The Competition Between Tesla And Global Electric Motorcars

Indroduction

Cars have played an important role in our lives since the late nineteen century when the first car was created. The world has had the need to improve the conditions of cars by making them more efficient, fast, safe and comfortable. They are the main form of transportation worldwide. In 2017, more than 70 million cars were produced and that number will continue to grow in the years to come. As car production increases, the need to build more efficient, eco-friendly vehicles increases as well. We live in a world where we fight a great battle against pollution and global warming. For this reason, companies such as Tesla and Global Electric Motorcars (GEM) produce revolutionary alternatives that not only improve the basic needs of transportation, but also pave the way for other companies to take initiative in leaving behind petrol engines.

Both Tesla and GEM are companies who build 100% electric powered vehicles. TeslaWas founded in 2003 in Palo Alto, California, they currently have 3 cars, two sedans and an SUV, and will be releasing a sports car in 2019. This company targets a higher market with cars ranging between $50, 200 and $250, 000 dollars. GEMA company founded in 1992 by General Motors engineers and owned by Polaris Industries. Currently, they have 5 cars that target a lower market with cars that cost $9, 200 to $16, 000 dollars. Both companies are very different, from their business models and the cars they produce to the customers they target and the strategy they follow. But, they both work in order to offer more efficient solutions to take the next step towards sustainable transportation.

Situation the company is facing

Tesla’s CEO said “The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model”. Since Tesla started their vehicle production, they targeted a higher market. Nowadays they keep serving customers who are willing to pay for top of the line technology, comfort and style which makes their company align with a sustaining innovation. Tesla strives to make their products better dominating the electric car market offering the best products. As the demand for electrics cars continues to increasing, with emission regulations and a need for sustainable transportation, large incumbents like Mercedes Benz, Audi and Porsche are already adding electric alternatives to their product lines and BMW is already selling them (the i3 and the sports car i8). These incumbents have been in the industry for a long time and they have the know-how and resources to be a great threat to Tesla. Tesla is currently facing some troubles of their own, and they must be able to continue to add value and differentiate from what will be a highly competitive industry.

Tesla is not in a good position right now, as mentioned above, since the company started they decided to target a high market and work their way down. They started selling their Model S which is a luxury sedan and is now selling their Model 3 which is an entry level sedan. The company has been following a deliberate strategy and it has been facing some serious issues. From not being able to reach their production goals “the company didn't hit its goal of producing 2, 500 Model 3s per week by the end of the first quarter of 2018”, to not being able to deliver the vehicles “Musk said that Tesla's most pressing issues had moved from producing vehicles to delivering them”.

With these problems slowing down Tesla, they should examine their company, take a step back and look at where they are failing in order to look for opportunities and shift to a better strategy. On the other hand, even though GEM produces electric vehicles, they compete in a totally different market. Their strategy is to sell vehicles in a low entry level market. This strategy allows them to create low-end disruption offering good enough performance by providing a top range of 100 miles and up to 30MPH. Large incumbents will not be interested to compete at these level since there is no profit or high margins for them, so GEM can concentrate on improving and continue to create value to its customers.

GEM is also aligned in a new-market disruption. They have created a completely new product that has no competition. They made electric vehicles available to customers who didn’t had the possibility of owning a high end products like a Tesla. I believe that with time new competitors will emerge, but GEM is on a right path, with a good strategy and they will be ready by the time that happens. They have a long way to go but they understanding their market, their customers and their products always focusing on the job to be done.

Job To Be Done

Tesla’s Job To Be Done is to help me get from point A to point B in the most efficient, eco-friendly and stylish way. Even though customers can hire many other products to do this job, Tesla creates an experience, the car is extremely modern and with top technology. I believe that Tesla does this job perfectly different from any other product in the market today.

For GEM the Job To Be Done is clearly expressed in their brand guide: “To help move people and cargo with ease and efficiency”. Even though Tesla and GEM sell different products to different target market, they both create a unique experience that help them be the best product available to the job so they can differentiate from the competition.