Case notes
Organizational health & performance (desired state)
“Super dedicated team”
Outsold both Nissan and GM I EVs (also outsold BMW and Audi)
Raised sales target, awards etc..
This will help us to justify why we are essentially taking on the same current strategy of continuing to sell high performance cars
Emphasize trade-off of performance / mass production of economy style cars
“What is Strategy” article
The Growth Trap
“compromises and inconsistencies in the pursuit of growth will erode the competitive advantage a company had with its original varieties or target customers. Attempts to compete in several ways at once (high performance and economy cars) create confusion and undermine organizational motivation and focus”
We need to “concentrate on deepening a strategic position rather than broadening and compromising it”.
We also can’t mass produce economy cars because we would need to compete on price, not necessarily differentiation (price is the biggest influence for this segment). Our manufacturing plant lacks the economies of scale & scope for this to be feasible.
Threat of new entrants even lower for largest car manufacturers (49% or market) as it costs $6bn for a new global car. Would also take 4-5 years although simpler redesigns of an existing model were often less than a year
We want to encourage this process of just redesigning an existing model and using our powertrain
If companies do this then they have a substantial switching cost because our powertrain design would be directly incorporated in their manufacturing process.
Also, large car manufacturers have “huge assembly plants” that “reach their minimum efficient scale at between 100,000 and 250,000 cars per year
The high performance EV market is not that big yet? (Right now too many people have doubts about EVs?) – Big car companies therefor can’t justify launching new niche EV model?
Economic deterrence
It would also be hard for new companies to create a new high performance EV because of high investment/FC experience curve for Li-Ion batteries 85-90% (best thing about first movers advantage and how we will be able to capture large margins for powertrains  less costs = more profit)
Should we project these cost decreases going forward in financials?
Could we maybe partner with the government and get them to give rebates on buying our powertrains? – If they want a certain % of a car manufacture’s fleet sales to be zero emissions and the biggest barrier stopping car companies doing this is the substantial cost to design/build powertrain/electric motor, then they can help car companies make the move by giving a discount to our powertrains (we still retain all the profit but the government covers the discount) – our interests align with governments (stakeholder analysis)
EV market valuation $25 billion by 2020 (5-60 depending on scenario)
Should we outsource activities such as plastic parts (pg. 8)? – not a core activity and customers aren’t buying Tesla for plastic parts.. (doesn’t contribute to value)?
“existing franchise dealers have a fundamental conflict on interest [as it is] impossible for them to explain the advantages of going electric without simultaneously undermining their traditional business” – strategy definition/term that we can use in our analysis
Include dealership conflict in analysis (pg.8) – this is a barrier as we can’t sell in all states?
We have the same life-cycle cost of a 5 series but better performance – VP/CA etc..
This performance differentiation is what sets us apart – competitors can’t match
This life-cycle cost will only decrease going forward as the EV learning curve progresses and we become more efficient
Need to factor in Europe in recommendation
Balanced scorecard processes, measures, targets, etc..
Management preference: high cooperation (with Panasonic, Lotus etc.)
This will help us justify why strategic alliances with other companies will work (selling them powertrains and advising them on how to