Case study:

Tesla CEO Elon Musk was pursuing a lofty goal with the development of the Tesla electric car: to make the world cleaner and sater. In the early days of Tesla, the company did not have the engineering to sell a mass-produced electric car at a low price. Competitive electric cars at the time were lower-priced vehicles such as the Nissan Leaf, known more for fuel efficiency than performance. Tesla's solution: the first Tesla to be launched, named the Model S, was released in 2012, at a base price of $72,000 (with add-ons, purchase price could easily exceed $100,000).

Obviously, Tesla was not pursuing the price-sensitive car buyer segment with the Model S. In fact, the Model S has one of the fastest 0-60 mph acceleration time of any car, and it willbecame known as a high-performance car that happened to be electric, redefining the popular conception of an electric car as a practical and economic alternative to combustion engines. Despite selling only about 100,000 units in its first three years, the Model S solidified Tesla's competitiveness in the auto industry: The Model 3 had won numerous Page 213 awards, including Motor Trend's Car of the Year, and Tesla was named the Most Innovative Company in 2017 by Forbes.

One reason Nissan could mass-produce an electric car, while Tesla was unable to with its first launch, is that the Nissan Leaf is built on an existing car platform -the battery is addedas a module replacing the combustion engine. By contrast, the Model S is built on a totally different car architecture. The drive train and other systems are engineered from the ground up around the battery; some of the subsystems such as traction control were not existing technologies borrowed from similar cars but were engineered using totally new and differenttechnologies. In short, mass-produced electric cars used existing car architecture; Tesla was essentially using an innovative new architecture. This product architecture decision made it possible for Tesla to protect its battery technology lead against competitors, even though Tesla gave competitors access to its technology patents. Another competitive advantage is the Supercharger battery charger, which allows for free, high-speed charging, but it only works on Tesla cars.

The distribution strategy Tesla uses should also be mentioned. Instead of distributing through existing franchised car dealers (which would seem the cheapest and quickest way to get distribution), Tesla has a series of company-owned stores and galleries, in malls, on busy shopping streets, or in other high-traffic areas. This strategy provides a couple of important benefits to the company. First, the high-visibility stores are designed to get potential customers curious and encourage a visit and a meeting with a product specialist. While car salespersons often work on commission, Tesla product specialists are not on commissions and do not pressure customers to buy. Mr. Musk himself has said that the most important metric for the product specialist is how much the customer enjoyed visiting the store and looks forward to coming back. Tesla feels that this strategy gives the product specialists a better opportunity to educate potential customers about this unique car than if they were operating in a typical franchise dealership. Another reason supporting the unusual distribution strategy: existing franchise dealerships sell mostly gasoline-powered cars, so they would be less likely to give proper support to the Tesla, which could cannibalize their existing business.

In the five years after the Model S launch, Tesla communicated with Model S buyers to determine what issues and challenges needed to be addressed in order to make a more affordable mass-produced car. Model S buyers were not only passionate high-performance car drivers, but they were also enthusiastic about electric cars in general. Furthermore, the Tesla name was getting substantial press, and sporty Model S cars driving along the highways acted as a kind of mobile billboard, building Tesla's brand image. When word came out that a mass-produced, affordable Tesla was in the works, the waiting list expanded quickly.

By July 2017, the Model 3 was launched, at a base price of $35,000 and with add-ons that could bring the sticker price up to $57,000. The problem facing Tesla at this time was sufficient production to meet the demands of the growing waiting list of customers. By April 2018, the waiting list had grown to 400,000 interested customers! Tesla produced 100,000 cars in 2017 but would need to double or even triple production in order to monetize the potential of the huge waiting list, some of whom had been waiting well over a year for the Model 3 by that point.

can you please answer the question:

1) Comment on the Launch of Model 3 (after Model S). Do you think it is a good move on the part of Tesla to launch Model 3 after Model S? If yes, why? If not, Why not?Comment on Teslas 4Ps. Should it be consistent across the two models?

2) What do you think is the customer profile of Model 3 (vis--vis Model S)?

3) Who are its competitors? Will they differ for the two different models?

4) Conduct a Technical Assessment of Tesla. How has that shaped their Launch Strategy (of launching Model S before Model 3)?

5) How would you test a concept like Model 3 (before & after launching Model S)

6) Would you classify Model 3 a Disruptive Innovation?