Welcome to Live Chat

Welcome to LiveWebTutors Services, World's leading Academic solutions provider with Millions of Happy Students.

Call Back
logo

24x7 Support Available

To Get the Best Price Chat With Our Experts

chat now

In A Hurry? Get A Callback

shopping cart 0

Subject Solutions Code Description Price Delete

Amount Payable : $0

continue shopping proceed to checkout

World's Leading Assignment Library

Tesla’s Damaged Goods Problem

Question Preview:

Consider Teslas business strategy on Model X cars. The Tesla Model X is a mid-sized, all-electric, crossover SUV. In this exercise, we focus on the pricing strategy of two models: Model X 75D and Model X 60D. Both models were launched by Tesla in 2015. The Model X 75D is equipped with a 75 kWh battery which gives the car a theoretical driving range of 417 km. While the Model X 60D shares exactly the same performing figures as X 75D and is also equipped with a 75 kWh battery, a software is installed to limit the maximum usage of battery to only 60 kWh, which gives the car a theoretical driving ...

View Complete Question >>

Question Preview:

Consider Teslas business strategy on Model X cars. The Tesla Model X is a mid-sized, all-electric, crossover SUV. In this exercise, we focus on the pricing strategy of two models: Model X 75D and Model X 60D. Both models were launched by Tesla in 2015. The Model X 75D is equipped with a 75 kWh battery which gives the car a theoretical driving range of 417 km. While the Model X 60D shares exactly the same performing figures as X 75D and is also equipped with a 75 kWh battery, a software is installed to limit the maximum usage of battery to only 60 kWh, which gives the car a theoretical driving range of 360 km. Suppose there are 500 potential Model X buyers in Australia each year. Tesla conducts a comprehensive market analysis and divides the potential buyers into two groups: high-type buyers and low-type buyers. Each type’s willingness to pay (in AUD) isSuppose there are 200 high-type buyers and 300 low-type buyers. We further assume that the marginal cost of production for both models is the same at $100,000. However, Model X 60D incurs an additional software installation cost of $1,000. Suppose there is no fixed costs (this assumption won’t affect our analysis below).Tesla has the following three options:Option 1. Launch only Model X 75DOption 2. Launch only Model X 60DOption 3. Launch both Model X 75D and Model X 60D Questions (a) (3 Marks) Determine Tesla’s optimal pricing strategy and profit under each option. (b) (1 Mark) Based on your answer in (a), which option should Tesla choose? Justify your answer. (c) (2 Marks) Many people may scratch their heads about why Tesla would like to intentionally (and costly) “damage” its own vehicles by limiting the capacity of 75 kWh battery to only 60 kWh? Why not just produce and sell Model X 75D as the quality is higher and the production cost is lower? For example, one consumer made the following point: "That makes no sense (to produce both models). If they have the same battery, it costs Tesla just as much to produce the 60kWh cars as the 75 kWh cars. Unless the demand curve is very flat, they should be able to sell more cars at the 60 kWh price point, and the increased volume ought to compensate for the lower price point." Based on your answers in (a) and (b), comment on the above statement. (d) (4 Marks) Assume now there are x high-type buyers and 500- x low-type buyers, where x can be any number from 0 to 500. Determine Tesla’s optimal product launch and pricing strategies based on the value of x.

View Less >>

Solution Preview

Solution -1 

Pricing strategy and profit under the each option In order to attract the consumers form the each type of group, we can adopt a strategy for the charging the price, which sufficient to recover the marginal cost, addition cost, and nominal profit. Here while formulating a pricing strategy we are focusing from the low types consumers groups, as such strategy can helps in converting both high as well as low type of proposed consumer groups into real consumer groups.Here we are offering a $ 120000 for the model X 75D and $ 115000 for model X 60.  We believe that the consumer who are willing to pay $ 115000 for the X 60D model can afforded for  X 75 D, also'and the probability for conversion of these consumer groups from Model X 60 D to model X 75 D would be 60 %.

question Get solution

$15

Orginal Price : $19.50

Pay Now

Upload Assignments

250 words

side

Get Your Assignment

Don’t delay more, place your order now. Quick assignment help will be offered to you.

Order Now

CUSTOMER REVIEWS

Excellent

logo

Based on 702 reviews See all reviews here

One of the Best Service

I trust LiveWebTutors for my assignments because of their ability to deliver the perfect assignments time and again. Only a few of my assignments required minor revisions. The rest assured it is the best assignment writing service in the market.

Elizabeth
Sydney

Great Service and on time

I felt so exhausted and burdened with the large number of assignments I had to write and desperately needed someone to help me with all the writing and there was LiveWebTutors company on the internet. They finished my assignments before the due date and also offered me a first-timer discount.

Christina
Perth

One of the Best Assignment Provider

I ordered my Mathematics and Marketing assignments from them last month. I received the content on the set date. Most importantly, the assignments were well-written and plagiarism free. I scored a top grade for the assignment written by them. They are a reliable company.

Oli
Brisbane

Very Helpful Customer Service

I was quite unsure about getting my assignment written online but after coming across LiveWebTutors.com, all my worries have vanished. The quality of the assignments written by their writers is just invincible. Their customer support is very polite and helpful. You should try their service at least once

Kabir
Adelaide