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What Makes Tesla Motors so Successful?

Nyamweya is a Kenyan scholar who has done many years of research on a diversity of topics


Overview of Tesla Motors

Tesla Motors is an American based company that is located in Palo Alto, California. Tesla Motors is an automaker company that deals in a manufacturer of energy storage and solar panel. Tesla Motors was established in 2003 by Martin Eberhard and Mark Tarppening. Other co-founders are; ElonMusc, Jbstraubel, and Ian Wright. Tesla Motors specializes in electric cars, solar panels, and Lithium-ion battery energy storage. Tesla Motors named after a Serbian-American inventor known as Nikola Tesla. The primary objective of Tesla Motors was to develop an electric vehicles-electric sports car. Eberhard was the chief executive officer while Tarppening was the chief financial officer to Nikola Tesla. The company funded by a variety of among the founders is ElonMusc who was the co-founder of PayPal. ElonMusc contributed to over $30 million to the venture and served as the chairman. This happened during the beginning of 2004.

Tesla Motors is also a public company trading on NASDAQ stock exchange using the symbol TSLA. Tesla’s first gained attention was through the production of Tesla Roadster which was the first fully electric sports car. The car accumulated 245 miles on a single charge. This was an extraordinary range of the first electric car production. Roadster could accelerate 0 to 60 mph in less than 4 seconds and reached a top speed of 125 miles per hour. The roadster made of carbon fibre which made it lightweight. Roadster used internal combustion engine hence produced no tailpipe emission. The electric motor was powered by lithium-ion cells mostly employed in laptops and batteries. The batteries could charge from a standard electrical outlet. The electric vehicles had a federal tax credit of $7,500.

2. Teslas' Activities

Tesla Inc. focuses on the production of high performance consumer-oriented electric motors. Tesla first designed a powertrain for a sports car built in an AC induction motor in 1888 by Nikola Tesla. The resulting Tesla Roadster kicked in 2008. The Roadster accelerated from 0 to 60 miles per hour in 3.8 seconds gaining a distance of 245 miles per charge on its lithium ion battery. Roadster set a new standard for electric mobility. Tesla was able to sell 2400 Roadsters in more than 30 countries. Tesla launched Model S in 2012, the first world premium electric sedan. The sedan was built 100 percent electric from the ground all the way up. This sedan redefined the idea of a four-door car. The electric sedan had room enough for seven passengers and 64 cubic feet for storage. Model S provided the utility and comfort of a family car and still the acceleration of a sports car of 0 – 60 miles in 5 seconds.

The battery of the S sedan is integrated into the chassis sitting below the cabin. This lends the car with a low center of gravity that enables strong road holding and handling driving at 265 miles per charge. The Model S was named Motor Trends of the year in 2013and got a five-star rating from the U.S National Highway Traffic Safety Administration. In late 2014, ElonMusc Tesla CEO revealed two new Motors- all wheel drive which was an improvement of the S model. With the new model it improved the vehicles handling and performance, with the 85D, it contained a high-efficiency motor both at front and rear which gives the car exceptional control of traction in all circumstance.

3.0 Tesla Inc. share price

Tesla Inc. now trades with a capitalization of the market of $39.87 Billion. The value shows a market habituating for revenues that have been growing 88.13% on quarterly year basis as of Tesla Inc. last quarterly report. The balance assets and liabilities of any firm play a key role in meeting its obligation and sustaining its investment base. For Tesla Inc., the company currently has $3.5 Billion of cash on the books which are neutralized by $ 1.15 Billion current liabilities. You can get a sense of how that is viable levered free cash flow of $1.56 Billion over the past one year. Generally speaking, returns are expected to increase in coming quarters. The analyst is forecasting returns of $ -0.68 on a per share basis this quad year. This explains why some of the outstanding share (0.40%) is held by institution investors. From the analysis above, Tesla Inc. has recorded a 52 week high of $ 287.39. Now trading at 38.8% of that level. The stock is trading $246.76 its 50-day going estimate by - 1.83%. The stock curved a 52-week degenerate at $ 178.19.

In recent action Tesla made a move of – 3.56% over the last one month, this comes on strong relative transaction volume. Over the following year, the stock is outperforming the S&P 500 by 1.08 and has gotten there by means that has been more elusive on a day to day basis than most stocks in the exchange. Regarding the mechanics lurking that movement, merchants will want to indicate that the stock on a float of 25.52% with a $ 126.17 sitting short, bidding on future deadlines. This advocates that something of the likelihood of crunched in stakes of TSLA.

