INF 327E Project 1 - Company Overview (Tesla)

Business & Product Description

  • Briefly describe their business. What are the SIC and NAICS codes (see the header information in EDGAR)? Use cross-tables to find the NAICS code if necessary
    • Brief Description: “Tesla’s mission is to accelerate the world’s transition to sustainable energy.” (About Tesla, 2016)
      “We currently design, develop, manufacture and sell fully electric vehicles and energy storage products.” (Tesla 10-K, 2016, p. 5)
    • SIC Code: SIC-3711 (SEC, 2016)
    • NAICS Code: 441110 (ZoomInfo, 2016)
  • List their products and briefly summarize each. How do they segment their products? State briefly what need the product set is fulfilling for the customer?
    • Products: “We design, develop, manufacture and sell high-performance fully electric vehicles and energy storage products (Tesla 10-K, 2016, p. 5).
      Tesla currently produces the following products: Model S, Model X, Model 3, and Energy Storage Applications (Tesla 10-K, 2016, p. 6).
      • Model S: “Model S is a fully electric, four-door, five-adult passenger sedan that offers compelling range and performance with zero tailpipe emissions.” (Tesla 10-K, 2016, p. 6)
      • Model X: “Model X is a sport utility vehicle that offers exceptional functionality with high performance features such as our fully electric, all-wheel drive dual motor system and our autopilot system.” (Tesla 10-K, 2016, p. 6)
      • Model 3: “After the Model X, our goal is to introduce the Model 3, a lower priced sedan designed for the mass market.” (Tesla 10-K, 2016, p. 6)
      • Energy Storage Applications: “Using the energy management technologies and manufacturing processes developed for our vehicle powertrain systems, we have developed energy storage products for use in homes, commercial sites and utilities.” (Tesla 10-K, 2016, p. 6)
    • Product Segmentation: all products are segmented based on their vehicle type or service: sports utility vehicle (Model X), sedan (Model S, Model 3), luxury (Model S), & development services (Tesla 10-K, 2016, p. 6)
    • Customer Need: “Our customers enjoy several benefits, including: Long Range and Recharging Flexibility, High-Performance Without Compromised Design or Functionality, Energy Efficiency and Cost of Ownership.” (Tesla 10-K, 2016, p. 5)
  • How do they segment their business? Do they show sales by product? Geography? Customer? Include graphs/charts
    • Segment Information: “We operate as one reportable segment which is the design, development, manufacturing and sales of electric vehicles.” (Tesla 10-K, 2016, p. 13)
    • Sales by Product: Consolidated Statements of Operations (Tesla 10-K, 2016, p. 49)
    • Sales by Geography: Information about Geographic Areas (Tesla 10-K, 2016, p. 73)
    • Sales by Customer: Credit Risk (Tesla 10-K, 2016, p. 57)
    • Graphs/Charts:
      • Stock Performance Graph (Tesla 10-K, 2016, p. 31)
      • Consolidated Balance Sheets (Tesla 10-K, 2016, p. 48)
      • Consolidated Statements of Comprehensive Loss (Tesla 10-K, 2016, p. 50)
      • Consolidated Statements of Stockholders’ Equity (Tesla 10-K, 2016, p. 51)
      • Consolidated Statements of Cash Flows (Tesla 10-K, 2016, p. 52)

Competitors

  • Who do they define as their competitors?
    • “The worldwide automotive market, particularly for alternative fuel vehicles, is highly competitive today and we expect it will become even more so in the future as we introduce additional, lower priced vehicles such as our Model 3.”
    • “We believe the primary competitive factors in our markets include but are not limited to: technological innovation; product quality and safety; service options; product performance; design and styling; brand perception; product price; and manufacturing efficiency.” (Tesla 10-K, 2016, p. 12)
  • Based on the business description, and your understanding of the products, list key words you would search to find “like” companies. Think direct and indirect competitors. Write out a search strategy (how and where) to find like companies.
    • Keywords: energy, efficiency, motors, energy solutions, fuel-efficient, vehicles, green, innovation, performance, luxury, electric vehicles, vehicle manufacturer, design
    • Search Strategy: My search strategy to find direct and indirect competitors of Tesla relies on the internet, primarily through Google and Investopedia searches.
      • Google Searches (to find news articles and lists):
        • tesla “competitor”
        • vehicle manufacturer +green +efficient
        • electric vehicle manufacturers
        • green energy producer “solution”
      • Investopedia Searches (to find news and investor articles):
        • tesla green competitor
        • electric vehicle manufacturers
        • electric vehicle market

