Table of Contents

I. INTRODUCTION:..................................................................................................2
II. OVERVIEW.............................................................................................................2
1. HISTORY OF TESLA INC............................................................................................................................. 2
2. CURRENT SITUATION:................................................................................................................................ 4
3. MAIN STRATEGY..........................................................................................................................................5
4. PHILOSOPHY................................................................................................................................................ 5
5. MARKET SEGMENTATION..........................................................................................................................6
6. ACTIONS REFLECT THEIR STRATEGY.......................................................................................................9

III. ANALYSIS TESLA’S SUPPLY CHAIN.............................................................13

1. HOW DOES THE AUTOMOTIVE SUPPLY CHAIN WORK?.......................................................................13
2. PRODUCTION............................................................................................................................................. 15
3. MARKETING.............................................................................................................................................. 17
4. SERVICE..................................................................................................................................................... 20
5. RESEARCH AND DEVELOPMENT:........................................................................................................... 21
6. HUMAN RESOURCES................................................................................................................................ 23
7. QUALITY MANAGEMENT SYSTEM......................................................................................................... 25

IV. POSITION IN THE AUTOMOBILE INDUSTRY...........................................26

TESLA’S FIVE FORCES ANALYSIS OF COMPETITIVENESS:...........................................................................26

V. CONCLUSION:.....................................................................................................27
REFERENCE:..............................................................................................................28

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 i. INTRODUCTION:
Tesla, Inc., founded in 2003 by Elon Musk, is an electric vehicle and renewable
energy company located in Palo Alto, California. Electric cars, home and grid-scale
battery energy storage, solar panels and solar roof tiles, and other related products
and services are among Tesla's most recent offerings. Nowaday, Tesla Inc. rapidly
grows to become the world's most valuable carmaker, and may herald the start of a
new age for the global auto industry, characterized by a Silicon Valley approach to
tech that is displacing traditional manufacturing know-how. Tesla is also the world's
best-selling plug-in and battery electric passenger car manufacturer, with a market
share of 16 percent in the plug-in segment and 23 percent in the battery electric
segment in 2020 sales. So how can a company with only 17 years of development
become one of the largest and most innovative companies in America, occupying the
No. 1 market share in the electric vehicle industry as well as a high position in the
automobile industry?

ii. OVERVIEW

1. History of Tesla Inc.

Tesla Motors was founded on July 1, 2003, by Martin Eberhard and Marc
Tarpenning. Eberhard said that he wanted to create "an automotive maker that is
also a technology business," with "the battery, computer software, and proprietary
engine" as its key technologies. In February 2004, the company received US$7.5
million in series A funding from a variety of investors, including Elon Musk, who
provided the majority of $6.5 million. Musk entered the company after the investment
and was appointed chairman of the board of directors. Elon Musk continued to lead
Tesla's $13 million Series B investment round in February 2006 and the third $40
million round. Eberhard resigned as CEO in August 2007 and was promoted to
"President of Technology" before leaving the organization in January 2008. Marc
Tarpenning, a co-founder and the company's Vice President of Electrical
Engineering, left the company in January 2008. In October 2008, Elon Musk became
Tesla Motors’ CEO.

Tesla's goal was to start with a premium sports car aimed at early adopters and then
moving into more mainstream vehicles. In 2008, The Roadster was first produced by
Tesla. They had earned US$187 million and delivered 147 cars by January 2009.
Elon Musk himself had put $70 million of his own money into the company.

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 (Image: Tesla’s first car – Roadster)

In May 2010, Tesla purchased what would become the Tesla Factory in Fremont,
California and launched its IPO on NASDAQ on June 29, 2010. Tesla stopped
manufacturing the Roadster in 2012 and introduced its second vehicle, the Model S
luxury sedan. During 2012 and 2013, the Model S received many automotive
awards. In 2015 and 2016, the Model S was the best-selling plug-in electric car in
the world. Tesla also unveiled Autopilot, a driver-assistance system since the Model
S.

Tesla joined the energy storage market in April 2015 with the release of its
Powerwall home and Powerpack industrial battery packs. In September 2015, Tesla
unveiled its third car, the luxury SUV Model X. The company was selling over 10,000
vehicles per quarter at this stage.Tesla purchased SolarCity in November 2016,
gaining entry into the solar photovoltaics industry. Tesla expanded its scale of
market, which included electric cars, stationary energy storage systems, and solar
power generation at the time. The Model 3 sedan, Tesla's fourth vehicle model, went
on sale in July 2017. The Model 3 was a more affordable vehicle than all the
previous ones to target the mass market. However, delays and manufacturing issues
hampered the rollout.

(Image: Tesla’s energy project)

The company has expanded its global production potential. In 2019, Tesla opened
the first Gigafactory outside of the United States in Shanghai, China. The Giga
Shanghai was the first foreign-owned car factory in China, and it was completed in
less than six months.

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 2. Current situation:
Tesla started deliveries of its fifth vehicle model, the Model Y crossover, in March
2020. Tesla's market capitalization surpassed $86 billion on January 10, 2020,
shattering the record for the highest valuation of any American automaker. In the
same year, Tesla surpassed Toyota's market capitalization of $202 billion to become
the world's most successful automaker.

