For the exclusive use of d. he, 2019. W13610 TESLA MOTORS: BURNING UP THE ROAD TO DOMINATION OR DOOM 1 Karam Putros wrote this case under the supervision of Professor Dante M. Pirouz solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certain names and other identifying information to protect confidentiality. This publication may not be transmitted, photocopied, digitized or otherwise reproduced in any form or by any means without the permission of the copyright holder. Reproduction of this material is not covered under authorization by any reproduction rights organization. To order copies or request permission to reproduce materials, contact Ivey Publishing, Ivey Business School, Western University, London, Ontario, Canada, N6G 0N1; (t) 519.661.3208; (e) cases@ivey.ca; www.iveycases.com. Copyright © 2013, Richard Ivey School of Business Foundation Version: 2014-04-16 It was November 2013 and Elon Musk and his innovative, premium electric car company, Tesla Motors (Tesla), were beginning to enter a difficult period in the young company’s history. Recent stories in the global press reported car fires in Tesla’s premier Model S sedan. 2 There were also reports that the company was inflating its financials by booking revenue from sales of its zero-emission vehicle credits granted to it by the State of California. Investors were becoming nervous. The next year would be crucial. The company had the potential to become one of the best high-end global car brands in the world. It could accelerate sales by continuing to generate big buzz about the revolutionary battery cell technology used in its cars and citing the almost fanatical customer satisfaction with them. But the company had to get the fundamentals right in order to build to a critical mass of sales that would allow it to survive in the short term. The characteristically confident Musk was faced with many issues that he had to resolve in order to survive the next 12 months. He needed to pick the most important ones and get those resolved right away while creating a winning formula for production, pricing and promotion of the Tesla car line before his investors started to bolt from the stock. THE COMPANY Founded in 2003 by Martin Eberhard and Marc Tarpenning, Tesla designed and manufactured high-end electric vehicles. The California-based company was well-known for producing the first fully electric sports car, the Tesla Roadster. Different from most car launches, Tesla decided to sell vehicles initially at a premium price point, with the Roadster priced at $109,000. 3 This pricing tactic limited the size of the target market and, of course, the number of units sold. This, coupled with the 2008 financial crisis in the United States and the subsequent recession, seemed to backfire. Despite significant financial investment from investors, the company failed to record profits in its first few years. 1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Tesla Motors or any of its employees. 2 Tesla Model S - Official Walkthrough HD, www.youtube.com/watch?v=6HtlmNzqQdo, accessed December 9, 2013. 3 “Key Events In The History Of Tesla Motors,” Associated Press, June 21, 2012, www.utsandiego.com/news/2012/jun/21/key-events-in-the-history-of-tesla-motors/, accessed December 4, 2013. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. For the exclusive use of d. he, 2019. Page 2 9B13A050 In 2008, Tesla encountered a major change in its leadership — Elon Musk, co-founder of three companies (most notably Paypal) was named chief executive officer (CEO). 4 Musk, a University of Pennsylvania graduate, was an important financier. As the recipient of several honours, including Time Magazine’s Top 100 Influential People in 2010, 5 he was considered the kind of charismatic leader that could shake up the company. This change of leadership, along with the slow recovery of the global economy, the increasing demand for fuel-efficient cars and the increasing price of fuel, allowed Tesla to finally prosper in 2013. TECHNOLOGY The lithium ion battery pack was the signature of the Tesla design. Typically used in laptops, these batteries could be charged at any outlet and stored three times more electricity than competitors’ batteries. Every hour of charge would produce power for 100 kilometres of driving. Tesla set up supercharge centres, usually at roadside outlets and cafes, in 34 locations in North America and six in Europe, where half the battery could be charged in 20 minutes at no cost. In order to meet the hefty utility costs of these free superchargers, Tesla incorporated solar-powered channels to run them — and these were built conveniently by Musk’s other company, SolarCity. In the near future, the lithium ion batteries were expected to fully charge within five minutes, about the same time it would take to fill