Tesla as an Example of an Effective Business

Tesla “designs, develops, manufactures and sells fully electric vehicles, energy storage systems, as well as installs, operates and maintains solar and energy storage products.” (Thomson, “Tesla Inc (TSLA.O) Company Profile.”, Reuters) According to Elon Musk, the founder of Tesla, Tesla started when GM forcibly recalled all-electric cars from customers in 2003 & then crushed them in a junkyard. (Musk, Elon., Home Page Tweet, Twitter) The company operates through two segments: automotive and energy generation and storage. The automotive segment includes the designing, developing, sales and manufacturing of electric vehicles. The energy generation and storage segment includes the designing and manufacturing stationary energy storage products and solar energy systems to residential and commercial customers, or sale of electricity generated by its solar energy systems to customers.

As of April 15, 2019, the company produced and sold five fully electric car models, the Model S sedan, Model X sport utility vehicle (SUV), the Model 3, a sedan designed for the mass market, Model Y, a compact SUV and the Roadster, a four-seater sports car. Tesla offers energy storage products, which includes the 14-kilowatt-hour (kWh) Powerwall 2 with an integrated inverter for residential applications and the 200 kWh Powerpack 2. 

The company develops energy saving products for use in homes and commercially. The company's energy product portfolio includes systems with a range of applications, from use in homes to use in large grid-scale projects. It also designs and manufactures other system components. Tesla is trying to promote a whole lifestyle by selling hats, water bottles, mugs, wireless phone chargers, and even kids toy cars. (“Tesla, Inc SHOP.” Tesla)Tesla builds both all-electric vehicles and also infinitely scalable clean energy generation and storage products. Tesla believes that the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better. (About Tesla | Tesla Canada)

Being a premium brand, Tesla does not need to offer many promotions to its customers. The company offers trial periods many you can return the car and get a full refund as long it has been less than a week and a total of less than 1000 km mileage. Lastly, they have a premium offer. If you buy one of their cars you get a free $300 tote bag. In their advertising the company focus’ on the fact they are eco-friendly. This is clearly captured in all their advertisements as “0 engine, 0 emissions, 100% electric” (See appendix 1). Unlike the popular Nike slogan, Just Do It, Tesla has no slogan. When you think about it, this makes perfect sense. They are not trying to be the N°1 electric car brand, instead they want to disrupt the car industry. Instead, they have a mission/mantra. Tesla’s mission is “To accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible.”

Tesla does not need to focus on marketing. Tesla doesn’t spend money on direct advertisement; it’s all done through word-of-mouth and through social media. They get a ton of “free publicity” because the media can’t seem to get enough of Tesla-related gossip. Tesla purchase transactions are conducted online, then the customer has to wait in line for months or years to get their car. This is because all Tesla cars are built to order. This saves the cost that comes with holding inventory. Tesla utilizes the “just-in-time” manufacturing strategy. This is where “inventory systems coordinate suppliers, warehouse storage, and factory floor delivery so that no material is on the factory floor that won’t be used up in a short space of time. This saves time, energy, waste, and factory space, and increases productivity a great deal. The just-in-time inventory system is all about having the right material, at the right time, at the right place, and in the right amount.”

Tesla directly competes with many automotive companies like BMW, Mercedes-Benz, Honda, Toyota, Nissan, Fiat, Mitsubishi, Chrysler Automobiles, Ford Motor Co., General Motors, Hyundai, Jaguar / Land Rover, Kia, Mazda, Subaru, Volkswagen and also Volvo. They have a high number of competitors. This is what makes the automotive industries so competitive. Tesla not only has these competitors but they also have a large list of indirect competitors too. This list includes the Ford Motor Company, General Motors (GM), Honda Motor Company (HMC), Nasdaq-listed Kandi Technologies, Navistar (NAV), a commercial vehicle holding company, Spartan Motors, a specialty chassis and vehicle manufacturer, Tata Motors, Toyota Motor Corp. (TM), a multinational automotive manufacturer; and Wabco (WBC), Federal Signal, an industrial conglomerate. There are also specific car models that are direct competition to some of Tesla’s cars. For example, the Chevy Volt and Nissan Leaf are both direct competitors to the Model Y. This is because they are both 100% electric cars.