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In Capitalism, there is several factors that contribute to a successful business. These factors are capital, production, distribution, establishing the correct price, dealing with competition, risk, and profit. Every business goes through these things to be successful. A very notable business that has done all of these things is Tesla. Tesla is a car company started by elon musk. The sell some of the nicest electric cars that are currently available. Tesla was started in 2003 by Elon Musk. A few investors invested in Tesla from the being with their personal funds, and it made it so Tesla was starting with a capital of $7.5 million dollars. Tesla’s idea was to make electric cars commercially available. He then went into the production stage and Tesla signed a contract with another car company, called Lotus, that said that Lotus would produce car for Tesla for 6 years. By 2009, 6 years after Tesla launched, they had only sold around 150 cars for around 100,000 each. Tesla was still very small at this point, but this is where it really started to become a large car brand. Tesla got a 500 million dollar loan and paid it back 3 years later.
Tesla has been notorious over the past few years for having problems distributing their cars in several states. Tesla does not sell their cars through dealerships and this is required in most states. This is why people in New Jersey can’t buy a Tesla and we have to go to Pennsylvania to get one. Tesla does need to work on their distribution in states like NJ if they ever want to sell more cars here.
Originally when Tesla first started and for several years after that, Tesla only sold a luxury sports car called the Tesla roadster. It cost over 100,000. Now they sell sedans and SUV’s and those are selling much better than the sports cars because of the price difference. Tesla’s sedans sell for around 70,000 dollars, but soon, they will also be releasing a lower end sedan for around 35,000 dollars. It took them several years to establish the best price point for their cars. When Tesla started, it was definitely not going into an industry that had little competition. Tesla was going into one of the biggest industries in the United States. It’s fairly safe to say that Tesla without a doubt faced a ton of competition.
The risk for Tesla when coming into this industry was extremely high. The auto industry mostly consists of a few large companies that own several different car brands each and sell them through dealerships. There is very few small companies in the auto industry, so for Tesla to start, it was taking a huge risk. However, Tesla succeeded in building a very successful company and are now starting to profit from it. Tesla Motors is now worth around 8 Billion dollars.
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