up a gasoline tank. Although the safety of these batteries has been questioned, a gasoline tank has 10 times more combustion energy. The powertrain inside Tesla vehicles provided an edge in speed. It was relatively simple in design, only containing one rotor that controlled the car’s movement. The powertrain in most other cars consisted of a variety of parts, such as a spark or belch, in addition to a rotor, thus reducing potential acceleration. Tesla’s simple powertrain could go from zero to 100 kilometres/hour in less than six seconds. In order to reduce weight and increase performance, Tesla relied on carbon fibre for the Tesla Roadster and aluminum for the Model S rather than the steel traditionally used by most automobile manufacturers. These lightweight parts increased performance by requiring less power. In fact, crash tests demonstrated that these lightweight materials, which were much stronger, performed better and had greater crash absorption potential (especially the case in aluminum) than steel, contributing to the Model S’s designation as the safest car of the year in 2013. 6 PRODUCTION Tesla produced its vehicles at a Fremont, California plant formerly occupied by Toyota and General Motors. In the 370-acre plant, 3,000 employees and 150 robots took about four days to manufacture each of Tesla’s technologically advanced vehicles. The plant had the capacity to produce up to 500,000 vehicles annually, though in 2013 only about 20,000 were being produced. Tesla expected to produce up to capacity within the next decade. Panasonic, its supplier for the lithium ion batteries used to power the vehicles, although able to meet demand up to now, was not expected to keep up in the future. As a result, 4 Claire Cain Miller, “Tesla Motors Zaps Another C.E.O. and Lays Off Staff”, October 15, 2008, www.green.blogs.nytimes.com/2008/10/15/tesla-motors-zaps-another-ceo-and-lays-off-staff/, accessed December 4, 2013. 5 Jon Favreau, “The 2010 Time 100: Elon Musk,” April 29, 2010, http://content.time.com/time/specials/packages/article/0,28804,1984685_1984745_1985495,00.html, accessed December 4, 2013. 6 Jerry Hirsch, “Upstart Tesla Wins Top U.S. Safety Rating; What Will Competitors Do?,” Los Angeles Times, August 20, 2013, http://articles.latimes.com/2013/aug/20/autos/la-fi-hy-tesla-nhtsa-safety-rating-20130820, accessed December 4, 2013. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. For the exclusive use of d. he, 2019. Page 3 9B13A050 Tesla recently considered buying a “giga plant,” which would be the largest lithium ion battery production site in the world. Tesla opened an assembly plant in August 2013 in Rotterdam, Netherlands to help meet increasing demands for its vehicles in Europe. SALES Tesla had a radically different way of selling its vehicles, bucking the traditional method of selling through dealerships and salespeople. Instead, Tesla used a factory-direct method of selling. Similar to Apple Computers, Tesla used factory stores to sell directly to the end consumer. It opened factory-based “galleries” in highly populated areas such as upscale shopping malls, where hundreds of people would visit every day. In 2013, the company had 41 galleries in the United States and three in Canada. It was not easy for Tesla to open and maintain these galleries. Franchising laws in the United States prohibited manufacturers from selling directly to consumers. However, Tesla strategically targeted states whose weak enforcement of franchise laws made them easy to circumvent. As a result, it was able to bypass the dealership system of distribution successfully. As a result of this approach, not only did Tesla avoid the extra fees, such as commissions, associated with selling its vehicles through dealerships, but the consumer could purchase vehicles at a lower cost. Despite this, Tesla still had limitations on how it could sell its cars in certain states. For example, Texas had many restrictions on what the company could do: the state did not allow test drives or negotiations over price at the Tesla showrooms. Moreover, Tesla’s factory-direct method sales approach angered many franchise dealers across the United States, triggering numerous lawsuits. Still, sales in North America increased at a significant rate, especially in Tesla’s home state of California, where it surpassed Porsche, Jaguar, Volvo, Landover and Lincoln in sales in the luxury car market as of September 2013. A total of 21,000 vehicles were expected to be sold globally that year. In the European market, Tesla sales slowly started to gain momentum, particularly in Norway, where the country provides electric car owners with benefits including free parking and tax benefits. Germany, which has a vast automotive industry, was a slow market for Tesla whose vehicles do not drive fast enough for many