Question

Tesla Motors entered the market with their first electric vehicle called Roadster in 2008. As the company was still young, their development was based on existing technology of Lotus Elise, an existing car model made in UK. The Roadster was a two-seater sports car and was only manufactured for a few years until it was discontinued due to poor sales. During that time, the Roadster was sold for 100,000 USD as an innovative electric two-seat sporty car for car enthusiasts. After discontinuing the Roadster, and rebranding into Tesla, the car manufacturer released their flagship Model S in 2012. The car was designed to be luxury, full sized car, and cost 90,000 USD for any perspective consumers. The car became a flagship model, extremely popular among their consumers to this day. While the growth of Model S stalled eventually, Tesla continues to innovate and create new models. A few years later, building upon the Model S, Tesla introduced the Model X, a larger, SUV model that was based upon their design of the Model S. The SUV was bigger, bolder, and cost 132,000 USD but came with additional interior and cargo space, at the trade-off of distance travelled. Sales of the Model X continue to grow albeit at a slow rate and the car doesn’t have a high market share. In 2017, production on Model 3 began, costing 50,000 USD, the model was targeted at regular car enthusiasts, while the model is still relatively new, the pre-order number is large, and many are waiting to receive their vehicle indicating strong growth numbers. To date, Model 3 is Teslas best sold vehicle.Why would a large company such as “Tesla” utilise the Portfolio Matrix tool? Explain the four categories of the BCG Portfolio Matrix and using your knowledge about Tesla products as well as the information provided above, categorise the vehicles into the BCG Portfolio Matrix, fully justifying your choices. (400words essay)

Answer 1

Why would a large company such as “Tesla” utilise the Portfolio Matrix tool? Explain the four categories of the BCG Portfolio Matrix and using your knowledge about Tesla products as well as the information provided above, categorise the vehicles into the BCG Portfolio Matrix, fully justifying your choices.

BCG matrix is a strategic tool which is used to evaluate the strategic positioning of the different products of the company and its impact on the overall business portfolio of the company.

Model 3 is the combination of design, style, convenience, and moreover safety. It has been priced as the least expensive model developed. The official launch and delivery of the first 30 cars said to be on July 28, 2018. So the Model 3 belongs to the question mark category of the BCG matrix.

Model S is a beautiful model which is packed with functionality, convenience, and safety along with style and energy. It is said that it has crushed large luxury car competition in the USA. Out of 10 large luxury car models, the Tesla Model S gobbled up a notable 34% of sales. Thus it belongs to the star category of the BCG Matrix.

Model X is a long-range SUV. It has unique designs with falcon wings that give the vehicle a unique and luxurious look and feel. Tesla is said to be pushing back its production schedule for the Model 3. The sales for Model X and Model S sales are soaring but Tesla is still struggling with Model 3 production. This puts the Model 3 in the Dog category of the BCG matrix.

The ZEV credits or Zero Emission Vehicle credits can belong to the cash cow for Tesla. It is required for automakers that a certain proportion of vehicles sold emit no greenhouse. Tesla only makes vehicles that run on battery and emit nothing, it usually has a surplus of sale. So by selling this, Tesla earned 100 million in revenue in 2017. The profit margin on this is 95%. Thus the ZEV credits are the cash cow.