range, style, price and
performance. Here at Tesla we already offer industry leading mileage range and we are known
for the style and performance of our vehicles. This leads us to the strongest influence, which is
price. By selling an expensive car we are only targeting a small market of a select few that can
afford it. This will allow us an opportunity to create a lower priced vehicle so that we can reach
the mass market.
Also, based on our survey findings, we asked the consumers how much they would be prepared
to spend on a NON-electric car and how much they would be prepared to spend on a similar
model but electric. For the NON-electric cars the top two price ranges were $30,001 - $40,000 at
44% and $40,001 - $50,000 at 32%. When asked how much they would be prepared for a similar
model but electric the price ranges were $30,001 - $40,000 and $40,001 - $50,000 which were
both tied at 26%. Another 22% of the respondents chose that they were prepared to spend
$50,001 - $60,000 on an electric vehicle while only 10% of the respondents chose that they
would be prepared to spend over $60,000. This shows that the consumers are willing to pay more
for the electric vehicle over the conventional gas motor, but the majority are prepared to spend
between $30,000 and $60,000.
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15.
Market Research
Increased Sales of Electric Cars
According to evobsession.com 100% electric car sales grew by over 360% in the last year. As
technology continues to make the batteries better and more charging stations are built the
consumers are demanding electric cars. Part of this could be from the rising price of gasoline and
the trend of people becoming more environmentally conscious. As more people start to look into
purchasing electric vehicles, the companies are going to need to build cars that set them apart
from their competition. Most electric cars are known for having poor performance which makes
them unappealing to most people. As the technology for this industry grows and becomes
cheaper to produce, the companies can become more innovative with the design and performance
of the car. The ideal situation would be to make a family line of electric vehicles that could be
appealing to everyone.
Price of Luxury Vehicles
The average price of the top 15 best selling luxury vehicles in 2012 was $41,073 and the average
growth of sales was 10.1% found through the goodcarbadcar.net. This shows that the luxury
vehicle industry is growing and people are okay with spending their money on luxury vehicles.
At the $40k average price it shows that people are mainly buying the entry level luxury vehicles.
These are priced so that they can be appealing to the mass market. A lot of the luxury car
companies are making entry level vehicles so they can reach a market that they have been left
out for years. This has been a burden with the regular automobile companies because they will
have to compete with this entry level luxury cars with the high-end options that they are
currently offering.
The average price for the top 7 large luxury cars, which is a competitor for the Model S, is
$75,174. The Mercedes S-Class sold the most in 2012 with 11,794 units sold. This shows that the
luxury car companies are making their money and market share on the lower priced cars they
sell. This will be an issue for Tesla as we try to gain market share. We can definitely outsell the
large luxury models, but in order to gain market share, we will need to sell in large numbers
which is not going to happen with a higher priced vehicle.
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16.
Cost of Charging Electric Cars
With the average US cost per Kilowatt Hour being $0.12, this translates to about $.04 a mile for
electric cars. On a yearly driving of 12,000 miles, this would only cost an electric car owner
about $480 total. With the average cost of gasoline currently at $3.56 per gallon, this translates to
a cost of about $.14 cents per mile in a 25mpg car using gasoline. On a yearly average of 12,000
miles, this would cost the traditional gas powered vehicle $1,680 with a 25mpg car. A driver
having an electric vehicle would save $1,200 a year just in gas expenses.
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24.
Challenges for Tesla
Tesla faces many challenges as a new to entry motor company in a very competitive auto
industry. We know what Tesla does best, “builds great fully-electric car without the sacrifice of
performance or style". We have the proper partnership and available resources to accomplish our
goal by changing the industry from gas fueled to electric powered, however, we have a problem
of not getting enough sold at the potential that we know we can as a company. We are seen by
some as this cool "techy" innovative company but no one is persuaded enough to come out and
purchase. So that's why we decided to do a little research on the stigma of electric cars and use
what we are good at to counterattack each challenge which will later on be executed into
something creative and new.
Misconceptions of Electric Cars:
Recharge time at home and cost
Upon delivery or at the time of pick up you will be supplied with a mobile connector. And Yes!
You can literally charge it wherever a wall plug is provided, but we recommend charging from
a 240 volt outlet rather than a 110 volt outlet. A 240 volt outlet provides a lot more power
than a standard outlet and will charge your car faster. You get 62 miles an hour while
charging so we will inform our leases or buyers that if they do this every night they will not
have any problem. So money is sometimes EVERYTHING so consider this extreme
scenario if a customer charges their car from empty to full it will only cost them $11.88 for
that charge. Compare that to the amount of money spent on gas and you can see this is a
drastic savings.
