Tesla

For the exclusive use of A. Figueroa, 2023.
CASE: OIT-122
DATE: 08/08/22
TESLA: BUSINESS & OPERATING MODEL EVOLUTION

INTRODUCTION
On August 2, 2006, Elon Musk, CEO and cofounder of the electric vehicle (EV) maker Tesla
Motors, published a blog post titled, “The Secret Tesla Motors Master Plan.”1 The company was
founded on the mission to accelerate the world’s transition to sustainable transport by rapidly
scaling the production and sale of electric vehicles. This ambition was met with skepticism
because of technological barriers facing EVs, the lukewarm reception by consumers, and the high
barriers to entry for new automakers. In this master plan, Musk described how the fledgling
automaker would produce enough EVs to achieve its mission, outlining Tesla’s long-term strategy
in four steps:
Build sports car

Use that money to build an affordable car
Use that money to build an even more affordable car
While doing above, also provide zero-emission electric power generation options
This master plan became the roadmap for Tesla’s business model evolution from a low-volume,
sports car manufacturer to a mass-market automaker and sustainable energy provider. Each time
Tesla transformed its business model, it reconfigured its operating model and developed
innovations that unlocked the subsequent stage of its master plan. Tesla’s journey from start-up
to the world’s most valuable automaker, surpassing Toyota in 2020, underscored the power of
1
Elon Musk, “The Secret Tesla Motors Master Plan (Just Between You and Me),” Tesla, August 2, 2006,
https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me (March 13, 2022).
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Tesla: Business & Operating Model Evolution OIT-122 p. 2
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staged business model development and the importance of aligning operations, processes, and
innovations in each stage.
TESLA’S FOUNDING
Tesla, Inc. (TSLA) was founded as Tesla Motors in July 2003 in San Carlos, California, by Martin
Eberhard and Marc Tarpenning, who had earlier cofounded and sold an electronic book reader
company. Their goal was to produce a sports car that was environmentally friendly. Eberhard
was concerned about climate change and the U.S. dependence on foreign oil when he came across
AC Propulsion, an early-stage electric vehicle firm. AC Propulsion had created a concept electric
car called the tzero, which could go from 0 to 60 miles per hour in 4.9 seconds using lead-acid
batteries.2 Believing he could improve the battery system and launch his own sports car, Eberhard
licensed portions of the electric powertrain technology from AC Propulsion, teamed up with Marc
Tarpenning, and incorporated a company named after Nikola Tesla, the inventor of alternating
current (AC) power transmission.3
Elon Musk, cofounder of X.com and SpaceX, shared Eberhard’s concerns about dependence on
fossil fuels and heard about the Tesla Motors founders from the folks at AC Propulsion. Musk
became the controlling investor, providing approximately $7 million to launch the company. J.B.
Straubel, a Stanford-educated engineer who saw the potential of lithium-ion batteries for EVs,
joined as the fourth cofounder.
In 2003, the idea of a high-performance electric sports car was squarely at odds with the consumer
perception of EVs. Major U.S. automakers launched EV offerings in the 1990s in response to
regulatory pressure to offer cleaner, more efficient vehicles. These EVs were costly due to their
battery systems and underwhelming in terms of their design, range, and acceleration. General
Motors’s launch and later withdrawal of the EV1 solidified this perception. The cost of the lead-
acid batteries for the EV1 added tens of thousands of dollars to its price tag. This line item put
pressure on GM to minimize the number of batteries—reducing the car’s range—and to cut other
car features, making the EV1 unappealing to most buyers. The model was discontinued in 2002,
with GM apparently convinced that a mass-market electric vehicle was an unprofitable niche of
the overall car market.
Toyota pursued a hybrid approach to enter the electric vehicle market. In 1997, it released the
Toyota Prius, which used an onboard battery to store power generated from the braking system
and the gas-powered engine. This design solved the range issue, as drivers could rely on the gas-
powered engine for extended trips. It also addressed the high cost of the battery pack because
fewer batteries were needed. The Tesla founders took notice that the buyers of hybrids like the
Toyota Prius skewed toward higher-end consumers. They suspected that there would be a market
for a high-end car that was also environmentally friendly.
2
AC Propulsion, “Who We Are,” https://www.acpropulsion.com/index.php/about-us/management
(March 13, 2022).
3
Electric powertrain is defined as all components that generate the power required to move the vehicle and deliver
that power to the wheels, including the energy storage system.
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Tesla learned from the large automakers’ past failures and set out to build an electric vehicle
without compromises. The team planned to start at the high end of the market, which could absorb
the higher cost of batteries, and strove to deliver a thrilling sports car built for performance and
design enthusiasts. The four outsiders to the automotive industry set out from scratch to establish
themselves as an automaker and entered phase one of their business model and master plan: the
Sports Car Era.
THE SPORTS CAR ERA: ROADSTER
The plan was simple: build a best-in-class electric sports car that appealed to car enthusiasts and
solved the key engineering challenges of existing EVs. The team strived to deliver an electric car
that did not compromise on range, design, or driving experience. In the process of completing a
full design-build-sell cycle, the team hoped to prove market demand for high-performance, sexy
EVs and establish Tesla as an automaker. They had to understand and overcome the technical
challenges that plagued former EV projects and wrestle with the pricing and unit economics of a
car that was much more expensive to produce, at least initially. Their learnings from the Roadster
would be used to launch the next car to a wider audience.
Design
During the design process, the founding team sought to borrow standardized components and
processes, in order to save time, capital, and engineering resources.
Energy Storage System (ESS)

