Current Market Conditions Competitive Analysis
The demand for electric motor vehicles is an established and ever growing market worldwide and we must consider that it will eventually develop into a competitive market with similar electric vehicle products. A paramount challenge for Tesla and our potential launch as competition in the electric vehicle market is meeting realizing the break even point is possible given production capacity. Demand for functional, quality electric vehicles is high and one consideration that has given stockholders pause in considering their investment is determining whether Tesla can meet production requirements to break even and eventually profit. There is a strong demographic for customers of electric cars as there are many Americans interested in saving money on fuel consumption and being more ecologically responsible with lessened emissions and carbon footprint. California is a stronghold for the electric automotive market because of higher gas prices and belief system of those who live there. The electric vehicle (EV) market is growing fairly rapidly according to new analysis from the Centre for Solar Energy and Hydrogen Research — with more than 320,000 new EV registrations in 2014, bringing the total global market up to 740,000 vehicles. These numbers will continue to grow as fuel prices continue being instable and as new EV makers figure out ways to capture potential buyers with state of the art design and performance technology. Generating enough units in production to satisfy the break even point has been a key consideration for Tesla and any future electric car company would certainly have to compare their startup process to that of Tesla motors.
Tesla Motors is a technologically advanced company who looks to change the functions of automobiles, as we know it. With a highly engineered product offering, this car surpasses competitive market conditions with similar offerings. Not only does this car enhance the effects of convenient long-term traveling, it also provides autopilot features, charging stations, and luxury items that other electric cars do not provide. Tesla Motors continually attracts a high demand of customers because there is nothing that completely relates to the offerings this vehicle brings forth. While the sufficiency of productivity and manufacturing rates of this automobile are currently in question for Tesla motors to achieve fiscal success and prosperity, it ultimately also comes back to the consumer demands, market requirements, price points and price elasticity. A common objective of the EV market product lines is for new and established companies to set price points that balance desired profits for shareholders with customer satisfaction
History of the Organization and Description of the Product
Tesla Motors, Inc, is synonymous with technological innovation. Historians will recognize Nikola Tesla's work with alternating currents in the war of currents in the late 1800's. Tesla motors founder Elon Musk is a very well known and brilliant billionaire entrepreneur who has taken electric motor technology to incredible levels, giving their products performance and service ranges unparalleled in the industry. Tesla motor’s has garnered the investment funds and backing of the public as consumer confidence in Musk's vision have manifested into investment capital and production facilities. Tesla's approach is industrious and well rounded and he has also steered the company into potential public transport with the advent of a high-speed train system that will simplify and speed up tricky and time-consuming Californian commuter traffic. There is no doubt that Tesla motors technological innovations give consumers and investors the confidence to invest in products and the company alike.
Tesla Motors was established in 2003, as a group of engineers in the Silicon Valley believed in the eco-friendly establishments of electric cars as opposed to gasoline-powered engines. Focusing on the power of the vehicle, Tesla Motors established a car with innovative engineering to best serve other competition and competitors. The Tesla car runs completely without gas, oil changes, or loud motors. Tesla’s product offering is a car ahead of its time in automotive advancements, offers a realm of advancements helping the human society feel safe in his/her automobile. A product is simply defined as“…the good or service for the target’s needs” (Perreault, Cannon, & McCarthy, 2011). As more and more people are looking to save money by making long-term investments, the Tesla proves to meet the consumers needs. As marketers' work to best satisfy the needs of the customers, many reviews stated that this car was very incompatible to the busy lives of traveling Americans do. As the launched methods of autopilot features within the car, charging stations, and customer safety feature, this company has shown significant growth over the past few months. “Deliveries over the first three months of 2015 came in 500 vehicles above Tesla's initial forecast, and represent a 55% rise over the same period a year earlier” (Stoll & Ramsey, 2015). The more that this company has demonstrated the effort to satisfy the consumer wants and desires, the direct effect has demonstrated growth and production throughout the company.
