Tesla Motors, Inc. Business Case

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Tesla Motors, Inc. Business Case Question #1 The electric vehicles (EV) are not comparable to the internal combustion engines (ICE) technology vehicles. The ICE vehicles depend on imported oil, thereby subjecting the car owners to unpredictable fuel prices, and cause environmental pollution through carbon emission. Unlike the EV, oil is not used for the vehicle motion, and, therefore, no carbon emission is associated with these types of vehicles (Lu et al., 2013). Furthermore, the car owners are not affected by the fluctuating prices of fuel across the globe. Also, the EVs can easily contribute to the achievement of the additional scale of economies to a company that manufactures them. This is possible because the company can lower the target market price by reducing the battery prices. On the other hand, Lu et al. (2013) explain that when comparing the charges per mile, depending on the electricity costs, the average fuel cost of the EVs is 3.5 cents per mile, while that of the ICE is about 16 cents or more a mile. Similarly, the EVs can be recharged at night, and their maintenance costs are also reduced because they do not require belts, oil, and filters as with the ICE (Lu et al., 2013). However, sin the oil prices vary, during the periods of lower prices of fuel, the competitive advantage of EVs in regards to the operating costs is reduced as the EVs’ savings over ICE rely on prices of fuel. EVs also represent a disruptive technology. With the innovative electric powertrain technology, there can be a technological transformation through the production of the EVs. The vehicles have gained a competitive edge in the automotive industry due to the advantages it

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