a. Where will EVs have the biggest growth in the Middle East?
Tesla will have the most significant growth in Electric Vehicles (EVs) in the United Arab Emirates (UAE), which is among the most prominent oil-producing nations in the world. In fact, before the opening of Tesla retail and service centers in the cities, orders for Model S and Model X had already been made. The countries are committed to new renewable energy, so that greenhouse gasses are reduced, and therefore, help combat climate change. In fact, according to Teslas director of new and upcoming markets, Peter Bardenfleth-Hansen, the company chose UAE as a beacon because Tesla wants to accelerate the world to a sustainable future (Langton, 2017). Being oil-producing countries, Saudi Arabia and UAE fit well to Teslas long-term goals of sustainable development.
According to Reuters (2017), Tesla is focussing on the Gulf nations, particularly the UAE because the sale of luxury vehicles in the Gulf States are among the highest globally in terms of the world per capita. Additionally, according to the case, it is clear that the Saudi Arabian government-owned shares with the company, meaning that the country was in support of Teslas EVs (Harryson, 2016a). In both countries, according to the director of new markets, the company also has the support of the governments (Elserty, 2017). For instance, the director stated that his company was aiming at providing 20% of all the UAE government fleets by 2021, as well as minimize energy sources to clean sources by 2050 (Elserty, 2017). Besides, the governments have invested heavily in alternative energy sources, which explains why they were in support of Teslas ambitions. As such, it can be derived that with government support, Tesla can experience growth in these two nations.
b. Where and how is Tesla currently entering the Middle East?
Tesla is entering in Middle East cities, such as in Dubai, where it has already established showrooms and stores. However, the company is focussing on two models of the EVs, which are the Model X and Model S, which are significantly affordable to many in the country. Also, the company has already set up charging points, which are essential for the clients. The company targets consumers who are more tech-oriented and environmentally conscious, and particularly who are younger than regular car consumers. In addition, the company is entering the Middle East market by ensuring that it has government support, such as the government has shares in the company. Also, just as Reuters (2017) reported, Tesla stated by selling luxury electric cars in Dubai, marking its first foray in the Middle Eastern countries.
Regarding clients purchases, Tesla is entering the Middle East through the acceptance of online orders. For instance, in its entry to the UAE market, it started by accepting online orders from UAE clients. It then opened pop-up stores in Dubai Mall, as well as a Tesla service center, which was built on Sheikh Zayed Road in Dubai. It consequently opened in July 2017 (Reuters, 2017). In addition, according to Reuters (2017), the founder of Tesla, Elon Musk, asserted that the company would open a service center and a store in Saudi Arabia this year, and also plans to grow to other nations in the Middle East. This includes other cities in Saudi Arabia, Oman, and Bahrain (Reuters, 2017). As such, the company enters the market by first ensuring the availability of clients in a country, and consequently opening up service centers and stores. Besides, it does not enter the market with all its EVs; rather, it has chosen luxury cars Model S and Model X.
c. How do you think Tesla could accelerate growth in the Middle East (partnerships, alliances, collaborations, etc)?
According to a report by Seeking Alpha (2017), by 2017, Tesla has expanded into 80% of the world car market sales by numbers. However, out of the worldwide car sales of 88 million units, Tesla only managed a small fraction of the number 76,000 (Seeking Alpha, 2017). As such, this shows that the company is not doing well regarding market share. Besides, Seeking Alpha also clarifies that the company does not have a big market in the Middle East, which is evidenced by the fact that the company planned to enter the Middle East market, particularly UAE, after three years of having entered other foreign markets, which means that it does not see a lot of potential in the market.
Therefore, to succeed, I think the company should adopt partnerships with companies such as Toyota and Daimler since according to the case, Tesla has previously partnered with the companies, which yielded profits and growth for Tesla (Harryson, 2016a). For instance, according to the case study, it is clear that the strategic partnership with Daimler helped Tesla accelerate the commercialization of EVs globally (Harryson, 2016a). Daimler endorsed the EV technology by investing in Tesla. To benefit from each others know-how, the investment Daimler enabled them to collaborate closely in developing battery systems and electric drive systems, and so did the Toyota deal. Therefore, it is recommended that Tesla adopts the same approach in the Middle East market.
2. How InnoVentum Invented without Innovation:
a. What geographies and cities in the Middle East are making the largest investments in renewable energy?