The Roadster’s key design innovation was to combine thousands of commodity 18mm x 65mm
lithium-ion batteries (called “18650s”) into a software-controlled EV battery pack. While previous
EVs had been powered by lead-acid batteries, the switch to 18650s offered major advantages.
Lithium-ion batteries had a higher energy-to-weight ratio and therefore provided greater vehicle
range. Furthermore, 18650s were inexpensive and easily sourced. For the prior two decades,
18650s had been mass produced for widespread use in consumer electronics, which led to cost
reductions and improvements in performance and reliability. By adopting 18650s from the
consumer electronics industry, Tesla bypassed the capital expenditures, engineering resources, and
development time that were typically required to bring a new technology to mass production.
However, significant engineering challenges remained: lithium-ion batteries were flammable,

prone to explosions when overheated, and subject to capacity degradation over time. Straubel led
Tesla’s in-house design and development of the system by which thousands of 18650s could be
safely combined to power the Roadster. This design used software, sensors, and cooling systems
to minimize the risk of overheating and to charge and discharge the cells in a way that extended
their useful life. The results were staggering: lithium-ion batteries brought the Tesla Roadster’s
range to 200 to 245 miles, up from the 55 to 78 mile range of the lead-acid driven EV1.4
4
“Performance Specs,” Tesla, October 2007, https://web.archive.org/web/20071011005034/http://www.teslamotors
.com/performance/perf_specs.php (March 13, 2022).
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Body
To achieve the high-end sports car aesthetic that the founders felt was necessary to attract their
target customer, Tesla partnered with the British automaker Lotus Cars. The team licensed the
body and structural design of the Lotus Elise and began working with the Lotus engineering team
to retrofit it as an electric car. This decision accelerated the design process and gave Tesla a proven
high-end aesthetic. Tesla could also use the Lotus factory to assemble the body of the Roadster,
and leverage Lotus’s existing suppliers for all components that did not require design changes.
Each component that Tesla could use off-the-shelf saved precious engineering resources and
reduced the development time required to design, test, source, qualify, and ramp up production for
a new component.
Still, the Tesla team made many body design changes to execute their extravagant vision for the
Roadster. With changes such as replacing a fiberglass body with a carbon fiber one and adjusting
the lip of the door frame to make it easier for passengers to climb into the car, manufacturing costs
per car ballooned to more than $83,000 from the original target of $49,000.5 The final version of
the Roadster included only about 7 percent overlap in parts with the Lotus Elise.6 This departure
from the use of standard body parts delayed production and counteracted much of the planned
savings on development and manufacturing costs.
Speeding Development Using “Mules” and Simulation
To both speed development and deliver a concept to stimulate demand, the Tesla team purchased
Lotus Elises and used them to build “mules”—drivable cars cobbled together with custom
bodywork and prototyped components. They removed the internal combustion engines and
replaced them with electric powertrain systems. Using the mules, they could quickly test
performance, battery system safety, range, and the look-and-feel of key features. They quickly
learned that placing a 1,000-pound battery pack in the middle of the car changed the structural and
handling dynamics of the Lotus Elise mule, prompting a redesign of the aluminum chassis. To
accommodate the rest of the electric powertrain, Tesla had to redesign the rear subframe and
suspension systems, resulting in a longer wheelbase and improved handling. Tesla used these
mules to rapidly identify the implications of electrifying a sports car and prioritize the design
changes.
From late 2006 through March 2007, Tesla built and tested ten such engineering prototypes,
compressing their design and development cycle significantly from years to months.7 As they
continued to refine components, the team relied on these mules to speed up the process of various
components and systems coming together into a unified design. Once the custom designs were
solidified with Lotus, Tesla built more than 25 evaluation prototypes (EPs), which surfaced
necessary refinements, and validation prototypes (VPs), which tested those refinements before
moving into production.8
5
Tim Higgins, Power Play: Tesla, Elon Musk, and the Bet of the Century (Doubleday, 2021)¸ p. 52.
6
Darryl Siry, “Mythbusters Part 2: The Tesla Roadster is not a Converted Lotus Elise,” Tesla, March 3, 2008,
https://www.tesla.com/blog/mythbusters-part-2-tesla-roadster-not-converted-lotus-elise (March 13, 2022).
7
“Validation Prototypes (VPs),” Tesla Motors Club Forum, August 20, 2006,
https://teslamotorsclub.com/tmc/threads/validation-prototypes-vps.429/ (March 13, 2022).
8
Ibid.
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To further speed development, Tesla relied heavily on computer-aided, model-based design. The
team’s origins in Silicon Valley and software orientation prompted them to use advanced software
to model the Roadster’s major subsystems and simulate the design trade-offs. Engineers funneled
data collected from road tests of the prototypes into the simulation models. They modeled
hundreds of combinations of motor sizes, transmission configurations, battery chemistries, and
inverter sizes to optimize performance and cost.9 This early use of software to improve design and
compress development time demonstrated the benefits of investing in software to break the
traditional paradigms of automotive manufacturing (i.e., insisting on prototyping and testing in the
physical world). Tesla continued to make software a core investment area and source of
competitive advantage as it moved on to later models.
Launch
Once Tesla had a working prototype, they planned a high-profile launch to drum up demand from
their ideal customers. With significant cost overruns from development and upcoming cash flow
crunches with suppliers, Tesla pioneered an unconventional tactic in car sales: collecting deposits
from customers ahead of production. From an airplane hangar in Santa Monica, California, Musk
unveiled the Roadster prototype to more than 350 guests. Those in attendance, including high-
profile CEOs, actors, and then-California governor Arnold Schwarzenegger, were encouraged to
write $100,000 checks to secure the first 100 cars scheduled for production in 2007. Engineers
were available to educate prospective customers on the new technology innovations that made the
high-performance electric sports car possible. More importantly, guests could take a test drive to
fully experience the thrilling driving experience and the myriad Roadster details designed to
delight.
The Roadster’s key value proposition to customers went beyond the appeal of a high-performance
sports car. Musk and Tesla were also selling a chance to be part of the electric vehicle movement—
one that would help save the planet and reduce dependence on foreign oil. By placing a deposit
and purchasing a Roadster, customers were joining the march towards affordable EVs for all, as
laid out in “The Secret Tesla Motors Master Plan.”
Within a few weeks, Tesla had received deposits for the first 100 cars. The celebrity buyers
generated buzz, free press, and word-of-mouth referrals for the Roadster, allowing Tesla to avoid
spending money on marketing. With the car launched, the focus shifted towards the new
carmaker’s biggest challenge yet: getting the Roadster into production.
Roadster Production
In March 2008, the company began regular production of the Tesla Roadster. By this time, 900
reservations had been placed, and Ze’ev Drori, the CEO brought in to replace Eberhard, set a target
9
Chris Gadda and Andrew Simpson, “Using Model-Based Design to Build the Tesla Roadster,” MathWorks, 2009,
https://www.mathworks.com/company/newsletters/articles/using-model-based-design-to-build-the-tesla-
roadster.html (March 13, 2022).
