Electric Car and Tesla Essay

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Pages: 19
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Overview
Tesla motors currently offers two products in their product line. The model S, which is a fully electric four door sedan and the Model X which is a fully electric four door SUV. The model S is the more popular of the two and is produced in higher volumes than the model X. The model S is available in two different models each offering a different battery and a different price, but both batteries are capable of driving more than 200 miles per charge. In regards to charge time, the model S can charge as quickly 34 minutes in a regular outlet in your garage, and there are charging stations all across the continental US interstate system. Although there is currently no road charging stations in Calgary, Alberta, there are more than a dozen located within 200 miles of the city which makes traveling achievable. The Model X, as stated earlier is a four door SUV that has just recently been introduced to the market. Tesla’s website says, “The Model X is designed from the ground up to blend the best of an SUV with the benefits of a minivan”. The most intriguing and distinct part of the model X is it’s ‘falcon wings’, which are doors the open vertically instead of horizontally, like a Lamborghini for instance. It is offered with the same battery options as the Model S, but brings more speed to the table at the same time. As far as the market for these vehicles goes, all of Canada is very concerned with fuel efficiency. The top ten selling cars in 2013 in Canada all got over 30 miles to the gallon of gasoline, which indicates that they are concerned with fuel prices. This implies that the Tesla models will do well since you only pay roughly 1/5th the amount of travel expenses when compared to a gasoline powered vehicle.
Economic/Social/Legal/Political
When determining the placement of our Tesla Automobile Dealership, many factors were considered including economic, social, and political-legal risks. A major economic risk to assess is the foreign exchange rate and the potential impact on the returns of our Greenfield investment. The Canadian dollar’s value floats against all other major currencies; since about 2009, the U.S. and Canadian dollars have been approximately on par, with the CAD (Canadian dollar) hovering either just below or just above the U.S. dollar (10). With the difference in the foreign exchange rate being minimal, there is little risk when investing in Canada. This minimizes the need to investigate and develop forward exchange rates because the spot exchange rate changes marginally. Another economic risk to evaluate is the sovereign credit ratings in determining a country’s access to international capital markets. In the latest credit rating, Moody’s gave Canada an Aaa rating, with a stable outlook (9). Under long-term ratings, the Aaa is rated as the highest quality and lowest credit risk. In the short-term ratings, Aaa is the best ability to repay short-term debt. With a stable credit rating and a low risk foreign exchange rate, Canada’s economic risk is inconsequential to our business plan. Canada’s political risk is very low. Canada is a high-income country which has access to a vast amount of natural resources. Canada has a well-established legal system which appears to be efficient as well as transparent. “Canada’s economy is inexorably linked to that of the United States, due to the latter’s geographic proximity, cultural similarities, and economic size” (3). The AMB Country Risk report says, “Canada is a CRT-1 country with very low levels of economic, political, and financial system risk. Canada continues to have sound macroeconomic fundamentals and a strong regulatory environment, placing it 17 out of 185 countries in the world in the Ease of Doing Business index. Growth is expected to be 1.5% for 2013, accelerating to 2.4% in 2014” (3).
The next phase in determining the placement of our dealership, our team looked at Calgary’s economic, cultural, and political-legal environment that may
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