theories, leading them to develop the direct sale approach thus cutting out the middle man to
provide their customers with savings. While most people associate a higher price with a higher
quality Tesla’s goal is to build a car cost effectively and come in price of under $35,000 with a
$7,500 Federally mandated incentive for buying an electric car. Tesla understands that in order to
flourish in a highly competitive industry, the cost of ownership needs to come down and the
information needs reflect the quality.
Tesla sees their survival to be, leading the way in innovation when it comes to the
development of a fully electric car. They determined the demand for the model 3 off of the
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growing EV/Hybrid market. They seek to maximizes their profits by offering more than their
competitors with the expansions of supercharger stations. The profits they have earned on
previous models have been put back into the company to allow them to develop an even more
affordable car. Tesla has conducted an extensive survey that consisted of 29 questions that
spanned from gender, demographics, money spent on gas, current vehicle, and if they see
purchasing an electric car as a good investment. Based off the results they found that brand
image is very important to consumers. This survey also allowed Tesla to determine the target
market interested most in an electric vehicle and plan for potential drawbacks that might be
associated with the purchase of an electric car.
Changes Group 4 Would Make in the Pricing of the Tesla Model 3
When it comes to selling any product one of the most important aspect is pricing. There is
a lot of things that go in to the pricing process of an item and the pricing for Tesla Model 3 is no
exception. The Model 3 is said to cost less than their competitors, in order to break in to the
mass-production market. According to the text Marketing Management, there are 5 major
objectives to consider when determining pricing; “they are survival, maximum current profit,
maximum market share, maximum market skimming, and product-quality leadership” (Kotler, P.,
& Kellar, K., p.469, 2012).
Some of the known competitors of the Tesla Model 3 are, “General Motors, Nissan,
BMW, Renault, BYD, Hyundai, and Volkswagen” (Winton, N., 2016). In order to compete
against these competitors Tesla is pricing the Model 3 at a “cost $35,000 before tax incentives”
and “priced with options would cost $42,000” (Branman, M. and Hard, A., 2016). If there were
any changes that could be made on the pricing for the Model 3, we believe that it should be to
the base price; it should not depend on the tax incentive to lower price. The base price should be
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at $28,000, and the price with the options should be no more than $38,000. This is because the
pricing of their competitors vary from “$31,000 for the BYD e6” to “$42,000 for the BMW M3”
(Winton, N., 2016).
