A careful evaluation of the Tesla Bike idea reveals its exponential suitability to Tesla, Inc. On the one hand, the proposed product seems aligned with the ideal and philosophy upon which Tesla operates. On the other hand, whereas launching the Tesla bike may come with technological and marketing challenges, Tesla’s history reveals that the company is able to overcome such challenges and thrive (Cooper, 2018). The Tesla bike is an electronic motorcycle based on the technology that Tesla uses on its current range of electronic vehicles. Such vehicles include Tesla sedans, the Tesla Semi and the proposed Tesla Pickup. The Tesla range of vehicles combines a relatively low cost of production, a highly efficient battery system, and innovative information technology advancements. An important component of the prerequisites of Tesla technology is a relatively small, easy to charge, yet high yield battery pack (Perkins & Murmann, 2018). Over and above the product itself, Tesla seeks to apply innovation in the production of environmentally friendly modes of transport. From a different perspective, the motorcycle industry is over a century old with many established players in the USA and around the world. Many of these players have ventured into the electric motorcycle industry already, alongside a large number of novel players. The established players will pose a monumental challenge for Tesla in terms of competition. However, available research reveals that Tesla has the ability to penetrate into highly competitive market niches and thrive in spite of the competition (Cooper, 2018). The project paper will also address marketing strategies that Tesla may employ to address and overcome the competition. The combination of the prerequisites and factors makes an electronic motorbike a suitable product for Tesla hence its selection for analysis in the project paper.
Background Information: Overview of the Marketer
Tesla, Inc., initially Tesla Motors, Inc. is an American company that primarily focuses on the production of electric motor vehicles. The company commenced in 2003 with two founders, Martin Eberhard and Marc Tarpenning. These founders named the company after Nikola Tesla, a futuristic American electrical engineer, and inventor, whose ideas lay the foundation for the alternating current (AC) electricity supply system (Allerhand, 2017). In its initial funding series, Tesla attracted its most famous executive, Elon Musk who retroactively became one of its founders. Musk not only become an integral member of Tesla’s research and development team but also its premier funder. With Musk as its Chairman and later its CEO, Tesla combined invention and innovation to develop a series of electronic vehicles. The vehicle began with high-end sedans with the intention of working its way down to mass-produced low-cost vehicles. By 2008, Tesla has commenced electronic vehicles. Ten years later in 2018, Tesla was the leading marketer of plug-in electric vehicles in the world with over 10% of the market share. Although electric cars are Tesla’s primary product, the company also produces battery packs, solar panels, and allied products (Perkins & Murmann, 2018; Cooper, 2018). In 2019, the company also expanded its product base through the proposed Tesla Semi and Tesla Cybertruck.
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Explanation of the Company’s Mission, Goals, and Corporate Strategy
Among the bearing factors for the proposal that Tesla develops a motorcycle is its vision, mission and general corporate strategy. The Tesla mission reads, “ to accelerate the world’s transition to sustainable energy ” (Rowland, 2018). Until 2016, the mission statement ended with the word “transport” as opposed to “energy”. This mission statement acknowledges the fact that the world is already transitioning from traditional energy such as fossil fuel to more sustainable energy. Tesla then presents itself as a catalyst that employs innovative technology to accelerate this transition. Motorcycles can be an important component of the said transition. For example, motorcycles are much smaller than car and trucks; hence require less energy to move. Developing motorcycles would thus align with the mission of Tesla.
On the other hand, Tesla's vision is “ to create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles (Rowland, 2018).” In common English parlance, the definition of vehicle includes two-wheeled modes of transportation such as bicycles and motorbikes. Therefore, the concept of Tesla Bike loosely falls within the vision of Tesla, Inc. Secondly; the general philosophy envisaged in Tesla's vision is to see a transition from traditional vehicle propulsion through the adoption of electric energy. The motorcycle is an important class of motorized vehicles. For Tesla to attain the transition it seeks fully, it would be important for the company to invest in the motorcycle industry alongside other vehicle industries.