Tesla posted four consecutive profitable quarters from July 2019 to June 2020,
making it qualified for inclusion in the S&P 500. Tesla's stock price rose 740 percent
in 2020, and its market capitalization was greater than the next nine largest
automakers combined as of December 2020. Tesla met its target of producing
500,000 cars by 2020 and had over US$19 billion in cash at the end of the year

(Image: Tesla’s stock price dramatic growth)

In 2021, experts forecast the business of Tesla is continuing to grow even stronger,
as the demand for electric cars is increasing. Elon Musk has also become the richest
person in the world due to the dramatic rise of Tesla’s stock price in recent periods.
The company itself is expected to have some potential plan in 2021. Tesla
announced that it had invested US$1.5 billion in Bitcoin and will consider it as a type
of payment. Two new Gigafactory, in Germany and Texas, United States are
expected to go into operation. New model of Model S, the releasing of Cybertruck as
well as a cheaper product line is expected to happen this year. According to some
recent report, 2021 will be a year for Tesla to expand its market and service center in
United States as well as other areas around the world

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 (Image: Bitcoin – Tesla’s future type of payment)

3. Main strategy
Tesla's goal, according to its About Tesla website, is to accelerate the world's
transition to renewable energy. Tesla Roadster, the company's first cutting-edge and
high-performance electric sports car, was unveiled in 2008. “Tesla Motors is to help
expedite the transition from a mine-and-burn hydrocarbon economy to a solar
electric economy, which I believe to be the main, though not exclusive, sustainable
solution,” said Elon Musk, CEO and Co-Founder of Tesla Motors (Musk, 2006).

Meanwhile, Musk said, "Tesla's strategy is to enter at the high end of the market,
where consumers are willing to pay a premium, and then quickly push the market
down to high unit volume and lower prices with each successive model." (Musk,
2006). To put it another way, Tesla's competitive strategy is a large distinction that
targets both high and low-price consumers in the automotive industry. Based on that
generic approach, Tesla sets itself apart from the competition by increasing its
research and development investment every year in order to create a highly
advanced, one-of-a-kind ecosystem for increasing economic returns.

Tesla also offers a wide range of goods and services around the world, including the
Model S luxury electric sedan, Model 3, and Model Y, an SUV version of Model Y.
They have a range of 250 to 370 miles and various battery performance, as well as
customizable seats and storage. They also offer solar roof solutions, power-pack
solar panels, mega-pack batteries, and other related products. SolarCity merged with
Tesla, Inc. to help create a clean-energy ecosystem, in line with the company's
strong differentiation strategy. Tesla's battery material costs will be reduced by R&D
and automation, enabling them to push the competition down with a lower price as a
niche that has evolved into a big differentiating factor to build on their competitive
advantages.

4. Philosophy

A famous statement in accordance with Elon Musk is: “We say things we believe
even if what we believe may be delusional”.

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 Image: Elon Musk

Tesla was presented as a proof that electric vehicles could outperform the traditional
gasoline transportations, especially in terms of function and speed, since 2003. Until
recent years, Tesla has been concentrating on manufacturing all-electric vehicles,
including eco-friendly energy and storage products. Indeed, the company holds a
strong belief that a zero-emission future would arrive as a consequence of the act of
cutting down on using fossil fuels. Hence, Elon Musk also referred to pointing out
mistakes as an urgent job, resulting in timely adaptive measures.

Musk said that one of the most important lessons they learned in their early years
was that even though you begin with false premises, the success you may gain is
the recognizing and correcting. Recognize and admit mistakes, and adapt easily.
“When you have a company full of passionate people who are mission-driven, what
you think you can do isn’t the same as what you can actually accomplish.”

5. Market Segmentation

Tesla Motors is well-known as one of the outstanding participants in the electric

vehicle market. However, it wasn’t always like this. It was not until 2008 that Elon
Musk became the CEO of Tesla and brought back the miraculous growth for Tesla
Motors like never before. First, Tesla was re-positioned as “the new technology for
clean energy” company. Besides, clever strategies, concerning price, storytelling and
target market segmentation, were executed with a view to increasing the demand for
electric sport cars. Tesla’s market segmentation is briefly described as follows.

Geographic:

The electric vehicle market is widely distributed in areas, especially those that have
greatly advanced infrastructure and high demand for charging networks like North
America and China, for instance.

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 (Figure: Global electric car stock by region 2010-2019) (Source: https://www.iea.org/reports/global-ev-outlook-2020)

Due to the technical requirements, Tesla is now available in developed countries.

From the above figure, it can be seen that in China – where the population is huge,
together with the advancement of technical skills – accounting for the largest
proportion in this market.

Demographic:

Currently, Tesla is following the mono-segment positioning, which means that only
one segment is put into a period of time. Up to now, family size or the number of
people in a family, stands as the most concerning in terms of demographic aspect.
To be more specific, such factors help shape the target market that benefit the
company the most.

(Image: Tesla X – One of the best options for family)

The pioneers in this market are those in the middle to upper class, especially male
with environmental consciousness. These people are not elastic to the price factor,
only focus on “the new technology for clean energy” of this unique sports car.
Whereas the current segmentation – family – is looking for models that meet these
criteria: economical, fully equipped as well as comfortable space for long journeys
like family trips.

