Should Tesla Motors stop free supercharging?

Instead of the cliché gasoline or diesel engines, Tesla has created a future. This brand manufactured electrically powered cars, specifically named, Model S and model X. These cars are made to work by a network of supercharger stations, and they are recharged with electricity in order to make them run for a long time. Tesla offer it for free, but this is only for initial sales. Customers who purchased the electrical cars before January 15, 2017 can enjoy this kind of benefit (Lambert, 2017). Electric cars are just in its infancy stage, it is critical that an effective business model is put in place.

If such vehicles are implemented on a wider basis, it would bring several challenges to both the automotive industry and related suppliers like that of battery creators (Kley, Lerch, and Dallinger, 2011). Proponents have suggested various business models and have questioned whether Tesla should retreat from unlimited free supercharging. Electric mobility and various topical approaches are some of the main considerations for such analysis (Kley, Lerch, and Dallinger, 2011). Through the use of Ethical objectives, CSR Corporate Social Responsibility, Target Marketing, Commercial vs. Social Marketing, SWOT Analysis, Marketing Mix, and Lewis Force-field analysis, free charging might be good for consumers in the long run since possible competition may give rise to high quality services, and thus, the company should consider continually giving such offer to the market.<\/p>

Ethical Objectives

Tesla follows a specific kind of business ethic that is naturally engraved in its business. The firm had created an innovation that not only create a proposed cheaper alternative for cars but also create an awareness to take care of environment (Chen and Perez 2015).

CSR

While costs might be high to start an innovative business such as electric cars, such venture can create an easy avenue for Corporate Social Responsibility. It can increase awareness by teaching people to use battery-powered vehicles to avoid the harmful effect to the environment of by-products of gasoline or diesel usage (Kley, Lerch, and Dallinger, 2011).

Target Marketing

While several target markets can be pursued, it is important for Tesla to focus on profitable ones first. The company currently operates around 760 of these stations all over the world (Lambert, 2017). Thus, they should consider concentrating on segments that are willing to sacrifice convenient usage of oil and gasoline. For Tesla's cars, it would mean initially targeting those people in the higher income bracket.

Commercial vs Social Marketing

One of the advantages of electric-powered cars is that one could easily do social marketing with it. However, this cannot easily be converted to higher profit. While it may enjoy benefit from the increasing prices of oil and carbon constraints, its commercialization can be ineffective due to problems that its production expects to encounter (Chen and Perez 2015).

Marketing Mix

For the price of the supercharging service, Tesla has varied plans as of the moment. It plans to charge around 15 USD for a road trip from Los Angeles to San Francisco (Dull, 2017). It would vary with different states and countries. 120 USD would be charged between New York and Los Angeles while 400 yuan is the suggested rate between Shanghai and Beijing (Dull, 2017). Owners can also be charged on a per kWh basis. This may vary between states from $0.11 cents to $0.20 (Dull 2017). Product here would be the supercars. Supercharging would be considered as a complimentary service.

As mentioned above, Place, or the point of sale would be dependent to where the stations of the superchargers are located. For the case of Tesla electric cars, it seems like they have already created 760 superchargers (Lambert, 2017). Such number is continuously increasing. It is usually placed on common locations of gasoline stations like convenience stores or lots in between long national roads. It can also be placed on malls and in between highways (Dull 2017).

Promotion seems to be minimal for the supercharging stations. Tesla maintains that such points are strictly not a center for profit (Lambert 2017). The company claims that they would use any money gathered from the charging points to expand their network of superchargers (Dull 2017).

SWOT Analysis

For the strength, one could consider the free pricing of the superchargers. However, since it is only given to initial buyers, it can be only considered as a temporary advantage for customers. Another strength is that the company have enough financial backing to continue pursuing growth.

For the weaknesses, another one of the marketing mix, the "Place", can be pointed out. It seems that there are only a few superchargers and main offices for the Tesla cars. This is understandable since they just entered the automotive market.

For Opportunities, one could point that electric cars has a lot of potential, especially nowadays that advocate groups are pushing for an alternative to oil-powered vehicles. While such product offering is new to the market right now and only a few owns them, it offers a lot of opportunity for growth in the future.