Finally, there is the issue of the Tesla corporate strategy. According to the Tesla website, the company aims at dominating the vehicle industry through sheer numbers. Initially, Tesla launched the Roadster in 2008 as a high-end vehicle but with the intent of gradually reducing the cost in order to expand the market base. After the high-end Roadster, Tesla developed the Models S and X; a sedan and an SUV respectively were also relatively expensive but less expensive than the Roadster. Eventually, Tesla developed Model 3, a relatively low cost-sedan by electric car standards (Rowland, 2018). Tesla indicates that it is in the process of developing a vehicle that is cheaper than the Model 3, in a bid to ensure that average Americans and middle-income individuals around the world can afford electric vehicles. Indeed, it is the eventual intent of Tesla that electric vehicles would eventually become cheaper than fossil fuel vehicles. Logically, the trend outlined above should gradually lead to the smaller vehicle category such as the Tesla electric motorbike as suggested in the proposal.
The Rationale for the Tesla Bike
Just as with the Tesla Car, the Tesla bike will first adopt to the current motorbike market, then establish a sustainable transformation. When Tesla joined the car market, several companies had established functional electric cars, most of which were high end and expensive both to purchase and run. Tesla began with an expensive car and worked its way towards an inexpensive electric car without compromising on quality. In the same way, according to Bonnier Corporation. (2019), the electric motorcycle market in the USA and around the world is also highly developed. First, there are new companies focusing on the electric bike such as Zero Motorcycles and Lightning Motorcycles. Similarly, mainstream players in the motorcycle industry such as Harley-Davidson, Honda and Yamaha have also ventured into the industry. The result is a combination of high-end bikes costing over a hundred thousand dollars, average cost bikes and relatively cheap bikes costing under five thousand dollars. For example, the Arc Vector costs $114,217 while Harley-Davidson's LiveWire costs $29,799, which is relatively average. On the lower end of the cost, the divide is the CSC City Slicker, which goes for $2,495 (Bonnier Corporation, 2019).
The costs of these motorcycles reflect their relative quality. For example, the City Slicker runs for 40 miles after up to 8 hours of standard charging while the Arc Vector can run for 270 miles after only 40 minutes of standard charging. The Tesla bike should aim at matching the performance capabilities of the Arc vector in terms of battery capability and power. The bike should then bypass the Arc Vector when it comes to Tesla’s established areas on innovation. For a start, the Tesla bike will have a relatively smaller size of the battery, enabled by the use of a battery pack as opposed to a larger battery. Just as with Tesla cars, the bike will have a pack of interconnected small batteries (Perkins & Murmann, 2018). The innovative strategy will lead to a smaller and cheaper, yet high yield battery. Secondly, the Tesla bike will exceed the Arc Vector in information technology advancements such as autopilot capabilities and computerized safety features. The combination of an innovatively cheap battery pack and Tesla’s modern advancement in lean management should enable Tesla to match and surpass the quality of Arc Vector, at a price that can compete with Harley-Davidson's LiveWire. This will be the first model, similar to the Tesla Roadster.
After using the first model to penetrate the motorcycle market, Tesla will then commence garnering for the low-end market dominated by cheaper products such as the City Slicker. Tesla will combine innovation and invention to cut costs without inordinately compromising in quality. It may not be possible to produce a high-quality bike for a cost, as low as $3000, so Tesla should not even attempt the same. However, they can gradually reduce the cost to as low as $10,00 which according to Bonnier Corporation. (2019) would still be among the cheapest versions in the market. In spite of the low cost, Tesla can still ensure relatively high quality through invention and innovation. Through a combination of version I and version II, Tesla would effectively compete at both the high cost and low-cost market segments making the Tesla Bike the dominant electric motorbike in the market.