Price Elasticity of Demand
Price elasticity of demand is summed up with the following formula: Price Elasticity of Demand = Changes in Quantity Demand / Changes in Price. In other words, if a good is perfectly inelastic, the demand will not change when the price changes. If a good is perfectly elastic, the demand will change equally to the percent change in price. In the automotive market, goods are considered very elastic. Consumers have many alternatives to choose from and can easily find substitute cars when necessary. For instance, if Chevrolet decided to raise it prices by twenty-five percent, this would likely create a large decrease in demand. Consumers would simply switch to other auto brands that offer lower prices for highly similar products. This same concept is true for the Tesla Motors Company, they will need to maintain prices that fall near the middle of the market. Some economists argue that the pricing only appeals to the one percenters and they may be disregarding much of the fuel based market in that the average prices for a good qualitry vehicle in the U.S. have risen considerably in recent years. Tesla Motors has displayed a significant properties that separate its offering compared to many other electric cars. When a product that is so unique and different hits the market, Tesla Motors attracts more customers simply because currently, there is nothing else comparitivly like this car in the stance of innovative and technological advancements.
Tesla vehicles are priced to the middle or higher end of the market and due to the lack of competition in the electric car market they will experience success in that price point. They’re fixed and sunk costs help to determine their required pricing and their goals for quarterly earnings and profits are a considerable factor as well. Tesla may determine in order to satisfy demand and create an equilibrium that they may need to raise prices, especially if production capacity is not up to a point where the company can meet demand and break even or profit. It is conceivable that Tesla has some elasticity in price in that their competition for similar products is virtually non-existent. The price of gasoline or diesel fuel may be the largest contributing factor to the price elasticity of tesla products. Also a potential affecting factor is the urbanization of neighborhoods nationwide where people are not driving as far to work or possibly utilizing public transport.
Technological Innovation
Ultimately, Tesla Motors is attempting to create a new electric car that will solve the fuel and smog crisis in America. Tesla motors continues to monitor other automobile companies that manufacture electric or hybrid cars that are fuel efficient and give consumers the healthier and green alternative vehicles. With new editions and modifcations to the Tesla offerings, Tesla Motors continues to offer a unique incentive to customers. This brand has a massive amount of capital that can be invested into these groundbreaking markets.
The Relationship between Labor & Capital Employed Capital employed can be summed up with the following formula: Capital Employed = Total Assets - Total Liabilities. This is the total value of shares that are vested into the company’s ownership structure. The amount of labor can be represented by the human capital that the firm needs to meet market demand for units produced and turn an appropriate profit. In order for Tesla Motors to launch a new electric car it will need to increase the amount of labor and machinerty infrastructure to manufacture this new product. If shareholders approve of this direction for the company, the capital employed may be reinvested into expenditures to meet this goal. As the amount of labor increases, the capital employed will decrease. This occurs because of a higher amount of working capital is needed to fund the salaries and benefits of workers. As for the relationship of dimishing returns of productivity, a fixed amount of capital invested in an EV plant may be considered. If the plant is understaffed the amount of labor may likely increase, for a time the product will be increased per unit of labor applied to the capital. After the point is reached where the plant is at ideal productivity numbers with a full staff, an increase in the number of laborers to achiever greater output of units will give less than a proportionate return per laborer employed. This will be true for many reasons including but not limited to personnel management issues, machinery limitations, space considerations and increased need for potentially disturbing maintenance. In other words, as the amount of labor is increased the total product will be increased but the product per laborer will be diminished. The law of diminishing returns is at work.

Factors Affecting Variable Costs, Including Productivity The single, most important, variable cost is the specific automotive parts which are used to manufacture this new car. Specifcally, market prices of battery packs, cooling systems and surrounding electronics will continue to be a variable cost in the EV market. Tesla Motors already has a well-established manufacturing base that can produce electric cars and distribute across the globe. If demand suddenly surges for electric cars, the price of raw materials could skyrocket, as well as the need for new vehicles in the EV market. A slight decrease in productivity may occur to train new employees about the new car, but otherwise, productivity should remain virtually unchanged as production technology also increases.
