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Tesla Case Study
Tesla Case Study
Tesla Case Study
AUTOMOBILE INDUSTRY
Case Study
POINT OF VIEW
This case study is to focus on the outline of the Tesla engine and how it entered the
market of the USA. Elon Musk, the CEO of Tesla, promoted the Model 3 electric car,
which was priced at $35,000. The vehicle was known for its efficiency, long battery life,
and energy-saving capabilities. However, in 2018, Musk's reputation was damaged when
the New York Times revealed the treatment of Tesla employees. The article revealed that
employees worked 120 hours a week, sometimes sleeping on the floor, and were supervised
by Musk himself. This led to a toxic work environment and a loss of 5,000 vehicles a week.
MAIN PROBLEM
The main problem in the case study of Tesla's entry into the U.S. auto industry, as
identified by Sull and Reavis, is the challenge of disrupting an established industry that is
resistant to change. The traditional car industry has been dominated by a select few
powerful players with substantial financial resources and long-standing corporate cultures.
For Tesla to enter the market, considerable entry barriers, including as high capital
SECONDARY PROBLEMS
The creation of a charging infrastructure for electric vehicles (EVs) was a challenge
Tesla encountered while entering the American auto industry. While Tesla concentrated on
creating high-performance electric vehicles, potential customers' major worry was the
For Tesla, creating a thorough charging network across the United States was a big
issue. The company's early charging infrastructure was inadequate, which led to range
anxiety among potential users. They were worried about getting trapped on longer journeys
for Tesla automobiles, required a significant investment by Tesla. These charging stations
were thoughtfully positioned along main thoroughfares and travel routes to offer Tesla
drivers convenient charging alternatives. Although it took some time, the network
Lack of compatibility with other EV models was another issue with the charging
infrastructure. The Tesla Connector, also known as the Tesla Supercharger Connector, was
the charging connector that Tesla initially used. As a result, owners of other electric vehicle
brands were unable to use Tesla's Supercharger network, while Tesla customers found it
Tesla makes steps to resolve this problem over time. They introduced an adapter,
but it wasn't a fully integrated solution, so other EV owners couldn't utilize Tesla's
(Combined Charging System), a new charging standard that is more commonly used by
other automakers. However, this change requires planning with charging infrastructure
Tesla had to build a strong charging infrastructure for electric vehicles when it
entered the U.S. auto business. To do this, a network of Supercharger locations had to be
established, and compatibility difficulties with other EV brands had to be resolved. Even
though Tesla has improved compatibility and expanded its charging network, there are still
OBJECTIVES
substitute for conventional gasoline-powered cars was one of Tesla's main goals. Tesla's
other major goals included promoting and hastening the transition to sustainable
transportation. According to Tesla, EVs may drastically lower carbon emissions and
transportation system.
Disrupt the traditional auto business: Established manufacturers now dominate the
traditional auto sector, which Tesla wanted to disrupt. The corporation sought to upend the
existing quo, shatter the mold of traditional auto manufacture and design, and offer novel
business models. One element of this innovative strategy was Tesla's direct-to-consumer
charging infrastructure for the wide adoption of electric automobiles. To give Tesla owners
quick and easy charging alternatives, the business planned to build its own network of
Supercharger stations and site them strategically along important thoroughfares. Tesla
sought to reduce range anxiety and make long-distance driving in electric vehicles more
SWOT ANALYSIS
STRENGTHS:
1. Tesla is recognized as a pioneer in the industry and is known for its cutting-edge electric
vehicle technology. Its distinctive selling offer was developed as a result of its focus on
2. Associated with luxury, performance, and environmental awareness, Tesla has a strong
and identifiable brand image. It benefits from a competitive edge due to this favorable
perception.
3. Tesla offers its customers quick and simple charging options through the development
of a vast Supercharger network. Tesla has an advantage over its rivals in terms of long-
presence, and customer loyalty as one of the first businesses to mass-produce electric
automobiles.