Marketing Strategy with Justification
The marketing strategy for the Tesla Bike will rely on the tripartite components of brand power, external factors, and product quality. For a start, in under two decades, Tesla has managed to develop one of the most powerful brands in the electric vehicle industry. Tesla cars are famous for their quality, efficiency, and safety. The marketing strategy will seek to benefit as much as possible from the power of the Tesla brand. Having a strong brand to associate itself with will also reduce advertising costs exponentially (Ferrell & Hartline, 2019). People who are already aware of the Tesla brand will find it easier to associate the new product with the success of its predecessors.
The second component of the marketing strategy will be taking advantage of the external environment more so with regard to environmental conservation. Current extreme weather in America and around the world, including wildfires and flooding have made climate change a popular topic. The global population is increasingly aware of the vagaries of the burning of fossil fuel in relation to climate change. Tesla can take advantage of this crisis to rope in a conversation about the environmental benefits of an electric motorbike. The company will use its public relations prowess on social media to market itself as a responsible global social citizen out to save the earth. Modern customers gravitate toward a company that seeks social justice (Hack, Kenyon & Wood, 2014).
Finally and perhaps most importantly, the marketing strategy of the Tesla bike will focus on product quality itself. The main reason why Tesla became the premier player in the plug-in electric car industry after only ten years of production is car quality. Developers and makers of the Tesla bike will ensure that the initial customer reviews will match and exceed the promises that the company makes about product quality. Key quality features will include power, safety, and environmental conservation.
Alignment of 4P’s, 5C’s, and STP with the Marketing Strategy
From the perspective of 5C’s, the company provides the most important aspect of the marketing strategy. Tesla Inc. is already an established company with a sound leadership structure, infrastructure around the world and a powerful brand. The marketing strategy will take advantage of the parent company to ease the marketing process (Ferrell & Hartline, 2019). Due to the power of the company, the collaborators component will be a relatively minor factor. Tesla does most of its manufacturing and sales internally. The main collaborators will be sources of raw materials. Tesla already has a comprehensive supply chain system as its current products closely align with the proposed product. In line with Tesla’s vision and mission, the customer base includes a cross-section of the global population. Tesla aims to save the earth through the transition of the energy sector. To attain such a vision, Tesla will need to gradually expand to cover a large segment of the global population by targeting both the affluent and the financially challenged. It is on this basis that the Tesla Bike comes in two main versions, one higher end model and one of which aims for as low a price a practicable. The product will face intense competition both locally and internationally and it has to factor this in its marketing plan. However, Tesla has already shown a proclivity to thrive in spite of the competition more so in its electric car division. For example, the premier electric car manufacturers are in China, yet Tesla is the leading marketer of electric cars in the Chinese market. Tesla will combine high quality and competitive pricing to overcome the challenge posed by competition. Finally, the current climate in the vehicular market both locally and internationally favors the Tesla Bike. Most of the target market segment is apprehensive about climate change. Companies that present themselves as champions of the environment have a higher propensity for gaining the approval of most modern markets (Hack, Kenyon & Wood, 2014). The market climate will thus act in favor of Tesla hence it's a marketing strategy to endeavor to take advantage of the environment.
The Segmentation, Targeting, and Positioning aspect of the marketing strategy will begin with the selection of a target market. The Tesla bike will have a general target market split into two groups. The general market involves young urban professionals, both men, and women but with a focus on men. The definition of young includes the youngest age allowed to ride a bike to around 49 years of age. The segmentation process will then divide the target market into two main groups, those for the high-end Tesla Bike I and for the low-cost Tesla Bike II. The first group will be the primary focus for the initial marketing drive, as the company will first produce Tesla I Bike. Positioning will involve a combination of environmental conversation and premium quality. The target customers will see the product as environmentally friendly and providing high quality yet at an affordable price.