4.0 Legal Structure

Tesla Motors has an organization structure that helps consistent business growth. A company’s corporate organization structure is the system and design that shows the ways and patterns of interaction among the firm's components. In Tesla’s firm, the company takes a traditional form seeing the company’s scarce approach to its production aptitude development. With a focus on fully electronic automobile producers, Tesla uses its organization structure to facilitate extensive administration of the company. The firm also majors its ability to make new strategies and manage its operations through its corporate structures. Tesla’s corporate structure enhances business capabilities that allow strong managerial administration despite the growing international operations. So, this organization structure aids Tesla’s vision and mission statement which stresses on global leadership in the automotive market.

Tesla has a corporate functional structure that involves organization functions as the main characterized factor. Other observable characteristics observable in other firms are present in Tesla Inc. although at less significant extent. Characteristics in the in Tesla’s corporate are as follows: Global hierarchy, Global centralization, and Minimal regional divisions. In global regime is the most significant of Teslas corporate. Global hierarchy involves the functional teams; and financial operations. Whereas Global centralization, need for global centralization is to control whole organization through a decision that a central group enacts. And in a minimal regional division, the characteristics of the organization structure are to focus on the amount of division in Tesla’s automotive business. The division's work is to enforce the strategies made by and marketing campaigns proposed. The minimal regional divisions also arrange financial records and files reports. The firm benefits from its corporate structure through its effective control of the firm in global operations.

5.0 Tesla Management Structure

In Tesla strategic decision area, operations managers focus on how the corporate influence cost, resources, and quality objectives. TSLA addresses this concern through circumstantial innovation. For instance, the company continuously innovates its supply chains to ensure productivity and in manufacturing enhanced electric vehicles. Moreover, Tesla management maintains its focus on an electric automobile. Quality management is yet another managerial practice in Tesla Inc. this operation management's main objective is satisfying clients’ quality expectation. Tesla does this through comprehensive research on the automotive market. To add on, the company continues to develop its product and processes to satisfy higher quality standards for the consumers. Process and capacity design are also a managerial practice practiced in the operations management. In this operation management, it deals with business process, along with related standards, investments, and resources. The company integrates automation for this concern. For instance, the firm has automated manufacturing processes coupled with human intervention.

With this Tesla can achieve maximum productive through operation efficiency in the electric vehicle business. Another operation management in Tesla Inc. is location strategy. This focuses on the nearness to the market, suppliers and resources are considered in the strategic decision. When it comes to resources, Tesla can utilize its global reach to attain resources. For instance, suppliers like Panasonic can provide materials necessary for electric automobile manufacture. Operation management also utilizes layout design and strategy. This strategic decision area focuses on achieving optimal flow of resources and information. In the firm’s case, layouts are designed to purpose capacity utilization of resources, mostly buildings used in manufacturing Electric Motors.

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6.0 The Brand and Branding Of the Company and the Product

Tesla Motors has profound marketing management presumptions, as it consigns from a unique perspective of Tesla’s new technological approach to automobile marketing and depicts it to the successful marketing model of Apple design of Apple computers. This kind of marketing approach is different from the traditional automobile industry that favored mass marketing and even mass production. A qualitative research was adopted for this report; the research conducted through comprehensive secondary literature collection and report as well of close examination of case studies aiming primarily on Apple computer.

Key results concluded that the; electric vehicle battery is poised for great growth; the firm is strategically positioned to capitalize on the thus development opportunity; a new technology approach to market management is prime for Tesla’s future development. Tesla Motors allocates $ 0 on their advertisement budget each year. By comparison, automotive manufacturers spend a huge amount of money in advertisement. A prominent example is the Nissan Motors that’s spent $ 25 million in advertising their fully electric automotive-the leaf in 2012. The lack of advertising in the Tesla industry is disruptively marketing in itself. The perception of non-existence move proclaims a statement of alternative marketing for the Tesla Inc. that gets consumers trust rather than buying it with dollars in the advert. ElonMusc is very committed to establishing the lineup of the best electric vehicle in the world. To ElonMusc, advertising the brand is not his main priority. Most of the money that could be used in the advertisement is put into research, production, and development. This is what makes Tesla’s brand a narrative on epic odyssey, one with profound conviction, innovation, and persistence.

7.0 Tesla Marketing Mix in Various Countries

Tesla a silicon valley based that designs manufacture and distributes electric vehicles for sale. It also deals in electric vehicle powertrain components. Tesla Motors is the only automaker selling highway-capable EVs. According to recent paper works from U.S security and exchange commission, Tesla produces at least 15 custom cars each week for consumers that need vehicles made according to their specification. The Tesla Roadster uses AC Motors down from the original Tesla design in 1882 which had come to him in hallucinations due to exhaustion working as an engineer. The Tesla Roadster is the first car to have used a lithium battery and the first in the production of EV. The Roadster had a range of 200miles per charge. The model accelerates from 0 – 60 miles per hour in 3.9 seconds. According to Tesla, it is twice energy efficient as Toyota Prius. With this the company was able to manufacture its thousandth Roadster in Jan 2010; Roadster has been distributed into 25 countries. Tesla began producing right-hand-drive in early 2010 for the U.K and Ireland markets expanding into Hong Kong and Japan. According to the answerability of the human resource is to recruit and keep highly certified and skilled employees who are considered a high priority in the primary activity of hiring competent people.

