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EXECUTIVE SUMMARY This report serves the purpose of the complete analysis for the introduction of well known company to world, named Tesla, in India. All the factors affecting the entry of Tesla in the selected region are discussed in detail to save Tesla from any risks while entering the new market. The report have a complete description of the company, its current international strategy, proposed changes to the strategy and a detailed regional analysis using different theoretical frameworks like DESTEP analysis and Ansoff matrix for the external environmental analysis, while SWOT analysis is done for the internal analysis of the company. The possible risks that Tesla may face are discussed in the end and the solutions to the identified risks are also stated so that the entry of Tesla in India is free from all the doubts. Tesla is already a well known Company to world for its electric cars, solar energy panels, and clean energy. India on the other hand is suffering from high pollution and high accident rates. To overcome these two specific problems India needs Tesla. On the other hand entering Indian market is the best possible way to target Asian market. So this strategy provides a win-win situation to both the parties. All these factors are discussed in detail in the report. INTRODUCTION OF TESLA TESLA was founded by a group of American engineers in 2003 and was named after the investor Nikola Tesla. Tesla motors aimed to develop electric automobile sports cars. The first completely electric motor car named Roadster was introduced in 2008. This eco friendly motor turned to be efficient. In 2012 Tesla stopped its production and concentrated on a more efficient model called S Sedan, which auto-pilot option which was available for use in 2014. In 2015 Tesla introduced “Crossrover”, which turned to be another success point. Along this Tesla expanded the business in solar energy products and batteries in 2016 with the SolarCity solar panel company. All these years Tesla have been working great in its field and became a world recognized brand with respect to electric motors and solar energy batteries and products. [ CITATION Sch18 \l 1033 ] Tesla has headquarters in California, with manufacturing facilities in California and Netherlands. Gigafactories of Tesla are located in Reno, Bufallo, Nevada, Berlin, New York, Shanghai, Germany and China. Nevada produces the storage products, while New York and Bufallo, factories serves the purpose of solar product manufacturing. More than 50% sales of Tesla are generated by US, 10%by China, 5% by Netherlands and 5% by Norway. Rest of the countries, generate 25% of sales.[ CITATION Vau20 \l 1033 ] SWOT ANALYSIS Apart from the great success and a large number of opportunities, Tesla still have some weaknesses and threats that need to be have highlighted when talking about the company. 1. STRENGTHS  Innovation  Great growth in small time period

 Strong performance  Brand reorganization  Good marketing power  Great strategies  Elon Musk (a great entrepreneur and pioneer ) 2. WEAKNESSES  Manufacturing problems  Less grip of Amazon in Asia  High debt ratio as compared to earning  Less market focus  Inconsistent production capacity  Company would fall without Elon Musk  No secure alternatives of minerals used in batteries 3. OPPORTUNITIES  High growth opportunities in China and South America  Can develop a wider product range for mid market  Have own secure battery production facilities  Can expand ecosystem  Can align more deals with corporate fleets  Work with more governments for incentives on electric vehicles 4. THREATS  Increasing competition  Court cases against Tesla  Chine developing home grown brands  Limited mineral recourse for battery production  Increased demand of minerals in market  Other possible solution for congestion and pollution control TOWS MATRIX External Opportunities  High growth opportunities in China and South America  Can develop a wider product range for mid market  Have own secure battery production

External Threats • Increasing competition • Court cases against Tesla • Chine developing home grown brands • Limited mineral recourse for battery production • Increased demand

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Internal Strengths  Innovation  Great growth in small time period  Strong performance  Brand reorganization  Good marketing power  Great strategies  Elon Musk (a great entrepreneur and pioneer) Internal Weaknesses       

facilities Can expand ecosystem Can align more deals with corporate fleets Work with more governments for incentives on electric vehicles

SO(Maxi-Maxi Strategy)

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Attacking strategy Expansion strategy Target more local regions Increase product availability

WO(Mini-Maxi Strategy)

Manufacturing problems Less grip of Amazon in Asia High debt ratio as compared to earning Less market focus Inconsistent production capacity Company would fall without Elon Musk No secure alternatives of minerals used in batteries

