Wednesday, March 27, 2013

Telsa and Mercedes

Tesla Motors has been collaborating with major car manufacturers to release all-electric vehicles. 

The first was Toyota's RAV4, on sale since last September.  A limited number (<3000) of these cars were manufactured, on sale for $50,000 (half the price of Tesla's own Model S, which has had extremely slow production).  This model was already in place, but Tesla was hired to make the vehicle electric.

Moving forward, next year Mercedes Benz will release a station-wagon type vehicle - B Class E.D. - in the U.S.  Tesla was brought on from early on, and the batteries are similar to its Model S.   It will feature a "quick charge" option of 2 hours for approximately a 60 mile range, and a longer charge for double that.  The aerodynamics and lighter weight of the B Class will allow to have a range similar to the RAV4, despite a lower power battery.

These partnerships are obviously beneficial to the larger companies trying to make a beachhead in the all-electric vehicle market, but what is in it for Tesla?  Aren't they just making things easier for their competitors?  Is this an operational efficiency change, or a strategic one?

I think it is the latter.  Tesla has demonstrated that there is a market for all-electric vehicles (there is a wait-list for their vehicles), but doesn't have the capital to enact quick production.  Toyota and Mercedes, however, have the facilities and customer base to really meet that demand.  The companies are also in slightly different classes of quality and customer demographic, meaning that more potential customers are possible.  Tesla's own Model S has a sticker price of $100,000, which is another class as well.

The shorter charge times mean that during even a longer commute, a B Class owner can fully charge their vehicle while at work or during a business lunch.  The higher demand from heavyweight car companies for access to charging facilities mean that more locations will be compelled to install them.  These infrastructure changes will assist Tesla, as well, once more of their own fleet has been distributed.

Should Tesla develop more relationships of this nature with other large companies?
Has Tesla realized that this type of business partnership is more profitable/sustainable than trying to create its own place in a niche market?

Sources (accessed 3/27/13):

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