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25.
Low number of charging stations
As Tesla grows as a brand, we already have plans to expand the number of charging stations
across the United States. While we have many charging stations already in place along both
coastlines, there will be a big demand for more. Throughout 2014 and 2015, we will greatly
expand this network of chargers to help the public travel across the country with convenience.
Fall 2013
Year 2014
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26.
Year 2015
Images provided by Tesla website
Initial cost of purchase
One of the top draw backs for potential electric car buyers was the high initial cost associated
with purchasing. As technology continues to advance, the cost of making electric cars is
decreasing. We’ve introduced a new model into the Tesla family of cars that focuses on the issue
of cost. This gives the customer a “no pressure feel” but gets cars on the roads. These consumers
can test out the experience and fall in love with the Tesla Motors Family. The new model, Gen 3,
reduces the initial cost for ownership of an electric car, putting more cars on the road. The initial
starting point of this vehicle is 40K, a dramatic drop from the Tesla Model S starting at 70K.
Low car choice options
While there aren’t as many options as the basic cars, electric cars are unique in how they are able
to operate. With an almost fully electric base, the car costs more money to produce than a normal
vehicle. In order to lower the price of the car, we’ve removed some key features from the top
models and kept the essentials that make it a luxury vehicle. By doing this, we’ve been able to
lower the price in order for more of the everyday consumer to purchase the car, no longer
limiting the car to the upper class consumer. By adding this new entry into the family market and
the SUV coming very soon, we have a full family line of Tesla’s that now can also help create
loyalty within the availability of picking and choosing which vehicle preference fits the
consumer.
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27.
Marketing Strategy
We will increase the market share of Tesla
Motors in the Electronic Vehicle / Hybrid
market by 5% over the next 5 years by
introducing a lower priced EV, the Tesla
Gen3.
Model: Gen3
Model year: 2015
Style: Passenger 4 door luxury sedan
Pricing base: $40,000 – $47,000
Objectives of this market strategy
To increase market share 5% with this
new vehicle
Increase brand awareness by the
number of vehicles on the road
Create brand loyalty
Build a family of Tesla’s that caters to
more target segments then what we
currently have
After conducting primary and secondary researches, we concluded that this vehicle is a solution
for the current demand by young working professionals that are looking for an entry level luxury
car. The price surveyors felt it would be an optimal price point for this kind of vehicle and was
quoted to start out at $40,000 with a $7,500 federal tax rebate which would bring the cost to the
consumer to be $32,500. With a no emissions car running completely on electricity, the
consumer would save around $150 to $200 on gas based on the average mpg of luxury cars and
premium fuel prices. By targeting the young professionals looking for an entry level luxury car,
it would allow us to build our brand image by getting more zero emissions cars on the road. With
Tesla’s battery technology that provides an unmatched mileage range to our competitors, we can
use that technology to produce a smaller car that is more affordable for our consumers. Although
we will not be able to lower costs to match the Nissan Leaf prices, our designs and performance
are much better than the Leaf. This will allow us to gain market share in the electric vehicle
segment that is currently controlled by Nissan.
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28.
Phases
Phase 1 (6 Months):
Implement communication strategies to inform consumers and press about a new addition
coming to the Tesla family of cars.
o Create banners on the Tesla home page promoting new car
o Reach out to automotive magazines to increase traffic to website (i.e.: Motor
Trend)
o Announce and promote new vehicle announcement on Social Media accounts
(Facebook/Twitter)
Finalize production plan and process to begin production in Phase 2
Phase 2 (6 Months):
Debut announcement of the Tesla Gen3 to the public
Start accepting reservations for new vehicle
Begin production of the car, allowing for a complete rollout in early 2015
Launch Test Drive America Campaign
Phase 3 (Years 2-5):
Release Gen3 to public sales and ship reservations.
Continue and expand communication strategies
o Launch Billboard campaign in major cities
o Continue promotion on Social Media accounts
o Update Website with any extra information
Implement “Amplify your Ride” trade-in program
Implement Loyalty Program for Tesla owners
Continue “Test Drive America” campaign
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29.