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Train new employees Focus on value creation Save labor cost Hire more local staf

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of minerals in market Other possible solution for congestion and pollution control

ST(Maxi-Mini Strategy)

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Defensive strategy Conduct surveys to know about market demand Adding value to services

WT(Mini-Mini Strategy)

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Stay updated with market changing values Keep eye on the competitors changing policies Improve audience circle Improve R&D

CURRENT INTERNATIONAL STRATEGY OF TESLA Tesla uses Global standardization for cost reduction by targeting three transactional consumer segments. First was the Roadster in sports car market, which was terminated in 2012. Secondly, Tesla’s luxury vehicles have high sales potential, which Tesla taps with the Model S and X. Third segment is the main stream consumer segment, known as the Model 3. All these segments indicate that Tesla can offer standardized product with less pressure for local responsiveness and do not need to change products

according to the market demand. When dealing in international market, Tesla has high pressure of cost reduction and face great completion by BMW, Toyota and Volkswagen. Tesla has increased its customer perceived value and reduced switching cost when it enters new international market.[ CITATION Yuy18 \l 1033 ]

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CHANGES IN STARTEGY Followings are the changes proposed to Tesla for strategy to get maximum output after entering a new market. POLLUTION CONTROL (CSR OBJECTIVE) India is on edge when it comes to pollution. High population and pollution and great consumption of fuels have destroyed the environment, specifically the developed cities like Delhi, Mumbai, Ghaziabad etc. [ CITATION STA20 \l 1033 ]

[ CITATION STA20 \l 1033 ] In this situation Tesla can make an entry with CSR objectives. This can act in the favor of Tesla by gaining the good image. Tesla can solve the pollution problem with high technology it uses in cars. Use of battery cars and panels instead of fuel cars and generators will serve the environment friendly services. This CSR objective will help Tesla as well as the companies Tesla will join hands with. A positive image created, when entering a new market, will allow Tesla to gain a good marketing and high trust rate. LESS PRODUCTION COST Tesla face high production cost as indicated in the SWOT analysis. Tesla has high pressure for cost reduction. Manufacturing and dealing in Indian market will benefit Tesla in this problem. India has low currency rate and high availability of technology with active investors in market. As many automobile makers are working in Indian market, this indicates the good availability of technology in market. This high availability of technology highlights the fact of less costly technology and equipments in region. It is fastest growing sector of India which will favor to reduce the production cost. [ CITATION Nos20 \l 1033 ]

LABOR COST REDUCTION Half of the population of India is of working age, so India has a large pool of labor. The international companies using the Indian labor needs to understand the diversity of labor class to gets benefits from demographic forces. Most of the labor class work in manufacturing sector, but the educational skilled staff is also getting better with time. Extensive availability of labor is positive point, but the more beneficial point is the low labor cost. The average cost of labor in India is very low as compared to the other countries including Germany, USA, Canada, Japan etc. the average recorded wages of labor is $148 per month.[ CITATION Oli19 \l 1033 ] These factors can help the company to reduce the cost pressures which is among the top of the weaknesses. Saving the cost can help to reduce the prices of the products and help the company to be available to middle class sector.

[ CITATION Oli19 \l 1033 ] AVOIDING ACCIDENTS India has a high road accident ratio. One death is recorded every 4 minutes due to road accidents in India. Delhi (Capital of India) is the top on list for road accidents[ CITATION NDT16 \l 1033 ]. Considering the statics, Tesla is again in benefit in this aspect. Tesla can initiate CSR project with respect to this issue. The ratio of accidents in India can be reduced by introducing latest self driving cars, cars with sensors