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of gradually increasing production in a “deliberate and controlled manner [to reach] a rate of 100
Roadsters per month by [the] next year.”10
Tesla avoided high capital expenditures and maintained design flexibility by outsourcing most of
the production of the Roadster. Lotus assembled “gliders” (Roadsters without the electric
powertrain) in the Lotus plant in England. More than 3,000 glider parts were shipped from
suppliers in Europe and elsewhere to the Lotus plant for assembly. Initially, rushing to fill
customers’ orders, Tesla air-shipped gliders from London to San Francisco. In nearby Menlo Park,
California, Tesla installed the electric powertrain to complete the Roadsters.
Glider assembly occurred on a flexible, low-volume, worker-paced line with only 12 stations. At
each station, technicians had a cycle time of 45 minutes to complete their assigned work on the
glider, at which point all stations would synchronously move the glider to the next station. If no
disruption or deviation occurred, this process took eight hours per glider, with a finished glider
coming off the line every 45 minutes.11 The work at each station was manual, using mostly
standard hand tools, and could be readily changed to adopt an improved part or process. In
contrast, assembly of a mass-market car would typically occur on a high-volume, machine-paced
line with hundreds of specialized stations, a one-minute cycle of work per car at each station and,
correspondingly, a car rolling off the line each minute. However, high-volume, machine-paced
lines required stable design, large capital investment, and high sales volume to justify the sizable
investment.
While ramping up production, Tesla continued to make design changes, switch suppliers for parts
(including body panels and the transmission), and modify the assembly process. By December
2008, the company had reached cumulative production and delivery of 100 cars total.12 Production
continued to ramp in 2009, with Tesla finally shipping more than 100 Roadsters in a single month
in July.13
Direct to Consumer Sales and Distribution
While other automakers relied on dealerships for sales and distribution, the founding team was
concerned that dealers were more incentivized to sell gas-powered cars, with their high lifetime
servicing spend, instead of Teslas. In an unconventional move, Tesla decided to sell directly to
consumers. They set up a limited number of showrooms to educate customers about the car’s
technology, provide a driving experience, and generate leads. Tesla then directed interested
customers to an online store to place the order. When the car, built to the customer’s desired
configuration, arrived, buyers could pick up the car at the showroom or have the car delivered.
10
Ze’ev Drori, “We have begun regular production of the Tesla Roadster,” Tesla, March 17, 2008,
https://www.tesla.com/blog/we-have-begun-regular-production-tesla-roadster (March 13, 2022).
11
Ken Jacobs, “Flying the Glider: Roadster Owner Ken Jacobs Tours Assembly Plant and Test Track,” Tesla,
July 18, 2008, https://www.tesla.com/blog/flying-glider-roadster-owner-ken-jacobs-tours-assembly-plant-and-test-
track (March 13, 2022).
12
Bay Area News Service, “Tesla Motors hands keys to 100th Roadster owner,” The Mercury News, December 9,
2008, https://www.mercurynews.com/2008/12/09/tesla-motors-hands-keys-to-100th-roadster-owner-2/
(March 13, 2022).
13
Julianne Pepitone, “Electric roadster maker making money,” CNN, August 7, 2009,
https://money.cnn.com/2009/08/07/technology/tesla_profitability/?postversion (March 13, 2022).
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This choice to sell direct to consumer was costly and difficult to scale. Rather than plugging into
a national network of dealers and allowing Tesla to focus solely on production, the company had
to stand up showrooms, build a salesforce, manage customer orders, and handle delivery logistics.
However, this choice enabled Tesla to control and to learn from the customer experience,
generating precious insights for the design and sale of future models.
Sports Car Era: Results
Production and sale of the Roadster continued until 2012, at which time Tesla decided to sunset
the Roadster and focus on its next model. Tesla had completed one design-build-sell cycle as an
established automaker, earning valuable credibility and expertise.
On design, Tesla had successfully designed an award-winning electric sports car, with the Roadster
winning Time magazine’s accolade for Best Inventions in Transportation in 2006. The Roadster
delivered on an electric car without compromises—hitting targets for range, acceleration, charge
time, and design aesthetics. In December 2009, Motor Trend acknowledged Tesla as “an actual
car company…. Tesla is the first maker to crack the EV legitimacy barrier in a century.” 14 Tesla
achieved this milestone through a mix of in-house development and innovation (e.g., energy
storage system) and co-development of automotive components with partners (e.g., body and
transmission).
On production, Tesla experienced the pain of overlapping design and manufacturing processes,
especially under the pressure to begin production for pre-paying customers. They learned the
importance of process and quality control and managed their first recall.
On sales, Tesla delivered approximately 2,450 Roadsters worldwide between February 2008 and
December 2012, with the majority being sold in the United States. With a low-volume production
model, profitability was predicated on customers’ high willingness to pay; the Roadster boasted a
sticker price of $109,000. However, as Tesla drew closer to completing development in mid-2007,
the cost per unit to produce was $140,000.15 Tesla worked hard to increase revenue by upselling
early customers on added features. It also invested in streamlining and simplifying the production
process to reduce costs. By mid-2009, the cost per unit was reportedly down to approximately
$80,000.16 Armed with its newfound credibility—and with Roadster production tapering off—
Tesla began its efforts to launch a premium sedan.
THE PREMIUM EV ERA: MODEL S AND MODEL X
Tesla turned its attention to step two of the master plan: move down-market from the Roadster
category and produce an affordable premium car that could compete with the likes of the BMW 5
Series. With design, engineering, and manufacturing expertise gained from launching the
14
Kim Reynolds, “First Test: 2010 Tesla Roadster Sport,” Motor Trend, December 29, 2009,
https://www.motortrend.com/reviews/2010-tesla-roadster-sport-test/ (March 13, 2022).
15
Nelson Ireson, “Tesla slashes production cost of Roadster, claims profitability within reach,” Motor Authority,
June 22, 2009, https://www.motorauthority.com/news/1033546_tesla-slashes-production-cost-of-roadster-claims-
profitability-within-reach (March 13, 2022).
16
Ibid.
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Roadster, Musk and the Tesla team raised their ambition even further: the next goal was to produce
the best premium car, period. The concept for the Model S, a four-door premium EV sedan, was
born.
The Model S was announced with an expected base price around $50,000 and range above 265
miles. It would also offer a spacious interior for a four-door sedan, allowing seven passengers
with two rear-facing child seats in a third row. Unlike the Roadster’s value proposition, the Model
S initial selling points focused on best-in-class features and a comparatively low total cost of
ownership. Given the purchase price, cost of fuel, and maintenance expenses, the Model S
represented superior economics compared to its gas-powered peers in the luxury sedan class. The
story was compelling to Tesla’s new target customers; now the team had to deliver on it.
Capital Strategy
Tesla had learned the hard way how capital intensive it was to design, engineer, produce, sell, and
deliver new vehicles. The insistence on owning so much of the value chain required large reserves
of capital, especially as the company planned to move to higher-volume, more efficient production.
To support this evolution from outsourced low-volume production to in-house mid-volume
production, Tesla needed a more robust capital strategy—one that did not solely rely on Musk and
existing investors.
In addition to Roadster sales, Tesla spun up additional sources of revenue, including the sale of