Tactics
Loyalty Program
We at Tesla Motors want you to be safe and comfortable in your Tesla vehicle. Some of the most
important people in the world are your family, and you always want them to be safe on the road
and be comfortable while driving in a reliable vehicle. The Tesla Loyalty Program allows you to
put your family in a Tesla vehicle, with added bonuses while already being a customer of Tesla.
In a special promotion with our new Gen 3 vehicle, customers who already own a Tesla and
purchase another one for their family will receive an instant $2,000 off the car and one year of
free service, including unlimited Service Ranger appointments at no cost to you. This promotion
will only be applicable if you purchase a four year program that will take effect immediately
after your first year has ended, giving you a total of five years of coverage.
We will take a minimal loss on this program, but will still be able to make the money back
through the customers who purchase the higher grade service plans or have service to be
attended to in the future. We will only be losing money if the buyer decides to purchase the
lowest service plan. Any future service sales will be profitable.
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30.
Amplify Your Ride
We at Tesla Motor’s would like to change the automotive experience drastically by offering a
program called “Amplify Your Ride”. In this program, we will be offering qualifying customers
the opportunity to trade in their current vehicle for our new Tesla Gen 3. This program will have
the benefit of two irresistible incentives which are 0% financing for the well qualified buyer for
the first 24 months as well as offering the best trade-in value for their vehicle as a down payment
for their new Tesla Gen 3. When trading in their car, we will be using Auto Nation as a 3rd party
trade-in program whom will be buying the car off of us.
Test Drive America
In order to help raise brand awareness of the Gen3 and to give drivers an opportunity to test the
car, we will launch a test drive campaign entitled “Test Drive America”. We will focus our
efforts on the 8 recent states who has been promoting the sales of electric cars. These states
include California, Connecticut, Maryland, Massachusetts, New York, Oregon, Rhode Island and
Vermont. Within these states we will focus on the larger population cities in order to have the
largest reach out. Our main cities that we focus on in 6 states which will be Los Angeles, San
Francisco, Seattle, Washington, New York and Atlanta. Currently 50% of all electric vehicle
sales have been made in these cities.
Each city we will host the event at a local track, giving the opportunity for drivers to get the full
performance experience from the test drive. If no tracks are available to run the event, we will
stop at our service stations located throughout the states and allow drivers to test drive the car for
at least 15 minutes. We will have 10 cars produced at the 60 kWh battery size at the event in the
different colors that are available to the public.
We would hire three “Street Team” positions at an average salary of $45,000 to travel with the
campaign and promote the new vehicles. We would then spend an average of $165,000 on travel
and lodging throughout the campaign.
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31.
Communication Strategy
With Tesla only focusing on online sales, site traffic begins to be a major concern. Increasing site
traffic is essential to the overall health of the company. Our communication strategy concentrates
on three main media sources; Google’s Ad Words, major newspapers/ magazines, social media
outlets and company sponsored events. These strategies will increase customer traffic which
ultimately will lead to an increase of revenue.
Website and Social Media
The Tesla Motors website will be the main hub of all announcements and advertisements. We
will announce the new car, promote the campaigns, and give complete details through our
website directly. We will also use our Social Media platforms to make announcements and
promote our events taking place. All ads would be on the homepage of each website, giving it
maximum exposure to those who enter the site through other channels.
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32.
Google Advertising
To help promote Tesla on the internet, we will use targeted advertising through Google Ad
Words. The targeted advertising would be focused on those who are looking at electric vehicles
or hybrid cars. Google’s Ad Words is a Pay-Per-Click advertising model that allows a company
to advertise online. Tesla will use Google’s specialized program to increase site traffic. Pay-PerClick is a program that Google offers allowing Tesla to set a predetermined advertising budget
based on the amount of consumers visiting our website. Each click will lead the potential
consumer to www.teslamotors.com. This strategy also has a secondary effect on Tesla. As each
individual visits the site, this can grow brand awareness resulting in an increase of overall sales.
The program offers real time conversion rate tracking that will let us determine the effectiveness
of the program. By choosing our specific goal, defining keywords that Tesla is associated with
and setting a budget can achieve a conversion rate averaging around 4.29% to 6.15% for the auto
industry. With 1,000 potential customers visiting the site at a 6.15% conversion rate can result in
62 new customers. This strategy can have limitless possibilities depending on our total budget set
aside for the program.
Media
Newspapers will be used to reach a certain demographic area that will increase site traffic. The
New York Times, Wall Street Journal, Forbes magazine and Motor Trend magazine will be used.
