Peer comparison
Both Ford Motor Company (NYSE:F) and General Motors Company (NYSE:F) are fairly mature automotive companies that do not offer cars with nearly the battery efficiency of Tesla Motors. Tesla’s car line is about luxury, which is in sharp contrast to Ford Motor Company (NYSE:F) and GM’s focus on the lower-end consumer who want to pay less than $400 a month in car payments. Tesla on the other hand offers payment plans at around $580 a month for its vehicles.
General Motors Company (NYSE:GM) foray into the EV market is the Chevrolet Volt. The Volt is more or less a flop as the range is limited to 38 miles, on the plus side the car can alternate between traditional fossil fuels and electricity, making it versatile. But the Tesla Model S comparatively has a 208 mile range. The Tesla Model S also comes with Tesla charging stations that allow for a Tesla Model S owner to charge on long trips.
The Ford Focus Electric is Ford Motor Company (NYSE:F)’s EV car. The Car is a worthy contender in the space, but its range is limited to 76 miles. On the plus side the car looks perfectly normal and it is priced at $37,995 when compared to the Tesla Model S which is priced at $77,400. The Tesla Model S has longer range, looks luxurious, and drives like a sport car.
The vehicles that Tesla Motors sells are marketed through a company operated retail network located in mall locations. I visited a Tesla Motors showroom at the Scottsdale Fashion Square Center which is a mall that is owned and operated by Macerich Co (NYSE:MAC). These stores help to show case the company’s products and services. This is entirely different from the dealership model that General Motors Company (NYSE:F) and Ford Motor Company (NYSE:F) adhere to. That being the case, Tesla Motor’s (NASDAQ:TSLA) showroom business model may be more profitable in that it lowers overall selling costs when compared to the alternative business of running multi-million square feet car dealership that are bloated with overhead costs. Tesla’s show-room business model benefits from the added foot-traffic malls tend to receive, which leads to free word-of-mouth-marketing.
Conclusion
Overall, Tesla seems to be doing the three facets of a business extremely well. It has done exceptionally at lowering manufacturing costs, leveraging effective marketing strategies, and offering phenomenal products.
Who wouldn’t want to upgrade to a fuel-efficient, iconic luxury car that has high re-sale value. Being at the cutting edge of technology would involve owning a Tesla. It’s the best American luxury brand that can stand toe-to-toe with the likes of BMW and Mercedes Benz.
The article Tesla Motors Stifles the Critics originally appeared on Fool.com and is written by Alexander Cho.
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