Supercharger was able to do the same in 30 minutes, saving customers hours in charging time. 25 Despite addressing concerns over “range anxiety,” consumer demand for electric vehicles remained muted relative to overall vehicle production in 2011, capturing just 0.1 percent of the market, as mentioned earlier. 26 This was due in part to high electric vehicle prices as a result of costly batteries. A report by technology research firm Gartner Inc., suggested that electric vehicles were in a “trough of disillusionment” an d would not experience full production for more than ten years: Due to high battery costs, EVs should initially be offered as premium vehicles with sport and technology sophistication or as small city cars. A breakthrough in battery technology, subsequent cost reductions and capacity increases will be needed to achieve broad market adoption. 27 Unlike its competitors, Tesla used thousands of small cylindrical lithium-ion cells, which were commoditized and provided a cost advantage relative to competitors ’ prismatic cel ls. And while prismatic cells offered reduced complexity, Tesla developed a proprietary battery management system to optimize performance, safety and useful life. 24 (April 19, 2013). 25 Assumes the use of a 30 amperage J-1772 adapter and an additional 26 miles of driving per hour of charging. 26 Brinkman, Carroll, and Chatterjee, op. cit., p. 11. 27 Simon Mingay and Stephen Stokes, “Hype Cycle for Sustainability and Green IT, 2012,” Gartner Inc., July 31, 2012, p. 92. Purchased by: Richard Selby [email protected] on August 18, 2013
Tesla Motors – Evaluating a Growth Company A-209 p. 8 Competitive Landscape While traditional automakers launched versions of electric vehicles to meet consumer and regulatory demands for more stringent fuel economy standards, these vehicles mainly targeted the mass market (see Exhibit 7 for competing electric vehicle launches). The Model S, on the other hand, while more affordable than the Roadster, was still priced at the mid- to high-end of the luxury market. This made comparable analysis difficult, particularly given Tesla’s newly developed and highly differentiated business model. Tesla focused purely on electric vehicles as opposed to most competitors who diversified their strategies with hybrids or internal combustion engine vehicles. In addition, Tesla developed and manufactured the majority of its parts internally, while most of its competitors outsourced similar parts. 28 And while larger automakers operated on much greater scales and benefited from brand recognition, larger distribution networks and access to financial resources, they were also encumbered with hefty costs associated with pensions and other post-employment benefits (OPEB). T ESLA ’ S F INANCIAL P ERFORMANCE Revenue Analysis While Tesla historically derived revenues primarily from the sales of the Roadster and from electric powertrain development services, the Model S became the primary contributor to revenue beginning in the fourth quarter of 2012. For the year ended 2012, total revenues for the company were $413 million, which was composed of $386 million in automotive sales (93 percent of total revenues) and $28 million in development services (7 percent of total revenues).
- Fall '14
- Tesla Motors, Tesla Roadster, Electric car, Electric vehicle, Plug-in hybrid