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Socioeconomic:

Consumers have a high level of income and are mostly highly educated about
consequences of climate change and pollution. Gasoline is just like most other
natural resources – non-regenerable and is predicted to be exhausted in the future.
As a result, alternative sources of fuel for transporting are in need either to be
discovered or developed. Moreover, fuel-efficient is also an aspect to be considered
when choosing a transport. It can be seen that the price of either petrol or diesel is
volatile and has the tendency to rise through the time. So, in terms of economical
aspects, these lines of product (electric vehicle) is more beneficial in the long-run.

(Figure: Fuel prices over period 2013-2021) (Source: https://www.racfoundation.org/data/uk-pump-prices-over-time)

Furthermore, technological advancement is also an advantage of these markets

compared to the conventional one as they concentrate on the production of
advanced electric vehicle systems that are expected to have lower emission at
relatively lower costs.

Psychographic:

Consumers who are into eco-friendly and sustainable transportation terms.

Moreover, the determination to reduce pollution of each consumer would also be
added as a plus. So, Tesla has divided their target customers into 3 main categories
based on their characteristics:

- Hardcore loyal users: this group contains people at upper class, and also,
highly aware of the environmental problems. This group will be the pioneers in
the purchasing and experiencing the product line, or in another word –
trendsetter.

- Fad users: just like its name – fad, this group consists of those who have
intense with trendy stuff. This group is pleased to pay for luxury things in order
to catch up with society. Proving their position in the society is the thought of
the majority of this group.

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 - Switchers: this group is about people who are conscious about eco-friendly and
willing to have some acts to prove their willingness to change. However, these
people have the high price elasticity, and would switch as soon as any
alternative appears.

Behavioral:

Factors that related to price, quality, or safety and performance should also be highly
considered in order to improve Tesla’s service, which helps the company gain better
customer satisfaction later on.

"We don't have a promotion plan now," Musk once spoke in October 2019. "Some
time in the future, we can do advertising, not in a traditional way.” So, Tesla has
introduced a program that the client is the root. Even when ‘word of mouth’ has
existed for a long time, applying it to this market is unprecedented.

Tesla knows who your customers are exactly, what will make customers love and
respect. Tesla owners are still proud of their vehicle, and a majority of them revealed
the willingness to purchase another Tesla in the future. Referral marketing only
works well with Tesla because they have products that make customers extremely
satisfied and willing to introduce to their friends.

6. Actions reflect their strategy

a. Green system

Tesla's business strategy is to transition the world from fossil fuels energy to
sustainable energy. The company wants to make electric cars instead of cars using
gasoline or diesel. CEO of the company, Elon Musk, said that “ Tesla Motors is to
help expedite the move from a mine-and-burn hydrocarbon economy towards a solar
electric economy, which I believe to be the primary, but not exclusive, sustainable
solution ”. To produce electric cars and be friendly to the environment, Tesla wants
to have their production line as green as possible. With the Electric Vehicle of Tesla,
it has prevented dumping 4 million tons of CO2 gases from entering the atmosphere.
Below is the image of the process of using materials to make a car in a Gigafactory.

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 (Image: Gigafactory Process Flow)

We will focus on the flow of lithium-ion batteries in this image. Firstly, the Gigafactory
will get the raw materials to produce batteries. Then they will manufacture the
cathode, anode, and separator. With the help of electrolyte manufacturing, they can
create Lithium-ion batteries for electric cars. Having the batteries, they can assembly
the car and sell it to the market. But there is one problem with the battery is that they
have a life cycle. It means that the battery can complete a certain number of charges
and discharges before lowering its performance. The Lithium-ion battery is affected
heavily by the depth of discharge, which is the utilized amount of a battery's storage
capacity. Normally, the Electric Vehicle manufacturers put an 8-year warranty on
batteries, approximately 100,000 miles. However, many Tesla cars can go up to
400,000 miles with minimal degradation on the battery. According to Tesla, the
company said that it recycled 60% of the components from its lithium-ion batteries
once they've reached the end-of-life cycle. Thus, about 10% of old batteries can be
reused to build parts of the electric car. In Gigafactory, there are special labs that
can store 1,000 pounds of old batteries waiting to be recycled. And Tesla just does
not only recycle old batteries but also sends unused leather from making car seats to
Apple to produce phone cases.

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 (Image: Gigafactory’s scale)

The company tries to use energy that harms the least to the environment. The
company is building the Gigafactory in Nevada closest to the new local renewable
energies: solar and wind. Although the cost of building renewable facilities at the
beginning will be relatively high compared to fossil fuels, in the long run, the outcome
that the renewable energies bring back will be much higher. It will help Tesla to keep
up with its business strategy, finding the sustainable solution for the environment.

b. Products

Elon Musk also pointed out that “Tesla is to enter at the high end of the market,
where customers are prepared to pay a premium, and then drive down market as
fast as possible to high unit volume and lower prices with each successive model”.
Tesla's business strategy is to target both segments by choosing high-end buyers
and low-price buyers in the car industry. Based on that plan, Tesla separates itself
among the competitors by expanding its research and increasing new technology
each year to create a profoundly imaginative special environment for expanding
returns to an economy of scale.

