Tesla Motors: Distribution Channels essay

The Tesla Motors electric car Tesla Roadster was first introduced to the public in 2006 and became a sensation in the automotive world. Series production of the electric car was launched in 2008. Tesla Motors describes their creation as the “electromobile without compromise” (Tesla Motors, 2010).
Indeed, the application of all the most recent advances in battery technology and electronics in this car allowed the producers to provide it with for cannon vehicle dynamics (acceleration up to hundreds of km less than in 4 seconds), as well as an impressive run on a single battery charge (about 350 km) (Tesla Motors, 2010; Hall-Geisler, 2008). With such a dynamics, Tesla Roadster can dominate over the elite sport car with gasoline engines, and the decent run on a single charge will secure from the fear to stay with a run down battery away from the electric connector.
Still, electric carts like Tesla Roadster stay in the row of elite automobiles, facing serious problems in distribution: from their high price up to their extreme innovation.
Despite the best efforts of manufacturers to reduce the price of cars with electric and hybrid engines, the comparative cost of electric vehicles remains a stumbling block in their way to the mass market, and the investments in this segment of the economy remain very long-term (Dewan, 2007).

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By 2010, the share of the global automotive electric vehicles of all kinds makes only 2%. Analysts expect (given the upcoming government and private investment in this industry) the share of electric vehicles in total sales to rise up to 16% by 2025. Analysts at Global Insight expect 20% of the total market by 2030, speaking about all the models equipped with a hybrid power plant with the possibility of charging from the electrical network, as well as the all-electric cars. The share of the first ones will make 8,6%, and the second ones are to capture 9.9% of market share (Dong, 2008). So, normal cars with internal combustion engines will set the tone in the automotive market even in the long run.
At the moment, the key factor in preventing the transmission of the consumers to electric cars is their high cost and low mileage from a single charge. Only 13% of car owners are ready to put up with mileage less than 250 km. Another critical factor is the cost of electric production; today only 14% of potential buyers are ready to pay more for a car with an electric motor, rather than buy a usual one (Dewan, 2007). Thus, the producers are to develop this area and invest in it. The volume of market research in this segment is estimated at € 80 billion by 2025. Moving in this direction, Tesla Motors is going to present its new budget sedan; according to preliminary estimates, its price will amount to 60 thousand dollars (Tesla Motors, 2010).
The pragmatic majority are people who need to know that the technology is debugged and working, that charging stations are available and are ubiquitous, and are easy to use. In addition, before deciding on a purchase, the buyers need to know that safety and cost of service is all right, and be sure that the state power grid in this or that country will cope with the increased workload (Hall-Geisler, 2008). IHS Global Insight specialists believe that electricity grid must be modernized at the local level, before it can accept new consumers in large numbers.
In our opinion, fully electric cars can find their niche in the city movement, while the hybrids rechargeable from the mains supply can be well used in the suburbs, where people have to travel great distances. However, the truth is that the components necessary to build competitive hybrids rechargeable from the mains supply are still very expensive. In many cases, only a set of batteries will cost about $10000. And since the oil price remains relatively low, consumers are not willing to invest additional funds in PHEV even provided that the state partially overtakes the costs or arranges compensations.
Nevertheless, under the slogan of fighting for the environment € 300 billion will be spent around the world over the next decade to reduce emissions of carbon dioxide in the atmosphere, and half of that amount will be used to develop an alternative type of transport (Dewan, 2007). Investment in environmentally cleaner production is already one of the main directions in the development of California. The governor and his administration expect that Tesla Motors and other manufacturers of electric vehicles will bring 7500 environmentally friendly vehicles on the roads of the State in the period from 2012 to 2014 (Saphores, 2009).
It is known that Japan intends to reduce harmful emissions by 25% by the year 2020. Therefore, the Japanese government actively supports the potential buyers of electric cars, making a significant discount for them. In the frameworks of this program a roadster cost decreased by 3.24 million yen ($ 38,000) on the Japanese market (Dong, 2008). In general, the Japanese market is an ideal place to implement the company’s products, as well as markets of other economically favorable countries (Switzerland, Denmark, UAE, etc.), largely because the local citizens prefer the high-class sports cars equipped with the most advanced technologies. Creating more affordable electric vehicles for mass buyers, high-performance and relatively cheap, in the future Tesla can capture markets in North America, Europe and Asia.

References
Dewan, K., & Ahmad, I. (2007). Electric vehicle: a futuristic approach to reduce pollution. World Review of Intermodal Transportation Research, 1 (2), pp. 300-312.
Dong, R., Zhao, J., & Hongpeng, E. (2008). Sustainable urban development: Policy framework for sustainable consumption and production. The International Journal of Sustainable Development and World Ecology, 15(4), pp. 318-325.
Hall-Geisler, K. (2008, March 9). Alternative Dealers Selling Alternative Power. New York Times, p. AU.10.
Saphores, J., & Sangkapichai, M. (2009). Why are Californians interested in hybrid cars? Journal of Environmental Planning and Management, 52(1), pp. 79-96.
Tesla Motors Website. (2010, June 19). Tesla Motors Opens Newport Beach Store
http://www.teslamotors.com/about/press/releases/tesla-motors-opens-newport-beach-store