BUSINESS MODEL CANVAS FOR TESLA MOTORS

After learning the business model of TESLA motors, I felt the government should start making electric cars in India on this model. It would go a long way in reducing our dependence on oil imports. What are your thoughts?

Key Partners

• Tesla has more than 150 suppliers all over the world who supply more than 2000 different parts.
• Chei Mei OptoElectronics Displays in car, GARMIN navigation systems, Google Earth map overlays, NVIDIA TEGRA 3 processor to run the electronics on the car, 3G modems from Sierra Wireless that runs broadband on the AT & T network. Panasonic is a strategic partner for developing battery packs.

Key Activities

• Electronic manufacturing services model of production. Central infotainment system and instrument cluster outsourced to leading technology companies. Rest of the hardware and software development is internalized.
• Tesla designs and builds bulk of the PCB assemblies in the car. 10 modular PCBs are used in the car
• Manufacturing electric sports cars and all the components there of.
• Manage it’s own chain of car dealerships all throughout the world.
• Tesla has made a significant investment developing charging stations in the US (112 to date, according to the Tesla website), Europe (63), and Asia (17). These supercharger stations can swap out the battery in less time than it takes to fill a tank of gas.
• Tesla recently announced a new $5 billion “gigafactory” battery plant in Nevada in partnership with Panasonic. It will reportedly handle all elements of battery cell production, from raw material to battery pack, rather than only battery pack assembly.

Key Resources

• In June 2014, open sourced it’s patent holding, claiming open source innovation is more powerful than anything one company could do.
• Co-located with Apple, Google, NVIDIA, ORACLE, CISCO and HP in the San Francisco – San Jose technology corridor, which speeds up the pace of innovation.
• Excellent top management team hired from top auto manufacturing and technology companies, led by CEO Elon Musk.

Value Proposition

• Sports and high end luxury electric vehicles with the highest environment friendliness ratings and also highest safety ratings.
• Longest driving range of over 200 miles in the electric vehicle segment. Lithium ion polymer battery pack design is unique and patented.
• The company innovated powertrain design, which has proven both robust and viable for everyday use. And it has received plenty of accolades for aesthetic design from the automotive media.

Unique Car Features

• The heart of Tesla’s Model S is its electric propulsion system, which includes a battery, motor, drive inverter, and gearbox. The battery is a microprocessor-controlled lithium-ion unit available in two sizes; spending more buys more range and more power.
• The induction motor is a three-phase, four-pole AC unit with copper rotor. The drive inverter has variable-frequency drive and regenerative braking system, while the gearbox is a single-speed fixed gear with a 9.73:1 reduction ratio.
• The battery of each Model S is charged with a high-current power inlet, and each vehicle comes with a single 10kW charger and mobile connector with adapters for 110-volt and 240-volt outlets as well as a public charging station adapter.

Customer Relationships

• Over The Air software updates for vehicle recalls, which is free and standard for all Model S owners.
• Set up charging stations all over the world for customers having a concern of range on the battery.

Customer Channels

• Direct sales through Tesla’s network of self-owned car dealerships all over the world.

Customer Segments

• High end, environment conscious, luxury and sports car segment is the primary target of Tesla.
• Tesla also plans to sell battery packs independently to home users for domestic use.
The customers are primarily from the upper middle class at this point of time. Tesla has a plan to introduce low priced cars at around $30,000 in the next 5 years to target the lower income segments as well.

Cost Structure

• Manufacturing plant costs are the largest overhead for Tesla.
• Federal Loans for environmentally friendly designs help fund significant part of the operations. $189 million in Federal loans were outstanding in February 2012.
• Governments in most countries give subsidies to electric car manufacturers as their environmental foot print is very low or 0.
• Batteries are significant part of the cost of the car.
• Tesla was founded in 2003 and saw first operating profit in 2013.

Revenue Streams

• Licensing agreements with Toyota and Mercedes for Electric Power Train Designs.
• Sales of electric sports utility vehicles and luxury cars through its dealership network.
• Tesla intends to sell its OEM batteries for non-automotive applications, which will enable it to increase production volume and reduce unit cost.
• Electric car makers such as Nissan Leaf are the main competitors of Tesla Motors.
• Hybrid electric cars such as Toyota Prius and Chevrolet Volt are eating into the eco-friendly vehicle market share of Tesla Motors