and auto-pilot mode cars. This will increase the market value of Tesla in India and again improve the trust level of people in brand for security purposes. CHOICE OF INTERNATIONAL MARKET Asia covers almost 60% of the world’s population with the two most populated countries China and India. Taking the increasing population of both regions, it is obvious that the Asian economies and industries are evolving including the demand of effective mobility. The region is considered the manufacturing hub for most esteemed automobile manufactures thus making the automotive industry the core industry of the region.[ CITATION Mol20 \l 1033 ] The new market chosen for Tesla’s expansion is Indian market. India is in race to become world’s largest growth engines (McKinsey, 2016). India replaced Germany and became the fourth largest market of auto market in 2019 with 3.99 Million Units. India is all set to replace Japan and become third largest auto market by 2021. The growing interest of the companies in the rural market has boosted the growth of sector. India has higher growth expectations in exporting auto and Government of India is playing an important role to boost the rate to become export leader in near future. [ CITATION IBE20 \l 1033 ] INDIAN MARKET SIZE The automobiles production increased with 26.36 Million vehicles manufacturing by 2.36% from 2016 to 2020 and the sales boosted by 1.29% with 21.55 Million sales of vehicles. The record of 20.1 Million vehicles is accounted in 2020. In the same year the exports of vehicles reached 4.77 Million with growing at CAGR of 6.94%. [ CITATION IBE20 \l 1033 ]

[ CITATION IBE20 \l 1033 ]

INVESTORS INTEREST IN INDIAN MARKET India has been a centre of attention for many of the investors of international companies to meet the increasing demand of the market. Indian market has attracted Foreign Direct Investment of 24.21 Us Million Dollars from 2000 to March 2020 (Data from promotion of industry and internal trade, DPIIT). In 2020 many motor companies have invested in Indian market to keep the race energetic:          

Toyota made an investment of $272.81 Volkswagen announced merger with 3 entities in India TVS bought Norton for $ 21.89 Million JRL launched Range Rover Velar Tata began a joint venture with Prestolite Electrics to enter electric vehicle component market Force Motors invested $85.85 Million for developing two new models Morris Garages invested $429.25 Million Audi launched 9 new models by end of 2019 Tata Motors aim to supply 5500 electric buses MG motors India have planned to launch MG ZS EV electric supply in early 2020 and Ev in coming years. [ CITATION IBE20 \l 1033 ]

GOVERNMENTAL SUPPORT FOR INVESTORS Government of India is welcoming to foreign investors and provides numerous facilities as a response for investment. India has allowed 100% FDI for auto industry. Government announced additional income tax deduction by $2146 on the interest rate on purchase of EVs. Government supports the R&D in manufacturing of automobiles and is planning to place R&D centers with an investment of $388.5 Million to boost the industry standards. India has shortlisted 11 cities to introduce EVs as a public transport. Government introduced FAME-|| Scheme with funds of $1.39 Billion for 2020-2022.[ CITATION IBE20 \l 1033 ] DESTEP ANALYSIS 

DEMOGRAPHIC FACTOR India has world’s second largest population after China, which is 17.7% of world’s population. India has a young population[ CITATION Wor \l 1033 ]. More than half of the population is below 30[ CITATION Sub20 \l 1033 ]. This large ratio of young population in India indicates towards the higher potential of the automotive industry in India.

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ECONOMICAL FACTOR India has one of the fastest growing economies and is known as one of the G20 major economies. India also has the title to be member of BRIC countries. The major part in India’s economy is played by the manufacturing industry and the majority of the population works in this sector. India has relatively lower debt rate and high production efficiencies [ CITATION Ple20 \l 1033 ]. Despite of a stable economy, the unemployment rate of India has increased in recent years which can be used in favor of Tesla by giving employment opportunities for a lower

salary packages.[ CITATION HPl20 \l 1033 ]

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SOCIO-CULTURAL FACTOR Indian auto industry id highly affected by the socio-cultural forces. The changing trends and people’s preferences influence the industry on a large scale. Vehicle makers have to change the policies according to modernity of the demand. Specific styles are preferred in different cultural areas of India. One popular model in one cultural area of country may not be as popular in the other. But the increasing technological demand remains constant.[ CITATION Abh19 \l 1033 ] This increasing modernity demand of all the cultures of India is a positive point for Tesla to get started with.