These magazines focus on college graduates with a median age of 40 plus and an average
household income of over $70,000. Through each magazine, a one page ad with no contracts
involved and a onetime ad will cost us at the low of $53,455 and a high of $117,465 for black
and white ads and up to $219,297.13 for color ads. With an audience of roughly 16 million Tesla
can use this media to further our brand awareness and increase site traffic at a fairly inexpensive
price.
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33.
We will also launch a billboard campaign to coincide with the launch of the new car. The
billboards will be used in Phase 2 before the Test Drive America Campaign. The billboard
campaign will launch in the 8 states that the Test Drive America Campaign visits.
Only a few billboards will
be placed in each major city
to maximize exposure across
the United States with our
full budget being expensed.
Our department will also reach out to
major sources of online media to help
gain exposure for the car. The online
media companies will have an
opportunity to test drive the car, much
like the Test Drive America plan, and
offer their reviews. These reviews will
help us gain exposure for the car and give
the car-shopping consumer more
information from a third party source,
helping to verify the Tesla marketing
campaigns. It will also give us an
opportunity to announce when and where
our next “Test Drive America” dates will
be, encouraging others to come and drive
the car for themselves.
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34. Vehicle Specs
Overall
Overall Length 176.0”
Height 56.1”
Wheelbase 109.3”
Ground clearance 5.9”
Track 65.4’ Front 66.3” rear
Width (mirrors folded 77.0”)
Width (mirrors extended 82.3”)
Convenience
Keyless entry
Cruise control
Front led lights
12 v power outlet
Automatic climate control
Dual control settings
Wi-Fi ready
Dual USB ports
Additional Dimension
Headroom (front/rear) 36.2/31.2”
Legroom (front/rear) 40.6/31.2”
Shoulder room (front. Rear) 55.2/51.7”
Hip room (front/rear) 51.3/50.7”
Seating capacity 5 adults
Curb weight 4,143.7 lbs
Weight Distribution (%front/rear) 40/60
Warranty
5 year warranty 75,000 miles
40 kWh battery has 10 year/150,000 miles
60 kWh battery has 8 year/125,000 miles
Power Train
Model Gen3 rear wheel drive
Electric vehicle liquid cooled
Power train includes the battery, motors, drive inverter, and gear box.
40 kWh, 60 kWh microprocessor
Controlled, lithium-ion battery
Instrumentation
12” Capacitive touch screen w/media Comm.
Cabin and vehicle controls
Bluetooth wireless and hands free
Tire pressure monitoring system
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35. Suspension, Steering, and Brakes
Double wishbone, virtual axis coil spring front
Suspension and independent multi-task coil spring rear suspension
Variable ratio, speed sensitive, rack and pin electric power steering
Electronic stability control
Traction Control
Anti-lock disc brakes (ABS) w/ ventilated rotors and electric parking brake;
Front 355mm x 32mm, rear 365mm x 28mm
Body
Lightweight aluminum body reinforced with high strength boron steel elements
UV and infrared blocking safety glass windshield
Rain sensing, adjustable speed windshield wipers
Frameless, tempered safety glass rear
Sunroof
Xenon headlights with automatic on/off
Safety
Eight airbags: Knee and pelvis airbags in the front plus
two side curtain airbags
Driver and front passenger seat sensors
Driver seat position sensor
Three point driver and front passenger safety belt with
retractor pretensions and secondary lap anchor
Rollover crash sensor
Acoustic safety belt warning
Anti-theft alarm and immobilizer system
Horn. Beep Beep
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40. Cost Per Phase
Phase 1: For the first 6 months of 2014 we will be spending an estimated $100 million dollars on
the research and development on building a lower priced car that can reach the mass market. We
will be using our current technology that will allow us to save money on the research and
development expense. We will also be implementing a communication strategy costing
$994,552, which will begin in Phase 1 and last throughout the whole year. We will use google ad
words for the Gen 3 that we will budget $20,000 for the year. We will also place advertisements
in the New York Times, Wall Street Journal, Forbes and Motor Trend costing $267,275,
$219,297.13, $290,640 and $197,340 respectively.