emission credits to other automakers17 and a lucrative deal to sell energy storage systems to
Daimler’s Smart division. J.B. Straubel was able to demonstrate the viability of the energy storage
systems in six weeks by converting a Smart model mule into a fully electric vehicle. The deal was
reportedly worth $40 million and led Daimler to invest $50 million for a 9 percent stake in Tesla.18
As an American electric vehicle manufacturer, Tesla also took advantage of low-cost debt from
government programs. In 2009, it announced a $465 million loan from the U.S. Department of
Energy, allowing the company to stay alive during its capital-intensive foray into production.
With the success of the Roadster, Tesla positioned itself to access the public markets. In January
2010, Tesla Motors announced its filing for an initial public offering (IPO), making it the first
American automaker to go public since Ford’s IPO in 1956.19 Shortly after the announcement,
Toyota announced its commitment to purchase $50 million in Tesla stock at the IPO and a
formalized agreement to jointly develop an electric version of the Toyota RAV4. The public
offering valued Tesla at approximately $2 billion and injected nearly $230 million of capital for
its Model S endeavors.
17
Certain regulators introduced minimum quotas for the sale of environmentally friendly vehicles versus traditional
ones. Automakers that could not meet those quotas could buy “emission credits” from a company like Tesla, if
Tesla exceeded the quotas.
18
Erwin Hettich and Günter Müller-Stewens, “Tesla Motors: Business Model Configuration,” The Case Centre,
2014.
19
Ibid.
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After Tesla unveiled the Model S prototype in 2009 and completed these rounds of capital raising,
Tesla was poised to go heads-down in completing design and development. In parallel, Tesla also
had to prepare for its biggest challenge yet: setting up its own in-house production facility.
A Platform for Tesla EVs
Automakers typically designed a “platform,” a set of components with specifications for how they
worked together, for use across multiple models. This approach allowed automakers to offer
customers a variety of models that were built from standardized components using common
production capacity and tooling. Interchangeable versions of components created greater variety
for customers, while the platform created economies of scale in engineering and production.
Platforms also sped development of a new model of car, with engineers able to focus on improving
one component without the complexity of considering the entire vehicle. Different components
could be improved in parallel. Tesla used a Mercedes-Benz E Class sedan in its prototype mule
and considered—but rejected—building the Model S on the E Class platform.
The key drawback with platform design was that constraints on how components fit and worked
together often limited the overall performance of the vehicle. While focused on improving an
individual component or subsystem, engineers sometimes failed to grasp important opportunities
to improve the vehicle at a systems level. Tesla experienced this tradeoff in their use of the Lotus
platform, and ended up redesigning and adding components to meet system-level performance and
aesthetic goals.
For the Model S, Tesla set out from the beginning to optimize overall performance and develop its
own “adaptable platform architecture and common electric powertrain” to support future models.20
Model S Chief Engineer Peter Rawlinson built a team and process, involving extensive computer
simulations, to understand the subsystems and optimization methods that would improve
performance for the electric vehicle as a whole.21 For example, rather than having batteries sit in
a tall box in the trunk, as in the Roadster, the Model S would have batteries in a shallow,
rectangular box beneath the vehicle floor, integrated into a sled-like chassis. The aluminum sled
chassis housing the heavy batteries would provide rigidity and a low center of gravity, thereby
improving safety and handling. This approach would require less material, reducing cost and
improving the vehicle’s range. It would also free up space in the trunk and vehicle interior. Each
major subsystem of the Model S would be designed with the ability to swap out or upgrade. This
design methodology left room for future innovations on the Model S and enabled rapid
development of later models.
The investment in platform design paid off when Tesla launched its next model, a premium sport
utility vehicle: The Model X. By building the Model X from the same platform as the Model S,
Tesla saved money in parts orders, tooling costs, and development time and expenses. Once in
production, the Model X shared 30 percent of parts with the Model S.22
20
Tesla, Inc. “Form S-1 Registration Statement,” United States Securities and Exchange Commission,
May 25, 2011, https://www.sec.gov/Archives/edgar/data/1318605/000119312511149963/ds1.htm (March 13, 2022).
21
Rawlinson emphasized to reporters, “We’re so different from traditional automakers that have silos of expertise—
body people, suspension people. We have an emphasis on process.” See Tim Higgins, Power Play: Tesla, Elon
Musk, and the Bet of the Century (Doubleday, 2021)¸ p. 138.
22
For further information, see “Tesla, Inc.,” HBS case study No. MH-0032.
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Software as Core to the Car
Tesla viewed software as a way to continually innovate even after the car was produced and sold.
If software controlled virtually every subsystem of the car and all interactions between driver and
machine, Tesla could push updates to customers over the Internet as soon as the new features were
available. Traditional automakers seemed to signal to their customers, “If you want the new
features, buy a new car.” Tesla offered, “We’ll make your car feel like a new car every time it
updates itself.” This shift was a powerful value proposition to customers, and a way to drive
innovation within Tesla. Engineers could launch the Model S quickly, knowing that improvements
could be made post-sale using data collected from users and cars on the road.
This feedback loop collapsed development cycles and spurred continuous improvement in the
driver experience. It also gave Tesla a way to manage a perennial headache for automotive
manufacturers: safety recalls. When reports came in of vehicles catching fire from road debris
puncturing the energy storage system, Tesla simply pushed a software update, over the air, to raise
the suspension and fix the issue.
Software took an even more central role in differentiating Tesla’s offering with the launch of Tesla
Autopilot in 2014. While the advanced driver-assistance system was not initially designed for full
self-driving, Tesla’s first version of Autopilot offered automatic emergency braking, adaptive
cruise control, auto steering and lane changing, and even a basic “summon” feature to move the
car towards the driver’s key fob. Tesla continued to add more advanced hardware systems and
released over-the-air software updates to unlock new features and better performance.
From upgrading the driver experience and mitigating safety recalls to innovating towards a fully
self-driving car, Tesla’s view of software as core created an enormous advantage for delivering a
best-in-class—yet still continuously improving—product.
Standing Up Production at NUMMI
As design and development surged ahead, plans for a production facility took shape. The RAV4
partnership with Toyota delivered another opportunity: the chance to buy the former New United
Motor Manufacturing Inc. (NUMMI) factory from Toyota. The NUMMI plant, which had housed
a joint venture between Toyota and GM before shutting down in 2010, was located in Fremont,
California—just miles from Tesla’s Palo Alto headquarters. Tesla acquired the facility, a 5.5
million square foot plant once valued at more than $1 billion, for a modest $42 million.23 Tesla
also hired former NUMMI employees and planned to leverage the Toyota RAV4 partnership to
learn the lean manufacturing principles that underpinned the Toyota production system. The deal
also included an additional $15 million purchase of stranded automotive production equipment
from Toyota.
These developments were powerful accelerators in Tesla’s quest to build manufacturing