The geographies include the United Arab Emirates and Saudi Arabia. In fact, the UAE has established itself as a regional leader in solar power as it has the technology and funds to support renewable energy projects. Masdar, which is a city in Abu Dhabi, UAE, is considered the nations renewable energy arm, which is connected to the Mubadala Development Company (Yigitcanlar, 2016). Masdar is mainly involved with renewable energy projects in the entire Middle East, as well as South America, Europe, and Africa. However, UAE is not the only country investing in renewable energy. In fact, all nations are conscious of the increasingly scarce natural resources, which has prompted governments and regulators of Dubai (UAE) and cities of Abu Dhabi (UAE), Doha (Qatar), Tehran (Iran), Istanbul (Turkey), Amman (Jordan), Mecca (Saudi Arabia), and Abu Rawash (Egypt) to start looking into areas where they can capitalize on renewable energy sources, such as wind and solar energy to make the cities smarter and greener (Yigitcanlar, 2016). The largest investment, however, is in Masdar, a desert location 17 kilometers southeast of Abu Dhabi. It is $22 billion state-funded project which is approximately 6 km2 in area and was launched in 2006 as a laboratory for testing sustainable urban technologies (Yigitcanlar, 2016).
b. What is the most important target for InnoVentum to commercialize its innovations in the Middle East?
The most critical target for InnoVentum in the Middle East should be developing sustainable energy sources solutions that are renewable and affordable. However, since most of the countries have invested in renewable energy sources, Innoventum should target an energy solution that is more sustainable composed of any other solution through the use of renewable and recyclable materials. The energy solution should also be more silent than any other solution through the use of smart materials in an intelligent manner. Besides, the company should also combine both wind and solar energy in ways that give a more stable energy delivery. This will ensure that the people can rely on renewable energy sources without the danger of failing. Also, the establishment should also be able to offer energy solution that is more resource and space efficient compared to any other solution through intelligent and modular designs.
Saving on resources and spaces is important as it will allow the company to also save on the costs of establishing these energy sources, thereby providing a higher likelihood that the company will make profits. Besides, the company should consider a visually compelling solution by bringing art into the designs (Harryson, 2016b). The models should also be erected strategically to offer accompanying services, which will attract more people. These services include Wi-Fi and charging stations at public spaces and spots that cities wish to provide a greener profile, for example, the Giraffe at the Eurovision site. Since EV is a concept that has been adopted in the Middle East, the company should consider coming up with charging stations that offer carport protection, as well as green electricity for the EVs. Wi-Fi and charging positions for mobile phones and PCs will also be necessary for the company as it will offer a better picture in the countries, thereby attracting clients (Harryson, 2016b). Essentially, the company has to provide competent products so that it gains an edge into the Middle East market.
c. How can InnoVentum acquire this target (partnerships, alliances, collaborations, etc.)?
InnoVentum can acquire the target of providing clean energy that is affordable to the Middle East countries, as well as promoting sustainability. The company needs to target new investors in the market, which will be essential for ensuring that the company has the finances and capability of putting in place green energy sources. The governments in the Middle East are conscious about renewable energy sources, and thus they can be vital investors. Besides, the company can partner with mobile telephone companies, including Sony Ericsson, Samsung Electronics, Blackberry, iPhone, and Nokia, which can be advantageous as it can offer a cheap avenue towards providing excellent charging systems, as well as Wi-Fi (Harryson, 2016b).
Also, the company can also partner with companies that offer EVs in the Middle East, including Tesla. This can consequently commercialize InnoVentum technology, which can yield more profitability to the company. Besides the partnership with Tesla will be important as both are focussing on the same goals of sustainability and greener cities with minimal carbon dioxide emissions. Besides partnerships, the company can also benefit from alliances. One of the most promising organization is the Asian Development Bank (ADB), which according to the case, is the single largest funding organization for off-grid renewable energy solutions. Remote towns in the Middle East can, therefore, benefit tremendously from an off-grid renewable energy source.
Elserty, A. (2017, July). Tesla continues to entrench its presence in the Middle East with a new store. Forbes Business. Retrieved from https://www.forbesmiddleeast.com/en/tesla-continues-to-entrench-its-presence-in-the-middle-east-with-a-new-store/
Harryson, S. (2016a). How Tesla Motors disrupted the automotive world. Case Study.
Harryson, S. (2016b). InnoVentum AB From start-up to grown-up, Case Study.
Langton, J. (2017, July). Middle East's first Tesla showroom launches in Dubai. The National. Retrieved from https://www.thenational.ae/uae/middle-east-s-first-tesla-showroom-launches-in-dubai-1.530591
Reuters (2017, February). Tesla targets Middle East drive with Dubai debut. Business Insider. Retrieved from http://www.businessinsider.com/r-tesla-targets-middle-east-drive-with-dubai-debut-2017-2?IR=T
Yigitcanlar, T. (2016). Technology and the city: systems, applications and implications (Vol. 99). New York, NY: Routledge.
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