Tesla Market Entring Strategy

Team N – Group Discussion –

Tesla Question No-3

Tesla Market Entry Strategy

• It not only launched a high premium and margin products but also disrupted the

market by combining style, efficiency and acceleration in its electric car.

• It sets up company owned store and service centre model in place of traditional

franchise dealership model to distribute its electric car, a strategy aimed at

maintaining exclusivity of its cars and improving customer buyers experience.

• Its automobile catered to niche market, a segment targeted to the more financially

privileged class of people, with a view to venture into lower mass car production

segment at later stage.

Barriers Tesla must overcome are as follows.

• It must dispel the preconceived notion that customer has in mind because a large base of customer still believes that electric cars are inferior to gasoline driven cars.
• It has invested huge capital expenditure and not been successful to drive down its production cost, significantly impacting its ability to benefit from the economies of scale. For Tesla, maintaining profitability and achieving high productivity are key challenges to sustaining innovation.
• Electric cars still account for less than one percent of total cars sold in US. Therefore, it must address all technological and convenience issues to compel and make it easier for customers to try and adopt eco-friendly electric cars on a large scale.

Things Nissan can learn from Tesla’s approach

• It can create a separate brand that can differentiate its electric car segment from traditional car segment ‘and that does not cannibalize its existing product line.
• Nissan does not need to copy the vision of Elon’s Musk because you cannot separate the brand Tesla from Elon Musk. It is difficult for Nissan to replicate the same business model at the expense of hurting the entire business prospects.
• There is an increased focus towards Eco-friendly vehicle and it must finds its own way of delivering a unique value proposition to customers.

How easy is it for others company to follow in Tesla footstep’s?

• It would be easy for incumbent players to allocate substantial resources to the

development of an electric vehicle if electronic car segment becomes profitable and customers start viewing electronic vehicle as a substitute for gasoline driven cars.

• If Tesla decides to go out of niche market, try to venture in to mass market, and start producing cheap electric cars, competitors can partner with other companies, utilize the existing large production facilities to gain an upper hand on it.