Germans, who are used to some of the highest highway speed limits in the world. PARTNERSHIPS Tesla slowly increased its partnerships with other top companies internationally. Recognizing that Tesla’s electric vehicle design and technology were distinct, Toyota partnered with the company to produce the RAV4 electric vehicle, which went on sale in the summer of 2013. Mercedes followed the same path and was expected to release its first electric vehicle with the help of Tesla in early 2014. As previously mentioned, Panasonic had long been a partner for Tesla, providing the company with lithium ion batteries. To help consumers finance the costly vehicles, Tesla partnered with Wells Fargo and U.S. Bank in 2013. Finally, AT&T provided the wireless service to enable buyers of Tesla’s premium vehicles to link to the Internet in their cars. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. For the exclusive use of d. he, 2019. Page 4 9B13A050 MARKETING STRATEGY Using the factory-direct approach, Tesla attracted three groups of consumers. Eco-friendly consumers, whose numbers were likely to grow in the future, were the main group that the company tried to attract. Next were mid- to upper-class professionals looking for a premium car and then tech-savvy individuals. Because electric vehicles were still fairly new in today’s market, Tesla trained product “specialists” to educate consumers who came to the galleries about the benefits of electric vehicles in general. Unlike car dealers, product specialists did not work on commission and thus were able to ensure a better experience for the consumer as they did not have to pressure to make a sale. Tesla’s in-house marketing team consisted of seven people, some of whom were in charge of the company website. Unlike most auto companies, Tesla did not rely solely on traditional advertising to promote its cars. Communication about the company’s products was disseminated through social media such as Twitter and Facebook, although the company did produce a few ads. Mostly the company relied on positive word of mouth and product technology announcements to drive its sales. News about Tesla tended to go viral among various types of people including car lovers, environmentalists, designers, techies and even investors. A 2013 article in Consumer Reports reported that Tesla’s Model S was given an almost perfect rating score by both owners and the editors of the magazine. 7 Ultimately, the distinctive factory galleries, which easily attracted customers with their impressive designs, along with the raving word of mouth from owners, positive buzz among car enthusiasts and high satisfaction and safety ratings, were the company’s best advertising. FINANCING TESLA’S GROWTH In the first few years of Musk’s leadership, the company made little progress financially. In 2010, the same year the company made its initial public offering of $167 million, 8 it lost over $150 million, 9 approximately three times more than the previous year. However, since Tesla was a relatively new business and the United States was still in the middle of a recession, time was needed to assess the true state of the company. In 2011, Tesla both announced it would expand its car sales to Europe and Asia 10 and partnered with Toyota. In the following year, it released a more affordable second car model, the Model S (priced at $50,000). Exactly a decade after Tesla’s founding, 2013 proved to be a financially successful year. In the first quarter, the company earned its highest ever profit of $11.2 million. 11 Moreover, the company’s new Model S was named the safest car on the road, 12 and with oil prices becoming more expensive than ever, 7 “Tesla Gets Top Marks in Consumer Reports Satisfaction Survey,” Reuters, November 21, 2013, www.reuters.com/article/2013/11/21/us-autos-tesla-satisfaction-idUSBRE9AK0J320131121, accessed December 7, 2013. 8 Jerry Hirsch, “Tesla Motors Plans $167-million Stock Option,” Los Angeles Times, June 16, 2010, http://articles.latimes.com/2010/jun/16/business/la-fi-tesla-ipo-20100616, accessed December 4, 2013. 9 Tiffany Hsu, “Tesla Motors’ Loss Widens 177% In 2010,” Los Angeles Times, February 16, 2011, http://articles.latimes.com/2011/feb/16/business/la-fi-tesla-earns-20110216, accessed December 4, 2013. 10 www.latimes.com/business/autos/la-fi-hy-tesla-stock-tops-100-20130528,0,1607302.story#axzz2jF6LGdRC, accessed December 4, 2013. 11 Jerry Hirsch, “Tesla Motors’ Second-Quarter Operating Profit Sends Shares Soaring,” Los Angeles Times, August 7, 2013, http://articles.latimes.com/2013/aug/07/autos/la-fi-hy-tesla-second-quarter-proift-20130807, accessed December 4, 2013. 12 Jerry Hirsch, “Upstart Tesla Wins Top U.S. Safety Rating; What Will Competitors Do?,” Los Angeles Times, August 20, 2013, http://articles.latimes.com/2013/aug/20/autos/la-fi-hy-tesla-nhtsa-safety-rating-20130820, accessed December 4, 2013. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. For the exclusive use of d. he, 2019. Page 5 9B13A050 Tesla’s shares 13 began to soar. Perhaps most impressively, in May 2013, Tesla repaid the government loan of $465 million it had received in 2010, 14 nine years before the due date. The company was clearly starting to show signs of financial stability. At the end of August 2013, Tesla’s stock price was $170, and by September it reached $190, giving the company a market capitalization of about $24 billion. Tesla was able to demonstrate this financial strength despite the fact that it had shipped only about 20,000 Model S units by that time. However, by the close of trading on November 28, 2013, the stock had fallen to $126.94. (The reasons for this are explored in the following two sections.) As a way of building sales, Tesla decided to start marketing and shipping cars to Europe. The time required to transport the cars from California meant that the company’s fourth-quarter outlook could not book these units as revenue until they were actually delivered. This made some analysts unhappy due to lower short-term earnings. Tesla continued to avoid expending any money on traditional advertising. They were able to sell every unit they had in production, and there was still unmet demand in the marketplace. Tesla was preparing production on a sport utility vehicle (SUV) version of the Model S to appeal to an additional target segment and compete head-on with other high-end auto brands such as BMW’s X series; the G, GLA, GLK and M series built by Mercedes; and Porsche’s Cayenne and new Macan series (the latter to be launched in 2015). While the Model S was priced between $70,000 to more than $100,000 depending on the features added, the Model X crossover SUV was to be launched at the end of 2014 with an unannounced price point higher than the Model S, given the expected demand. In order to increase production velocity and avoid the uncertain supply of the battery packs, Tesla signed a four-year production deal with Panasonic for 1.8 billion battery cells. This would allow Tesla to produce 250,000 cars. It was estimated that Tesla could produce and sell approximately 100,000 cars in the next two to three years, according to Canada’s The Globe and Mail. 15 To meet the demand, Tesla was contemplating a production partnership with another battery supplier to build a “giga factory,” which could produce enough battery cells to build hundreds of thousands of vehicles. This would also allow Tesla to better control a large component of the variable cost in the vehicle by closely managing the production of the most expensive equipment in the car — the battery. It was estimated that based on estimated earnings in 2016, the current stock price was relatively cheap at only 13 times earnings 16 Model S unit sales were 5,500 for the third quarter of 2013, but analysts were not impressed: “Brian Johnson, an auto analyst at Barclays PLC, had expected 5,820 Model S sales. Dan Galves of Deutsche Bank AG estimated the company would ship 5,850 cars in the quarter.” 17 Tesla planned to ship about 6,000 units in the fourth quarter of 2013. It reported a gross margin of 21 per cent in the third quarter with the biggest share price increase of any carmaker. The company was also 13 “Does Tesla Deserve Its Rising Stock Price?” Fox Business News video, www.youtube.com/watch?v=MQLY36ED-hY, accessed December 4, 2013. 14 Jerry Hirsch, “Tesla Motors Pays Off Department of Energy Advanced Technology Loan,” Los Angeles Times, http://articles.latimes.com/2013/may/22/autos/la-fi-hy-tesla-pays-off-doe-loan-20130522, accessed December 4, 2013. 15 Chris Umiastowski, “Why My Money’s on Tesla, Despite the Stock’s Volatility,” Globe and Mail, November 28, 2013, www.theglobeandmail.com/globe-investor/investment-ideas/strategy-lab/growth-investing/why-my-moneys-ontesla/article15659893/, accessed December 4, 2013. 16 Ibid. 17 Bruno J. Navarro, “Tesla’s Run Just Beginning: Analyst,” CNBC.com, www.cnbc.com/id/100946446, August 7, 2013, accessed December 9, 2013. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. For the exclusive use of d. he, 2019. Page 6 9B13A050 preparing to ship to Asia by year end 2013 and estimated that over time up to two-thirds of its sales would come from abroad. Expenses continued to rise due to the aggressive roll-out strategy of company-owned stores, charging stations and the additional research and development (R&D) needed in order to bring production costs down for a proposed lower priced model to be launched within the next three years. Revenue was $431.3 million compared with $50.1 million the previous year, with net losses of $38.5 million or 32 cents per share in 2013 versus $110.8 million or $1.05 per share in 2012 (see Exhibit 1). 