Factors Affecting Fixed Costs
Fixed costs will not change when the new fully electric SUV/car is introduced in America. The company’s current facilities are more than adequate to handle the launch of the new car. The main materials needed in this project are automotive frames and body parts, industrial automotive which are already, existing fixed assets. Steel prices have remained stable in the last decade and EV manufacturerers can rest assure knowing they have fixed costs they can make balance sheets and profit estimates around.
Changes in Demand
According to Colander (2013) there are five different factors which can cause demand to shift. In no particular order those are: taste/preferences, income, substitutes, expectations, and taxes and subsides (p. 80). On the demand should there be a shift then the line moves to the right with an increase and to the left with a decrease. Unlike a change in the quantity demanded, which occurs when price changes, a shift will change the price point people are willing to pay for the product. As with all vehicles taste and preferences will play a big role on demand in this market. If consumers prefer to be able to travel long distances without having to stop for over an hour to get a full charge on their vehicles then demand for these types of products will decrease. However, an increase in demand could also come if gasoline & diesel fuel prices rise to the point that buyers are no longer interested or cannot afford to pay them.
Changes in Supply
When looking at the supply curve there are also five factors which can cause a shift in supply. They are the price of resources, technology, expectations, taxes and subsides, and the number of producers in the market (Colander, 2013, p. 86). In a world where we as a country look to find ways to live a cleaner life by utilizing cleaner energy there are opportunities for companies which specialize in this to receive subsides from the government. When a corporation receives a subsidy from the government this makes their costs to supply lower which in turn leads to an increase in the supply. In the same way new technology of electric battery powered cars decreased the supply for gas and diesel fueled vehicles the same could happen here. If technology continues to advance and we are able to find a better and more reliable source of fuel than electricity then this technology could cause a decrease in the supply of electric vehicles.
Market, Competitors, and Customers
In the automobile industry there is not a large amount of suppliers, one of the barriers of entry could be the extremely high costs it would take to get entry, and since there are not many suppliers the companies must watch each other and react to different moves each company makes. Because of these characteristics the market would best be described as an oligopoly. Competitors would be other automobile suppliers such as General Motors, Ford, and Toyota. Initially potential customers would be dealerships who provide vehicle sales to consumers who seek personal transportation. However, since the product being sold is also based on storing energy in an efficient manner there are opportunities to expand the business which both the competitors and customer pool would increase. On the competitor side the competition could be any old source of energy such as gas or coal or other battery suppliers like Duracell. Consumers would be anyone wanting to have independence from the electric grid.
Conclusion
Tesla Motors are manufactured and shipped across the globe. As the demand for electric cars increases, the overall need and desire for specific motors will also accelerate. Tesla Motors has a great launch and establishment of a car technologically advanced beyond its years. From a competitive standpoint, this car still reins ahead of other similar electric automobiles and still consistently displays market growth. The productivity, resources, as well as expectations all set forth by customers are setting this company aside from other competitors.

Reference
Clean Technica. (2015, March). Electric Car Demand Growing, Global Market Hits 740,000 Unit. Retrieved from http://cleantechnica.com/2015/03/28/ev-demand-growing-global-market-hits-740000-units/
Colander, D. (2013). Microeconomics (9th ed.). Retrieved from The University of Phoenix eBook Collection database.
Perreault, W., Cannon, J., & McCarthy, E. J. (2011). Basic marketing: A marketing strategy planning approach (19th ed.). New York, NY: McGraw-Hill Irwin..
Stoll, J., & Ramsey, M. (2015, April). Tesla First-Quarter Car Deliveries Rise Above 10,000; Tesla looks to accelerated volume gains for rest of year. Wall Street Journal. Retrieved from http://search.proquest.com.ezproxy.apollolibrary.com/docview/1669458021?accountid=458