Tesla in Automotive industry Strategy project
Table of contents
1. Introduction 3
2. Market definition 5
3. Industry attractiveness and profitability 5
4.Tesla in the market 9
4. Sustainability of the competitive advantage 11
1.1 Trends in the automotive industry 11
1.2 The isolating mechanisms 12
1.3 Strategy recommendations 13
5.Conclusion 14
6.Bibliography 14
1. Introduction
The Encyclopaedia Brittanica defined the automotive industry as all the companies and activities involved in the manufacturing of motor vehicles, including most components, such as bodies and engines; but excluding tires, batteries and fuel1. The automotive industry started with the production of what is widely considered to be the first ever automobile, the Benz Patent-Motorwagen in 1886. Although the first car was originally manufactured in Germany, in the many decades to come, the United States led the world in total automobile production until the start of the 21st century, when China took the top position. Today, China produces nearly 20 million units per year, almost double the amount of the United States. It is one of the world’s most important sectors when measured by revenue and it is a business that is still growing significantly. Last year for example, over 87 million automobiles were produced worldwide, a 3.6% increase compared to the year before and a 43.82% increase compared to 20032. Needless to say, the automotive industry is big business and it is very probable there are business opportunities that are yet to be exploited.
Tesla Motors is an American car manufacturer that tried to exploit such a business opportunity. It’s an American company that designs and manufactures electric vehicles and electric car components3. Founded in 2003, Tesla’s goal was to lessen the world’s dependence on petroleum-based transportation and drive down the cost of electric vehicles. Moreover, Tesla’s aim is to prove that electric vehicles can be awesome as well4. This might not sound particularly unique, but Tesla
1. Introduction 3
2. Market definition 5
3. Industry attractiveness and profitability 5
4.Tesla in the market 9
4. Sustainability of the competitive advantage 11
1.1 Trends in the automotive industry 11
1.2 The isolating mechanisms 12
1.3 Strategy recommendations 13
5.Conclusion 14
6.Bibliography 14
1. Introduction
The Encyclopaedia Brittanica defined the automotive industry as all the companies and activities involved in the manufacturing of motor vehicles, including most components, such as bodies and engines; but excluding tires, batteries and fuel1. The automotive industry started with the production of what is widely considered to be the first ever automobile, the Benz Patent-Motorwagen in 1886. Although the first car was originally manufactured in Germany, in the many decades to come, the United States led the world in total automobile production until the start of the 21st century, when China took the top position. Today, China produces nearly 20 million units per year, almost double the amount of the United States. It is one of the world’s most important sectors when measured by revenue and it is a business that is still growing significantly. Last year for example, over 87 million automobiles were produced worldwide, a 3.6% increase compared to the year before and a 43.82% increase compared to 20032. Needless to say, the automotive industry is big business and it is very probable there are business opportunities that are yet to be exploited.
Tesla Motors is an American car manufacturer that tried to exploit such a business opportunity. It’s an American company that designs and manufactures electric vehicles and electric car components3. Founded in 2003, Tesla’s goal was to lessen the world’s dependence on petroleum-based transportation and drive down the cost of electric vehicles. Moreover, Tesla’s aim is to prove that electric vehicles can be awesome as well4. This might not sound particularly unique, but Tesla