A Report

On

Sustainability of Tesla Motors

In partial fulfilment of the Sustainability course

SUBMITTED TO
Professor Sneha Thapliyal
IIM Indore

SUBMITTED BY
Md Kashif, 2015PGP029
PGP, BATCH 2015-17

On March 21st, 2016

Indian Institute of Management Sambalpur

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Letter of Transmittal

To: Sneha Thapliyal

Professor, IIM Indore
From: Md Kashif
Roll: 2015PGP029
PGPM 15-17 Batch
IIM Sambalpur
Sambalpur
Date: March 21st, 2016
Subject: Report on sustainability of Tesla Motors
As instructed by you, this document has been submitted in partial fulfilment of Sustainability
course and contains an analysis on sustainability of Tesla Motors.
If you need any further information, please let me know.

Md Kashif

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CONTENTS
2

Company Background.......................................................................................... 4

CSR ratings of Tesla Motors..................................................................................8

Measures to improve sustainability......................................................................8

Tesla Follows Strong Sustainability Model..........................................................13

Tesla Motors control some of the 9 planetary Boundaries..................................13

Follows Triple Bottom Line Framework...............................................................14

Conclusion.......................................................................................................... 14

References......................................................................................................... 14

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Title: Sustainability of Tesla

Motors
Scope: Tesla Motors cars, Superchargers and Powerwalls
Objective: To determine sustainability of Tesla Motors strategic decision to produce
fully electric cars

1 COMPANY BACKGROUND

Mission: to accelerate the worlds transition to sustainable transport [1]

Tesla Motors was founded in 2003 by a group of engineers in Silicon Valley who
wanted to prove that electric cars could be better than gasoline-powered cars. With
instant torque, incredible power, and zero emissions, Teslas products would be cars
without compromise. Each new generation would be increasingly affordable, helping
the company work towards its mission: to accelerate the worlds transition to
sustainable transport.

Teslas engineers first designed a powertrain for a sports car built around an AC
induction motor, patented in 1888 by Nikola Tesla, the inventor who inspired the
companys name. The resulting Tesla Roadster was launched in 2008. Accelerating
from 0 to 60 mph in 3.7 seconds and achieving a range of 245 miles per charge of
its lithium ion battery, the Roadster set a new standard for electric mobility. Tesla
would sell more than 2,400 Roadsters, now on the road in more than 30 countries.

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Tesla Roadster

In 2012, Tesla launched Model S, the worlds first premium electric sedan. Built from
the ground up to be 100 percent electric, Model S has redefined the very concept of
a four-door car. With room for seven passengers and more than 64 cubic feet of
storage, Model S provides the comfort and utility of a family sedan while achieving
the acceleration of a sports car: 0 to 60 mph in about five seconds. Its flat battery
pack is integrated into the chassis and sits below the occupant cabin, lending the
car a low center of gravity that enables outstanding road holding and handling while
driving 265 miles per charge. Model S was named Motor Trends 2013 Car of the
Year and achieved a 5-star safety rating from the U.S. National Highway Traffic
Safety Administration.

Tesla Model S [2]

In late 2014, Tesla CEO Elon Musk unveiled two dual motor all-wheel drive
configurations of Model S that further improve the vehicles handling and
performance. The 85D features a high efficiency motor at the front and rear, giving
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the car unparalleled control of traction in all conditions. The P85D pairs a high
efficiency front motor with a performance rear motor for supercar acceleration,
achieving a 0 to 60 mph time of 3.2 seconds the fastest four-door production car
ever made.

Now with more than 50,000 vehicles on the road worldwide, Tesla has launched
Model X, a crossover vehicle that entered volume production in 2015. Featuring
exhilarating acceleration, falcon wing doors, and room for three rows of seating,
Model X defies categorization.

Tesla Model X [3]

Tesla owners enjoy the benefit of charging at home so they never have to visit a gas
station or spend a cent on gasoline. For long distance journeys, Teslas Supercharger
network provides convenient and free access to high speed charging, replenishing
half a charge in as little as 20 minutes. Superchargers now connect popular routes
in North America, Europe, and Asia Pacific.

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Tesla Superchargers

Teslas vehicles are produced at its factory in Fremont, California, previously home
to New United Motor Manufacturing Inc., a joint venture between Toyota and
General Motors. The Tesla Factory has returned thousands of jobs to the area and is
capable of producing 1,000 cars a week.