capabilities. To support its evolution towards higher-volume manufacturing, Tesla moved from a
worker-paced line to a machine-paced line with more stations, shorter cycle time, specialized
23
Joshua Davis, “How Elon Musk Turned Tesla Into the Car Company of the Future,” Wired, September 27, 2018,
https://www.wired.com/2010/09/ff-tesla/ (March 13, 2022).
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
equipment, and standard processes. On the main production line, the Model S progressed through
the following areas: stamping, sub-assembly, body framing, paint, final assembly, and quality
test.24 The electric powertrain was produced on the second floor of the factory, and “married” to
the chassis near the end of final assembly in a single step.
Tesla’s direct sales strategy offered a planning and inventory management advantage over
competitors. Traditional automakers forecasted customer demand, orchestrated their supply chain
and production systems to produce cars based on that forecast, and then pushed vehicles out to
dealers. In this made-to-stock model, cars were sold to dealers and put into inventory, with aging
inventory eventually marked down for sale. In contrast, Tesla launched each model well in
advance of production and had a direct demand signal from the customer—reducing the need for
an accurate forecast. Customers selected their configuration online and Tesla built the vehicle
according to those orders. As Tesla grew and improved its production, this direct connection
between customer demand and the manufacturing operation made Tesla much more responsive to
the market than competitors.
In keeping with the Silicon Valley ethos and Tesla’s long-term plans to move to mass
manufacturing, Tesla hoped to break the mold with its Fremont automotive factory. More than
100 robots, some of the largest in the world, were installed and painted Tesla red. Musk’s goal
was to use robotics technology to automate every step possible to achieve maximum efficiency
and consistency. The robots were multi-use robots—able to exchange tool heads and complete a
variety of jobs from welding to bonding to clamping. However, to establish and later revise an
automated process was difficult. Each robot required extensive programming and training to
perform reliably, and all processes that included automation had to be completely standard and in
control. While automation, in principle, provided efficiency and standard operation, it was not yet
flexible enough to handle deviations, a variety of products, or errors incurred earlier in the process.
With all the above investments, Tesla hoped to have the first production-grade Model S units on
the road in December 2010 for testing. Tesla committed to begin deliveries in mid-2012, with a
plan to produce 5,000 units in 2012 and scale to 20,000 units per year starting in 2013.25 Reaching
this milestone posed many unforeseen challenges for the new factory. While they were starting to
gain economies of scale for purchasing and automated production, the factory remained at
relatively low-volume production. Whereas a high-volume car manufacturer might run a stamping
press with a single die, or mold, for hours to generate thousands of parts, Tesla needed only
hundreds of parts. Each time they had to change over the die—a process that could take an hour—
they reduced the overall operating efficiency of the plant. Tesla was also working with
aluminum—an unconventional frame choice, but one deemed necessary to achieve vehicle weight
and range goals. Learning how to properly stamp, weld, and join aluminum parts—while not
cracking or denting the surfaces—led to many quality issues and manual rework.
As the team moved towards safety certification, finalization of design, and outfitting of the
production line, engineering changes were still flooding in to increase reliability or make cosmetic
24
Gilbert Passin, “The Tesla Factory: Birthplace of the Model S,” Tesla, June 16, 2010,
https://www.tesla.com/blog/tesla-factory-birthplace-model-s (March 13, 2022).
25
George Blankenship, “A Quick Update on Model S,” Tesla, March 7, 2011, https://www.tesla.com/blog/quick-
update-model-s (March 13, 2022).
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
changes to the car, often at Musk’s request. To incorporate more flexibility into the production
line setup, the team purchased automated carts that followed magnetic tapes and moved the body
through the process. If they needed to add stations or change the order of production, they could
simply adjust the tape. Additionally, as they struggled to quickly reprogram the robots with
updated instructions, robotic workstations were often replaced with manual work to keep the line
moving.26
Over time, Tesla inched towards greater standardization and process control. Their lessons in
generating standard work instructions, fixing quality issues, and designing for manufacturability
would later serve them well as they scaled to higher-volume production and new models.
Sales, Distribution, and Charging
In line with scaling production, Tesla also needed to scale its sales, distribution, and charging
infrastructure. Tesla reportedly had 10,000 pre-orders for the Model S in the months after release.
As word-of-mouth spread, the number of customer leads soon swelled to more than 100,000.27
Tesla needed a way to engage new customers, drive online orders, distribute and service cars post-
sale, and build a charging infrastructure for the growing fleet of Teslas.
Tesla continued its direct sales go-to-market strategy, using a mix of Tesla-owned showrooms and
online engagement to complete the sale. They organized hundreds of test-drive events across the
country to get prospective customers behind the wheel of the Model S. Musk also brought in
George Blankenship, one of the architects behind Apple’s iconic stores, to lead the store design
and wave of openings. By the end of 2012, Blankenship had opened 32 stores globally, with plans
for up to 20 more in the next six months.28
Because Tesla pointed customers to complete the sale online, the company also built a sales
function to increase conversion rate and follow-up with customers. This function, operated out of
Tesla call centers, became critical to executing the direct sales strategy across a wider customer
base.
For service and charging, Tesla wanted to address all concerns about owning and driving an
electric vehicle. It offered 24-hour roadside assistance, remote diagnostics, and extensive system
monitoring—all made seamless by software. Tesla also planned to invest in service centers across
North America, all of which had access to knowledge and direct lines to Tesla R&D in Silicon
Valley. In terms of charging infrastructure, Tesla launched its Supercharger network in 2012,
originally with an up-front access fee that provided free charging for life. Superchargers were
solar-powered and grid-connected, selling electricity back to the grid when not actively charging
vehicles. By 2014, there were more than 380 chargers as part of the network, with plans for an
aggressive build-out to remove any worry of drivers being stranded on long rides.29
26
Higgins, op. cit., p. 156.
27
28
29
Tesla, “2014 Annual Report,” December 31, 2014,
https://www.sec.gov/Archives/edgar/data/1318605/000156459015001031/tsla-10k_20141231.htm
(March 13, 2022).
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
With the advent of the Model S, and production volumes of tens of thousands per year, Tesla had
to invest in significant post-production infrastructure to reach, serve, and satisfy customers.
Tesla’s choices to build these capabilities in-house underscored its preference for vertical
integration, especially for areas that were critical to the customer experience.
Premium EV Era: Results
For the Model S, Tesla set out to produce the best car. Period. As more people got to experience
the premium EV, rave reviews poured in. Motor Trend named the Tesla Model S the “Car of the
Year,”30 only to be outdone by Car and Driver later calling it the “Car of the Century.”31 In 2015
and 2016, the Model S became the best-selling plug-in electric vehicle worldwide, with sales
exceeding 50,000 in 2016.32
The company also reached a critical financial milestone in 2013. Delivering more than 4,000
Model S vehicles and selling $68 million of virtually pure-profit emissions credits, Tesla posted
