BUSS1000 Study Guide - Midterm Guide: Creating Shared Value, Magna International, Sustainable Transport
23 Jun 2018
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TESLA AUSTRALIA CASE STUDY
Founded in 2003, Tesla is an American-based public company that specialises mainly in electric vehicles but has also
moved to manufacturing energy storage and solar panel solutions.
The company’s mission is “is to accelerate the world’s transition to sustainable energy through increasingly
affordable electric vehicles in addition to renewable energy generation and storage.” This coincides with their vision
to “stop relying on fossil fuels and move towards a zero-emission future.” ("About Tesla | Tesla Australia", 2018)
Their first automotive innovation, the Tesla Model S was the world’s first premium all-electric sedan, followed by
Model X, 3 and the Roadster. Along with their product expansion, Elon Musk’s high-volume production plan to
increase to a rate of 500,000 vehicles a year by 2018, aligns with TESLA’S mission to “accelerate” their world’s
transition to a zero-emission future. ("About Tesla | Tesla Australia", 2018)
Their recent addition of energy generation and storage solutions to their mission statement as of 2016, clearly
exemplifies Tesla’s drive to achieve their vision of a zero-emission future by not limiting to just cars but other
sustainable energy innovations.
To support their high-volume production of Tesla’s automotive and energy products is Gigafactory- “a facility
designed to significantly reduce battery cell costs and, by 2018, produce more lithium-ion batteries annually than
were produced worldwide in 2013.” ("About Tesla | Tesla Australia", 2018) Their aim is by increasing production,
Tesla’s cost of battery cells will significantly decline through economies of scale, allowing Tesla to produce clean
energy products that are available to individuals of various socioeconomic classes thus maximising the impact on
transitioning the world to sustainable energy.
To successfully penetrate the high-risk entry of Australia’s electric vehicle industry, Tesla Motors should further
employ strategies and tactics that will specifically cater to the Australian consumer market. The following report will
analyse the current operating environment of Tesla Motors Australia and provide a detailed discussion on
opportunities for business growth.
VALUE NET ANALYSIS
1
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A critical examination of Tesla Motors Australia through the Value Net Analysis framework, pushes the company to
develop a allocentric mindset by understanding the key relationships that drive the company’s ability to succeed
sustainably.
Customers and Suppliers
Tesla Motors has released 4 car models to the Australian market: Model S, Model X, Model 3 and the Roadster,
allowing us to understand Tesla’s primary customer market:
1. Customers wishing to save on fossil fuel costs in the long run
2. Middle-high income earners.
Although this has sought high appeal in overseas markets, Electric Vehicle Council Australia has observed “electric
vehicle sales fell 23% from 2015 to 2016” where this “decline may be linked in part to the limited number of lower
priced models available” (Electric Vehicle Council, 2018,p.5)
Thus to gain a wider market reach in Australia, it is encouraged that Tesla also include the average income consumer
into their target market segment. Although the Tesla Model 3 does present a more affordable alternative, Tesla
should cut down costs in the production process to set a more affordable selling price yet still maintain its luxurious
features that set its brand apart as the innovator. However, the competition between Australian consumers wanting
cheaper electric vehicles and suppliers raising prices to meet quality specifications and high pressure deadlines,
impedes Tesla from starting this approach.
Approximately 40% of the Tesla’s suppliers are located in the United States, and about 30% are located in
Switzerland, Japan and China. ("Craig", 2016). Its main suppliers are:
Panasonic: manufactures a variety of products that include electronic components, semiconductors, batteries,
chargers
Magna International: diversified automotive parts manufacturer and supplier based
AK Steel Holding Corporation: focused on steel production as well as electrical steel products.
Although Tesla maintains a strong global network, the lack of local Australian suppliers for Tesla Motors Australia
could see overseas suppliers charging heavily due to extensive importing processes and its need to adapt to
Australian vehicle standards. Tesla should be open to the opportunity to collaborate with a group of EV companies
and build a local network of suppliers that can supply standardised parts of the production process among all electric
companies in Australia. This will mediate the conflicting needs of customers and suppliers by minimising production
costs and increasing supply chain efficiencies.
COMPETITORS AND COMPLEMENTORS
Once having a strategic partnership with Tesla Motors, Daimler now is seen as Tesla’s biggest rival in the Australian
EV industry, where the Mercedes EQ C SUV is seen as a direct alternative to Tesla Model X and the Jaguar iPace,
starting at a base price of has seen “more than two-dozen tech savvy Australian buyers had already begun placing
orders before the production car or pricing.”( Scrimshaw,2018 cited in Dowling, 2018)
“Of the 1.1 million new cars Australians purchased in 2015, only 0.1 per cent of new vehicles sales were EV. It is
observed that 26.4% of Victorian respondents would be willing more for an electric car if more infrastructure was in
place.” (Electric Vehicle Council, 2018,pg.5)
Instead of limiting the current development of a network of proprietary ‘Supercharger’ fast-charging stations to only
Tesla owners, all EV companies can work to standardise a majority of charging stations around the nation. Tesla and
its competitors can partner with complementors such as Shopping centres and large retail stores (Woolworths, Coles
2
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Document Summary
Founded in 2003, tesla is an american-based public company that specialises mainly in electric vehicles but has also moved to manufacturing energy storage and solar panel solutions. Their first automotive innovation, the tesla model s was the world"s first premium all-electric sedan, followed by. Their recent addition of energy generation and storage solutions to their mission statement as of 2016, clearly exemplifies tesla"s drive to achieve their vision of a zero-emission future by not limiting to just cars but other sustainable energy innovations. Tesla"s cost of battery cells will significantly decline through economies of scale, allowing tesla to produce clean energy products that are available to individuals of various socioeconomic classes thus maximising the impact on transitioning the world to sustainable energy. To successfully penetrate the high-risk entry of australia"s electric vehicle industry, tesla motors should further employ strategies and tactics that will specifically cater to the australian consumer market.