Factory in Fremont, California

The company is expanding its manufacturing footprint into other areas, including in
Tilburg, the Netherlands, where it has an assembly facility, and Lathrop, California,
where it has a specialized production plant. To reduce the costs of lithium ion
battery packs, Tesla and key strategic partners including Panasonic have begun
construction of a gigafactory in Nevada that will facilitate the production of a massmarket affordable vehicle, Model 3. By 2020, the gigafactory will produce more
lithium ion cells than all of the worlds combined output in 2013. The gigafactory will
also produce battery packs intended for use in stationary storage, helping to
improve robustness of the electrical grid, reduce energy costs for businesses and
residences, and provide a backup supply of power.
Tesla is not just an automaker, but also a technology and design company with a
focus on energy innovation.

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2 CSR RATINGS OF TESLA MOTORS

As per report from CSRHub LLC, USA [4]

3 MEASURES TO IMPROVE SUSTAINABILITY

Non-renewable fuel to electric cars: Tesla Motors design, develop, manufacture
and sell high-performance fully electric vehicles and advanced electric vehicle
powertrain components. They have established their own network of sales and
service centers and Supercharger stations globally thus creating a unique business
model in the automobile industry. Model S received 99 out of 100 in an owner
survey conducted by Consumer Reports, the highest customer satisfaction score of
any car in the world. Our goal is to deliver the highest possible level of ownership
satisfaction in every way.
Comparison of Electric Cars: [5]
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Brand

Price

Range

Mitsubishi iMiEV

cheap, at $22,995
(or $15,495 after
the US federal tax
credit and $12,995
after that plus the
$2,500 California
ZEV rebate)
tad more
expensive
$25,000, or
$19,990 +
$80/month battery
rental (after the
US federal tax
credit, $17,500, or
$12,490 +
$80/month)
costs $29,170
($21,670 after the
US federal tax
credit and $19,170
after that plus the
$2,500 California
ZEV rebate)
costs much more,
$41,350 ($33,850
after the US
federal tax credit
and $31,350 after
that plus the
$2,500 California
ZEV rebate)
lower price
$27,495 ($19,995
after the US
federal tax credit
and $17,495 after
that plus the
$2,500 California
ZEV rebate)
MSRP of $35,445
($27,945 after the
US federal tax
credit and $25,445
after that plus the

62 miles

Smart Electric
Drive

Ford Focus Electric

BMW i3

Chevy Spark EV

VW e-Golf

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Special
Comment
takes 13.5
seconds to get to
60 MPH

68 miles

gets to 60 MPH in
9.8 seconds

76 miles

takes 10.1
seconds to get to
60 MPH

81 miles

gets to 60 MPH in
7.1 seconds

82 miles

60 MPH in 7.2
seconds

83 Miles

sluggish 10.4
seconds to get to
60 MPH

Mercedes B-Class
Electric

Nissan LEAF

Fiat 500e

Kia Soul EV

Tesla Model S

$2,500 California
ZEV rebate).
MSRP is $41,450
($33,950 after the
US federal tax
credit and $31,450
after that plus the
$2,500 California
ZEV rebate)
price of $29,010
($21,510 after the
US federal tax
credit and $19,010
after that plus the
$2,500 California
ZEV rebate)
$32,300 ($24,800
after the US
federal tax credit
and $22,300 after
that plus the
$2,500 California
ZEV rebate)
$33,700 ($26,200
after the US
federal tax credit
and $22,300 after
that plus the
$2,500 California
ZEV rebate)
$76,000

84 miles

7.9 seconds to get

to 60 MPH

84 miles

10.2 seconds to
get to 60 MPH

87 miles

8.7 seconds to get

to 60 MPH

93 miles

11.8 seconds to
get to 60 MPH

240-286 miles

2.8 seconds to get

to 60 MPH, autopilot
Thus we observe that Tesla Model S is a clear leader vis--vis its travel range per
charge and acceleration. The price is high but not very high if we look at
comparable SUVs like Audi Q7 priced at $55,750 [6]; Tesla Model S and X with the
luxury it provides and features like auto-pilot make it a vehicle worth the money.
Developing an ecosystem for its cars: Tesla Motors is also building a network of
Superchargers in the United States and Europe to enable free and convenient long
distance driving. Superchargers allow Model S owners to replenish 50% of the
battery pack in as little as 20 minutes. Supercharger stations are strategically
placed along well-travelled highways to allow Model S owners to enjoy long distance
travel with convenient, minimal stops. As of February 19, 2014, they had 90
Supercharger stations open in North America and Europe. They expect that Model X
and their future cars will be able to use this network. [7]