Phase 2: For the second half of 2014 we will we will begin to advertise on billboards in the
states that will be participating in the Test Drive America campaign. Each destination will have 5
billboards costing $2,000 per month, which will have a total cost of $480,000. In this phase we
will be producing 8 of our 60 kWh cars with upgrades for our Test Drive America campaign at a
cost of $328,000. After the cars are made, we will begin our Test Drive America campaign that
will cost a total of $150,000. We will hire 3 “Street Team” positions at an average of $45,000,
which will cost $67,500 for 6 months. On this campaign we will have an $82,500 budget on the
traveling and lodging for the 6 months.
Phase 3: Starting in 2015 we will begin to produce the Gen 3. We will keep our Test Drive
America program that will run twice a year at a total cost of $300,000. This cost will be
$135,000 in the “Street Team” salaries and $165,000 in the travel and lodging throughout the
year. We will use the same communication strategy that will cost $994,552 for the whole year.
During this phase we start the Loyalty Program that we estimate will be for 10% of our sales in
the first year that will cost us $3,843,511. We will also keep the billboards for the first 6 months
in the same places that will cost $960,000. We are also estimating that we will produce 50% of
our 19,218 cars with the 40 kWh battery that will cost $307,480,875 and 50% of our 60kWh that
will cost $355,524,762. During this phase we will carry over the cost from 2014 totaling
$101,952,522. In 2016 we will keep the same costs for the Test Drive America and the
Communication Strategy. We will increase our production to 36,566 cars that we will estimate
again that have 50% 40 kWh batteries and 50% 60 kWh batteries that will cost $573,356,154 and
$662,943,053. This will also increase the cost of our Loyalty Program to $7,313,216. In 2017 the
costs for Test Drive America and the Communication Strategy will stay the same. We will
Increase our production to 55,242 cars keeping the same strategy of 50% 40 kWh and 50% 60
kWh costing $848,513,455 and 981,093,683. The loyalty program will also increase to
$11,048,352. In 2018 we will also keep the same costs for the Test Drive America and the
Communication Strategy. We will increase production to 120,271 cars that will be 50% of the 40
kWh and 50% of the 60 kWh that will cost $1,083,937,046 and $1,253,302,209. The Loyalty
program will increase to $14,414,056.
40 | P a g e
41. Works Cited
Baker, David R. "8 States Sign Deal to Boost Electric-car Sales." SFGate. SFGate, 24 Oct. 2013.
Web. 1 Nov. 2013.
Brown, Nicholas. "Over 50% Of Electric Cars Sold In US Are In 5 Cities." CleanTechnica.
Clean Technica, 19 Aug. 2013. Web. 17 Oct. 2013.
Cain, Timothy. "GOOD CAR BAD CAR." 2012 Year End Top 30 Best-Selling Luxury Vehicles
In America -. N.p., 4 Jan. 2013. Web. 2 Oct. 2013.
"Daily Fuel Gauge Report." Daily Fuel Gauge Report. AAA, 31 Oct. 2013. Web. 31 Oct. 2013.
"Electric Power Detailed State Data." Electric Power Detailed State Data. U.S. Energy
Information Administration, 28 Oct. 2013. Web. 12 Nov. 2013.
"ForbesLife Audience Research." ForbesLife Audience Research. Forbes, n.d. Web. 5 Nov.
2013. <http://198.20.70.218/~forbesme/wp-content/uploads/2013/03/ForbesLifeDemographics.pdf>.
"Independent Statistics and Analysis." EIA. U.S. Energy Information Administration, Sept. 2013.
Web. 12 Nov. 2013.
NADA DATA State-Of-The-Industry Report 2012. Rep. no. 2012. NADA.org, n.d. Web. 2 Oct.
2013.
"The New York Times Media Kit." The New York Times Media Kit. The New York Times, n.d.
Web. 5 Nov. 2013.
"Promoting Electric Drive Technologies And infrastructure." Electric Drive Sales. Electric Drive
Transportation Association, n.d. Web. 12 Nov. 2013.
Shahan, Zachary. "US Electric Car Sales Have Increased 361% In 2013 So Far." CleanTechnica.
Clean Technica, 6 Nov. 2013. Web. 7 Nov. 2013.
41 | P a g e
42. Soames, Chris. "Google Ad Words Conversion Rate Averages by Industry." Smart Insights.
N.p., 15 Nov. 2013. Web. 3 Nov. 2013.
"Tesla." 136 Marketing Music Technology. N.p., n.d. Web. 15 Oct. 2013.
"Tesla Motors." Tesla Motors. N.p., n.d. Web. Oct.-Nov. 2013. <http://www.teslamotors.com/>.