For threats, one could point out the disruptive nature of the electric cars, which can bring abrupt technological change. Thus, the market may not be ready yet since they are more fixated in traditional vehicles. It could also be noted that there are a lot of existing oil companies and traditional car manufacturers that would probably push for the continuation of their agenda. They will surely lose a lot of profit since they already have built-in economies of scale. All of them would find unified ways to control the vehicle market and may probably conspire to make electric cars obsolete. At the moment, only Tesla seems to provide superchargers and electric-powered vehicles. This may be a threat since people might find it inconvenient to own such cars because of scarcity of ways to keep their vehicle running.

Force-field Analysis

For the present desired state, one could note that there is an increasing number of supercharger stations that could service the initial customers of electric-powered cars.

Driving forces that could positively affect changes for this include people's support to current environmental concerns and possible cheaper price of electric cars in the long run.

For the Restraining Forces, one could take note of the convenience that people enjoy today for traditional vehicle relying on gasoline and diesel. The question is whether customers are willing to shift. Another restraining force is the absence of current samples that could confirm the reliability of electric cars.

Findings and Conclusion

It is important to take note that CSR and Ethical Objectives would both be naturally advantageous for Tesla. It would also be easier to initiate social marketing. While such causes might be a good consideration for its target market, the rich people, it would be difficult to justify charging for superchargers for now as seen in the marketing mix analysis. The Lewin's Force-field analysis shows that while electric cars look good right now because of the environmental awareness it creates and the potential for a cheaper car of tomorrow, one could question whether people are willing to shift from traditional gasoline or diesel powered vehicles. There is also an absence of an ample amount of data to see if such innovation is actually reliable. It is critical that such data is studied further.

While supercharging stations are just complementary services to electric cars, it should be noted that it is also important to consider both the internal and external forces to be able to see if it could be used to generate profit for the firm. Through the use of SWOT analysis and the other methods mentioned above, an appropriate strategy can be adopted with regards to supercharging. Since the stations are considered complimentary, the only customers expected to use them are the owners of the electric cars, in which the target market for now is the rich people. Gasoline or diesel powered vehicles usually has standardization practices that allow different companies to have their automotive to be loaded from any firms. In the case of Tesla's electric cars, compatibility can be an issue. All of these can be considered as huge threats. The firm's weakness can also be pointed out to the superchargers since there are only a few of them for now. Despite a strong ethical objective and CSR, it is critical that Tesla motors continue free supercharging and not retreat from it. Such move will not only allow them to counter the weaknesses and threats, but also to maintain one of their strengths. Tesla can also rely on their superchargers being free of charge in order to take advantage of the opportunity for market growth and the potential for a cheaper alternative in the future as seen in the Lewin's Force-field analysis. The service or product itself only caters to specific Tesla electric cars, and since these vehicles are just in its infancy stage, people should be enticed to get a unit by offering free supercharging instead of making them reconsider their purchase and choose cheaper and more convenient alternatives.

References

Chen, Y., and Perez, Y., 2015. Business model design: lessons learned from Tesla Motors. Electric Vehicle Innovation Management, 15(50): 1-10.

Dull, H., 2017. Tesla unveils pricing structure for supercharging stations. [online]. Available at: http://www.autonews.com/article/20170113/OEM05/170119888/tesla-unveils-pricing-structure-for-supercharging-stations. [Accessed March 26, 2017].

Kley, F., Lerch, C., and Dallinger, D., 2011. New business models for electric cars: a holistic approach. Energy Policy, 39(6): 3392- 3403.

Lambert, F., 2017. Tesla is extending unlimited supercharging for cars ordered in the next 2 weeks. [online]. Available at: https://electrek.co/2017/01/01/tesla-unlimited-supercharging/. [Accessed March 26, 2017].

Lee, C., 2015. Marketing mix: a review of 'P'. [online] Available at: < http://www.icommercecentral.com/open-access/marketing-mix-a-review-of.php?aid=38598> [Accessed March 26, 2017].