Tesla Strategy

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Table of Contents

1        Executive Summary        

2        Automotive Industry and Tesla Motors        

2.1        History – The Early Years        

2.2        Tesla Motors        

2.3        Current Market Scenario        

3        Industry analysis: Electric cars        

3.1        Electric Car Industry Structure before Tesla opened up its patents        

3.2        Electric Car Industry Structure after Tesla opened up its patents        

4        Financial Analysis and Investor’s view        

5        Tesla’s Competitive Advantage        

5.1        Innovative Lithium ion batteries        

5.2        Large Network of Supercharger stations        

5.3        Unique direct-to-customer selling model        

5.4        Development of Lithium ion cells ‘Gigafactory’        

6        Tesla’s strategy to sustain market leadership        

6.1        All Our Patent Belong To You – An act of philanthropy or a strategic game changer?        

6.2        Joint Ventures        

6.3        International Expansion        

7        Conclusion        

8        Bibliography        

9        APPENDIX: One Page Project Outline        

1. Executive Summary

The following company report talks about the strategic plays that Tesla Motors has employed to gain a competitive advantage in the electric vehicle segment of the automobile industry. It has effectively played a new game strategy creating a niche product and a position for itself in the market. Tesla has turned its lack of knowledge into an advantage by going for a new electric drivetrain for its vehicles and a unique direct-to-customer selling model. This has enabled it to provide an end-user experience unmatched by any existing automobile manufacturer.

Tesla has been successful because of innovation in product and supply chain. Electric hybrid vehicles were already present in the market when Tesla entered but the innovative Lithium-ion battery packs developed by Tesla are more efficient compared to the competitors. The company has also developed a whole ecosystem with huge investments in the setup of Supercharger stations and with projected further investments and government incentives, the electric vehicle (EV) market is destined to take off. The setup of a ‘Gigafactory’ for production of Lithium-ion cells on a large scale, will help Tesla become one of the largest cell manufacturer in the US and a potential supplier to other EV automobile manufacturers.

The opening up of the patents might be a dangerous move but Tesla could potentially convert its competitors into collaborators and reduce the EV manufacturing costs. We feel Tesla has identified that it cannot develop the whole ecosystem of EVs on its own and needs partners. However, with its first mover advantage in the R&D of EVs and move towards being a battery producer, it will still be able to secure a key position in the future EV market. This is reflected in the stock price of the firm which is on a growing path despite low earnings per share. Investors are confident in the strategies employed by Tesla and believe in it to become a market leader in future.