Tesla Model 3 the Electric Vehicle

1.Introduction

The electric vehicle (EV) industry is still in the introductory stage of its life cycle but the ideas for the EV’s has a history of more than 100 years, with significant efforts in the 20th century and followed by a series of starts and stops. In recent years, there is a new found enthusiasm for EV’s ultimately due to climate change and the technology development. A conventional car’s carbon emission is reduced in recent years due to various policies but still not enough to make a big change there was still co2 emissions new technology for transport using green energy was needed and oil prices are hiked due to its scarcity. The battery technology and the recharging infrastructure have improved compared to years ago. In last decade many original equipment manufacturers (OEMs) enterprises have provided Many innovative business models to promote EVs and overcome the technological shortcomings.

Tesla Motors Inc. is an EV manufacturer based on Palo Alto, California was founded in 2003 by group of engineers in Silicon Valley. Their mission was to develop a sustainable transport industry by introducing high performance EVs to the market. Tesla motors use highly automated manufacturing process with its exceptional design to create these high performance EVs. While OEMs still takes convectional business model for developing EVs Tesla stands out with its disruptive innovation solutions. Tesla was also known was known as a black horse in automobile industries later known as OEM for the EVs.

In 2008 the company launched its first car Tesla Roadster, an EV with sports car like performance i.e. 0 to 60 mph in 3.7 sec and running 245 miles per battery charge. In 2012, Tesla launched Model S world’s first pure electric sedan. After its huge success in Model S Tesla launched its electric SUVs named Model X in 2015. Model S and Model X was said to be the market leaders in their respective category, but the prices of theses Models were high. So, in March 2016 Tesla launched its Model 3 a cheaper model average pricing at $35,000 for mass market by 2017. The critical problem faced by Tesla was the mass production of the Model 3. Before Model 3 Tesla was a boutique brand specializing in niche automobiles but after Model 3 was launched it received over 325,000 preorders for the car within a week.

In 2014 Tesla announced that all their patented technologies could be used by ‘anyone in good faith’ to spread the development of EVs. This move made by Tesla hoping that other EV manufacturers would adopt its technologies and like to become the industry standard for the all EVs.

This report starts with evaluation of the Model 3’s business model and based on the evaluation, assessment for Model 3 for becoming a market player in car manufacturing is done and Analysis of the operational risks is done.

2.Evaluation of the Tesla’s Model 3 business model

Direct sales

A conventional car manufacturer sells their product through a middleman a franchised dealership whereas Tesla uses direct sales and eliminates the middle men through which money can be saved and the price of the car is reduced comparatively. Tesla showrooms have a no conflict of interest, the customers only deal with the tesla employed sales and service staffs. It has created an international network of owned car showrooms and galleries mostly in prominent urban centres around the world (318 locations as of third quarter of 2017). In the showrooms tesla carries a small inventory of the vehicles for immediate sales. A walk-in customer would see a few sample Tesla cars and a exposed version of the car’s chassis in the back. A customer would order the car in store or online where customisation of the car can be done, and car would be delivered to the door.

Service

Tesla employs a servie called tesla rangers, they are a mobile technicians who will do the car service to the door or a customer convenient locations. one of the unique features of the Tesla’s vehicles were designed with the capability to wirelessly upload data via an on-board system with cellular connectivity so the technicians could view and fix the problems online if necessary the Tesla rangers will visit the site of the vehicle. Tesla has combined many service and sales centres and called the concept ‘service plus’. customers could charge their vehicles or get services to the vehicles in the service plus locations. The Tesla Model 3 came with an 8-year or 100,000-mile warranty

Charging

Charging the batteries of the vehicles key set backs for the EVs in general since the product is still in the introductory stage of its life cycle so only select places has the charging locations and charging tend to slow. Tesla has created a new and its own network supercharger stations. The drivers can fully charge their vehicle in 30 minutes for free. Tesla is slowly but surely working to adapt the charging stations with many hospitality locations such as hotels, shopping centres, resorts etc.

Manufacturing

Traditionally auto companies outsource most of their components production work to suppliers meanwhile the company focuses on engine manufacturing and vehicle assembly. whereas in Tesla 80% of the components production is done in house. The component manufacturing and assembly is done in Fermont, CA and the battery production is completed in The Gigafactory 1 in Nevada.

Safety

The li-ion (lithium ion) batteries used in the Tesla’s vehicles could cause a serious explosion when crashed but the Tesla developed its proprietary battery