International Expansion Report Tesla Motors, Inc.
November 21, 2011
Rio Consulting Group Michael Dawes James Hadel Daniel Ma Simon Qin
International Expansion Report | Tesla Motors, Incorporated | Rio Consulting Group
Executive Summary Founded in 2003, Tesla strives to design, develop, manufacture and sell high-performance fully electric vehicles and advanced electric vehicle powertrain components. Currently, Tesla’s presence internationally is limited to dealerships in Europe and a minor production plant in Britain. In order to be best positioned moving forward, we recommend expanding into Latin America and Asia Pacific to better fulfill CEO Elon Musk’s primary goal to commercialize electric vehicles all the way to mass market.
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However, we suggest a hybrid approach, incorporating vertical and horizontal FDI to achieve the most efficient and profitable operation. Partnerships should also be considered. Finally, Tesla should be aware of the risks and dynamics of capital budgeting and money management when evaluating these projects from a financial standpoint. When considering a foreign market, Tesla should evaluate the political, economic, and cultural benefits, costs and risks involved in conducting business in these two countries. These factors are outlined in our report. We believe that Singapore and Brazil have several common offerings: established political relationships with the United States, economic opportunities for growth and expansion, and manageable cultural characteristics. In our overall goal of establishing Tesla in the Latin American and Asian Pacific markets, both Singapore and Brazil offer location specific advantages that other countries in the region lack. Finally, we made mention of ethical and legal considerations associated with expansion into these two nations. Next, we focused on the operational actions of the firm. We listed out specific procedural and strategic actions that Tesla will have to undertake in its expansion to Brazil and Singapore. These included decisions such as selecting the appropriate division leadership and acquiring human and land capital. After elaborating on these actions, we looked at the financial impact of the