"WSJ.com Audience Profile." WSJ.com Audience Profile. Wall Street Journal, 8 Dec. 2012.
Web. 5 Oct. 2013.
"Wsj.com Traffic and Demographic Statistics by Quantcast." Wsj.com Traffic and Demographic
Statistics by Quantcast. Quantcast, n.d. Web. 28 Oct. 2013.
42 | P a g e
45. Demand Forecast
Estimated Electrics, PHEVs and Hybrids
2013
2014
2015
2016
2017
2018
Total Market
563,414
704,268
880,334
1,056,401
1,214,861
1,336,348
Tesla Market Share
4%
3%
5.25%
6.5%
7.75%
9%
Total Untis
21,000
21,000
46,218
68,666
94,152
120,271
Model S
21,000
21,000
21,000
23,100
25,410
27,951
Model X
‐
‐
6,000
9,000
13,500
20,250
Gen 3
‐
‐
19,218
36,566
55,242
72,070
2014 Costs
2014 Revenue
8 60 kWh cars with upgrades
Test Drive America
Communication
R&D
40 Billboards
Total Cost
$ 328,000
$ 150,000
$ 994,552
$ 100,000,000
$ 480,000
$ 101,952,552
40 kWH Selling Price
60 kWh Selling Price
Total Cost of 40 kWh Car
Total Cost of 60 kWh Car
2014 Profit
$ 40,000
$ 45,000
$ 32,000
$ 37,000
1,922 Reservations
$ 4,805,000
Test Drive America
Communication
Loyalty Program
Billboards
Total expenses from building cars:
40 kWh Car
60 kWh car
Carry Over Exp. From 2014
$ 300,000
$ 994,552
$ 3,843,511
$ 960,000
Total Cost
$ 771,056,252
$ (97,147,552)
2015 Profit
40 kWh
60 kWh
Loyalty Program
$ 384,351,094
$ 432,394,980
$ 3,651,335
Total Revenue
$ 307,480,875
$ 355,524,762
$ 101,952,552
$ 4,805,000
$ 101,952,552
Profit
2015 Revenue
2015 Costs
Total Revenue
Total Cost
Total Revenue
Total Cost
$ 820,397,410
$ 771,056,252
$ 820,397,410
Profit
$ 49,341,158
ROI
6%
46. 2016 Costs
2016 Revenue
2016 Profit
Test Drive America
Communication
Loyalty Program
Total expenses from building cars:
40 kWh Car
60 kWh car
$ 300,000
$ 994,552
$ 7,313,216
40 kWh
60 kWh
Loyalty Program
$ 731,321,625
$ 822,736,828
$ 6,947,555
$ 573,356,154
$ 662,943,053
Total Revenue
$ 1,561,006,009
Total Cost
$ 1,561,006,009
$ 1,244,906,975
Profit
$
1,244,906,975
$ 316,099,033
ROI
2017 Revenue
2017 Costs
Total Revenue
Total Cost
20%
2017 Profit
Test Drive America
Communication
Loyalty Program
Total expenses from building cars:
40 kWh Car
60 kWh car
$ 300,000
$ 994,552
$ 11,048,352
40 kWh
60 kWh
Loyalty Program
$ 1,104,835,228
$ 1,242,939,632
$ 10,495,935
$ 848,513,455
$ 981,093,683
Total Revenue
$ 2,358,270,794
Total Cost
$ 2,358,270,794
$ 1,841,950,042
Profit
$
1,841,950,042
$ 516,320,752
ROI
2018 Revenue
2018 Costs
Total revenue
Total Cost
22%
2018 Profit
Test Drive America
Communication
Loyalty
Total expenses from building cars:
40 kWh Car
60 kWh car
$ 300,000
$ 994,552
$ 14,414,056
40 kWh
60 kWh
Loyalty Program
$ 1,441,405,646
$ 1,621,581,352
$ 13,693,354
$
1,083,937,046
$
1,253,302,209
Total Revenue
$ 3,076,680,352
Total Cost
$
2,352,947,864
Total Revenue of Plan
Total Cost of Plan
$
7,816,354,565
$
6,210,861,133
Profit
$
1,605,493,432
ROI
26%
$ 3,076,680,352
$ 2,352,947,864
Profit
5 Year Total
Total revenue
Total Cost
$ 723,732,488
ROI
24%