High-end products

So the Tesla's first product was the Tesla Roadster - luxury sports car typeh The
numbers of Tesla Roadster sold to the market were quite small, about 2,500 ones
before closing production in Jan 2012h

Once Tesla set up its brand and had delivered and conveyed its concept car to the
commercial center, it fortified its trade demonstrationh Tesla's trade show is based
on a three-pronged approach to the offering, adjusting, and charging its electric
vehiclesh

Sales directly

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Not like other car producers who offer through diversified dealerships, Tesla offers
specifically to customersh It has made a worldwide arrangement of company-owned
showrooms and exhibitions, for the most part in urban centersh By owning the sales
channel, Tesla accepts that it can pick up an advantage within the speed of its item
improvementh Not like other car dealerships, Tesla showrooms have no potential
clashes of intrigueh Clients bargain as it were with Tesla-employed deals and
benefits staffh Including the showrooms, Service Plus centers (a combination of
retail and benefits centers), and benefits offices, Tesla has 429 areas worldwide as
of March 2019h Tesla has utilized Web sales—consumers can customize and buy a
Tesla onlineh

Home Services

In some places, Tesla has people called Tesla Rangers - mobile technicians who
make house callsh Especially with the Model S's ability to upload pieces of
information, Tesla Rangers can have a peak and repair the challenges without
physically touching the vehicle, and deliver the service remotelyh

The “Supercharger Network”

The problem when having Electric Vehicles is that you have nowhere to charge your
car except your homeh Tesla has solved this problem by creating its own network of
"supercharger stations"h These are the places that drivers can have their Tesla free
charge in about 30 minutesh Tesla does this to speed up the adoption rate of electric
cars by making them less expensive and easier to approachh

(Image: Tesla’s supercharger network)

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Low end products

This is where Tesla has not been able to achieve this market. The lowest car price of
the company, which is the Tesla Model 3 with price ranging at $39,000while the
average car price in the US is $37,876. Its price is above the average, which means
that the lowest customer range that the company is targeting is the average
American people, not the one below that. There are two main reasons that they will
need to wait some more time before approaching the low-end car market.

Shortage of manufacturing capacity

The demand for Tesla cars is increasing monthly. The company seems to break the
sales record of the previous month. But in the production line, there is a bottleneck,
creating a waitlist for backordered cars that is growing regularly. Tesla does not have
enough manufacturing capacity to meet the current request all at once. Since the
demand surpasses the current supply, the basic economics said that the price would
be bid up. Tesla found trouble in production, not demand. Tesla has completed
phase one of building the Gigafactory in the Nevada desert, which helps them to
scale up production line and it will take some time in the future.But at the moment,
the price of Tesla will not be cheap

Battery technology

Batteries to store and utilize electrical power are the ones that cost the most in a
single part of these cars. Although during the last decade, the price of Lithium-ion
batteries was cut down and now the price is only 1/10 compared to its in 2010.

One of Tesla's main objectives is to reduce the battery costs per kilowatt-hour for its
car. There are some bright sides toward that objective. Forbes estimates that Tesla’s
battery costs have reduced from approximately $230 per kilowatt-hour in 2016 to
almost half price 127$ in 2019. Although Tesla’s battery costs are about 20% lower
than the average car industry, that's not enough to reduce the car price to target a
lower one. Elon Musk said that if he halves the battery price, the car price can be just
only $25,000. But at the moment, the price of Tesla will not be cheap.

iii. ANALYSIS TESLA’S SUPPLY CHAIN

1. How does the automotive supply chain work?

SCM includes managing relationships and the flow of products, services, and
information (network) between and among producers, suppliers, and consumers. A
supply chain covers all processes, roles, and facilities involved in the flow and

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transformation of products and services from the manufacturing stage to the end
user (directly or indirectly).

There are two types of companies in the auto industry: automotive producers and car
parts manufacturers. The number of components produced, as well as the number of
suppliers, has risen dramatically as cars have become more complex and require
more electronic parts. Since car manufacturing is so big, there are only a few car
manufacturers in this industry. Toyota, Volkswagen, Nissan, and Huyndai are some
of the world leaders. Since there are only a few producers selling a wide variety of
goods, this industry is an example of a mixed oligopoly.

Dealerships

Dealers are companies that market cars. They can be physical retail stores or
separate businesses. A single company can own a number of dealerships. The
crucial thing to note is that these dealerships are separate from the automakers and
are largely self-contained.

Customer support, knowing the needs of their particular geography and customer
base, and car servicing and repair are all areas where dealerships excel.

Manufacturers

Automobile manufacturers are the well-known brands such as Ford, Toyota, BMW,
and their rivals.

OEMs (original equipment manufacturers) is a popular term for these companies,

which is misunderstood. Although these companies make some original machinery,
their main strength is in designing vehicles, selling them, ordering parts from
suppliers, and putting the final product together.

When it comes to apps, the “design” part of the equation becomes a little hazy.
Some of the software is used in subsystems that are developed by the OEM but
installed by third-party vendors. Some software, on the other hand, is created directly
by manufacturers.

Tier 1 Suppliers

Tier 1 suppliers are companies that supply OEMs with parts or devices directly. Tier
1 suppliers are known for producing “automotive-grade” hardware. This means
hardware that can withstand OEM demands for motion, temperature, and durability.

These suppliers generally work with a number of car firms, but they're usually closely
connected with one or two OEMs and have a more distant relationship with others.
Delphi, for example, was once owned by General Motors before being spun off as a
separate corporation.

