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Entering the Electric Car Market in Germany

Strategic Management

Scientific Study 2008 17 Pages

Business economics - Business Management, Corporate Governance

Excerpt

Table of Contents

Executive Summary
Critical Success Factors
Emerging Issues and Trends
Support of Innovation

1 Critical Success Factors
1.1 Production Facilities and Suppliers
1.2 Predicted Sales
1.3 Importers
1.4 Dealers
1.5 Service Garages and Road Service
1.6 Advertisement and Public Relationships
1.7 Customer Resistance
1.8 Technical Predominance
1.9 Pricing of Future Models and Model Changes

2 Emerging Issues
2.1 Resistance and Influence of “Oil Industry”
2.2 Petrol Stations and Infrastructure
2.3 Resistance of Car Manufacturers
2.4 Garages
2.5 Traffic Safety
2.6 Competition from Petrol Cars and “Green Cars”
2.7 Automobile Crisis and Global Recession

3 Emerging Trends
3.1 “Green” Trend
3.2 Environmental Legislation Changes
3.3 Free Recharge Power
3.4 Concept “Vehicle to Grid”

4 Support of Innovation
4.1 New Market Segments
4.2 Innovative Distribution System
4.3 Technical Innovation
4.3.1 Implementation of Super-Capacitors
4.3.2 Additional Solar Cells
4.3.3 Modular Battery System

References

Executive Summary

Tesla wants to bring three electric car models on the German market; the Roadster in early 2009 and two future models in the following years. This strategic analysis is aimed at supporting Tesla in its management decisions to successfully launch these three models and gives advice on future strategy. It provides specific information on the German market and is divided into the analyses of critical success factors, emerging issues and trends and the support of innovation.

Critical Success Factors

It is most important to manage the cars’ entrance into the market from the factory to the customer. This includes the choice of a strategic location for a future manufacturing facility that enables Tesla to produce higher quantities of the two future models, the distribution channel via importers and dealers, the marketing including advertisement and public relationships, and customer service. Pricing will be a success factor for the two future models.

Emerging Issues and Trends

Emerging issues can be considered on a global scale, most of them aren’t specific to Germany. The major issue is the influence of the oil industry on the whole automotive sector. Transport experts predict that electric cars will be the successors of petrol cars; this is a threat for the existing industries and their established infrastructure.

Supported are electric cars by the “green” trend and changes which are made in environmental legislations by the German government and some city councils. Further support comes from the power industry which desires to launch the concept “vehicle to grid”. This concept reduces energy generation and distribution issues and only works with an increasing number of electric cars.

Support of Innovation

Tesla can be innovative by developing electric cars for new market segments that are currently not yet served, due to limitations in battery technology. Hence, improving the existing battery technology will enable Tesla a variety of future options that secure being a leader in the electric car market, within Germany as well as globally.

1 Critical Success Factors

1.1 Production Facilities and Suppliers

The current production facilities at Lotus Cars in the UK aren’t designed to manufacture electric cars on a large scale, but they are ideal for manufacturing the Roadster. Tesla’s future models, the Tesla S and the “BlueStar”, will be produced in larger quantities and therefore require larger production facilities. Building up an own production facility is a step that will pay off for future operations. The location of the production facility has to provide Tesla with strategic advantages such as good transport infrastructure access, proximity to suppliers and skilled and preferably cheap labour. Production facilities in East Europe are ideal because of their lower wages and their proximity to the mid-European markets.

Future models will require different parts from new suppliers. Choosing reliable and qualified suppliers is key to ensuring an optimal supply-chain management.

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1.2 Predicted Sales

Only 250 Tesla Roadsters are going to be sold in Europe in 2009 and the demand is higher than supply. As it is projected from Tesla, supply is going to catch up with demand at model 4 after 2012.[1] Depending on the type of model 4, the expected sales have to be accurately adjusted to the German market demand. In total, 46.6 million cars are currently admitted on German roads and there is a yearly demand for 4.26 million new cars.[2] 20% of all sold cars are middle-class and 4% upper-class; these values are significant for the Tesla S and “BlueBird”.[3]

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1.3 Importers

The Roadster is going to be manufactured at Lotus Cars in the UK. A distribution network using suitable importers has to be set up. Important success factors are flexibility in contracts and quick deliveries from the UK to Germany. The importer must have experience in all issues which are related to freight of cars, German customs and insurance. In terms of location, an importer with headquarters at one of the big German ports Bremerhaven, Duisburg or Hamburg is to be preferred.

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1.4 Dealers

In Germany, Tesla’s cars will be sold by authorised dealers. Many of these dealers are already contracted by other car brands. The strong market positions of popular car brands leads to a highly competitive market where the dealers are often dictated by these brands. A general dissatisfaction emerges which is caused by margin and other limitations. These affect the whole sales process. Tesla can approach dealers and offer them packages that provide them with financial benefits and more freedom in deciding on how to sell and market the Roadster. These attractive contracts can help Tesla to find motivated dealers and to build up a dealer network. Setting up these partnerships creates barriers to market for competitors who also require a distribution and service network for their electric cars. In order to facilitate future growth it is recommended to Tesla to sign a contract with the largest German dealer group, Emil Frey.[4] Emil Frey has the advantage over many competitors that they cover entire Germany with their network of branches.

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1.5 Service Garages and Road Service

Tesla requires a nationwide network of service garages. Setting up partnerships with existing garages and using their infrastructure saves capital costs. As the Roadster is produced at Lotus Cars, a partnership with Lotus Cars’ licensed garages in Germany would be favourable as many business processes could be intertwined between Tesla and Lotus Cars. Quick supply concerning spare parts is crucial. Also, partnerships with the ADAC[5] have to be formed in order to provide their road service with information on maintaining Tesla’s electric cars in case of a breakdown.

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1.6 Advertisement and Public Relationships

The most common media for car advertisement in Germany are (in order): internet, TV, radio and newspapers. Others, such as sponsoring of sports events or clubs follow. Getting the advertisement right is one important success factor for Tesla. As the Tesla Roadster is only aimed at a small target group and the waiting lists are already full, the model isn’t affected by this. However, the future models are suited to larger customer groups, so advertisement in German media will play a role.

Media that report about cars in Germany are predominantly TV magazines (Auto Motor Sport TV, Abenteuer Auto) and print media (Auto Bild, PS, Sport Auto, Auto Zeitung, Autofocus, ADAC motorwelt). Tesla has to actively maintain the relationships with these media by providing them with technical information, invitations to test-drives, etc. Advertisements in these magazines are most likely to reach the targeted customer groups. Taking part in key public relationship events such as the Essen Motor Show or the Frankfurt Motor Show are also success factors for publicity.

[...]


[1] Source: http://www.autobloggreen.com/2006/07/26/exclusive-q-and-a-with-elon-musk-on-the-tesla-roadster-and-the-fut/

[2] Source: http://www.autokiste.de/psg/0701/5980.htm

[3] Source: http://de.statista.org/statistik/diagramm/studie/87886/umfrage/bevorzugte-art-des-naechsten-pkw/#info

[4] Source: http://www.autohaendler-in-deutschland.de/automobilhandelsgruppen.html

[5] “Allgemeiner Deutscher Automobil-Club“, the largest German road service association

Details

Pages
17
Year
2008
ISBN (eBook)
9783640375837
ISBN (Book)
9783640375639
File size
510 KB
Language
English
Catalog Number
v131302
Institution / College
University of Canterbury
Grade
B
Tags
Entering Electric Market Germany Strategic Management

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Title: Entering the Electric Car Market in Germany