18 Tesla’s positive financial reports stemmed in part from the revenue booked by sales to other companies of zero-emission vehicle credits in California and other participating states (see the discussion in the next section). This totaled $68 million in revenue in the first quarter, fell to $51 million in the second quarter and significantly declined to $10 million in the third quarter of 2013. In addition, it was reported that California was considering cutting the number of credits Tesla could receive for sales on the Model S. 19 Did this mean that this valuable revenue stream was dwindling? How would investors react to this new revelation? TESLA IN COURT Most start-up companies, particularly automotive ones, are no strangers to adversity, including lawsuits. Martin Eberhard, former CEO of Tesla, filed a lawsuit claiming he was no longer considered a co-founder of the company. 20 Franchised car dealers in New York filed a lawsuit, claiming that Tesla should not be allowed to bypass the law that allows only licensed franchises to sell cars. 21 Recently, Tesla was accused of manipulating its financial status to attract potential investors. For instance, as noted above, California rewarded carmakers that are environmentally friendly by issuing zero-emission vehicle tax credits to them. Tesla’s sale of its tax credits to other companies made up roughly 50 per cent on average of its gross profits every year. 22 However, California was reviewing these tax credits and was contemplating issuing fewer to Tesla in the future. Thus, although a sizeable source of profit now, a large amount of Tesla’s gross profit might be wiped out. Also, to cover up its lack of cash flow, Tesla emphasized its revenue and other financial measures by using non-generally accepted accounting principles for reporting purposes, making them appear much more profitable. 23 18 global.factiva.com.proxy1.lib.uwo.ca/ar/default.aspx. Angela Greiling Keane, “Diesel, Fuel Cells Get Spotlight As Plug-Ins Lose Favor,” Bloomberg News, November 11, 2013, www.businessweek.com/news/2013-11-11/diesels-to-fuel-cells-join-spotlight-dimming-on-plug-ins-cars, accessed December 9, 2013. 20 “Tesla Founders End Bitter Legal Fight,” Ken Bensinger, Los Angeles Times, September 22, 2009, http://articles.latimes.com/2009/sep/22/business/fi-tesla22, accessed December 9, 2013. 21 Julie Bykowicz and Angela Greiling Keane, “Tesla Lobbies Lawmakers With Test Drives,” San Francisco Chronicle, November 28, 2013, www.sfgate.com/business/article/Tesla-lobbies-lawmakers-with-test-drives-5019840.php, accessed December 9, 2013. 22 “Why Tesla’s Zero-Emission Tax Credits Are At Risk,” Bloomberg West video, October 24, 2013, www.bloomberg.com/video/why-tesla-s-zero-emission-tax-credits-are-at-risk-fnlnKS~SRKOUkwEXLG3Uqw.html, accessed December 9, 2013. 23 David Mistead, “Tesla’s Financials: A Peek Under The Hood,” The Globe and Mail, October 2, 2013, www.theglobeandmail.com/globe-investor/investment-ideas/tesla-financials-a-peak-under-the-hood/article14668932/, accessed December 9, 2013. 19 This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. For the exclusive use of d. he, 2019. Page 7 9B13A050 CARS ON FIRE Despite these issues, it was not until October 1, 2013 that Tesla faced its greatest adversity. One of the Model S units, which had been touted as the safest car of 2013, caught fire when the battery was punctured by a piece of metal on the road in Washington State. 24 On October 18, another Model S caught fire in Mexico, when the driver (under the influence of alcohol and driving at high speed) smashed it into a concrete wall. 25 In both cases, Tesla tried to downplay the incidents by claiming that the fires never reached the passenger seat and, in the second case, that despite crashing at a high speed, the driver was not hurt, which demonstrated the safety of the car. The National Highway Traffic Safety Administration (NHTSA) decided not to investigate. However, a third crash resulting in a fire on November 7, 2013 in Tennessee put that decision in question. 26 The official comment from Tesla was the following: We have been in contact with the driver, who was not injured and believes the car saved his life . . . Our team is on its way to Tennessee to learn more about what happened in the accident. We will provide more information when we’re able to do so. 27 In addition, during the same week as the third crash, Tesla reported lower than expected earnings. Excluding special charges, earnings for the quarter was $16 million or 12 cents per share, which was higher than the 11 cents analysts had expected. 