WEAKNESSES:
1. Tesla has encountered difficulties with increasing production to keep up with demand,
which has caused delivery delays and backlogs. This flaw might make it more difficult for
2. Because they are typically more expensive than conventional gasoline-powered cars,
Tesla's vehicles are less accessible to a wider user base. Wider acceptance is still hampered
by price sensitivity.
achievements. The sales and profitability of the company may suffer if these incentives are
reduced or eliminated.
vehicles, despite the company's expansion over time. Due to this, its market potential is
OPPORTUNITIES:
1. The demand for electric vehicles is anticipated to increase as the globe promotes
sustainability and combats climate change. Tesla may benefit from this trend by increasing
of electric vehicles is rising. By entering new markets, a business can diversify its revenue
sources.
3. Tesla has the chance to develop its products and provide better features, such greater
4. Tesla is able to expand its business beyond automobiles thanks to its vertical integration
model, which includes its battery manufacture and energy storage solutions. It can improve
THREATS:
1. The auto industry is fiercely competitive, and both established automakers and recent
arrivals have made significant investments in electric vehicles. Tesla may see its market
share decline as a result of the increased competition it confronts from both existing
and tariffs, may have an effect on Tesla's business and the wider market for electric
supply chain, including component shortages, trade disputes, and transportation issues.
which hinders the ease and general acceptance of electric vehicles. Tesla's potential for
Pros:
- Higher profit margins on luxury vehicles can help fund future growth initiatives.
- Establishes Tesla as a premium brand in the market, potentially attracting more wealthy
customers.
Cons:
- Limited market size due to the higher price point, reducing total growth potential.
- Risk of losing potential customers who may see the brand as exclusive or unreachable.
- Due to a more limited market, there is more focus on the success of smaller models.
Pros:
- Greater impact on the overall adoption of electric vehicles, aligning with Tesla's mission.
- Increased competition from established automakers, who may have more resources and
brand recognition.
- Lower profit margins on mass-market vehicles, which could affect Tesla's financial
stability.
demand.
Pros:
established partners.
- Reduces the risk of failure by sharing the burden of growth with a partner.
- Allows Tesla to focus on core competencies such as electric vehicle technology and
design.
Cons:
- Potential loss of control over the brand and product direction, as partners may have
- As it becomes affiliated with other automakers, there is a chance that Tesla's brand
best interests.
DECISION CRITERIA
Market Potential: The decision should consider the growth potential and market
demand for different vehicle segments, taking into account factors such as customer
alternative, considering factors such as profit margins, production costs, and economies of
scale.
Brand Identity: The decision should consider the impact on Tesla's brand identity
innovation.
Resources and Capabilities: The decision should assess Tesla's internal resources
technological expertise.
Risk and Competition: The decision should analyze the risks associated with each
Long-term Viability: The decision should evaluate the long-term viability and
Recommendation:
vehicles. This dual approach allows Tesla to tap into the larger market potential and drive
the adoption of electric vehicles through mass-market offerings. At the same time, focusing
on luxury vehicles helps to establish Tesla as a premium brand and generate higher profit
Implementation:
manufacturing capabilities to meet the demand for mass-market vehicles. This includes
Product Development: Tesla should continue to innovate and improve its electric
vehicle technology, range, and charging infrastructure. This includes investing in battery
network.
Marketing and Branding: Tesla should strengthen its brand identity by emphasizing
its commitment to sustainability, innovation, and premium quality. This can be achieved
expertise. This can help accelerate growth and overcome some of the challenges associated
policymakers to shape favorable policies and incentives for electric vehicles. This includes
advocating for charging infrastructure investments, tax credits, and other initiatives that
advancements is essential to ensure that Tesla remains agile and adaptable in the rapidly
CONCLUSION
Tesla’ CEO Musk has a high vision to make Tesla as the strongest automobiles
provider, and he was able to control the process of production with the other subordinates.
Though Tesla received high revenue every time they release new supplies of automobiles,
they still encounter receiving low ROI every other quarter. Different investors also give
them a second thought of making it to the top by establishing long term viability. Given
this matter, Tesla remains well stablished and continue to provide quality automobiles by
having the strategy of entering the high-end market where people are able to pay premium
automobiles through diving high volume for the market with low prices every model.