its first quarterly profit of $11 million. Around the same time, Tesla quietly canceled plans for a
more affordable Model S with smaller battery pack and shorter range, presumably to simplify
production; customer orders for the cheaper Model S would be filled by a Model S with a standard
battery pack and a software-limited range.33
With the Model S appealing to a broader customer base of environmentally conscious, premium
buyers, Tesla successfully transitioned from a niche sports car maker to a viable player in the much
larger premium segment. It competed head-to-head with the combustion engine versions of the
world’s most respected brands: BMW, Mercedes, Audi, and others. Tesla had earned a place in
the mainstream consciousness as a force in the automotive industry. The strength of the Tesla
brand would become a valuable asset as it looked toward its third and most ambitious act yet:
producing a mass-market EV—the car for everyone.
THE MASS-MARKET EV ERA: MODEL 3, TESLA ENERGY, AND AUTONOMOUS VEHICLES
Producing only sports cars and premium vehicles would not fulfill Tesla’s mission, master plan,
or path to profitability. Tesla needed an affordable, mass-market EV model that could generate
earnings at scale.
Tesla’s target customer group was its most price-sensitive yet—likely middle class to upper-
middle class environmentally conscious consumers. To capture these customers, Tesla had to
address prevailing concerns about adopting EVs, including range and charging infrastructure, and
make the case for a lower total cost of ownership compared with gas-powered alternatives. The
30
Christian Seabaugh, "Ultimate Car of the Year Introduction: 70 Years of Remarkable Cars,” Motor Trend,
July 8, 2019, https://www.motortrend.com/features/motortrends-significant-car-year/ (March 13, 2022).
31
Don Sherman, “Tesla Model S,” Car and Driver, May 11, 2015,
https://www.caranddriver.com/reviews/a15105454/2015-tesla-model-s-70d-instrumented-test-review/
(March 13, 2022).
32
Jeff Cobb, “Tesla Model S Is World’s Best-Selling Plug-in Car For Second Year In A Row,” HybridCars.com,
January 26, 2017.
33
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
team strove to design and produce an electric sedan with a 200-mile range, a host of delightful
driver experience features, and a $35,000 price point.
Design: Cost-down Initiatives and Open-source Innovation
The Model 3 leveraged the Model S platform and included many of the driver experience features
of the Model S and X, but was slated to be approximately 20 percent smaller, with its own distinct
design.
The main challenge for the Model 3 was reducing cost, which required scrutinizing every
component and optimizing how systems would work together. For example, by eliminating or
changing a component to reduce weight or drag, Tesla could then use fewer battery cells to achieve
the same range—bringing down the cost of the car. Designers eliminated gauges and consolidated
them to a large screen in the center console. Engineers redesigned the venting system to be simpler,
lighter, and more cost-effective.
If Tesla was to reach the scale and cost-effectiveness envisioned for the Model 3, the company
needed continued innovation and a guaranteed supply of key components. To spur innovation and
capacity-building by suppliers—and perhaps to solidify Tesla’s designs as the EV standard—Tesla
announced an open-source policy for its patents in 2014. In a blog post, Musk wrote:
Tesla will not initiate patent lawsuits against anyone who, in good faith, wants to
use our technology…. Our true competition is not the small trickle of non-Tesla
electric cars being produced, but rather the enormous flood of gasoline cars pouring
out of the world’s factories every day…. We believe that Tesla, other companies
making electric cars, and the world would benefit from a common, rapidly evolving
technology platform.34
While some called the release a public relations stunt, others hailed it as a meaningful catalyst for
innovation in the EV ecosystem. Tesla also stood to benefit from increased use of its designs. In
theory, as other EV makers leveraged Tesla patents to create similar designs, the capacity for those
components and technologies would increase to meet demand. Standards would coalesce around
Tesla’s design methodologies, reducing the risk of technology obsolescence and positioning Tesla
as a leader.
The design of the first Model 3 version was completed in mid-2016, with production set to begin
in mid-2017.
Scaling Production and Sales
With sales of the Model S and Model X continuing to grow and the design of the Model 3
underway, Tesla began confronting the challenges of delivering on production and sales. Tesla’s
sourcing, production, sales, delivery, and support functions, which were built for low-to-mid
volume production, required significant scaling to support millions of Model 3s.
34
Elon Musk, “All Our Patents Belong to You,” Tesla, June 12, 2014, https://www.tesla.com/blog/all-out-patent-
are-belong-you (March 13, 2022).
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Battery Manufacturing
Batteries had become a bottleneck. If Tesla was to continue to purchase the cells needed to build
their energy storage systems as it ramped to full production capacity in the Fremont factory, it
would need to procure 100 percent of the global annual supply of batteries in 2015.35 Moreover,
the batteries were still too expensive—even if purchased at scale—to put in a mass-market car set
to cost $35,000. While the cost of batteries had come down to about $250 per kilowatt-hour,
analysts believed that the cost needed to come down even further to $100 per kilowatt-hour in
order to be economically equivalent to gas-powered cars.36 To increase and guarantee battery
production capacity, Tesla began yet another ambitious project: opening a dedicated battery
factory.
In 2016, Tesla opened Giga Nevada to produce Model 3 energy storage systems in partnership
with Panasonic. Tesla had an existing partnership with Panasonic, dating back to 2010, to supply
Tesla with battery cells and collaborate on EV-specific battery development. To streamline the
operations and reduce cost, Tesla invited Panasonic to co-locate and co-develop at Giga Nevada,
which avoided raw materials being shipped from mines in South America to Japan for cell
production, and then back to North America for assembly.
Production at Fremont
Tesla began outfitting the Fremont facility for high-volume Model 3 production, expanding its
utilization of the factory that was originally built to produce more than 450,000 vehicles annually.
Tesla installed paint lines that could process 500,000 vehicles annually and prepared its stamping
press line to handle the new Model 3 parts and increased volumes. 37 Doubling down on
automation, Tesla purchased Grohmann Engineering, an automated manufacturing engineering
firm, to launch Tesla Advanced Automation.38 This group was responsible for developing high-
volume manufacturing processes for Model 3 production.
By August 2017, Tesla had more than 455,000 reservations for the Model 3, with customers
putting down $1,000 to reserve their spot in line for a car. The overwhelming demand put pressure
on Tesla to ramp up production. Customers, especially those interested in the Model 3 as their
sole vehicle, were not likely to wait years to receive their car.
Though Musk set a target to increase production to more than 5,000 vehicles per week by the end
of 2017,39 ramping a highly automated production line proved extremely difficult. Tesla ended
2017 producing only about 800 vehicles per week.40 The company’s investments in automation
35
36
Akshat Rathi, “The Magic Number That Unlocks The Electric-Car Revolution,” Bloomberg News,
September 22, 2020, https://www.bloomberg.com/news/articles/2020-09-22/elon-musk-s-battery-day-could-reveal-
very-cheap-batteries (March 13, 2022).
37
Angela Campbell, “Tesla Motors Model 3 Equipment ‘Already Online’ at Fremont Factory,” The Country Caller,
August 4, 2016.
38
https://www.sec.gov/Archives/edgar/data/1318605/000156459017003118/tsla-10k_20161231.htm
(March 13, 2022).
39
Ibid.
40
Joe Ciolli, “Tesla misses its Model 3 deliveries by a mile,” Business Insider, January 3, 2018.
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
required installation, programming, and refinement—often forcing Tesla to revert to manual

