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1. TESLA Report
-A Rare Success Story in EV Industry
By Nishat
2014.03.25
해외영업팀 1

2.  Contents
Executive Summary
Company Overview
Financial Review
Corporate Strategy
Business Overview
Strategic Positioning
Business Growth Strategies
Model & Expansion Plans
Partnership
Success Factor of Tesla
Daesung Scope and Conclusion

3.  Executive Summary
Upside
 Earns profit
 Able to sell their cars directly to customers in more states allowing
for greater exposure
 Mercedes-Benz B-Class and Toyota RAV4 are of high demand so
Daimler and Toyota contract more with Tesla
 Exceeds 22% gross margin and 20,000 unit sales (2013)
 Creates strategic partnership with new company
 Sales overseas exceed expectations
 Consistent stable growth and decreasing margins
 Record new Model S reservations (launched in 2013)
 Plans to open 15 to 20 more stores and galleries this year with
about half the openings in Europe and Asia
 Plans to expand superchargers coverage on the U.S. West and East
Coasts and around the rest of the country
Downside
 Daimler and Toyota are unhappy with Tesla service
and product
 Courts rule against Tesla being able to sell cars
directly to customers
 Material problems with Model S or Model S
supply chain
 Majority of customers using finance option return
car after three years
 Material problems with Toyota RAV4 or Mercedes-
Benz B-Class

4.  Company Overview
 Founded :2003
 Founder :Elon Mask
 Owners :Elon Musk (27%), Toyota Group (0.27%), Daimler AG (0.14%)
 HQ :Palo Alto, California, USA
 Products :
1st Generation - Tesla Roadster (Sports car)
2nd Generation –
•Tesla Model S(2013) – most awarded car of 2013 (Luxury Sedan)
•Tesla Model X (2014) (Cross over vehicle)
3rd Generation (~2016)
EV Car Manf.
 Revenue :US$ 2.013 billion (2013)
 Employees :6000 (Jan 2014)
 Partnership :Lotus, Panasonic, Borge Warner, Dana Holding Corp, Toyota, Daimler AG, Freightliner
 Vision :To sell 500,000 units in 2020
 Website :www.teslamotors.com

5.  Financial Review
 Financial performance (Year ended dec, 2013)
Y/Y Sales 5 Times Higher
In thousands USD
Dec, 2013 Dec, 2012 Y/y
Automotive Sales $ 1,997,786 $ 385,699 5.18 folds
Operating expenses 517,545 424,350 21% Up
thereof: research & development 231,976 273,978 15% Down
thereof: selling, general & admi
nistrative
285,569 150,372 89.9% Up
Loss before income taxes (71,426) (396,077) 81.96% Down
Net loss (74,014) (396,213) 81.3% Down
Source: Tesla Motors SEC Filings (FORM 10-Q)
Automotive sales for the year ended Dec,2013 were $2 billion
R&D expenses decreased due to the significant development, prototyping and testing expenses related to
the Model S launch in 2012, partially offset by an increase in similar costs in 2013 for Model X and other
programs.
Gross margin 22% (where the total revenues were $2.1 bill & gross profit $456 mill)

6.  Corporate Strategy
Starting from High End to Reach to Low End
Strategy
“The starting point is a high performance sports car, but the long term vision is to build cars of all kinds,
including low cost family vehicle”
 1st Step: To introduce “Roadster” model to the market & establish a keystone for Evs (already
accomplished by 2011)
2nd Step: In continuation, in 2012 the new “Model S” was introduced to the market to target to middle to
upper-middle class consumers
3rd Step: Finally, by 2014 Tesla plans to produce and market a new model named “Model X”
Low End (Mass market)
High End
Mid to High-mid

7.  Business Overview
Silicon Valley Based Company
Designs, manufactures & sells EV & EV power train components by their own
Two separate business segments
 Automotive sales
• 90% of the firm revenue
• Two sub division – Vehicle, options and related sales & Powertrain
component and related sales
 Development services
• Develop electric powertrain systems for other automobile manufacturer.
• Existing partnership with Toyota & Daimler

