Tesla Motors Company’s New Product Management

Executive Summary

The name of the product “Tesla”, as shown in the picture Nickolas Tesla is one of the most famous Electricity pioneers, his study and researches had contributed a lot for the science of electricity, especially when it comes to the Electric Motor. Tesla Motor had picked the name to inspire the invention of Electric Motor as the future of Automobiles. They first production car has prove very encouraging results, for an electric car which can be charged at home when it parked at night, so it can be driven for up to 400KM rang. As for the main car it would not be cheap, they are aiming at the super car market, with tag price of $100,000.

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They believe there is a good market for their product even with that price but they are set aside from the competition by being the first practical all electric car. They first car which are due in this year is already booked, and they expecting a long waiting list for the potential buyers.

Various reasons gave rise to Tesla’s entry into eco-friendly automobile market. First, company management saw the rising cost of oil and oil politics as a threat to the very existence of American economic power. Secondly, the issue of green house gases, especially carbon dioxide emitted from automobiles had to be reduced so the world can breathe again. Third, hybrids that were in the market at the time of entry did not meet the needs the market. For instance, most, if not all, hybrids were small cars that compromised on passages comfort. This gave rise for better automobiles that would not compromise on comfort.

Tesla motors has done a great job of managing its new products right from designing stages, to assembling and to the current selling process. In fact, even before the first Tesla brand is delivered to the curst customer, the product is receiving accolades from various corners; it has won several design and performance awards in the few months alone. This new brand of environmental friendly automobiles has an advantage over other brands because it is the only car that will be running entirely on electric, whereas its competitors continue to run on both gasoline and electric power.

Introduction to Tesla

“Tesla Motors designs and sells high-performance; highly efficient electric sports cars with no compromises. According to the company’s mission statement, Tesla Motors cars strive to combine style, acceleration, and handling with advanced technologies that make them among the quickest and the most energy-efficient cars on the road.

Their first projection car is a super performance car which is expensive too. They believe on changing the perception of the bulky design of electric cars which failed many time in the past to prove their ability to takeover the place of gas running cars. If they can prove an electric car can compete with the gas ones then they will have a big impact in the current perception of the electric car.

Its not the end of their future plans, they will have more economical higher volume electric cars in the near future after lunching their first super car, which will be the DNA for their latter models. The market penetration has already started, and the expectation is very high due to their latest test.

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Content

New Product Process

Tesla Motors has received all regulatory approvals to import the first production Tesla Roadster for sale. This includes all necessary EPA and DOT approvals, including completion of all Federal Motor Vehicle Safety Standards. The company has already started taking orders for 2008 models, whose waitlist is already full, and 2009 whose waitlist has already started to build up. Potential owners are encouraged to fill their application on the company’s website, with a down payment of US$ 5000; the car’s purchase price is estimated to be US$ 100,000.

Crash test

After a final round of crash tests, the Tesla now meets U.S. Federal Motor Vehicle Safety Standards. With that hurdle cleared, the car officially meets DOT and EPA requirements to be sold in the lucrative United States market. The passage of those tests means that the car can be sold in any of the Americans 50 states. Considering that US is seen as the trendsetter in car safety standards due to its regulators strictness, many other markets in the world, especially Europe and Asia will easily welcome Tesla on their roads.

Tesla had to pass the following requirements

Windshield defrosting, mirror coverage and EPA Clean Air Act requirements were also necessary. Precise information on how the carbon fiber body crashed haven’t been released, but the company announced that it did pass and that the car has been approved for U.S. sale, thereby keeping the company on track to begin delivering cars as scheduled. Currently, the only mechanical change to the Tesla is a one-speed transmission that will be used on early production models. Acceleration is limited, from the blistering 4.0 second 0-60mph time promised to a more sedate 5.7 seconds, but the single-speed gearbox is reportedly more durable than the two-speed transmission that was originally planned.

Tesla is in the process of developing the faster transmission for production but plans to begin limited production on schedule with the interim transmission. The passage of all those key tests on its initial model is a step ahead, considering that most car models, especially start ups, go through several designs before receiving clean roadworthiness bills from regulators. Furthermore, the success means that further improvement of subsequent models will make the brand more superior compared to other cars of their class and market. Also being the first performance, non-gasoline car will further put Tesla on a new class of its own; potential competitors will have hard time catching with this market-leader-to-be.

