1. Ivana Tong ◊ Sid Shekhar ◊ Matt Tomlinson ◊ Haswiny Deva
Powering the Future
Tesla is a visionary and not a but the leader in EV development thus we are excited to join you in this journey of realizing Tesla’s dream-creating an affordable EV. You have been successful with the development and release of luxury Evs however, producing a mass-market EV is a different animal and we are here to provide what we believe is the best path to achieving this.
Ivana Tong ◊ Sid Shekhar ◊ Matt Tomlinson ◊ Haswiny Deva

2. What’s the Current Situation?
2017
500,000 Teslas on the road
2020
GOAL }
How will Tesla get here?
Issue:
Bring Gen III to mass market
Disruptor:
Financing
Solution:
Model S & X sales to fund Gen III
We began by understanding Tesla. Its goals a 2017 release of Gen III and in ,000 annual car sales-all audacious goals. But the issue is how will you get here? What is inhibiting Tesla? We came to conclude financing. You need a lot of capital for R&D, and production for Gen III. How might we achieve this necessary capital? By using Mr. Musk’s vision of using profits generated from Models S & X and in order to create the profit we want many initiatives will be undertaken to create the necessary infrastructure, technological capabilities, and consumers for this. Not only will these create profit to fund Gen III but they will help with adaption of Evs into society. All of these initiatives will lead to the end goal of Gen III on road in 2017.
Specifically we want to zoom in on our initiatives.
END
Gigafactory
Creating an environment
Building a market
International Expansion
Gen III
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

3. Product Capabilities and Innovation
Bring existing consumer base up to speed with company innovations while maximizing core internal competencies
Product Capabilities and Innovation
Giga-factory with a capability to produce multiple battery types
Push forward in battery innovation
Sell battery technology across industries
Consumers
Chinese consumer market
Converting consumers to the EV
Gen III for Gen Y
Competitively position our operations such that Tesla is the leading EV component manufacturer
Reinvest profits from sale of EV components in Gen 3 R&D and production
Expand upon Model S and Model X sales Internationally
Develop Battery Charging Station infrastructure in Europe and China
We are emphasizing on bringing current and potential customers up to speed with an EV lifestyle while continuing technological innovations as that’s Tesla’s core competency. To address this we have split the issue and recommendations into three sections: The first being product innovation where we focus on the Gigafactory and its added benefits. The second is focusing on the consumer market: tapping into China, converting consumers to the EV lifestyle, and specifically looking into Generation Y. The third is looking into the competitive landscape and positioning Tesla as not only the leader in Evs but as the leading EV component manufacturer. Matt will now be speaking about product innovation.
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

4. Converting Consumers to the EV
Benefits of Owning a Tesla
Time Benefits
- Carpool Lane
- No gas station visits
Cost Benefits
- Servicing
- Government incentives
- Fuel
Guaranteed Resale Value
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

5. Converting Consumers to the EV
Range
Anxiety
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

6. Converting Consumers to the EV
Our Recommendation: Leasing
Allowing consumers to “own” an EV without having to commit fully will increase confidence
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

7. Global Interest in the Electric Vehicle
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

8. Zooming in on China
The growing luxury market in China leads us to believe that it will receive Tesla’s luxury cars well.
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

9. TESLA Gen III Our Recommendation: Marketing to Generation Y
Generation Y is a good fit for the Generation III model.
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

10. The Gen III Model for Generation-Y
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

11. Generation Y is all for the EV
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

12. Generation Y is all for the EV
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

13. The U.S Auto Market
Key Takeaway–Tesla has an opportunity to capture much larger market share with cheaper Gen 3 model
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

14. Gen 3’s Main Competitors
Car
MSRP
2013 Mercedes Benz C Class
$35,350
2013 Audi A4
$32,500
2013 BMW 3-Series
$32,550
2013 Infinity G37
$32,850
2013 Acura TSX
$30,510
2016 Tesla Gen 3
$35,000
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

15. Gen 3 v. Current Electric Models
Car
MSRP
Range (per charge)
2013 Nissan Leaf SV
$31,280
73 miles
2013 Ford Focus Electric
$39,200
76 miles
2016 Tesla Gen 3
$35,000
200 miles
- Opportunity to achieve what porter calls the golden position – low cost leadership and differentiated products (with features such as range twice that of any existing IC or EV car) to raise customers willingness to pay.
Key Takeaway–Integrated cost leadership and differentiation opportunity with Gen 3
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

16. Recommendation Our Recommendation: Reinvest in production
Use revenues earned from sale of EV components in Gen 3 R&D and production.
Tesla’s Giga-factory is being constructed with the goal of reducing the cost of lithium-ion batteries by 30% in three years and 50% in 2020
For a standard 85 kW version of the Model S, average battery cost is $20,250 or $238/kWh
Provision of technology and components to both Toyota and Daimler for their electric vehicles
Diversify suppliers of battery cells (Panasonic is currently the only supplier.
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