production during equipment breakdowns. In 2018, Musk even tweeted, “Excess automation at
Tesla was a mistake… my mistake. Humans are underrated.”41 To ramp production above 5,000
per week, albeit with higher labor cost, Tesla set up a less robotic assembly line, hired hundreds
of workers, and pledged to operate 24/7.42
Tesla continuously promised—and frequently missed—aggressive production targets over the

next two years as the company struggled to make the leap to high-volume manufacturing. But the
tide eventually turned. Tesla ended 2019 with more than 300,000 Model 3 deliveries, making it
the world’s best-selling plug-in electric car for the second consecutive year. And in June 2021,
the Model 3 became the first electric car to sell more than 1 million units globally.43 Tesla had
survived what Musk described as “production hell” to become a legitimate mass-production
automaker.
Home Solar Electricity Generation and Storage
Tesla’s production ramp for the Model 3 was accompanied by a foray into home solar electricity
generation and storage. Tesla aspired to provide zero-emission electricity, so customers could
definitively claim zero-emission transit. Musk envisioned a system for a customer’s home that
would capture energy from the sun during the day and store the energy for use when needed. In
this way, Tesla strove to “empower the individual as their own utility.”44
In April 2015, the company announced the formation of Tesla Energy, a subsidiary that would
apply the battery technology it had developed for Tesla vehicles to build a home energy storage
system called the Powerwall. Home energy storage capitalized on Tesla’s cumulative investments
in lithium-ion battery development and production, as well as the increased volume and scale at
the Giga Nevada facility.
In August 2016, Tesla acquired SolarCity, the largest U.S. producer and installer of home solar
electricity generation systems by market share. After the acquisition, SolarCity began bundling
the solar panel installations with the Powerwall battery systems, and developing a solar shingle
product called the Tesla Solar Roof.
41
Julia Horowitz, “Tesla is temporarily stopping production of the Model 3,” CNN Business, April 17, 2018,
https://money.cnn.com/2018/04/16/news/companies/tesla-model-3-production-stop/index.html?iid=EL
(March 13, 2022).
42
Chris Isidore, “Tesla will start working 24/7 to crank out Model 3s,” CNN Business, April 18, 2018,
https://money.cnn.com/2018/04/18/news/companies/elon-musk-tesla-model-3-production/index.html
(March 13, 2022).
43
Zachary Shahan, “Tesla Model 3 Has Passed 1 Million Sales,” CleanTechnica, August 26, 2021,
https://cleantechnica.com/2021/08/26/tesla-model-3-has-passed-1-million-sales/ (March 13, 2022).
44
Elon Musk, “Master Plan, Part Deux,” Tesla, July 20, 2016, https://www.tesla.com/blog/master-plan-part-deux
(March 13, 2022).
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Vehicles for Every Segment
As Tesla ramped production for the Model 3, designers and engineers were already working to
expand the lineup of electric vehicles. Tesla’s second goal in Master Plan: Part Deux was to
address all major vehicle segments. The Model Y, a compact crossover utility vehicle, was
unveiled in March 2019. The Model Y was based on the Model 3 sedan platform, sharing an
estimated 75 percent of parts with the Tesla Model 3.45 Tesla also announced in 2017 it would be
adding an all-electric Class 8 semi-trailer truck to its lineup and unveiled the Tesla Cybertruck
pickup in 2019. Both vehicles suffered production delays, with estimated production timelines set
for 2023.
Tesla’s expansion into all major vehicle segments aligned with its mission and leveraged its hard-
earned capabilities in design, manufacturing, and distribution. Musk believed that being able to
rapidly scale up production volume was the key to Tesla being successful. Therefore, he assigned
Tesla’s engineers to treat the automotive factory as a product itself. Seeing the Model 3 factory as
a version 1.0, Tesla hoped to drive a five-to-tenfold improvement in output as it iterated on the
production systems for the next generation of Tesla vehicles.
Autonomy & Sharing
In Tesla’s 2016 “Master Plan: Part Deux,” Musk clarified his plans for the development of
Autopilot:
Develop a self-driving capability that is 10x safer than manual via massive fleet
learning
Enable your car to make money for you when you aren’t using it 46
Tesla had continued to improve Autopilot with subsequent hardware and software updates since
its launch in 2014. Musk believed that the technology would eventually mature to allow full self-
driving with “fail-operational capability,” meaning that any given system in the car could fail with
the vehicle still able to drive itself safely.47 Tesla pursued an agile approach to Autopilot
development, deploying partial autonomy in its vehicles, because Musk believed that “when used
correctly, it [was] already significantly safer than a person driving themselves.”48 Tesla’s massive
fleet of connected cars also allowed the company to learn more rapidly from deployed vehicles
and refine the software.
The rationale for investing in self-driving had multiple components. While other automotive
companies were hesitant to get ahead of regulators, Tesla positioned itself as an innovator in self-
driving and generated buzz as customers marveled at the autonomous features. Second, Tesla
believed that reaching fully autonomous driving would unlock the opportunity to share vehicles
45
Fred Lambert, “Tesla Model Y teardown: shows some great improvements over Model 3 despite sharing 75% of
parts,” Electrek, April 8, 2020, https://electrek.co/2020/04/08/tesla-model-y-teardown-improvements-over-model-3-
sharing-parts/ (March 13, 2022).
46
Elon Musk, “Master Plan, Part Deux,” Tesla, July 20, 2016, https://www.tesla.com/blog/master-plan-part-deux
(March 13, 2022).
47
Ibid.
48
Ibid.
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
across many users, especially in dense urban areas. This shift would reduce the number of cars on
the road as consumers accepted rides in shared fleets in favor of owning a car themselves. Third,
putting autonomous and sharing together transformed the value proposition for car owners. If
customers were able to add their car to the Tesla shared fleet and generate income while they were
not using it, this income could offset or even exceed the monthly cost of ownership, allowing many
more consumers to own a Tesla.
Musk believed that the key milestone for realizing and getting approval for full self-driving would
require roughly 6 billion miles of fleet learning tests and a benchmark of being 10 times safer than
human driving. Tesla’s aggressive deployment of self-driving technology displayed an aspiration
to be a leader in autonomous vehicles, perhaps both to unlock new self-driving fleet business
models and to increase demand for its lineup of EVs under a new value proposition.
Mass-Market EV Era Results
By the end of 2021, Tesla had produced and delivered more than 936,000 vehicles worldwide with
total revenues of nearly $54 billion, a 71 percent increase from the prior year.49 The ability to
produce and sell nearly 1 million vehicles per year created a scale that unlocked opportunities for
Tesla’s non-automotive business models. Tesla customers could be upsold on home solar
electricity systems and truly emissions-free transport. Tesla’s energy storage products benefited
from the high capacity of Tesla’s battery production. And the realization of autonomous driving
and a Tesla ride-hailing network was accelerated by fleet learning at scale, with many more Teslas
on the road.
THE NEXT ERA
Tesla was founded with a mission of accelerating the world’s transition to sustainable
transportation and a breakthrough innovation of using lithium-ion batteries to propel vehicles. It
accomplished a series of Herculean tasks: establishing itself as an automaker, changing public
perceptions of electric vehicles, developing the vehicle around a software core, constructing
behemoth factories, pioneering a direct sales model, providing low-cost solar electricity, and
inventing a self-driving car. Along the way, Tesla evolved its business model, operating model,
and even its mission.
Now, with its mission to accelerate the world’s transition to sustainable energy, what business
model and operating model innovations should Tesla pursue next?
49
https://www.sec.gov/Archives/edgar/data/1318605/000095017022000796/tsla-20211231.htm (March 13, 2022).
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Exhibit 1
Financial Summary 2017 - 2021
Source: “Tesla 2021 Q4 Shareholder Deck,” January 26, 2022, https://ir.tesla.com/#tab-quarterly-disclosure.
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Exhibit 2
Tesla Vehicle Production 2016 - 2021
Source: Statista.
____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
Exhibit 3
Operational Summary 2017 - 2021
Source: “Tesla 2021 Q4 Shareholder Deck,” January 26, 2022, https://ir.tesla.com/#tab-quarterly-disclosure.