In recruiting new employees to fill a vacancy, the human resource management needs to set criteria by which all employees would be subjected to in order choose and get the most suitable employee for the job. In this way, the criteria show the technological skills, tasks to be handled, knowledge requirements, work and activities that can be handled, skills and abilities required, educational attainment, and job training.

8.0 Taxes Paid In Tesla Inc. As A Proportion of Profit

In the profit margin, companies with a minimum track of 12 months after tax dividend margin of 7% have a fewer shareholders return comparing to those that have passed this criterion. The companies above this criterion can enjoy greater shareholder returns as well as influence position in their industry. A proper test of the quality of a company is whether they can maintain this margin, as with Tesla’s profit margin of – 11.04%, it fails this test. Investors need to look on the relative strength of the company, a company whose strength is 90% or above are considered attractive.

This means that the firm outperforms by 90% of the market in the past year. Tesla with a relative strength of 52% fails this test. However, Tesla’s insiders should own at least 10%, but they own 22.06% of the company’s outstanding shares while the minimum shares to be owned stands at 10%. With the higher percentage, it shows that the insiders are confident that the company will do well. In the inventory to sales, small companies should have a tight control over sales and relatively alarming if the inventory to sales increases notably compared to the previous year. The inventory can increase up to a 30% but no more. As of Tesla, the inventory to sales was 31.58% last year and on this year is 29.53% with the inventory to sales decreasing by - 2.05% the company passes this criterion.

Account received to sales; this methodology ensures that the account received does not outline with sales. It is a worrying sign if the company's receivable accounts increase significantly to sales for the previous year. The accounts receivable to sales for Tesla Motors was 4.18% in 2016 while this year it is 7.13% despite the AR to sales is rising it is beneath the maximum 30% allowed.

9.0 Taxation Issues of TSLA

With the election Donald Trump as the new President, the popular take is that it would be challenging for TSLA Motors with Trump’s clear opposition to renewable energy and hindering climate change. Tesla car is very unprofitable. The electric car maker scored a big deal in 2014. Gov. Brian Sandoval and Nevada passed a 1.3billion subsidy to attract Tesla to build in Storey County. Storey County is a huge battery manufacturing facility that is essential in its business. The package also let go sales taxes for 20years, ten-year payroll taxes, and property and discounted electricity rates. Tesla also got $120 million tax credit and $75 million more depending on the number of jobs created. The transferable tax credits are important coupons that Tesla can sell to third parties to use them to offset their Nevada tax bills. Lawmakers created the transferable tax credits not to have to use outright cash grants to private companies to get around constitutional prohibitions. (Lawrence and Knecht, 2016)

Morgan Stanley confirmed that it had made a mistake to a significant number of wealth management clients with incorrect information that made them underplay their taxes. The problem occurred due to Morgan Stanley’s reporting systems that reported wrong cost basis for clients who owned a particular stake or bond. This reporting system determines how much a gain or loss is accepted when shares are sold for instance, which actuate how much tax is owed. This errors affected returns for filled 2011 tax year through 2016. This means that some clients will prepare filled deadlines for April with inaccurate information. This mistake remains to be corrected to make filed taxes with accurate information.

10. Favorable and Unfavorable Media on Tesla Inc

Tesla Motors is a luxurious brand known to millions of people across the world from its use of electric lithium batteries. And although Tesla Motors is covered in the press every day, there are interesting facts about the Tesla yet to be unveiled. On that note, Valuewalk published infographic in order to show case these facts about Tesla and Elon Music. They note that Musc’s, background in physics and economics has provided the right chemistry to earn his $12.1 million fortune. Musc has never lost his faith in dominance of electric motor vehicles. Tesla continues to dominate in the electric vehicle movement. With a value of $33.5 billion and 14000 staff, for which Musc draws a value of a single dollar per year – the firm has grown to reflect the vision of his iconic boss.

Some of the interesting facts about Tesla Motors is the Tesla Model 3, according to the presentation of the S3 is that it will be very much safe the model got a 5-star rating on the fact that it is an incredibly safe car. The Model S can fit five adults comfortably. This is because the instrument panel has been adjusted and compressed to move forward. On the rear view mirror is also one continuous pane of glass. This gives the car an elegant look and a wide area of view for the driver. The S model also has a more cargo space than any other vehicle with similar dimensions could carry this can be credited to the front and rear trunks. The S model is also said to have a 215-mile range as the minimum figure, Music also hopes to increase that figure in future.

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