Tesla Keeps Shifting Tactics

Once again we examine Tesla. Ok, ok, we know we covered it last month when the company announced it would be closing stores, and then reversed the stores closing. Also last month, the company announced price increases for all models except for the Model 3. And that seemed like a lot for a relatively short period of time. But, Tesla still wasn’t quite done.

Later in March, Tesla announced a new vehicle named the Model Y, a compact sport-utility vehicle with an expected price of $39,000. Model Y will begin production in 2020, have a range of 300 miles/charge, and go from 0 to 60 mph in 3.5 seconds. Larger than the Model 3, Model Y will sell for $47,000 in fall 2020 with a $39,000 version expected in spring 2021. Tesla is now taking orders for Model Y with a $2,500 refundable deposit.

Next, in mid-April, Tesla announced that it is halting online sales of the Model 3 at the $35,000 base version. (Wait – wasn’t last month’s tactic shift about moving buyers to use online shopping? What’s happening?) Buyers can order the $35,000 priced version only by telephone or at Tesla’s retail stores. If buying online on Tesla’s website, the minimum price for the Model 3 starts at $39,500, 13% higher than in stores. This is the fourth price change already this year for Tesla.

Another point of confusion concerns test drives. On Tesla’s website it states that customers can drive a car for a week, or less than 1,000 miles, and still return it. Some stores have told buyers that is they test drive before buying, they only have a single day to return the car.  Also according to the website, car delivery should happen within two weeks, but stores have stated that it can take much longer in some areas, particularly if customers want the $35,000 base model.

It’s not good to confuse consumers.

Group Activities and Discussion Questions:

  1. Discuss Tesla’s distribution model and compare it to other automobile manufacturers’ models. What are advantages? Disadvantages?
  2. Show the Model Y in class: https://www.tesla.com/modely
  3. What are the key differentiators for this model versus competition?
  4. Review key aspects of developing a product positioning map, including determining the axis labels for positioning.
  5. Divide students into teams and have each team develop a positioning map for Tesla.
  6. Have each team draw their map on the board.
  7. Debrief exercise.

Source: Wall Street Journal, New York Times, Assoc. Press, other news sources

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