Opportunity Identification & Selection

Tesla founders selected the motor industry because they saw various problems that had not been fixed by the existing motor assemblers. Those problems include:

Hybrid Demand

Just few years after hybrid cars were developed by Ford and Toyota, people mostly in developing world seem to have seen the like them and started investing in these new automobiles. But because only few companies were making the cars, it became clear enough that meeting the demand for the hybrid will be difficult, and surely it was. The wait lists were getting longer everyday. As a result the resale value of used hybrid cars like Toyota Prius was even higher for most people to afford. This unmet demand had Tesla maker select the motor industry as their chosen field of operation.

Lack of High Performance Hybrid

Since the hybrid were in high demand and in the initial years of production, the available brands were not developed enough to meet the demand of people who liked high performance cars that were emitting less or no carbon at all. Instead, the cars were designed to reduce owners’ fuel cost. Most hybrids were small cars with basic requirements. After all, they were meant for regular commuters who did not care much about the features on the car. Thus Tesla manufacturers saw it fit to develop products that will cater for consumers that would like fuel efficient cars with more features.

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Compromise on comfort

The existing hybrids were (as it is today) accused of compromising on passengers’ comfort, because manufacturers tried to cut on any heavy equipment that could decrease the power-weight-ratio, which determines that energy to be used in the driving process. It is not therefore by mistake to notice that most hybrids had fro many years been concentrated on smaller commuter cars. It is only recently that four-wheel-driven cars started using the hybrid technology. The status quo that had existed previously was not making many would be drivers of hybrids happy, because they will have to compromise on their driving costs for the case of fuel efficient. This never augured well with many drivers, which explains Tesla’s entry into the market.

Not green enough

The hybrids further stood accused of not being green enough, a tag that thy got from their use of both electric energy and gasoline. It occurred to Tesla’s management that hybrids preached reducing the emission of carbon dioxide while contributing to the same. It was therefore important to provide the market with completely green automobiles that addressed both emission of greenhouse gases and the increasing cost of gasoline. This answer was to be found in Tesla’s all-electric models, first of which will be coming to the market by end of this year.

Preparation & Alternative

In the preparation stages for the product, Telsa’s management was keen to look into four aspects that the product had to go through:

Competitive

The management had to look for how competitive their product would be in the eco-friendly market. The main competitor to their product was the hybrid cars that are currently all the craze among individuals with high environmental concerns. The competitiveness of Tesla models was to be cultivated in the mode that would power them, which came to be lithium batters. By doing that the management did not only put bring forth a competitive edge against hybrids, but also created a new market for its products. Another competitive edge was the sporty look and lightness that came with this performance car.

Product Cycle

The Company had to look for ways of reusing the cells that would be used in its cars. Upon research, Tesla designers concluded that products used on the automobile were recyclable, which made more appealing to the environmental friendly target market.

Teamwork

This aspect of new product management involves how production goals will be achieved by the company teams. In Tesla, designing teams were to be devided into two (and several sub-teams that worked under the two): the first team was to take care developing the battery on which power will be stored, whereas the other team dealt with issues regarding the cars body weight and looks, which specially involved ways to make carbon fiber produce desired results.

Supply

Among other aspects that Tesla had to deal with involved deciding the supply chain to be used, so the product can reach the target customers. This has completely been done through the internet, where potential buyers pay US 5000 to get on wait lists, custom make their cars as well as looking on the progress being made.

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Problem – Based Ideation

Innovators of Tesla Motors had four ideas that led to the creation of their new product: Tesla Roadster, the first high performance non gasoline, that is, electric car. These ideas rare discussed below in detail:

Global Warming

Tesla inventors felt it was necessary to meet the needs of people concerned with the global warming, which is partially being cause by carbon dioxide emissions from gasoline-operated motor vehicles. This need was especially directed to wealthy individuals that were willing to pay for a modestly priced but well designed automobile that had reduced carbon emissions. There was already a market for such cars, as indicated by the increasing popularity of hybrid cars from various assemblers, especially Toyota, Honda and Ford. Inventors thus sought to participate in this market by creating a more superior product named Tesla.

Oil Dependency

Makers of Tesla intended to meet the needs of Americans that were concerned that their country was depending too much on foreign oil, which made some of them (Americans) to worry that national security could be comprised by supplying nations. Considering that the largest promotion (more than half) of imported oil is used in transportation industry, some American really needed a way of getting out of that tangle though more efficient transportation means. In fact, such feelings recently caused policy makers to provide incentives for alternative sources of oil. The all electric Tesla cars are therefore meant to break America’s oil-dependency-syndrome.

