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Can Tesla Motors be a viable business?
After reading Tesla Motors case from the course pack, it is not difficult to prove that Tesla Motors can be a viable business. We can look at the question using the five forces competitive analysis checklist. 1.The threat of entry is low. The customer switching costs are moderate, they can trade in their current CV and buy a Tesla. Also government encourages EV by providing tax credit and even rebate to customers. 2.The power of suppliers is low. A regular CV usually sourced from more than a thousand suppliers, and the most complex part was the powertrain. However powertrain of a Tesla is nothing more than a electric motor, also they decided to bring the full assembly of the Model S in-house. Not only they made their own powertrain, they also sold electric powertrains to other car manufacturers and provided design services for electric powertrains. 3.The power of buyers is low. Tesla has direct sales store unlike dealership in which dealers take some of the margin. The customers are most likely regular people. 4.The threat of substitutes is moderate and rivalry is low. There are some electric cars on market, Nissan Leaf, Toyota Prius, VW Golf and Ford Focus, but they are all low-end family car. Also Tesla is going to build an even more affordable car in the future competing with BMW 3 series, Mercedes C class and Audi A4. The technology of Tesla is so far ahead among his competitors, the Model S was controlled by software that could be wirelessly updated using cellular. It is also the first car with autopilot which is a self-driving system on the market.

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