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Tier 2 Suppliers

Many companies supply parts that end up in vehicles, despite the fact that they do
not sell directly to OEMs. Tier 2 manufacturers are the companies in this group.

Tier 2 suppliers are often experts in their profession, but since they serve a large
number of non-automotive customers, they lack the capacity or willingness to
manufacture automotive-grade components.

Tier 3 Suppliers

Tier 3 refers to manufacturers of raw or near-raw materials such as metal or plastic

in the automotive industry.
Tier 3 companies supply OEMs, Tier 1 companies, and Tier 2 companies with raw
materials. As a result, the distinction between a Tier 2 and a Tier 3 supplier who sells
to Tier 1s is hazy.
(Image: Tesla Model X Supply chain)

2. Production
Tesla produces all of its automobiles in Fremont, California. Most recently, they
constructed a warehouse inside this headquarters to support the weekly production
of 5,000 Model 3 vehicles. Furthermore, they manufacture key components of each
vehicle, such as the electric motor, battery pack, and charger. Tesla manufactures
lithium-ion batteries in a Nevada subassembly facility, in addition to its Fremont
headquarters. They also purchase manufacturing parts in the United States, Europe,
China, and other locations. For example, they often source lithium from China and
Australia. Furthermore, as electric vehicles become more prevalent, lithium prices
have been steadily increasing. Due to a secured partnership with a Ganfeng lithium
supplier, Tesla now has a small competitive advantage over other firms.

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 (Image: Tesla’s factory in Fremont)

The Five Forces frameworks' production helps Tesla to decrease the power of
consumers by producing cars that can be personalized using their manufacturing
techniques. The SWOT review helped Tesla to replace its previous supply chain
weakness/threat (capacity limits) with a strength (automation) and long-term
competitive advantage
Tesla perfects the Strategy Diamond diagram by effectively crafting their automation
results. Tesla's automation systems, for example, can help automate whole
workflows, learning, and adaptation. Additionally, automated robots are used to
assist with tasks such as automated stamping, painting, welding, and even final
assembly on the assembly line. Although machines and robotics can be helpful to
the manufacturing industry, Tesla also employs humans to replace robots that are
sluggish and underperforming.
In recent years, the company has expanded its global production potential. In
Shanghai, China, Tesla opened the first Gigafactory outside of the United States in
2019. The Giga Shanghai was the first foreign-owned car factory in China, and it was
completed in less than six months. Tesla also began work on a new Gigafactory in
Berlin, Germany, and another in Texas, United States, the following year.

(Image: Tesla’s present and future manufacturing projects)

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3. Marketing
To achieve their organizational goals, Tesla employs the four Ps in their marketing
campaigns.

a. Product

Tesla makes cars, electric vehicle parts, batteries, energy storage, and solar panels,
among other things. Because of rising demand and innovation, Tesla is
concentrating more on its electric vehicles as it seeks to expand as a multinational
and global business.

(Image: Tesla’s electric vehicle products)

b. Place

Tesla pays almost 0% for brand marketing through brand marketing agencies,
according to their Financial Director. Instead, the company's top priority will focus on
the experience channel in traditional showrooms, where people can freely explore
and experience its products. Tesla sells directly to customers, unlike other car
manufacturers that sell to franchised dealerships.Tesla showrooms, unlike car
dealerships, are free of potential conflicts of interest. Customers only work with Tesla
sales and service representatives. Tesla has developed an international network of
company-owned showrooms and galleries located in major cities.

(Image: Tesla’s showroom)

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The company has also embraced online purchases, allowing customers to
personalize and buy their car from their own home. There are the Tesla Rangers –
mobile technicians who make house calls. The service can be provided remotely,
allowing technicians to access and repair any issues without ever having to touch the
vehicle. Tesla also has its own network of "supercharger stations" where drivers can
get a free charge for their vehicles in about 30 minutes, in order to make electric
vehicles widespread by making them cheaper and simpler to maintain.

(Image: Tesla’s online purchasing platform on their website)

c. Promotion

Tesla's marketing strategy mainly relies on viral marketing, but it also employs
personal selling, public relations, product promotion, and direct marketing strategies..
They use social media as a key source of earned media. Elon Musk, the company's
CEO with his 17.9 million Twitter followers plays a huge role in its brand marketing,
by sharing tweets that are mostly lighthearted, making use of memes and
personifying the company's brand picture. Every post of Elon Musk on Twitter can
stagger the market with millions of likes and retweets.

(Image: Elon Musk’s Twitter account)

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Tesla’s stock price or Bitcoin price - as Tesla has recently purchased $1.5million
worth of this cryptocurrency - is affected by Elon Musk. He is also candid about the
company's shortcomings, which makes the company more personable and draws
consumers' attention. However, sometimes the company can be backfired by his
social media action. When Musk drank whisky and smoked marijuana during an
interview on a livestream in 2018, he angered investors and caused Tesla share
prices to drop.

