Electric Vehicle Industry Essay

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Strategy Development at Tesla Motors

The hybrid and all-electric vehicle market is growing rapidly, and some industry analysts suggest that the future of personal transportation is in the hands of these manufacturers. One company that is in the vanguard of this industry is Tesla Motors, named for famed inventor Nikolai Tesla. The purpose of this capstone project is to provide an industry analysis to develop a strategy for the CEO of Tesla Motors to help shape the company's future.

Review and Analysis

Define strategy and examine how the definition of strategy fits Tesla Motors and its situation

Although a number of different definitions have been advanced over the years, a useful definition in an organization context states that “strategy determines the direction and scope of an organization over the long term, and it should determine how resources should be configured to meet the needs of markets and stakeholders” (Three levels of strategy, 2018, para. 4). Applied to Tesla Motors (hereinafter alternatively “Tesla” or “the company”), this definition of strategy refers to the manner in which the company intends to achieve its corporate objectives over the short- and long-term and how it will allocate the organizational resources needed for these purposes. This definition is also congruent with the strategic approach that the company has used over the past decade as discussed further below.

Summary of the main strategies that Tesla's management took leading up to this company's recent development

Since the company’s founding in 2008, Tesla has used a luxury marketing strategy that has focused on the most affluent consumers who are interested in cutting-edge technologies that have the potential to replace fossil fuels. In this regard, Uggla (2016) reports that, “In general, a luxury brand has a deeper and richer extended brand identity as compared to more mundane brands.

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It also has a more subtle brand personality and stronger brand credibility and brand integrity” (p. 35). Although the company has most recently focused on developing all-electric vehicles to the exclusive of hybrids, its strategy remains focused on a luxury marketing strategy that appeals to its target market. This approach has also been used in varying degrees by the company’s main competitors as discussed below.

Identification of Tesla Motors’ industry and its main competitors and their respective strategies

While a number of major vehicle manufacturers are either planning on introducing their own hybrid or all-electric vehicles or have already done so, Tesla Motors’ current major competitors include those set forth in Table 1 below which lists their corresponding corporate strategies.

Table 1

Tesla Motors’ major competitors and their respective strategies

Competitor

Description of strategies

Effectiveness of strategy

Ford Motor Company

Transition from existing internal combustion engines to hybrid or all-electric by 2022, including 40 all-electric vehicles as well as some mid-range priced vehicle models (Carey & White, 2018).

This strategy requires the reallocation of scarce organizational resources away from Ford’s existing models which will likely erode consumer confidence and their marketability until the new product launches.

General Motors

Focus on low-cost, flexible vehicle designs with proven efficiency with high volume production in China to appeal to mid- and upper-end consumers (Lienert & White, 2018).

These strategies will help reduce the price of ell-electric vehicles but their point of origin may become a politically charged region in the foreseeable future, disrupting both manufacturing and marketing planning.

Honda Motor Company

Development of an affordable all-electric vehicle by early 2019 by drawing on its current Urban EV Concept (Honda Urban EV Concept, 2018).….....

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References

About us. (2018). Tesla Motors. Retrieved from https://www.tesla.com/about.

Carey, N. & White, J. (2018, January 14). Ford plans $11 billion investment, 40 electrified vehicles by 2022. Reuters. Retrieved from https://www.reuters.com/article/us-autoshow-detroit-ford-motor/ford-plans-11-billion-investment-40-electrified-vehicles-by-2022-idUSKBN1F30YZ.

Honda Urban EV Concept. (2018). Honda Motors. Retrieved from http://world.honda. com/Electric-Vehicle/.

LeSage, J. (2017, December 23). Electric vehicles: Toyota could become Tesla’s next big headache. USA Today. Retrieved from
https://www.usatoday.com/story/money/ energy/2017/12/23/electric-vehicles-toyota-could-become-teslas-next-big-headache/977877001/.

Lienert, P. & White, J. (2018, January 9). GM races to build a formula for profitable electric cars. Reuters. Retrieved from https://www.reuters.com/article/us-gm-electric-insight/gm-races-to-build-a-formula-for-profitable-electric-cars-idUSKBN1EY0GG.

The history of the electric car. (2018). U.S. Department of Energy. Retrieved from https://www.energy.gov/articles/history-electric-car

Three levels of strategy. (2018). MindTools. Retrieved from https://www.mindtools. com/pages/article/what-is-strategy.htm.

Todd, J. & Thorstensen, L. (2013). Creating the clean energy economy: Analysis of the electric vehicle industry. New York: International Economic Development Council.

Uggla, H. (2016, March). Leveraging luxury brands: Prevailing trends and research challenges. IUP Journal of Brand Management, 13(1), 34-39.

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