Topic > The Role of Infrastructure in Tesla's International Expansion

Considering the above, it is clear that the existence of a charging infrastructure is critical to the development of the electric car market. Tesla plans to become a mass producer of electric vehicles and to do so it is necessary to have facilities that allow the company to produce enough vehicles and it is necessary to have enough charging stations. Tesla is an interesting example and probably a benchmark for electric car manufacturers. In fact, some measures have been adopted to overcome the main obstacles linked to electric cars. First, it owns a widespread network of fast charging stations that work for Tesla cars, called Tesla Supercharger (Tesla motors Inc, n.d.). Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essay. Specifically, these charging stations are meant to charge Tesla models and are intended exclusively for them, but other electric cars can potentially use them as well. This means that Tesla is potentially ready to open its network to other manufacturers and shows that its strategy is forward-thinking and that it is already planning for its charging system to become the standard for industry networks. Indeed, networks have effects on competition, as the Betamax – VHS case explains. Tesla knows the importance of networks on competition. In fact, he released his patents so that every other company can use his technology, which is practically open source (Solomon, 2014). Therefore, the company is ready to share its technology and its compressors with other manufacturers, as its CEO Elon Musk said, but in reality none of these seem interested. The reason for this is that some manufacturers use different batteries that need to be charged at a lower voltage and some of them need an adapter to use the Tesla network. However, considering the fact that Tesla's technologies are open source, automakers that are behind in the development of electric vehicles may find it convenient to freely adopt Tesla's advanced and high-quality technology to offer electric cars. This can certainly help Tesla Superchargers technology become the international standard in its industry. However, building a network involves costs and revenues. On the one hand, Tesla burns a lot of money to build the Super Charger network, and it is expected that it will still need 1.9 – 7.5 billion dollars to meet the convenience of the US gas structure, building 30,000 new Superchargers in the United States alone United States of America. America.How can it be sustainable for Tesla to continue expanding its network to practically maintain its competitive advantage in the future? Tesla has already chosen to directly build its infrastructure even in foreign regions and is intent on establishing its technology as standard. To do this it can license the use of its compressors, sharing the network and the costs associated with it. Furthermore, by increasing the number of users of the network it will have even more value and will contribute more to the company's revenues. This network is already widespread in North America, Europe (especially Western), Israel, the United Arab Emirates, China, Taiwan, Japan, South Korea, Australia and New Zealand. Furthermore, many new stations are being built and Tesla is very advanced compared to other manufacturers or energy companies. In particular, they are consolidating the network where there are already stations and plan to build some in Eastern Europe and also in Russia, near Moscow and St. Petersburg. Unfortunately the rest of the world is notstill served by Tesla Superchargers. They have built these stations both in cities and on highways, so that it is possible to travel by car for long distances even if it is electric. Furthermore, they have signed agreements with numerous restaurants, hotels, shopping centers and tourist villages so that Tesla owners can also charge it once they arrive at their destination. These charging stations are called “Destination Charging” and considering them and the Superchargers, Tesla has a great network. This represents a competitive advantage for Tesla over its competitors because it can offer customers greater value. At the moment, in fact, a network of fast charging stations is certainly rare, precious, expensive to imitate and difficult to replace. However, it is important to understand whether or not it will be sustainable in the future, allowing Tesla to obtain even higher profits than its competitors. To do this it is possible to undergo a sustainability test. There are three main measures to consider: Difference between the company's product and those of the competition, imitability, improvements. Starting from the first on the list, it is clear that Tesla is seen as different by customers, and this is due not only to the specific characteristics of its cars and its brand, but also to the presence of the network of fast charging stations (DeBord, Tesla is to report profits, but no one will talk about its greatest competitive advantage, 2017). In fact, Tesla's Super Charger network is the only one known in its industry, meaning that the vast majority of customers or potential buyers are unaware of any competitor networks other than public ones. Tesla owners will be able to charge their car at a network of well-positioned charging stations just for Tesla cars and will also be able to use public stations or charge at home. Therefore Tesla offers its customers many more charging options than its competitors. Secondly, it is not difficult to imitate Tesla's network technology, considering that it is now open source, but it would be difficult and expensive to imitate the diffusion of Tesla's network which is already notable today and which is ready to be extended and improved . Even if some competitors, as will be analyzed below, have their own networks or are designing them, Tesla will always be one step ahead of them. In fact, it is now already planning to improve its network and expand it, whether others are still planning it or they don't offer the same benefits, such as fast charging. Finally, Tesla is not only a car company, but also a high-tech company. Therefore, it is clear that improving their products is always their goal. In fact, it is working not only on new models, but also on how to make its charging technology even faster with the new Super Chargers V3 (Lambert, 2018). Therefore, it is clear that Tesla's competitive advantage passes the sustainability test. However, to once again analyze Tesla's competitive advantage and verify whether it is sustainable or not, another strategic management tool, the business model canvas, can be useful. In particular, in some respects the comparison with Tesla's competitors may be useful. First of all, the customer segment is populated by environmentally friendly people, usually belonging to the upper-middle class. Tesla's value proposition is based on safety, fast charging and the ability to charge a Tesla not only at home, but also in one of the Super Chargers or at a destination Charger. Customer relationships are based on the Tesla.com website. In fact, during navigation the customer is invited to a test drive and after the purchase, the main interactions between the company and the customer take place through the interface of the cars, which