Customers

  • How many customers do they have?
    • If “customers” are defined by the number of cars Tesla has sold, Tesla has approximately 140,000 customers (at the end of Q2 2016). (Tesla Q2’16 Update, 2016)
  • Who are their top customers (as in amount of revenue they derive, not necessarily size)?
    • “Our primary source of revenue is from the sale of our vehicles.” (Tesla 10-K, 2016, p. 33)
    • Top revenue sources: Automotive, Services and other. (Tesla 10-K, 2016, p. 49)
  • Who are their customers? small business, large business (B2B) or individuals/consumers (B2C) (hint: who are the final customers)?
    • Vehicles: Individuals/consumers (B2C) (Tesla 10-K, 2016, p. 6)
    • Energy Storage Applications: Commercial businesses (B2B) (Tesla 10-K, 2016, p. 6)
  • Are they targeting specific “vertical” markets? Or particular size of customer?
    • “After the Model X, our goal is to introduce the Model 3, a lower priced sedan designed for the mass market.” (Tesla 10-K, 2016, p. 6)
    • “We market and sell cars directly to consumers through an international network of company-owned stores and galleries. Our Tesla stores and galleries are highly visible, premium outlets in major metropolitan markets, some of which combine retail sales and service.” (Tesla 10-K, 2016, p. 8)
    • Based on the information listed above, Tesla is primarily targeting upper-middle class, relatively wealthy, individual consumers.

Monetization/Pricing

  • What is the pricing model for their products? i.e. Subscription, Lease, consulting, transaction percentage, free with advertising, off-the-shelf, combination etc?
    • Residual value guarantee: “We offer resale value guarantees or similar buy-back terms to all customers who purchase vehicles and who finance their vehicle through one of our specified banking partners.” (Tesla 10-K, 2016, p. 36)
    • Direct vehicle leasing program: “We offer a vehicle leasing program in certain locations in the United States, Canada and Germany. Qualifying customers are permitted to lease a vehicle directly from Tesla for 36 or 48 months. At the end of the lease term, customers have the option of either returning the vehicle to us or purchasing if for a pre-determined residual value.” (Tesla 10-K, 2016, p. 36)
  • How much (approximately) do they sell each product for?
    • Model S: $53,000 – $121,500 (Model S, 2016)
    • Model X: $61,100 – $122,600 (Model X, 2016)
    • Model 3: $35,000 (Model 3, 2016)
    • Energy Storage Applications:
      • 40 Powerpacks (1,000 kW, 4,000 kWh): $2,012,600 (Powerpack, 2016)
      • 1 Powerwall: estimated $3,500 (Powerwall, 2016)

Backgrounds

  • What companies did the top executives work for prior to this one? The top executives include CEO, President, VP of Marketing, Business development and Sales and CTO. Note the companies and industries.
    • CEO: Elon Musk (Management Tesla, 2016)
      • Zip2 Corporation – newspaper directories
      • X.com/PayPal – online payment system
      • SpaceX – space flight/exploration
    • CTO: JB Straubel (Management Tesla, 2016)
      • Volacom – bird control solutions
      • Rosen Motors – vehicle powertrain systems
      • Pentadyne – energy storage
    • CFO: Jason Wheeler (Management Tesla, 2016)
      • Google – internet-related services and online advertising technologies
  • What companies do the members of the Board of Directors come from? Note the name and industry of companies.
    • Chairman: Elon Musk (Board of Directors Tesla, 2016)
      • Zip2 Corporation – newspaper directories
      • X.com/PayPal – online payment system
      • SpaceX – space flight/exploration
    • Director: Brad W. Buss (Board of Directors Tesla, 2016)
      • SolarCity Corporation – solar power systems
      • Cypress Semiconductor – semiconductors and programmable logic devices
      • Altera Corp. – programmable logic devices
    • Director: Robyn M. Denholm (Board of Directors Tesla, 2016)
      • Juniper Networks Inc. – high-performance network solutions
      • Sun Microsystems – computer hardware and information technology
      • Toyota Motor Corporation – automotive manufacturer
      • Arthur Andersen and Company – holding company/accounting firm
    • Director: Ira Ehrenpreis (Board of Directors Tesla, 2016)
      • Cleantech – sustainable innovation
    • Director: Antonio J. Gracias (Board of Directors Tesla, 2016)
      • Valor – growth investment firm
      • MG Capital – investment banking
      • Goldman, Sachs & Co. – global investment banking
    • Director: Steve Jurvetson (Board of Directors Tesla, 2016)
      • Draper Fisher Jurvetson – venture capital
      • Hotmail – email service
      • Interwoven – digital experience management software
      • Kana – customer service and knowledge management
      • Tradex – motor trade insurance
      • Cyras – multi-service-over-optics solutions
      • Hewlett-Packard – information technology
      • Apple – computers and consumer electronics
      • NeXT – computer workstations
    • Director: Kimbal Musk (Board of Directors Tesla, 2016)
      • Medium, Inc. – internet software
      • Zip2 Corporation – newspaper directories
      • Everdream Corp. – software as a service
      • BlackBook Media – arts and culture
      • SpaceX – space flight/exploration
      • ProgressNow.org – progressive advocacy organization
      • The Kitchen – food/restaurant
  • What do the company backgrounds say about their strategy or potential strategies?
    • The company backgrounds of the executives and board of directors says that Tesla is very interested in having highly skilled people working at their company who already have strong backgrounds in engineering and/or green technologies. They are also looking to create potential strategies that are friendly to investors (i.e. the directors with the strong financial and venture capital backgrounds) but are also forward-thinking (i.e. strong technical backgrounds).