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Developing a competitive advantage: Tesla Motors sells and services its electric
vehicles through its company-owned sales and service network in North America,
Europe and Asia. Its intent is to offer a compelling customer experience while
gathering rapid customer feedback and achieving operating efficiencies, better
control over the costs of inventory, warranty service, pricing, and the development
of the Tesla brand. Tesla stores do not carry large vehicle inventories and, as a
result, do not require corresponding large floor spaces. The benefits they receive
from distribution ownership will enable them to improve the speed of product
development and improve the capital efficiency of our business. This approach
provides them with a competitive advantage as compared to incumbent automobile
manufacturers.
Helping other companies to become sustainable: In addition to developing
their own vehicles, Tesla Motors provide services for the development of full electric
powertrain systems and components, and sell electric powertrain components to
other automotive manufacturers. They have provided development services and
powertrain components to Daimler AG (Daimler) for its Smart fortwo, A-Class, and BClass electric vehicles. The have also developed a full electric powertrain system for
Toyota Motor Corporation (Toyota) for use in its RAV4 EV and began shipping
production components to Toyota in 2012.
Exploiting its competitive advantage to bring additional sustainability:
Tesla Motors have also exploited its battery making prowess for cars by developing
tesla home batteries Powerwall.
Its advantages include: [8]
Solar electricity at night: Powerwall stores electricity generated by solar panels
during the day and makes it available to ones home in the evening. This bridges
the gap between peak solar and peak demand, allowing one to use ones photons
when one needs them.
Go net zero: Combine solar panels and one or more Powerwall home batteries to
power ones home independently from the utility grid. A net zero energy rating
means that a home produces as much energy as it consumes, but is still connected
to the utility grid for periods of high demand.
Emergency backup: In the event of a utility outage, Powerwall can power an entire
home or select appliances with an uninterrupted supply of electricity. When installed
along with solar panels, Powerwall will allow ones home to use solar generated
electricity during a utility outage.

Our fully electric vehicles combine zero tailpipe emissions, market leading range on
a single charge, impressive acceleration, and pricing competitive with other vehicles
in their classes. For example, our Model S accelerates from zero to 60 miles per
hour in as little as 4.2 seconds and has a range on a single charge of up to 265
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miles. We offer Model S with 60 kWh and 85 kWh battery pack options. Model S has
an effective base price of $62,400 and $72,400 in the United States for the 60 kWh
and 85 kWh options, respectively, assuming and after giving effect to the
continuation of a United States federal tax credit of $7,500 for the purchase of
alternative fuel vehicles. Even without the tax credit, we believe our list prices are
competitive from a pricing perspective with other premium vehicles. We believe
that Model S demonstrates our ability to produce increasingly affordable electric
vehicles that offer long-range capabilities and uncompromised performance, energy
efficiency, convenience and design.

Competitive advantage that is very difficult for others to copy thus making
it sustainable: Their battery pack and electric powertrain system has enabled
them to deliver market-leading range capability on their vehicles at a compelling
battery cost per kilowatt-hour. Their battery packs use custom electric vehicle
lithium-ion battery cells and contain two to three times the energy of any other
commercially available electric vehicle battery pack, thereby significantly increasing
the range capabilities of their vehicles. Designing an electric powertrain and a
vehicle to exploit its energy efficiency has required extensive safety testing and
innovation in battery packs, motors, powertrain systems and vehicle engineering.
Their proprietary technology includes cooling systems, safety systems, charge
balancing systems, battery engineering for vibration and environmental durability,
customized motor design and the software and electronics management systems
necessary to manage battery and vehicle performance under demanding real-life
driving conditions. These technology innovations have resulted in an extensive
intellectual property portfolioas of December 31, 2013, they had 203 issued
patents and more than 280 pending patent applications with the United States
Patent and Trademark Office and internationally in a broad range of areas, including
the battery pack and other technologies.
Energy Efficiency and Cost of Ownership: Their vehicles offer consumers an
attractive cost of ownership when compared to similar internal combustion engine
or hybrid electric vehicles. Using only a single electric powertrain enables us to
create a lighter, more energy efficient vehicle that is mechanically simpler than
currently available hybrid or internal combustion engine vehicles. The estimated
cost to fuel for their vehicles is approximately one-fifth that of comparable internal
combustion vehicles in the United States, and even less internationally where
gasoline prices are typically higher. Their electric vehicles have lower relative
maintenance costs than hybrid, plug-in hybrid, or internal combustion engine
vehicles due to fewer moving parts and the absence of certain components,
including oil, oil filters, spark plugs and engine valves. Additionally, government
incentives that are currently available can reduce the cost of ownership even
further.

Improved battery packs: We design our battery packs to safely store significant
amounts of energy and to have long lives. For example, we have designed our Tesla
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Roadster battery packs to store 53 kilowatt hours of useful energy and to have an
estimated life of over 100,000 miles or seven years. In addition, we have designed
our battery packs to be modular so that we can leverage technology developments
across our different vehicles and products.