(Image: Elon Musk tweets cause financial markets chaotic)

They use salespeople in their stores to sell their components and batteries through
personal marketing and direct marketing. According to Marketing Manager Anna
Melton, referral strategies are also used as promotions. Tesla does not spend a lot of
money on ads because word of mouth is one of their strongest promotional
resources, thanks to their strong brand identity and media presence, especially on
social media.

d. Price

Tesla's pricing benefits both the company's earnings and the public's view of the
company. When the company was first starting out as a niche differentiator, they
used premium pricing. Then they used both premium pricing and customizable price
points for their range of cars as they moved to a wider differentiator strategy.
Customers trust high-performing innovations that aren't present in any other
commodity on the market, so premium pricing allows use of high price points. They
also use market-oriented pricing, which uses lower pricing for their newest car model
3 as well as their other items, such as solar panels and services.

e. Distribution Channels

Their policy has recently expanded to the global market. They are expanding their
promotions, opening new markets, and creating new exclusive items to attract
consumers and boost sales. They are currently establishing new business
partnerships with other businesses in order to expand their operations. Tesla avoids
using intermediaries in favor of a Direct-to-Consumer approach that focuses on
better service quality and cost reduction. They have complete leverage over their

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sales distribution networks, which include their online website and company-owned
stores. In the future, B2B markets could be lucrative for Tesla.

(Image: Overview of Tesla Business model)

4. Service

Tesla service focuses on speed and seamless process. Technicians at Tesla keep a
close eye on the status of their product with over-the-air updates to reduce time and
need to visit the Maintenance Center. In the uncommon case that a Tesla vehicle
requires maintenance at the service center, administration will be speedy and
consistent—and likely be finished in an hour maximum. Tesla’s Service center
ceaselessly associated with their central command, permitting Tesla professionals
and designers to cooperate to distinguish and resolve issues continuously. In
practically no time, technicians can make refreshes across Tesla's whole client
armada. The company is likewise growing new ways for their product to self-
improve. The outcome is a vehicle that is continually developing and improving,
permitting clients to avoid the shop and focus on the road

a. Over-the-air updates

Over-the-air (OTA) update is the remote conveyance of new programming, firmware,

or other information to the Maintenance center.

OTA processes are a more proficient path for technicians to fix bugs and update
programming than to physically overhaul every individual Tesla automobile. OTA
updates can get issues before gadgets dispatch, which can set aside technicians
time and cash, just as lessen the product advancement and quality-affirmation (QA)
measure. OTA refreshes likewise empower OEMs to all the more effectively update
programming on gadgets that are hard to get to, like publicizing shows.

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An OTA update is likewise advantageous for end clients since it keeps them from
going to an actual store or interface with a PC to refresh their gadgets. All things
being equal, the end client just requirements to press a catch on their cell phone to
download a product update, for instance

This technology allows engineers and technicians to keep their client’s Tesla
Automobile status updated in real time. In the case there is a failure in the system,
Remote Diagnostics comes in handy

b. Remote Diagnostics

A significant component of unwavering quality and accessibility will be connected to

touchless support and activity. Gadgets and entryways particularly should work for
extensive stretches of time without physical (active) upkeep or specialized help to
determine issues. The only options in contrast to involved overhauling are either self-
diagnostics and fix or distant diagnostics and goal by the actual framework or by
human administrators.

In the case where Remote Diagnostics finds a flaw, SmartAlert will be activated

c. SmartAlert

SmartAlert works to give the clients the most convenient experience. It will convey
what the vehicle needs and is able to walk the clients through a basic fix or associate
them to their Maintenance center.

Should specialists not have the option to go to their customers by means of Versatile
Assistance, Tesla Administration Focuses with distant diagnostics and programmed
registration, technicians can pre-analyze fixes and request parts before clients even
show up. Working on designing implies that most help doesn't need lifts. Tesla
vehicles can as a rule be fixed right on the floor, for a speedy and helpful experience

5. Research and development:

It's no surprise that Tesla is at the forefront of artificial intelligence deployment
among major automakers. The automotive manufacturer from California is arguably
the most creative in the world. Tesla's engineering policy has resulted in a high level
of hardware and software integration within the vehicle. Most other automakers have
yet to implement such cutting-edge technology, far less completely leverage AI and
deep learning's potential.

The company's R&D expenditures increased from US$0.7 billion in 2015 to

approximately US$1.5 billion in 2018. Tesla's R&D budget, on the other hand, fell by
about 8% in 2019 to US$1.34 billion. In 2020, Tesla expects to spend approximately

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1.5 billion dollars on research and development. Tesla has become the largest
electric vehicle producer in the United States as a result of increased investment in
recent years.

(Figure: Tesla’s R&D spending and losses from 2010 to 2015)

With Research and Development, Tesla is concentrating on Automation, Material

Costs, and Software Updates over the long term.Their significant long-term research
and development sets them apart from the motor vehicle industry. “We assume that
the only way to achieve a general approach to complete self-driving is to use
advanced AI for vision and planning, assisted by efficient use of hardware.
Increasing investment in R&D to develop new products that meet market demand for
improved renewable energy solutions, such as batteries for different purposes, is
also one of the company's strategic objectives.” - Christine Rowland claimed on
Panmore Institute about Tesla's strategy.