Regarding 4P’s, the Product will be the primary area of focus just as with all other Tesla products. The market mix will begin with the creation of a product that markets itself due to its superior quality and friendliness to the environment (Milichovsky & Simberova, 2015). Most bike lovers aspire for a powerful bike but such bikes come with high maintenance engines that pollute the environment. On the other hand, cheaper and less pollutant engines are relatively weak. Tesla will solve this impasse by innovatively developing a powerful engine that is cheap to maintain and with limited pollution. Pricing will also be an important component of the pricing strategy. The Tesla bike will be worthy of premium pricing due to its quality, yet sold at competitive prices. In spite of the relatively low prices, Tesla will make profits through innovation in both product nature and manufacturing processes such as the use of Tesla Gigafactories. The place factor will adopt the current Tesla approach of combining online stores and physical showrooms. Tesla already has a large physical presence inter alia through charging centers. Such locations shall serve the role of exhibition centers where potential customers can sample the product. However, all sales will take place in the company’s online platforms. Finally, the promotion aspect will mainly revolve Tesla’s global social media presence. Tesla CEO Elon Musk is one of the most prolific social media users in the world (Popkin, 2018). For example, tongue-in-cheek fundraising to buy Musk a couch in 2018 raised over $9000 and became the subject of national news. Musk’s popularity and notoriety on social media will provide a cheap yet highly effective mode of promotion for the new product.
Short and Long-term Measures for Success
Most of the work in the development of the Tesla Bike is on a short-term basis while a long-term strategy is necessary for the product to fulfill the company’s vision. Once again, the short versus long-term measures of the Tesla Bike mirror those of Tesla as a company. Tesla is the leading plug-in electric car manufacturer in the world but the company has not recorded an annual profit in over ten years of production (Cooper, 2018). After the company finished developing the kind of product that has made it the best in the world, it is now fine-tuning the process to make the product profitable. A similar approach is necessary for the Tesla Bike. The short-term measures are to spare no resources in creating the best and most advanced electric motorcycle in the world. Such measures include the most advanced and innovative motorcycle battery that is small, powerful, easy to charge and capable of performing over 300 miles after less than an hour of charging. The bike should also be comfortable, safe and having advanced IT components. The culmination of the short-term measures will be the creation of the Tesla Bike I. Tesla will proceed to market and sell the first model at a reasonable price based on production cost. Just as with the other Tesla products, during this segment, the Tesla bike might be profitable. Attaining profitability is the long-term measure. Tesla will need to use the knowledge gained in the first phase alongside the technology it continues to garner to reduce production cost for manufacturing the Tesla Bike, without compromising quality. These measures include creating a cheaper version of the bike itself and developing a cheaper process of manufacturing. Through this second phase, Tesla will reduce the overall costs to the level that mass production is possible. It is through the mass production process that the Tesla Bike will not only be profitable but also capable of changing the world.
Conclusion
Based on the research and analysis above, the concept of a Tesla Bike seems especially suitable for Tesla. The said bike would play a role in the furtherance of the philosophy upon which Tesla operates as a company. This philosophy involves using advanced technology to develop environmentally sustainable transportation through a combination of innovation and invention. Similarly, Tesla already has advanced technology that would be useful in developing and producing the Tesla Bike. Such technology includes an innovative and advanced battery pack that is both small and light but with a high power storage capability. Tesla only needs a smaller version of the battery to use for the bike. The concept of lean manufacturing and mass production, inter alia through Tesla Gigafactories will also be useful in the development of the new product. Finally, Tesla has a powerful brand name more so in the electric vehicle industry, a fact that will aid in the marketing of the new product. As outlined in the marketing strategy segment above, it would aid the company to focus on a younger, urban and professional market base, as it would be most suitable for the proposed product. To reduce marketing costs further, the company should utilize its prowess in social media advertising, more so through its CEO Elon Musk. The combination of the factors above not only make the proposed product suitable for Tesla, Inc. but also increase its propensity for success on the local and global market.
References
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