Tesla''s Potential Market Expansion in India - Plan

1. Tesla Motors’
Potential
Market
Expansion
in INDIA
Ha Thi Thu Ngo
Digant Bamb
Shreyans Jain
Prateek Dhariwal
Puneet Kaur
Chief Strategy
Officers:

2. Who
are we?
 Tesla was founded in 2003, California, USA
by Elon Musk and Martin Eberhard
 Design, manufacturers and sells electric cars and vehicle powertrain
components
 Tesla is positioned as a high-end green electrical car’s company in a luxury
market
 Gained widespread attention after launching first fully electric sport cars-
The Tesla Roadster in February 2008

3. Our Top
Markets

4. Competitors

5. Core
competencie
s
Newly categorized products
Generate self-reinforcing enthusiasm for the brand
Create and utilize cutting edge, sustainable technology

6. Global
Expansion
Gain a more global presence and business growth
A hit demand of Model 3 in global markets
Reduce transportation and production costs worldwide
Supercharger network need to double in size worldwide

7. Value Chain

8. Countries
Examined
INDIA SOUTH AFRICA VIETNAM

9. INDIA VIETNAM SOUTH AFRICA
Political
• Make in India
• 100% FDI in industry
• Assisting use of vehicles
propelled by alternate
energy sources.
• Govt. supporting NATRIP
(National Automotive Testing & R&D
infrastructure projects) for growth
of Auto industry in India.
• Receptive attitude
towards
welcoming FDI
• Political risk
mitigated using
local partners
• Stable political
environment
• Govt. support to
export market
PESTEL ANALYSIS

10. INDIA VIETNAM SOUTH AFRICA
Economic
• Growing at a healthy GDP
rate of 7.9%.
• Increasing domestic sales.
• Manufacturing sector
growing at 8-10 %
• One of the fastest
growing economy
(5.4% GDP
Growth)
• Low disposable
income
• Weak currency
• Largest economy
in Africa.
• Low GDP growth
rate of 2%
• High
unemployment,
growing public
debt, income
inequality.
PESTEL ANALYSIS

11. INDIA VIETNAM SOUTH AFRICA
Socio-
Cultural
• Preference for fuel efficient
car with good looks.
• Household living standards
improving year over year.
• Lower labor costs
• Primary
Language- English
• High Literacy Rate
(94.5%)
• Low labor cost
• Current
population not
very high.
• High literacy rate.
• Low number of
labors
PESTEL ANALYSIS

12. INDIA VIETNAM SOUTH AFRICA
Technology
• Great emphasis on R&D
• Presence of advanced tech
because of global entrants for
product as well as production.
• Evolution of hybrid cars in the
recent years.
• Technology sector
in early
development
stage
• Lack of knowledge
• Dependent on
external expertise
• Leaders in
technology
related to energy
and fuel.
• World renounced
quality and
research
PESTEL ANALYSIS

13. INDIA VIETNAM SOUTH AFRICA
Environmental
• Improving physical
conditions of roads and
bridges.
• Most companies switching
to Bio Fuel.
• Poor
transportation
links
• Extreme weather
conditions
• Very strict
environment
protection laws.
• Should comply
with Consultative
National
Environment
Policy Process
(CONNEPP).
• Stricter laws
PESTEL ANALYSIS

14. INDIA VIETNAM SOUTH AFRICA
Legal
• Indian legal standards and
norms at par with
international standards.
• Motor Vehicle Act, 1988
governing emissions and
safety.
• Progressive laws
for FDI
• Govt. has
dominance in
influencing
judiciary
outcomes.
• Extreme water
conservation
practice.
• High level of
corruption.
PESTEL ANALYSIS

15. PORTER’S DIAMOND MODEL OF NATIONA
:

16. Demand Factors
 People is a great demand factor for the electric cars.
Example- switching to the use of environment friendly
products ODD-EVEN rule in Delhi, India.
 The high population and improving roads and highways will
also support the demand for automobiles in India.
PORTER’S DIAMOND MODEL OF NATIONA

17. Factor Conditions
 With the Make in India initiative and also
the employment for all initiative, the
government would help them in their
initialization.
 Inexpensive and skilled labor.
 Firmly established testing and R&D facilities.
PORTER’S DIAMOND MODEL OF NATIONA

18. PORTER’S DIAMOND MODEL OF NATIONA

19. Firm Strategy, Structure & Rivalry
 Electric Cars manufactured would be a
differentiating factor in the present Automobile
industry.
 Rivals – a number of automobile industries are
currently present in India like BMW, Mercedes,
Chevrolet, Honda, Toyota, Tata Motors.
PORTER’S DIAMOND MODEL OF NATIONA

20. Government’s Role (As a catalyst)
 The Indian government is committed to encouraging alternate pollution-free
transport in the country by providing incentives to bio-fuel, CNG, ethanol and
electric vehicles. It offer incentives to bio-fuel, CNG, ethanol and electric
vehicles.
 Vision 2030: To become 100% e-vehicle nation
PORTER’S DIAMOND MODEL OF NATIONA