However, other corporations are adopting electric vehicles, and Tesla aims to
maintain its competitive advantage by making their products difficult to copy. The
significant investment in R&D is intended to develop more advanced technology for
their cars, thus increasing the barrier to entry into the electric vehicle and battery
markets

.
(Figure: R&D intensity of Tesla vs selected car manufacturers in 2015)

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Tesla invests to keep upgrading its AI autopilot function that sets it apart from the
competition. The staging of software upgrade within the Diamond Strategy reduces
the perceived age of Tesla car models. Software iterations set themselves apart from
the competition by encouraging end users to configure their user interfaces, as well
as providing self-parking and self-driving capabilities. Tesla's entry into the
automotive industry has been aided by automation and customization research,
which has reduced costs and elevated Tesla's status as the leading electric car
seller.

The company also plans to build a major new vehicle R&D lab, called the "Future
Energy Reliability Lab," as well as a vehicle testing facility aimed at increasing
reliability. This lab was designed with test chambers, a workshop, and solar energy
product testing equipment. Tesla has the unique position of being the industry's
innovator and pioneer due to its substantially higher R&D spending compared to
other companies in the market, which keeps Tesla in the niche position of having a
competitive advantage in the (electric) vehicle market.

6. Human Resources

Tesla, Inc. has an imaginative critical thinking authoritative culture. This kind of
corporate culture inspires representatives to create productive answers for current
and arising issues in the objective market. For instance, the organization utilizes its
authoritative culture in creating advanced electric vehicles as an answer for
ecological issues encompassing cars that have inner ignition motors. The
organization's capacity to continue to present progressed electric vehicles mirrors
the advantages of its corporate culture. Tesla Inc. recognizes six primary highlights
of its authoritative culture

- Move Fast
- Do the Impossible
- Constantly Innovate
- Reason from “First.Principles”
- Think Like Owners
- We are ALL IN

a. Move Fast

Tesla Inc.'s upper hand is influenced by speed. The importance of representatives'

ability to rapidly respond to trends and shifts in the global market is highlighted by
this characteristic of hierarchical culture. For example, the company's HR
department enables it to develop cutting-edge products that complement or
outperform those offered by competitors. As a result, Tesla's corporate culture
promotes market versatility by responding quickly to recent issues and challenges in
the global automobile industry.

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 b. Do the Impossible

Tesla should ensure that its organizational culture encourages employees to explore
innovative innovations while developing cutting-edge products. This social trademark
recognizes the importance of ground-breaking ideas and arrangements, but it also
emphasizes the benefits of thinking in unconventional ways. Human resource
managers, for example, train employees to think beyond the box in terms of
profitability and creativity when it comes to car design, resulting in the creation of
new energy and transportation solutions. This situation provides Tesla Inc. with new
opportunities to enhance its business execution. This social situation also makes the
company a strong catalyst for innovative ideas in the global automobile and energy
systems markets.

c. Constantly Innovate

Tesla, Inc. is focused on research and development. This aspect of the authoritative
community revolves around the organization's coherent concept of progression. For
example, the company is actively researching and forming agreements to strengthen
current energy stockpiling item plans. Consistent innovation brings electric vehicles
and related products to the forefront in this context of business investigation.
Continuous progress is critical in addressing the strong power of market competition
as determined in the Doorman's Five Powers investigation of Tesla Inc. The
company caters to this need by fostering a corporate culture that encourages
continuous improvement. Directors persuade workers to add to steady advancement
in business cycles and yield.

d. Reason from “First Principles”

Thinks beyond the first principles. These principles revolve around identifying root
elements in order to comprehend and address real-world problems. Take, for
example, Tesla Inc.'s. Energy stockpiling products are one of the solutions to the
challenges of using environmentally sustainable power and increasing energy
productivity. Workers use first principles to fulfill their responsibilities as a result of
the company's organizational culture. Tesla's executives are responsible for planning
programs to assign members to this aspect of the company's authoritative
community.

e. Think Like Owners

Tesla employs its authoritative culture as a tool to maintain a mindset that promotes
business growth. For example, the company encourages its employees to think of
themselves as owners. This attitude of ownership supports Tesla's corporate vision
and statements of intent by encouraging employees to accept liability and
responsibility in their jobs and in the overall operation of the company. The
possession mentality is a fantastic conduct factor that helps organizations build and

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maintain their respectability in a variety of industries. This corporate social efficiency
aligns employees with the organization's most important goals, enhancing key
viability.

f. We are ALL IN

The hierarchical culture of Tesla, Inc. brings together members into a community that
works to develop the business. For example, by teamwork, this social trademark
reduces clashes. Collaboration in the HR department of a company is often
facilitated by such cooperation. As a result, the organizational culture maximizes the
benefits of employees' gifts and skill. Tesla's global auto industry seriousness is
bolstered by synergistic cooperation. This tying-it-all-together social approach also
helps in organizational management and process execution around the board.

7. Quality Management System

Quality Control includes definitely more than reacting to an issue, after an issue gets
self-evident. A decent spot to start understanding present day quality control is to
audit ISO Principles, Global Association for Norms. Momentarily, ISO necessitates
that associations: Report your methodology for everything the association does, [say
what you do], Follow your archived systems and review your exhibition to guarantee
that workers are really following techniques, [Do what you say] and set going to
ceaselessly improve each activity and afterward update your strategies to
accomplish catch the improvement strategy.

ISO consistency requires a profound jump into all parts of the business which goes a
long way past trusting that an emergency will emerge and afterward dealing with the
emergency.

Responsibilities of a Tesla QMS engineers are:

- Gather and keep up records of the most recent correction level documentation
important to characterize item setup and control producing measures.