17. Potential Risks
Potential for competitors to innovate and ‘catch up’ by 2017
Maintain distinctive competence of valuable human assets and intellectual capital
Panasonic is currently the primary supplier of battery cells
Giga-factory will mitigate risk as Tesla can manufacture own cells
Customer willingness to switch brands
Charging station network and brand positioning
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

18. Long term cost of ownership
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

19. Tesla’s Charging Network
U.S. Supercharger stations, 2015
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

20. Tesla’s Charging Network
Europe Supercharger stations, 2015
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

21. Tesla’s Charging Network
Chinese Supercharger stations, 2015
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

22. Recommendation
Our Recommendation: Focus on sales of Model S and X in Europe and Asia
Use charging station infrastructure as well as long-term cost savings to capture luxury car demand in China and Europe
Blue ocean advantage – high differentiation
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

23. Analysis of the Gigafactory
Increasing production
Lowering costs
Lowering flexibility
To reach the desired cost reduction of 30% from current lithium ion production, Musk is bringing all production of the batteries into the factory. Unlike others, this Gigafactory will build its batteries from the raw materials rather than simply assemble parts developed elsewhere. While this will offer Musk the ability to drag costs down enough to achieve his vision of a competitively-priced car for a wider consumer market, Tesla will also be tying itself to its current production. By investing too much capital into lithium ion battery production, Tesla risks losing the flexibility and adaptability that has enabled it to stay at the forefront of automobile innovation, while competitors have stagnated due to their huge facilities and engrained design and sales practices.
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

24. Competition in Battery Production
Lithium Air
IBM
Toyota VW
This risk is especially worrisome as the battery industry is currently innovating at 5-8% per year, with numerous companies and universities researching new battery technologies that, if successful, would completely revolutionize the battery industry.
One such technology is the Lithium Air Battery. We’ve provided a brief technical description of the technology in the handout, but essentially a Lithium Air Battery, if successfully built, will be lighter, smaller, faster-charging, and capable of taking a car hundreds of miles farther on a single charge. Many major competitors in the automaking industry as well as the tech industry are in the process of developing lithium-air batteries for cars, including Volkswagen, Toyota, and IBM. IBM specifically is scheduled to release a prototype of their battery this year, and has set a goal of 2020 for achieving commercial viability.
Higher energy density than lithium-ion batteries because they replace the heavy conventional compounds used in lithium-ion batteries with air
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

25. Expanding Batteries into Other Industries
While the Global Automotive Lithium-Ion Battery market is forecasted to reach $9.6 billion by 2015, the global market for Consumer Batteries is projected to reach $55.4 billion by With the completion of the Gigafactory, Tesla will have the capacity to produce more lithium-ion batteries than currently produced in the entire world. Thus, Tesla has a tremendous opportunity to leverage its competitive advantage in battery design across a variety of industries. We recommend specifically devoting attention to developing batteries for Utilities and Phones. Tesla has already engaged in talks with Apple to discuss collaborations. As a principal battery supplier to Apple and other phone manufacturers, Tesla would stand to potentially gain XYZ in revenue.
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

26. Recommendation Our Recommendation: Adaptable Design
Create factories capable of mass production, with emphasis on machine tools that can be easily retrofitted when new technology is developed
That said, a wait-and-see approach would be foolish for Tesla, and would prevent the company from attaining profitability in the short-run. We therefore recommend that Tesla aggressively pursues its current technological advantage over competitors by developing the Gigafactory and mass-producing its current generations of vehicles – The Model S, X, and E. However, we advise designing the factory with a focus on production capabilities that can be quickly and affordably adapted as the technology improves. If the Lithium-Air battery or another emerges as a viable alternative to the Lithium-Ion battery, Tesla needs to be prepared to make the switch. We therefore think that Tesla should be prepared to sacrifice a degree of its Gigafactory’s total production and efficiency in order to ensure its adaptability.
Dynamic production with machines that can be used to build numerous different types of batteries
Consider expansion into other industries
Utilities
Phone batteries
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

27. Competition in Battery Production
This risk is especially worrisome as the battery industry is currently innovating at 5-8% per year, with numerous companies and universities researching new battery technologies that, if successful, would completely revolutionize the battery industry.
One such technology is the Lithium Air Battery. We’ve provided a brief technical description of the technology in the handout, but essentially a Lithium Air Battery, if successfully built, will be lighter, smaller, faster-charging, and capable of taking a car hundreds of miles farther on a single charge. Many major competitors in the automaking industry as well as the tech industry are in the process of developing lithium-air batteries for cars, including Volkswagen, Toyota, and IBM. IBM specifically is scheduled to release a prototype of their battery this year, and has set a goal of 2020 for achieving commercial viability.
Higher energy density than lithium-ion batteries because they replace the heavy conventional compounds used in lithium-ion batteries with air
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