Maintain domestic economic stability

America’s driving cultures has resulted to increasing national oil bill due to the rising demand of the product nationwide. At the same time, the country production of oil started declining in the third quarter of the twentieth century, and it is not showing signs of recovery. Attempts to drill oil in Alaska and other wildlife sanctuary areas consistently lead to public uproar. These two scenarios has meant that America has to keep importing oil from other country’s, which is somehow economically damaging considering that oil prices have been reaching record heights consistently since the turn of the twenty first century.

Create alternative to hybrid cars

The increasing popularity of hybrid cars in the American market hugely contributed to Tesla makers’ feelings of producing even better environmentally-friendly cars. Huge demand for some hybrids, such as the Toyota Prius convinced inventors that the market could really accommodate more competition. Besides, the all popular hybrids still used some gasoline burns gasoline and emits still emits the very CO2 they were supposed to reduce. This latter comparison is gradually becoming one of Tesla’s major competitive advantages of the hybrids. Competitors, even the ones providing hybrids, will have rough time overcoming that challenge, which will give Tesla a head start in the increasingly competitive market of environmental-friendlily automobiles.

The Concept Evaluation System

To determine whether the chosen battery will work effectively in the car, Tesla developers chose to first use smaller versions (AA-sized) of lithium batteries in their tests (Berdichevsky, Kelty, Straubel & Erik Toomre, 2006). When the first AA-sized lithium battery seemed to work in the tests, the designers started adding more cells and consequently monitored their performance. The addition of cells meant increase of power in energy that could be stored in the increasing size of relevant batteries. At long last, designers were able to reach the current size battery, which has a total of 6800 AA-sized smaller versions.

Concept testing

Self and independent testing

Owing to the fact that electric cars have been developed before and failed miserably, Tesla makers were under pressure to ensure that theirs was not yet another poor showing of electric cars. Their use of lithium battery was also to be put under heavy scrutiny because it was the first time such attempts had been made. To make sure that their product will work well while in customers’ hands, battery prototypes were subjected to hundreds of tests from the designing team and even more tests by well respected independent Lithium battery testers. No flaws were found, probably because of the long time and professionalism that was requested in the development process. Among the independent bodies that tested Tesla cars included Society of Automotive Engineers (Berdichevsky, Kelty, Straubel & Erik Toomre, 2006).

Driving on extreme conditions and deliberate crashing

Completely assembled cars were driven in extreme and normal conditions that potential drivers will find themselves in during the cars lifetime. This was all to endure that Tesla cars will not disappoint owners, as well as testing their safety in normal and abnormal conditions. The company website reports that wholly assembled cars were being crashed deliberately on different conditions to makers can point any concept flaws that had to be dealt with before Tesla brand was released to the market. This was also in preparation for testing by national and international transport and safety regulators.

Testing by national and international authorities

Tesla cars were subjected to further testing by the United States Department of Transportation and the Federal Motor Vehicle Safety Standards (FMVSS). Certification from both organizations required before any motor vehicle is sold in any of America’s fifty states. Most other countries usually follow the ruling of the American regulators, which means that cars cleared in the US are as well allowed to operate on foreign nations’ roads.

Apart from the two national bodies, the United Nations’ special committee had to observe the car’s reaction when subjected to tough crashing tests. The UN Committee was to represent the interest of international drivers. This is because of the risk posed be the presence of Lithium batteries on cars, especially during time of accidents. Tesla had a choice of only subjecting its product to national regulatory tests and then forward results to the UN, but opted to invite authorities from both sides so as to instill confidence of its products to both national and international clients. The company further considered the passage the United Nation’s tough tests and regulations on transportation of Lithium batteries as a good indicator of how safe drivers would be in Tesla’s cars (Berdichevsky, Kelty, Straubel & Erik Toomre, 2006).

Product Protocol

Tesla designers intended to develop a product that had several features over the existing competition, and features that will cause future competitors hardship in their attempts to copy Tesla’s success. Those product protocols are detailed below:

Zero emission

The final product that will be sold for the first time this year is completely emission free as it used lithium batteries rather than gasoline engine. This is seen as much improvement from hybrids that are the existing competitors. The latter uses both electric power and gasoline whereas the former will entirely depend on stored electric energy.

