Tesla Motors The Investment Environment of The United Arab Emirates
Outline of topics • Auto Industry in the UAE • Luxury Auto Market • Our Competitors • Culture of Auto Industry • Tesla Products within the UAE • Expansion Plan • Mode of Entry • Locations • Infrastructure • Strategic Alliance • Considerations • Our Company • Brief History • Operations • Our Product in the UAE • The United Arab Emirates • Demographics • Social, Political, and Economic • Cultural Dimensions
Our Company
Tesla Motors • 2003 - Tesla Founded • Founders: • Martin Everhard • Marc Tarpenning • 2004 - Joined by Elon Musk • 2006 - First production car produced
Making Electric Cars without Compromises Tesla Motors 2006 Tesla Roadster 0-60: 3.7 seconds Max Range: 200+ miles Cost: $130,000 2000 Chevrolet EV1 0-60: 8 seconds Max range: 100 miles Unavailable for purchase
Tesla Operations Freemont, CA – Production Factory Tilburg, Netherlands – Factory opened August 2013 Supercharger stations Showrooms
Our Product in the uae • Model S • Seating for 7 • Range of 300 miles • Stylish and luxurious • Model X • Seating for 7 • All wheel drive • Falcon doors
The united Arab Emirates
Demographics • Population as of July 2013 • 5,473,972 • Languages • Arabic (Official) • English • Farsi • Hindi • Urdu • Religions • 96% Muslim • 4% Other (Christian & Hindu) • Gender Comparison • 2.19 Males per Female (2013 est.) • Age Comparison • 0-24 years: 34.4% • 24+ years: 65.6%
Social • Official language: Arabic • English is widely used • 80% of population is non-Emirati • High literacy rates for region • 90% can read & write • Arabic & Islamic traditions • Subtle variations between seven emirates • Dubai • Abu Dhabi • Ajman • Fujairah • Sharjah • Ras al-Khaimah • Umm al-Qaiwain
Political • President & Prime Minster • Elected by Federal Supreme Council • Seven emirs (hereditary monarchs) • National government • Emirates govern where national responsibility ends • Flexibility to address local issues & concerns • Constitution of the United Arab Emirates • Various freedoms & rules of law • Overseen by elected Federal Supreme Court • Includes Sharia (Koran teachings) & civil courts
Economic • 7th largest oil reserve • Electricity production: 37th largest worldwide (2012, est.) • 83.31 billion kWh • GDP: 50th worldwide (2012, est.) • Greater than $275 billion • Inflation rate: 11th lowest in the world (2012, est.) • About 0.7% • Key industries • Commercial Ship Repair • Construction Materials • Fertilizers • Cement • Aluminum • Fishing • Petroleum • Petrochemicals • Open economy • Diverse & non-dependent on oil & gas, < 25%
Cultural Dimensions (Hofstede) • Power distance (90) • High inequality in power distribution • Hierarchical based government • Individualism (25) • Relatively low score • Loyalty to hierarchical rule • More collectivist society • Masculinity (50) • More masculine society • Homosexuality is illegal • Distinct gaps in gender roles • Uncertainty avoidance (80) • Intolerant of unorthodox behavior • Strong Islamic roots • Long-term orientation (no score) • Relatively new nation • More sustainable future-orientation
the UAE is a good fit for tesla
auto Industry in the UAE
Tesla Model S Our Industry Luxury car sales Booming 2012 successful for luxury car manufacturers Growth in industry By 2017, expecting 9% growth Arabian Automobiles Increase of 25% in share price in 2012 Highest in last 5 years
UAE Luxury Auto Market In 2012: 245,000 cars sold Increase of 25% over 2011 Projected for 2013: 370,000 vehicles, Increase of almost 38% Q1 of 2013: Audi: increase of 46% The Volkswagen Group: increase of 45% Jaguar Land Rover: increase of 25% Abu Dhabi Motors Rise in sales of 39% in Q1 Emirates Motor Company Rise in sales of 23% in Q1
Sustainable Competition KARMA FISKER BMW I3, HONDA JAZZ, NISSAN LEAF, ETC. Economical Size Economical Features High Price Not Luxurious- Different Class Than Tesla • Hybrid • Only 80 miles • Cramped Interior • Slow Charging • About $150K Mitsubishi MiEV
Luxury competition ASTON MARTIN FERRARI About $400K “Stupidly expensive” No fuel efficiency 6L v12 engine About 14 mpg MERCEDES BMW 3 SERIES • Price averages $190K • “Embarrassingly expensive & impractical” • 7.3L v12 engine • About 15 mpg • About $100K • Priced too high • Poor fuel efficiency • About $100K • Overpriced • Feels more sporty than luxurious • Poor fuel efficiency
Attributes of our product • Single charge: range of 480 km • Seat 5 adults & 2 children • 2nd trunk under hood • More room than station wagons • 3g wireless connectivity • Automobile magazine and motor trends 2013 car of the year • The wall street journal calls it “simply amazing” • Practical & Luxurious
Expansion Plan
Mode of entry • First: Direct Exporting to Dubai • Branch Office • Foreign Sales Representative • Marketing Strategy • Brand Awareness • Dubai Auto Zone • 100% Ownership • Tax Exemption • Later: Foreign Direct Investment • Dealerships • Manufacturing Factory • New or Existing Buildings • Contract Manufacturing & Local Hiring
Locations • First showrooms in Dubai near: • Airport • Downtown Mall Area • Autodrome • High End Residences
Building an infrastructure • Two charges to get around four biggest cities • Mercedes-Benz E63 AMG valued at $80,000 ($10,000 more) on one full tank • Presence of superchargers will increase competitive advantage • Cost of Installation: • Home Charging: < $1,000 • Charging stations: $10,000 to $40,000 per station • Charger at gas station: $1,000 to $2,000 per charger
Strategic alliance Opportunities • UAE Government • Electricity Generation • Real estate • Showrooms • Superchargers • Ptl Solar • Encourage Purchase • Reduce Costs for Consumers • Sustainability
Negotiation Considerations • Punctuality • Time to Reach Agreement • Appointments & Meetings • Several Meetings • Prayer Time • “Fi Amanillah” • When Escorting to Exit