21. Multiple
Regression
Analysis
“Intention to Purchase Electric Cars
in India- A Study”
Study by: Khandelwal U (2016)
Major
Factors
Impacting
Purchase
Intention

22. Corporate
Strategies

23. Porter’s 5
forces
Rivalry
among
existing
firms
Threats
from New
Entrants
Bargaining
Power of
Suppliers
Threat of
Substitute
products
or services
Bargaining
Power of
Buyers
Moderate
Low
Moderate
Low
High

24. Mode of
EntryRisk
Time Commitment & Control
Low
Low
High
High Joint Venture:
 Efficient Market Entry
 Risk / Reward Sharing
 Joint Product Development
 Enables to achieve marketing or
manufacturing presence with local partner in
a new market
 Comparatively Higher Risk, Higher Returns
Importing in India :
an expensive
option!
125% Import Tax
Setting up an assembly facility can boost
domestic demand by bypassing the problem
of import duties and make Tesla more
competitive on price-basis

25. Mode of
Entry
Joint Venture is the way!
 Institutional voids exist within India resulting
in inefficient markets for acquisition of
resources, Tesla must choose between an
acquisition mode of entry and a JV.
 Foreign entrants can gain access of local
resources held by local firms via JVs.
In this case, a JV is a more attractive option
Institutional Framework
Weak Strong
Local
Resources
Required
None Greenfield Greenfield
Tangible JV Greenfield/JV
Intangible JV Acquisition
Institutional cum Resource based Framework (KE Meyer et al)

26. Risk
Mitigatio
n Potential Risks in India How the risks will be mitigated
Infrastructure to support enough “charging
stations”
Government Support (Subsidize duty on
lithium imports, battery manufacturing costs)
Market Perception of Electric Cars in India
(Previous failures of Mahindra Reva, E2O)
Lot of advertising and performance & reliability
reviews to be shown on different media
Premium Price of the Tesla Car ₹ 18-24 Lakhs. Position it for the luxury car
segment
Culture –
“Culture eats Strategy for Breakfast”
(Peter Drucker)
Localization Strategy has to be adopted in
coordination with the local partner
Power Shortage – A massive risk! Tesla Plan to build a India-wide Supercharger
network in collaboration with the Govt –
PPP Model
Currency Risks – Appreciation of USD can
have negative implications on production &
assembly costs
Hedging foreign exchange risk by buying a spot
contract. Negative swing won’t hurt much.

27. Strategic Locations
for Setup
 Well established automotive industry
 Sea-port : Easy Accessibility
 Extremely Skilful labour
Drawback:
 High Power shortage!
Kaveri dispute (Karnataka Vs Tamil Nadu)
Option 1 : Chennai, Tamil Nadu

28. Strategic Locations
for Setup  The new Global auto hub!
Proximity to the port
 Good governance & incentives for Foreign
investors
 Abundant power supplies
 PM’s vision to make Gujarat a large scale, low
cost manufacturing and exports hub
 Easy availability of land
Drawbacks:
 Skilled labour shortage
 Quality of labour
Option 2 : Sanand, Gujarat

29. Strategic Locations
for Setup
 Proximity to the Capital of India – New Delhi
(One Of the major potential markets within
India)
 NH8 Highway that links major cities
 International Centre for Automotive
Technology set up in Manesar
Drawbacks:
 Stagnant growth
Option 3 : Manesar, Haryana

30. Strategy to Capture
the Indian market“Electric car market in India hasn’t seen much success.
But it has humungous potential. History must not be repeated.
Hence, careful measures have to be taken.”
 Enter the market in strategic partnership with a local partner (JV)
 Establish a solar powered - super charger network in India in collaboration with the Indian
Government by 2018-19 – PPP Model
 Set up lithium battery manufacturing units by 2018 to reduce massive import costs
(this can be used for household purposes too) and a fully automated
car-production facility at one of the strategic locations discussed by 2020.
This will facilitate domestic production as well as exports targeted to the Asia region.
 Localize the brand using marketing strategies with the assistance of the local partner
(Introduce only Tesla Model-3)
 Open showrooms in Tier-1 cities such as Delhi (No VAT, No Registration, No road tax,
15% subsidy on electric cars), Bangalore & Mumbai

31. Model 3
(Price : ₹ 18-24 Lakhs) – LUXURY CAR MARKET SEGMENT
Competitors: BMW 3-Series, Audi A4 and Mercedes Benz C Class
Features:
 The base model will accelerate from zero to 60mph (97km/h) in less than
six seconds, other models will go faster.
 It will include the "autopilot" safety features found in existing models,
which allow the cars to steer themselves and avoid collisions.
 It will support "supercharging" as standard, allowing the cars to recharge
more quickly at special power stations. Tesla aims to double the number
of places offering supercharging to about 7,200 worldwide by the end of 2017.
 It provides storage room at the front and rear of the vehicle

32. Estimated Investment

33. THAN
K YOU
INDIA is ready to ditch
the pump
and
embrace the PLUG!