Acquisitions

  • What acquisitions if any have they made in the last 2 years? Include dates and amounts.
    • SolarCity: $2.6B in Stock (CrunchBase, 2016)
    • Riviera Tool: n/a (CrunchBase, 2016)
  • What does it say about their strategy? Are they buying out competitors to eliminate them and gain market share, buying new technology or entering new markets?
    • SolarCity: most likely acquired in order to advance Tesla’s knowledge of the solar power industry or they produce a product that Tesla would like to use in their own products (i.e. buying new technology in a market they have previously invested in).
    • Riviera Tool: most likely acquired in order to reduce Tesla’s load on manufacturing needs and vehicle part production.

Partnerships

  • What strategic alliances or partnerships have they engaged in in the last 2 years?
    • Daimler AG (Cheong, Song, & Hu, 2016)
    • Toyota (Cheong, Song, & Hu, 2016)

References

Biography.com. (2016). Elon Musk Biography. Retrieved from http://www.biography.com/people/elon-musk-20837159

Cheong, T., Song, S., & Hu, C. (2016). Strategic Alliance with Competitors in the Electric Vehicle Market: Tesla Motor’s Case. Retrieved from Hindawi: https://www.hindawi.com/journals/mpe/2016/7210767/

CrunchBase. (2016). Tesla Motors Acquisitions. Retrieved from CrunchBase: https://www.crunchbase.com/organization/tesla-motors/acquisitions

SEC. (2016). Tesla Motors Company Filings. Retrieved from EDGAR: https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001318605&owner=exclude&count=40&hidefilings=0

Tesla Motors. (2016). About Tesla. Retrieved from https://www.tesla.com/about

Tesla Motors. (2016). Board of Directors Tesla. Retrieved from http://ir.tesla.com/directors.cfm

Tesla Motors. (2016). Management Tesla. Retrieved from http://ir.tesla.com/management.cfm

Tesla Motors. (2016). Model 3. Retrieved from https://www.tesla.com/model3

Tesla Motors. (2016). Model S. Retrieved from https://www.tesla.com/modelx/design

Tesla Motors. (2016). Model X. Retrieved from https://www.tesla.com/models/design

Tesla Motors. (2016). Powerpack. Retrieved from https://www.tesla.com/powerpack/design#/

Tesla Motors. (2016). Powerwall. Retrieved from https://www.tesla.com/powerwall

Tesla Motors. (2016, February 24). Tesla 10-K. Retrieved from Tesla SEC Filings: http://files.shareholder.com/downloads/ABEA-4CW8X0/2782192938x0xS1564590-16-13195/1318605/filing.pdf

Tesla Motors. (2016, August 3). Tesla Q2’16 Update. Retrieved from http://files.shareholder.com/downloads/ABEA-4CW8X0/2563692152x0x903036/562D56A1-5426-4D79-8B99-3408D1B60226/Q216_Update_Letter-_final.pdf

Wheeler, J. (2016). Jason Wheeler LinkedIn. Retrieved from LinkedIn: https://www.linkedin.com/in/jasonswheeler

ZoomInfo. (2016). Tesla Motors Inc Company Profile. Retrieved from http://www.zoominfo.com/c/Tesla-Motors-Inc/104333869


Jenny Plunkett

Applications Engineer @ Arm