8.  Strategic Positioning
Competitive Advantage:
 Direct-to-customer sales, stores & service centers:
EV High End Manf. & Dealer
•Unlike other OEMs, Sells its cars to customers through its stores which it fully
owns and operates (similar like apple’s marketing strategy)
•Can achieve operating efficiencies as well as capture sales & services
revenues that typical automobile manf do not
 Innovative consumer financing options:
•Combination of lease+loan: 5.5 year loan for around $500-$600 per month
and is allowed to return the car after 3yrs with 43% residual value.
Tech Innovations:
•CEO, Elon Musk is an extremely inventor & will be able to keep Tesla current
& competitive

9.  Business Growth Strategies
Affordability, Global Expansion &
Continuous Innovation
Product offering, making its product more affordable, creating more attractive
products and expanding globally.

10.  Model & Expansion Plans To Reach Target Sales to 500k in 2020
Years Global Sales Launch & Sales Models Description
2013 22,000 Selling Model S first production model developed from
scratch to take full advantage of electric
vehicle architecture.
2014 40,000 Launching Model S, Starting sales in China
2015 80,000 To launch Model X Seven-Seater Crossover based on the Mo
del S is an all-wheel drive model powered
by two motors
2016 ~ 2017 250,000 To launch Gen III sedan Compact sedan, half price of Model S
2020 500,000 To launch Gen III crossover in 2018 Tesla Motors plans to develop a
crossover that will compete with the BMW
X3 and Audi Q5.
Issues to address
When the annual sales exceed 200k units, Tesla Motors will need to outgrow of its presence as a manufacturer in
a niche market.
Will face new challenges including production, sales, service and maintenance, charging infrastructure and used
car sales.
Will find itself in direct confrontation with established luxury car brands
Major automakers may launch EVs with high market appeal

11.  Partnership
3 types: Suppliers, R&D alliances, OEM alliances with other automotive manufacturers
For Business Growth
Strategic Alliance Partner
(Location)
Types Equity/Non-Equity or JV
alliance
Products/Services Provided
Sotira (France) Supplier Non-Equity Mfg. carbon fiver & sends it to Lotus in U.K.
Lotus (U.K) Supplier Non-Equity Build unique chassis and sends it to Tesla in
Menlo Park, CA.
Panasonic, multiple
suppliers (Japan)
Supplier Equity Battery cells for Tesla’s battery pack
Borge Warner (U.S.) Supplier Non-Equity Single-speed gearbox
Panasonic (Japan) R&D Equity Battery cell R&D; working on developing
nickel-based li-ion battery cells
Dana Holding Corp.
(Canada & U.S.)
R&D Non-Equity Heat kills batteris. Designed heat-exchange
technology to keep batteries operating at
peak efficiency using Tesla’s climate control
system
Daimler (Germany) OEM for other
auto mfg.
Equity Daimler integrates Tesla’s battery packs and
charging electronics into Smart Fortwo
development
Freightliner (owned by
Daimler); Toyota; and
Others
OEM for other
auto mfg.
Equity Develop electric vehicles, power train
components, battery packs, charges, parts
and production systems and engineering
support
Toyota OEM for other
auto mfg.
Equity Develop electric version of Toyota’s Rav4
SUV in Tesla’s new Los Angeles, CA.
manufacturing plant (former GM-Toyota
manufacturing plant); production and sales
begins in 2012.
US Government-DOE Loans Loans to accelerate production of affordable,
fuel-efficient vehicles

12.  Partnership with Panasonic R&D Collaboration(Battery Pack)
Highlights
Battery pack is probably the most important component of an EV, especially for Tesla Motors whose battery
packs are one of its main core innovations
2009 – entered into supply agreement
2010 – Panasonic invested $30 million in Tesla Motors to strengthen the partnership
2011
-made a supply agreement for automotive grade Li ion battery cells
-Used in Tesla’s Model S and met Tesla’s margin and cost targets for Model S
 Later established an agreement of R & D collaboration for the developing of next-generation automotive-grade
battery cells
-based on nickel chemistry and it is specifically optimized for EVs