28 Earnings reported for the quarter were $16 million or 12 cents per share, outpacing analysts’ expectation of 11 cents. But this did not account for special charges including stock-based compensation and interest expenses which, when included, reduced earnings to an overall loss of $38 million for the quarter. As a result, Tesla’s shares were hit hard and went down 7 per cent to under $140 per share by the end of the week. This was a big change for investors who had become used to the 400 per cent increase in the stock price during the earlier part of 2013. As a result, Tesla was under severe pressure in the last quarter of 2013; many critics wanted an explanation for the ongoing occurrences of battery fires. All fires seemed to have one common feature: they involved the car crashing into metal at very high speeds. It was suggested that the metal could have either short-circuited the lithium ion battery cells in the Model S or torn through the battery pack so that the highly combustible electrolyte liquid leaked. Although the exact cause was still under investigation, Musk made it clear that the news reporting of the fires was exaggerated. He countered critics by writing in a blog post that over 1,500 serious injuries or deaths occurred as a result of gasoline-based fires in the United States since the Model S was released in 2012. In contrast, no serious injuries or deaths have resulted from a Model S fire. 29 Could this issue be handled simply through better public relations or was there more that needed to be done? 24 Peter Valdes-Dapena, “Third Tesla Model S Catches Fire After Crash,” CNNMoney.com, November 7, 2013, http://money.cnn.com/2013/11/07/autos/tesla-fire/, accessed December 9, 2013. 25 Angelo Young, “Watch This Video Of A Tesla Model S Fire In The City Of Merida Yucatan State, Mexico,” International Business Times, October 28, 2013, www.ibtimes.com/watch-video-tesla-model-s-fire-city-merida-yucatan-state-mexico1444006, accessed December 9, 2013. 26 www.latimes.com/business/autos/la-fi-hy-tesla-models-fire-20131002,0,3965564.story#axzz2jF6LGdRC 27 Alan Ohnsman and Jeff Plungis, “Tesla Falls After Third Model S Car Fire: Mover,” Bloomberg News, November 7, 2013, www.bloomberg.com/news/2013-11-07/tesla-falls-after-third-model-s-car-fire-mover.html, accessed December 9, 2013. 28 James O’Toole, “Tesla Shares Sink As Quarter Underwhelms,” CNNMoney, www.money.cnn.com/2013/11/05/investing/ tesla-quarterly-earnings/?iid=EL, accessed December 4, 2013. 29 Jay Yarow, “Elon Musk Writes A Blog Post On The Stories About Teslas Catching Fire,” Business Insider, November 19, 2013, www.businessinsider.com/elon-musk-blog-post-on-tesla-fires-2013-11, accessed December 9, 2013. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. For the exclusive use of d. he, 2019. Page 8 9B13A050 CONCLUSION Despite the setbacks to the company’s safety reputation in 2013, Tesla still retained the loyalty and buzz that a new tech company needs to succeed. Under Musk’s leadership, many believed that the company was in good hands for years to come. On the other hand, some feared that such an influential leader might create a “Steve Jobs’ effect,” which might doom the company if and when he leaves. On October 24, Tesla hired Douglas Field, former vice-president of Apple, 30 to oversee its new vehicle programs. Just like many cutting-edge innovations, such as the Samsung Galaxy and the Apple iPad, Tesla’s products were met initially with skepticism and slow sales. However, with the increasing demand for fuel-efficient cars, Tesla was on its way up, and many people claimed that it was the “Apple of automobiles.” 31 And with Field joining a Tesla leadership group that already included another former Apple executive, the company was certainly heading in that direction. Tesla had the potential to become one of the premier luxury car manufacturers in the world if only it could push its marketing strategy into high gear. 30 Mike Ramsey, “Tesla Motors Taps Apple Talent,” The Wall Street Journal, October 24, 2013, http://online.wsj.com/news/articles/SB10001424052702304069604579155932934851384, accessed December 4, 2013. 31 Chris O’Brien, “Tesla Hires Apple Exec To Lead New Car Development,” Los Angeles Times, October 24, 2013, www.latimes.com/business/technology/la-fi-tn-tesla-apple-car-development-20131024,0,804763.story#axzz2jF6LGdRC, accessed December 4, 2013. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. Page 9 EXHIBIT 1: TESLA FINANCIAL STATEMENTS – BALANCE SHEET 9B13A050 For the exclusive use of d. he, 2019. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019. Source: global.factiva.com.proxy1.lib.uwo.ca/ar/default.aspx, accessed December 4, 2013. Page 10 EXHIBIT 1 (CONTINUED) 9B13A050 For the exclusive use of d. he, 2019. This document is authorized for use only by dongming he in MKT 300 Case Coursepack #2 taught by Dante Pirouz, Michigan State University from Mar 2019 to Sep 2019.
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