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TECHNICAL FACTOR

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The growth of automotive industry in India is 9.5% per year, which is the 4 th largest in the world. The technological factors have played their role in this achievement. Government of India has been playing an important role to make the industry this successful by taking the initiatives like “Make in India”. The investors are taking initiatives to invest in technology more and more. GSD on electric vehicles has been reduced to 5% for sake of technological promotions. India is as active in the technological race as any other successful country[ CITATION ELE20 \l 1033 ]. These technological factors indicate towards a green signal for Tesla to start its business activities in India. ECOLOGICAL FACTORS The automobile sector of India has not been in favor of the ecological forces. None of the companies could achieve much when it comes to the environmental factor. The maximum percentage for the automobile industry to that favors the environment is 45%. In automobile segment it was found that there is a direct relation between the environmental factor and the company success. [ CITATION Cen20 \l 1033 ] Considering this Tesla can be a hero among all the companies currently working that market. As Tesla is the most efficient for environmental factors. POLITICAL FACTORS Government of India is playing a positive role when it comes to promoting the automobile industry in region. They have been providing facilities to the investors on all possible levels. Both local and international investors are enjoying the perks of Indian market being so profitable. Government has took initiatives to attract foreign investors by reducing tax, relaxation in foreign exchange, being lenient with imports and refining the banking policies[ CITATION Aja09 \l 1033 ]. Tesla can take advantage of all these facilities and save cost.

ANSOFF MATRIX Since Tesla is entering a new market with existing products. So Tesla falls under the category of market Development according to Ansoff matrix. The risk factor for entering the new market can be reduced by joint venture entry strategy as stated in the sections below.

PORTERS DIAMOND MODEL Firm Structure, Strategy and Rivalry

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Demand Conditions

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Related and Supporting Industries

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Factor Conditions

Chance Government

As discussed in the cultural section of India, joint venture will help Tesla to gain a better image with entering the market by joint venture with the local market dealers i.e. TATA Motors. Competitors of Tesla like BMW are Mercedes are present in the market already. This factor is to be kept in mind while operating in the region. India have high ratio of young population Ratio of middle class is higher in region English is business language in India Growing GDP rate of India is positive aspect for company India is 4th largest market of automobile in world and is growing in race India produce a high ratio of IT engineers every year Automobile industry plays an important role in the GDP rate of India Technology exports rate is high in India India have high natural resources including minerals India have a huge labor source which increases every year Indian market have a huge growth potential High automobile industry of India is a golden biscuit for Tesla As discussed in above sections the government of India is supportive and encourage the foreign investors by providing various facilities like low tax ratio, less interest rate, providing ease of business and by introducing supportive policies in favor of investors

ENTRY STRATEGY The entry strategy for Tesla to enter India is using the Joint venture with Tata Motors. TATA Motors is worth $35 Billion organization from 1868. It is India’s leading automobile manufacturing company which manufactures sports utility vehicles, bus, trucks and defensive vehicles. Tata provide a wide spectrum globally with about 8.5 Million vehicles customized according to environment, safety, quality and standards. Tata have tight grip in international market as it has been exporting to different international markets since 1961. Tata Motors is now present in more than 125 countries with strong brand recognition and have a network of over 8400 touch points. Due to high experience Tata have become successful in gaining customer trust and understands the market values at best.[ CITATION TAT20 \l 1033 ]

[ CITATION TAT20 \l 1033 ] BENEFITS OF JOINT VENTURE IN INDIA Joint venture is the entry strategy when two or more companies join to share the liabilities and unite to provide services and goods. India’s market is new to Tesla. In this situation holding hands with the other stable companies in the area can help Tesla to get a good start and a long lasting impression on the market. Joint venture with Tata Motors can benefits Tesla in many ways, as stated below.             

All Indian registered companies even with 100% foreign equity are considered to be local. Tata brand image will help to get a good start Tata is trusted company with a great experience Both the parties will share responsibilities Tata have access to international markets Experience of Tata will favor Tesla to understand market values better Tesla can access established distribution It will help in marketing Tesla can access available financial resources Help to set operational activities Tesla can establish contacts thru Tata It can increase produ...