13.  Partnership with Daimler Electric Drive & Battery Systems
Highlights
2009 – Daimler AG acquired a 10% equity stake of Tesla Motors by investing $50 million
Scope
- Cooperation for developing of electric drive and battery systems as well as in individual vehicle projects
- Integration of li-ion battery packs and charging electronic from Tesla Motors into Daimler’s smart two-seater
city car
2011 – alliance with Daimler affiliate – Freightliner. The purpose is to develop Tesla Motor’s battery back to
Freightliner’s electric delivery van
 Partnership with Toyota Production Systems & R&D support
Highlights
2010 – Toyota acquired 3% equity stake of Tesla Motors by investing $50 million
Tesla >Toyota
-Create a plug-in EV (electric version of Toyota’s current model RaV4)
-Develop electric power train for RaV4
Toyota > Tesla
- Engineering and production expertise for its Model S
- Secure manufacturing facility in California for Model S
-

14.  Success Factor of TESLA Strategic Alliances Wise
Strategic portfolio of alliances : Suppliers, R&D, OEMs and Government Loans/Alliances
New techs availability
Filled-up the missing parts

15.  Success Factor of TESLA Marketing-Wise
Remarkable Digital Business Model(Website)
E-Commerce Best Practices:
-Tesla website is embedded with whole user experience (press testimonials and trust elements)
-Visible calls to action (knows exactly what it wants you to do, Audi’s case is unclear)
-Order can be placed in three steps (Audi’s case, one can only place a quote or call local dealer)
Configuration
-Excellence user interface for configuring your own car (very cleared steps, in Audi’s case users get frustrated)
Test Driving
-Tesla serves this very well (clearly visible steps on webpage, for Audi’s case, someone needs to search for
local dealer)
>for users already experienced driving this car (Place order)
>for users not yet have test driven (Test Drive)
Conclusion
-Remarkable digital business model for selling cars
-Skipping dealers made their selling process (no embedded CRM,ERP and so on) easy, controlled and
innovative
Source: webrepublic

16.  Success Factor of TESLA Marketing-Wise
Better Customer Experience(Stores)
Store Front
-Transparent and inviting
-Affluent, high-traffic locations
Interior
-Technology that informs customers
-”Product Specialists” to answer questions
-Display vehicles open for customers to sit it
Test Drive cars
-Conveniently located parking area for test-drives and Tesla Vehicle
Charging
Conclusion
-Engaged, Excite & Inform (similar like Apple marketing strategy)
Source: Presentation for Investor by TESLA

17.  Success Factor of TESLA Tech-Wise
Flat Battery Packing
Battery Tech-Competitive advantage over competitors:
-Bigger Storage Capacity:
>A flat slab that sits between the wheels and serves as part of the vehicle’s frame. This gives Tesla more
storage capacity (front and back)
-Less Manufacturing Cost & Higher Durable
>Applied cylindrical cells for the laptop industry (economies of scale) by which Tesla reduced
manufacturing cost
>This shape gives natural honeycomb structure which is very durable
-Safer
>Liquid cooling system that snakes between the cells and can remove heat quickly (i.e., problem with one
cell doesn’t spread to others)
Fig: The battery pack in the Model S is flat and part of the frame that supports the car
– the metal case provides structure support.
Source: MIT Tech review news
>Flat cells will deform in a collision & possibly
catch fire. Tesla has passed crash tests without its
cell deforming or coolant leaking

18.  Success Factor of TESLA Tech-Wise
Comparison Factors
Source: Presentation for Investor by TESLA

19.  Daesung Scope & Conclusion Only EV Products
Tesla will form partnership with Chinese automaker and start local production. (15%
reduced cost for S-model)
-Daesung can supply EV parts from it’s China plants at local prices
Tesla is entering in mass market with low-end EV cars
-Suppliers with localized products would be competitive. Daesung EV products
would be competitive for China market.
Tesla’s current battery tech is Li-ion
-Daesung’s battery pack would be compatible?
Daesung’s all EV products could be promotional to Tesla. But price competitiveness
would be an issue.