Thursday, October 23, 2014

Blue Ocean Strategy Tesla Motors – Allowing Competitors access its patented technology

Tesla Motors, Inc. designs, manufactures, and sells electric cars and it is the first company that combined the features  of the green vehicles that generate zero emissions with that of a premium sports vehicle, basically it provided an electric car that is not only environmentally friendly but also fast and powerful. Till Tesla Roadster, the company’s first vehicle that used lithium-ion battery cells as fuel, it was believed electric cars were small, slow, not suitable to travel long distances and expensive to fuel. The Roadster had a sports car look, accelerates from 0-60 mph in 4 seconds with a top speed of over 130 mph, can be charged anywhere and has a much wider range of over 200 miles per charge which was first for any electric vehicle at that time.  Tesla created an uncontested market space in terms of high performance electric cars that are high speed but with zero emissions targeting the environmentally conscious customers who are ready to pay top buck for cars that are extremely environmentally friendly. Tesla eliminated the traditional fossil fuel gasoline usage that emits carbon emissions that harm the environment and also maintenance costs related to motor oils and filters and also reduced the service maintenance costs and also the charge time for its battery fuel cells. Tesla also raised energy efficiency of the cars, driving range per charge, acceleration speed and created stylish and performing electric car that can be charged anywhere with its built in  battery charging system that plugs into commonly used outlets. The current size of the electric car market is just 1% of the overall car market size and Tesla Motors is planning to increase the market share.

Instead of withholding to its highly patented technologies, Tesla Motors granted access to its competitors all its intellectual property so that the competitors can also use these technologies to develop innovative electric cars and expand and grow the market size. Tesla Motors in order to increase its sales and market has to work with the traditional automakers that are also looking to manufacture new hybrid vehicles that run both on electric and gasoline. With more charging stations and other infrastructure in place more electric cars will be sold leading to economies of scale that reduce the cost of production which ultimately lead to low price of the cars. Currently electric cars are priced very high and are not affordable to most of the customers only the affluent customers can buy them. The company has announced to build a $5 billion battery factory in partnership with Panasonic that manufactures batteries for cars in quantities that exceed Tesla’s needs but also supply to other electric car manufacturers too. Tesla is also working with other industry layers to build common industry standards for charging stations and plugs so that all the electric cars can use same charging stations and also building the battery fuel cell standards too. Tesla wasn’t first with an electric vehicle but it pioneered the concept of electric cars and combined with superior design and strong technical leadership, it offered an innovative high performance car that attracted the customers. Tesla Motors beat the competition with a superior car with innovative features and created a new “green performance vehicle” market space. With the market expansion, Tesla Motors is expected to profit significantly as it has a significant advantage in terms of first mover advantage and access to key resources and technologies like the battery fuel cells. After creating a new market space, tesla Motors current mission is to increase the number and variety of electric cars available to the mainstream consumers.

2 comments:

  1. reduced the service maintenance costs and also the charge time for its battery fuel cells. Tesla also raised energy efficiency of the cars, driving range per charge, acceleration speed and created stylish and performing electric car that can be charged anywhere with its built in battery charging system that plugs into commonly used outlets. The current size of the electric car market is just 1% of the overall car market size and Tesla Motors is planning to increase the market share. 500k Motors

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