Cutting edge engineering design: The powertrain is very compact and contains
far fewer moving parts than the internal combustion powertrain. These features
enable it to be adapted it for a variety of applications, including future vehicles and
any powertrain components they build for others. The flow of electricity between
the battery pack and the motor must be tightly controlled in order to deliver the
performance and behavior expected in the vehicle. For example, software
algorithms enable the vehicle to mimic the creep feeling which drivers expect
from an internal combustion engine vehicle without having to apply pressure on the
accelerator. They design and engineer bodies, chassis, interiors, heating and cooling
and low voltage electrical systems in house and to a lesser extent in conjunction
with their suppliers. Our team has core competencies in computer aided design and
crash test simulations which we expect to reduce the product development time of
new models. Additionally, their team has expertise in lightweight materials, a very
important characteristic for electric vehicles given the impact of mass on range. The
Tesla Roadster is built with an internally-designed carbon fiber body which provides
a balance of strength and mass. Model S is built with a lightweight aluminum body
and chassis which incorporates a variety of materials and production methods that
help optimize the weight of the vehicle.

Batteries that are not toxic to the environment: Tesla Motors Lithium-Ion cells
are not classified as hazardous and are landfill safe. However, dumping them in the
trash would be throwing money away, since the battery pack can be sold to
recycling companies (unsubsidized) at the end of its greater than 100,000-mile
design life. Moreover, the battery isnt dead at that point, it just has less range.
Power Plant Emissions aka The Long Tailpipe: A common rebuttal to electric
vehicles as a solution to carbon emissions is that they simply transfer the CO2
emissions to the power plant but this is not the case with Tesla Motors [9]

CO2 Cont Efficienc CO2 Emissi

ent
y
ons
0.32
Honda CNG Natural Gas 14.4 g/MJ
45.0 g/km
km/MJ
Nat Gas-Fuel
0.35
Honda FCX
14.4 g/MJ
41.1 g/km
Cell
km/MJ
0.56
Toyota Prius
Oil
19.9 g/MJ
35.8 g/km
km/MJ
Tesla
Nat Gas1.14
14.4 g/MJ
12.6 g/km
Roadster
Electric
km/MJ

Car

Energy
Source

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4 TESLA FOLLOWS STRONG SUSTAINABILITY MODEL

Profit figures: [10]

5 TESLA MOTORS CONTROL SOME OF THE 9

PLANETARY BOUNDARIES

Climate Change: Yes (prevents greenhouse gas emissions)

Ocean acidification: No
Stratospheric ozone: No
Biogeochemical nitrogen cycle and phosphorous cycle: Yes (No fuel emission)
Global freshwater use: No
Land system change: Yes (recyclable batteries)
Rate of loss of biological diversity: No
Chemical pollution: No
Atmospheric aerosol loading: No

6 FOLLOWS TRIPLE BOTTOM LINE FRAMEWORK

People: Features like auto-pilot and luxury
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Planet: Reduces harmful fuel emissions, recyclable batteries

Profit: Gross profit has increased from $30k in 2012 to $923k in 2015 [10]

7 CONCLUSION
The commercial production of a highway capable, fully electric vehicle that meets
consumers range and performance expectations requires substantial design,
engineering, and integration work on almost every system of our vehicles. Tesla
Motors roots in Silicon Valley has enabled them to recruit engineers with strong
skills in electrical engineering, power electronics and software engineering. They
have complemented this talent base with automotive engineers with substantial
expertise in vehicle engineering and manufacturing. Their ability to combine
expertise in electric powertrain and vehicle engineering provides a broad capability
in electric vehicle design and systems integration. These capabilities, coupled with
their focus solely on electric vehicle technology as well as their strong in-house
engineering and highly vertical manufacturing capacity, will enable them to sustain
the electric vehicle industry leadership they created through the production of the
Tesla Roadster and Model S.

8 REFERENCES
[1] https://www.teslamotors.com/about
[2] http://www.businessinsider.in/The-Tesla-Model-S-is-a-quiet-masterpiece-oftechnology-and-design/articleshow/49681474.cms
[3] http://fortune.com/2015/07/01/tesla-model-x-features/
[4] https://www.csrhub.com/CSR_and_sustainability_information/Tesla-Motors-Inc/
[5] http://evobsession.com/electric-car-range-comparison/
[6] http://www.caranddriver.com/audi/q7
[7] http://ir.teslamotors.com/secfiling.cfm?filingid=1193125-14-69681&cik=
[8] https://www.teslamotors.com/powerwall?
_ga=1.61241519.20100327.1458569312
[9] https://www.teslamotors.com/blog/secret-tesla-motors-master-plan-just-betweenyou-and-me
[10] http://www.nasdaq.com/symbol/tsla/financials?query=income-statement

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