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TESLA: BUSINESS & OPERATING MODEL EVOLUTION

Build sports car

THE SPORTS CAR ERA: ROADSTER

Energy Storage System (ESS)

However, significant engineering challenges remained: lithium-ion batteries were flammable,

Speeding Development Using “Mules” and Simulation

Direct to Consumer Sales and Distribution

Sports Car Era: Results

THE PREMIUM EV ERA: MODEL S AND MODEL X

A Platform for Tesla EVs

Software as Core to the Car

Standing Up Production at NUMMI

These developments were powerful accelerators in Tesla’s quest to build manufacturing

Sales, Distribution, and Charging

Premium EV Era: Results

THE MASS-MARKET EV ERA: MODEL 3, TESLA ENERGY, AND AUTONOMOUS VEHICLES

Design: Cost-down Initiatives and Open-source Innovation

Scaling Production and Sales

required installation, programming, and refinement—often forcing Tesla to revert to manual

Tesla continuously promised—and frequently missed—aggressive production targets over the

Home Solar Electricity Generation and Storage

Vehicles for Every Segment

Autonomy & Sharing

Mass-Market EV Era Results

THE NEXT ERA

Source: “Tesla 2021 Q4 Shareholder Deck,” January 26, 2022, https://ir.tesla.com/#tab-quarterly-disclosure.

Source: “Tesla 2021 Q4 Shareholder Deck,” January 26, 2022, https://ir.tesla.com/#tab-quarterly-disclosure.

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