areconstantly updated. As for channels, Tesla only uses its own stores, delivering via Vans Service Centers and Mobile Service. Tesla's key activities are to improve its electric and self-driving models and create new ones, building them around the target customer in automated factories. Additionally, they continually innovate so that their cars require less maintenance and constantly release software updates. The company's main assets consist of its own engineers and its charging network, though key partners are locations where the target chargers are located. Tesla does not have service partners because it makes its own deliveries. Finally, the cost structure is influenced in particular by the development of new technology, considering both hardware and software. Furthermore, other cost sources are human resources, production, marketing, sales and services. On the other hand, the main revenue streams come from sales of its cars, especially the Model S, and pre-sales of the Model 3. Additionally, maintenance and sales of wall connectors generate revenue for the company. Analyzing its competitors, the difference between Tesla and them is clear. For example, BMW has very different revenue streams, which also include leasing fees and high rental fees. Furthermore, its customers are performance-oriented and BMW wants to offer the best driving experience. It has a traditional dealer network and its main partners are other automakers and IT companies. From this analysis it is easy to understand the differences between Tesla's business model and that of a traditional manufacturer. Tesla's competitive advantage is also given by factory automation and self-driving cars. Therefore, it is clear that the lack of a network of charging stations can suppress demand (Todd, Chen, & Clogston, 2013) and that Tesla is the only company in the market that is investing to overcome these problems. The others rely mainly on public charging stations. The Tesla case is therefore a virtuous example. In fact, its main competitors, such as BMW, also produce internal combustion engines, both Tesla and electric. So it is crucial for them to ensure their customers can charge their cars, otherwise it will be impossible for Tesla to achieve its goal of becoming a mass producer. This strategy will definitely help Tesla achieve its goal of international expansion. The company, in fact, has not concentrated its activities only in the United States of America but in many parts of the world, including both developed and some developing countries. However, even if Tesla's production facilities reach the target of 5,000 Model 3s per week, these numbers seem rather low for a mass producer but, after all, it is only the beginning of its transformation from a luxury to manufacturer of luxury electric vehicles. global mass producer. Furthermore, Tesla must find a way to make its competitive advantage truly sustainable. As already mentioned, Tesla had the foresight to create its own charging network, but it is interesting to also consider the position of its main competitors on the same topic. At the moment, none of Tesla's competitors plan to directly invest millions to build their own charging infrastructure (DeBord, Tesla is about to release profits, but no one will talk about its biggest competitive advantage, 2017). Europe something similar to Tesla's Supercharger network. It is called “Ionity” and is a joint venture between BMW AG, Daimler AG (Mercedes-Benz), Ford Motor Company Inc and Volkswagen AG (in particular Volkswagen, Audi and Porsche). It is expected tobuild 400 fast charging stations in Europe by 2020, of which the first 20 will be located in Germany and Norway near motorways. Ionity aims to become a highly reliable charging network across Europe for all electric car owners, but at the moment it is irrelevant compared to Tesla's network. In fact, there are only six Ionity charging stations open across Europe. Furthermore, it is essential to inform customers of the launch of this network, but at the moment it does not seem to be absolutely unknown in Europe, whether Tesla's Superchargers are known all over the world and are one of the reasons why customers prefer to buy a Tesla rather than a another electric vehicle (Van Den Steen, 2015). In the United States of America, however, there is a company called ElectrifyAmerica, set up by Volkswagen AG which will invest 2 billion dollars over the next ten years to build fast charging stations throughout the USA. It uses a technology called “Combined Charging System” which is proposed as an international standard against Tesla's Super Chargers. Although many of these have been planned across the country, only a few are already in operation, making it impossible to travel by electric car from the West Coast to the East Coast or vice versa. In fact, only 12 stations operate in the entire United States (Electrify America Inc, 2018). The difference between Tesla's widespread network and that of Electrify America is therefore clear. Additionally, there is another competitor in Japan that is also building EV charging infrastructure. It's called “CHAdeMO”, which stands for “Charge the Move”. It is a Japanese joint venture between Tokyo Electric Power Company, Nissan Motor Company Ltd, Mitsubishi Group, Subaru Corporation and Toyota Motor Corporation (CHAdeMO, 2018). Their technology is proposed as standard, competing with those of Tesla and Volkswagen. CHAdeMO has built a very widespread network in Japan, building even more charging stations than Tesla (considering both Super Charger and Destination Charger). Furthermore, it is present in many other Asian countries and has a good diffusion in Europe, comparable and comparable to Tesla's Super Chargers, and is present in North, Central and South America, with a good diffusion in the USA, even if less developed than the network Tesla. Furthermore, CHAdeMO also has a good presence in Oceania, particularly in New Zealand, and there are some charging stations in Africa as well. Therefore, given the current diffusion, only CHAdeMO seems to truly compete with Tesla's charging network. However, there is an important difference between these two solutions. Superchargers are made to charge only cars made by Tesla and are very fast, while all other charging stations are made to charge many different cars from different manufacturers and are less fast. Anyway, this exclusivity can add value to Tesla products and all competitors don't have something similar and it seems like they don't even plan to. From this analysis it is clear that a charging network can have an impact on competition, but also that it is very expensive to create. This is why it is interesting to understand the reason behind the choice of multiple companies to build a network together or alone, like Tesla. The main incentive for Tesla to build its own network is that, without it, it would be much more difficult to compete with other traditional manufacturers. In fact, Tesla is willing to compete on a large scale and no other electric vehicle manufacturer has done so before. In the past, in fact, sales of electric vehicles have always been very low when compared to cars with internal combustion engines. The only way for Tesla to expand is to ensure its customers can charge their cars and travel for long distances.