Stylish

Tesla Roadster that will hit American roads later this year will successively compete in the stylish market due to the sleek finishing that designers accorded this début model. Its carbon fiber body made it possible for designers to come up with nice contours on the cars body that will leave a great deal of admiration from consumers. The sleek inside is on the class of its own. These features explain the high demand that the car has received; 2008 waitlist is full. In fact, the company was forced to open a new waitlist for 2009 despite the US 5000 waitlist fee that potential drives will have to pay.

Classy

Designers really wanted to produce a classic car. And surely they did! Tesla Roadster has succeeded in attracting young and classy professionals with passion to ride on environmental friendly car that does not compromise on performance and the looks—this is what designers provided potential drivers.

Design

Tesla makers had several goals in mind that resulted to the current design. Firstly, designers wanted to achieve low dynamic drags that would increase the cars performance and efficiency. Secondly, they wanted to gain high power-to-weight ratio that would aid easier acceleration, because the car would be lighter than normal. These two goals were achieved by making car’s body with the use of carbon fiber instead of steel. According to Tesla’s website, carbon fiber and steel have the same mass per pound; however, carbon fiber uses 30 percent material to achieve same strength that would be achieved by one pound of steel.

It is this factor that made it possible for the car to gain the desired power to weight ration that aided quicker acceleration (Tesla Motors, 2008). Further, carbon fiber has a smoother finishing lines compared to steel; this made it possible for designers to come up with smooth curves that in achieving the desires dynamic drags. The result: a sleekly looking automobile that is destined to attracting high end customers, at least in the initial stages before the company embarks on mass productions. The interior of the car is market with smooth contours that have had potential drivers all but glare at the stylish look.

As illustrated in earlier sections of this report, the car battery uses lithium-ion (Li-on) to store energy (Tesla Motors, 2008). This is the same kind of battery used on consumer electronics, only that it is bigger and little bit sophisticated; it is rumored to be the biggest lithium-ion battery ever made. The car’s underneath and floor are designed such that the battery is well protected from damage from rough road conditions, and that passengers are protected from any danger should the battery start malfunctioning. The design thus ensures passenger safety as well as guaranteeing the battery’s durability.

According to Tesla’s website, Roadster’s (current model) has won several awards from prestigious organization, which shows the respect that the car has started commanding in the market place. For instance, the design won Time Magazine’s Best Inventions of the year 2006, in the transportation invention category. In 2008, the design won the prestigious IDEA (Gold International Design Excellence Award) that is jointly sponsored by IDSA (Industrial Designers Society of America) and the BusinessWeek Magazine. The award accrued to the design’s ability to bring out positivism and quality on the resulting product. Winning such excellent awards are indications of the bright future that beholds on Tesla’s automobiles.

Conclusion & Recommendations

Recommendations

Tesla Motors has so far done its best in designing a product that will meet demands set upon it by consumers. It has for instance succeeded in providing stylish car that does not emit carbon dioxide, exactly what it promised automobile industry. Costs of production are however so high that the company cannot at the moment produce more cars for the mass market, which makes some lower end consumers view the company as just another manufacture that only considers needs of the wealthy in the society. The company has however indicated that it will eventually start producing for the mass market.

This will bode well with meddle and lower income earners who share environmental interests with their rich colleagues who can afford such a car. In case there is great success in its debut model, the company should consider gradual increase in its production lines and lower the US$ 5000 that potential drivers are supposed to pay before they get on the coming year’s wait list. Further Tesla should consider aliasing or sharing technology with other like minded assemblers—which will increase the rate by which its innovative product will reach the masses. By doing that, Tesla will have achieved two of its main goals: to help curb global warming and reduce reliance on oil.

Conclusion

Tesla has employed a successful new product management for its automobiles. All the steps of the management process were well planned and executed to an extent that the debut model, Tesla Roadster has already won several awards for both performance, ability to achieve set goals and design. Though its new product management process, Tesla has been able to provide consumers with the product it promised in the initial stages.

Setting such precedence in the company young history will go a long in keeping customers happy and attracting more ones in its fold. Owing to the fact that Tesla will be operating in a relatively new “fuel-efficient” market that is dominated by few players, the company could easily be able to position itself in the market before competition heats up. Actually, the company could even be able to create a new market for all-electric cars. Should that happen, Tesla will be on its way to becoming a major player in the world’s automobile market, a trendsetter when it comes to non-gasoline cars, and a great contributor in the attempts to control carbon emissions and oil reliance.

References

Berdichevsky, G., Kelty, K., Straubel, J., & Toomre, E. (2006). The Tesla Roadster Battery System Tesla Motors. Tesla Motors.

Telsa Motors (2008). How it Works. Web.

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