- Ideal dissemination of most recent correction level documentation to every

single proper client and guarantee that out of date documentation is
eliminated from dispersion.

- Keep a PC information base of all recorded documentation that guarantees

quick recovery of archives.

- Making instructional reports on quality frameworks

- Moving bit by bit through industrial facility subjects with engineers, taking
notes and photos for new documentation en route.

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 - Altering and modifying drafts after survey by specialized specialists for
precision.

- Utilizing Microsoft items to create records, sticking to reliable style and

designing characterized by point by point formats.

- Graphically conveying ideas like movement, activity and heading utilizing

bolts, images and text in Word.

- Expeditiously and plainly raising issues and questions verbally and

additionally by means of email during documentation drafting.

iv. POSITION IN THE AUTOMOBILE INDUSTRY

Tesla’s Five forces analysis of competitiveness:

1. Competitive Rivalry or Competition with Tesla, Inc.

This factor of the Five Forces Analysis is the strongest force to impact the business
of Tesla since it operates in a highly competitive market. In the competition of
automotive and energy solutions market, Tesla has to face only a small number of
firms having their operations in this field but with high aggressiveness. Although
according to Porter’s Five Forces analysis framework, such external factors can limit
the competition on companies like Tesla, large rival automotive companies are still
very aggressive in their marketing campaigns of innovating and promoting their
products. Tesla’s marketing mix of 4Ps partly meets such aggressiveness, which
strengthens the effects of competitors against the business. Also, the low switching
costs or the low impediments can make customers easily choose other
manufacturers to buy cars from, which further strengthen the competition force.

2. Bargaining Power of Tesla’s Customers/Buyers

Although Tesla has a large number of customers buying their EV in the automobile
market, their customers don’t have enough bargaining power and they can hardly
negotiate on prices. Due to the limited availability of substitutes and the low volume
of purchases (each customer only has one or a few cars), the influence of customers
on Tesla has been minimized. For example, since many customers living in the
suburb have limited access to public transportation, therefore it is essential for them
to have a private car. Tesla also uses a business to business model where the
customers’ bargaining power is lower than others to sell their products, allowing
clients to have a much lower price.

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 3. Bargaining Power of Tesla’s Suppliers

The suppliers of Tesla have a low level of forward integration. In other words, they
have little control in their distribution and sale of products. For instance, some
suppliers have a direct transaction with Tesla, while others have to use third parties
to sell their products to the company. Porter’s Five Forces analysis framework has
pointed out this factor only has a moderate influence on the companies. Additionally,
hardly any of these suppliers can have a huge impact on the automotive industry
environment since they are moderately sized. The moderate level of supply also can
affect Tesla as well but only to a limited degree.

4. Threat of Substitutes or Substitution

As we have pointed out above, low switching costs can enable competition and
substitutes, which may be a barrier for Tesla. However, the customers only have a
small range of substitutes in the market and those substitutes are also limited in level
of performance and hard to meet the customers’ needs. For example, driving a
private car is way more versatile and flexible than getting in public transportation.
This condition further limits substitutes’ force against Tesla.

5. Threat of New Entrants or New Entry

This aspect of the Five Forces Analysis is the weakest one since Tesla’s business is
challenging to compete with. The automobile manufacturing is a high cost market
with aggressive rivals, where new firms have to struggle to gain their positions.
Especially when it comes to Tesla, which has a high cost of brand development
along with the popularity of Elon Musk, making it impossible for new entrants to
compete with. On the grounds of external factors in this aspect, threats of new entry
is only a minor concern in Tesla strategic management.

v. CONCLUSION:
Tesla began as a niche differentiator for luxury cars and is now pushing the market
down with a deep differentiator strategy. The business stages its marketing strategy
using earned media and online sales pages, while automation, supplier relations,
and analysis distinguish their goods. Their acquisition of SolarCity was a major step
forward, enabling them to expand into new markets such as solar panels, which are
also environmentally friendly. Effective HR and TQM strategies have given the
business a creative, hardworking culture that fuels their success in their respective
markets and arenas. Tesla aims to fulfill its vision of accelerating the world to
renewable energy as economic growth provides the organization with strong cash
flow and immense momentum.

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Reference:
1. https://alecfurrier.medium.com/tesla-business-model-strategic-analysis-
c7d00bdc0339#:~:text=Tesla's%20broad%20differentiation%20strategy
%20is,such%20as%20solar%20roof%20tiles.&text=According%20to%20the
%20About%20Tesla,world's%20transition%20to%20sustainable%20energy.
2. https://en.wikipedia.org/wiki/Tesla,_Inc.
3. https://www.investopedia.com/articles/active-trading/072115/what-makes-
teslas-business-model-different.asp
4. https://www.talkwalker.com/blog/tesla-marketing-strategy-social-ceo
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strategy-2020/
6. http://panmore.com/tesla-motors-inc-five-forces-analysis-recommendations-
porters-model
7. https://www.tesla.com/service
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analysis
9. https://forums.tesla.com/discussion/55179/quality-control
10. https://www.alliedmarketresearch.com/electric-vehicle-market
11. https://www.coxautoinc.com/market-insights/can-tesla-find-new-buyers/
12. https://taylorwells.com.au/target-market-segmentation/

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