28. Recommendation Our Recommendation: Adaptable Products
Expand sale of lithium-ion battery into other industries to take advantage of much larger market opportunities
That said, a wait-and-see approach would be foolish for Tesla, and would prevent the company from attaining profitability in the short-run. We therefore recommend that Tesla aggressively pursues its current technological advantage over competitors by developing the Gigafactory and mass-producing its current generations of vehicles – The Model S, X, and E. However, we advise designing the factory with a focus on production capabilities that can be quickly and affordably adapted as the technology improves. If the Lithium-Air battery or another emerges as a viable alternative to the Lithium-Ion battery, Tesla needs to be prepared to make the switch. We therefore think that Tesla should be prepared to sacrifice a degree of its Gigafactory’s total production and efficiency in order to ensure its adaptability.
Dynamic production with machines that can be used to build numerous different types of batteries
Consider expansion into other industries
Utilities
Phone batteries
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

29. Our Plan of Action 2014 2015 2016 2017 2018 2019 2020 500,000 Teslas
Superchargers: US,
Europe
100,000 Tesla
International
Expansion
Gen III: Europe
Superchargers: China
Gigafactory production
2020
500,000 Teslas
on the road
We’ve given you a lot of information but what have we told you? To achieve Tesla’s goal of Gen III and ,000 annual car sales we are recommending expanding the consumer base, creating the infrastructure and technology for Gen III, and preparing the company for the meteoric success expected after the 2017 Gen III release.
How we see achieving this is by providing you the timing and placement of all our initiatives has already seen efforts in international expansion and moving forward with the Gigafactory which will begin construction by the end of this year is the release of Model X, increasing production to make room for this, and unveiling Gen III will see the necessary infrastructure of Evs in the US and Asia and hitting the milestone of selling 100,000 Teslas annually. 2017, will be the release of the long-awaited Gen III, the Gigafactory beginning production and generating revenue, and focusing our attention to China with constructing a factory is international expansion part 2: Gen III to Europe and Superchargers in coastal and Southern China will be R&D for a new car and evaluating Tesla’s efforts to see what has been successful and what has not. This will all funnel to 2020 where Tesla will achieve its 500,000 annual sales.
Model X
1,000 production: 700 X, 300 S
Gen III Unveiled
Construction of Chinese facility
New product development
Revise & evaluate
Gen III: US
Gigafactory begins
production
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

30. Tesla’s Projected Growth in Sales
2014: 32,500 Model S $598 million —
2015: 36, 400 Model X $400 million
15, 600 Model S $287 million
2016: 70,000 Model X $686 million
30,000 Model S $552 million
2017: 35,000 Model E $350 million
85,000 Model X $784 million
47,000 Model S $736 million
2018: 60,000 Model E $600 million
97,000 Model X $950 million
70,000 Model S $$1.2 billion
2019: 130,000 Model E $1.3 billion
100,000 Model X $980 million
83,000 Model S $1.52 billion
2020: 300,000 Model E $3 billion
108,000 Model X $1.05 billion
92,000 Model S $1.69 billion
32,500: $598 million }
52,000: $687 million }
100,000: $1.24 billion }
167,000: $1.87 billion }
227,000: $2.75 billion
What we mean by meteoric success is that we have estimated what we believe to be the sales of Tesla for the next 6 years. As you can see 2017 onwards the company will experience rapid growth in sales and revenue. }
313,000: $3.8 billion }
500,000: $5.74 billion
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

31. Implementation & Feasibility
2014
2015
2016
2017
2018
2019
2020
Sales
Revenue
$687 million
$1.24 billion
$1.87 billion
$2.75 billion
$3.8 billion
$5.74 billion
$598 million
Operating
Expenses
-$488 million
-$532 million
-$672 million
-$ 850 million
-$976 million
-$1.06 billion
-$1.13 billion
$110 million
$155 million
$568 million
$1.02 billion
$1.77 billion
$2.74 billion
$4.61 billion
Profit
Other
-$5 billion
-$51.7 million
-$5.6 million
-$18 million
-$415 million
-$500 million
-$18 million
80 Chinese Superchargers
-$2 billion Tesla
-$2.3 billion bonds
- $1 billion Japanese partners
- $2-3 billion partners
These are all great ideas but how will we make these a reality? Our emphasis is creating the environment and from that the market. What you see is the profits for the company in the next 6 years and how we can use these to fund our projects as you can see the capital necessary for these projects can be readily paid for by Tesla’s profits. All this leads to reaching expanding EV consumers and reaching the 500,000 sales mark but most all
230 US Superchargers
Production of Chinese facility
-$438 million
25 US Superchargers
80 European superchargers
New production line
Gigafactory
Introduction
Key Issues & Recommendations
Consumer Analysis
Competitive Analysis
Gen III Product Development
Implementation

32. What we see as the future of Tesla
What we see as the future of Tesla. A leader in not only EV and battery technology but at the forefront of creating a cleaner environment.

33. Thank you.

34. Questions?