Business Growth

Management -
Tesla Case Resume
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Resume
Tesla Motors was founded in 2003 and named after Nikola Tesla, one of the
inventors of the electric AC induction motor. The founding team included Elon Musk
and Tesla’s CTO, JB Straubel. None of Tesla’s founders had a background in the car
industry and neither did its original engineering team. Over time, Tesla assembled a
team that was a mix of specialists from the car industry and people with their roots
in Silicon Valley. Elon Musk believed that Tesla’s Silicon Valley roots gave it an
important edge when it came to this kind of innovation.
In its 10 years since founding, Tesla had launched both a high-end limited edition
“Tesla Roadster” and its “Model S” production car, and was now taking reservations
on its upcoming “Model X” electric crossover SUV. While some of its most visible EV
competitors went bankrupt or halted production, Tesla became profitable. Elon
Musk wanted Tesla to be a mass manufacturer of electric cars.
Tesla was off to a great start in 2013. In the first half of 2013, it sold 10,500 model S
cars and was expanding sales to Europe. Elon Musk overtly stated from the outset
that their goal, in creating Tesla, was to be a company that was instrumental in
transitioning to electric mobility with a digitised business model, integrated with
engineering principles that would help circumvent “classical” barriers to entry of the
nascent disruptor.
The most significant particular entry barriers were economies of scale, the
longevity of charging per trip (battery charge), building a platform ecosystem
of research and development partners in this innovator/early adopter digitally-
driven emerging market space. Elon Musk’s location of Silicon Valley, as the
headquarters of Tesla, was not coincidental. At the heart of his vision was Tesla
as a disruptor, using information systems at the core of the driving experience,
along with modular systems that would allow economies of scope to be gained
from the reusability of components, across all final products, the Model S,
Model X, Model 3, using a carefully engineered base platform. The use of
leading paradigmatic engineering and information systems appealed to
innovator and early adopter categories of consumers, providing a base or
diffusion through the disruptive niche whilst simultaneously side-stepping the
entry barriers.

Instrumental to the success of Tesla has been the data-driven decision-

making approach to the creation and management of its products, putting
data, information and knowledge exchange at the center of an ecosystem and
platform architecture that recursively creates and recreates modular
components, making the complexity and therefore risk, manageable. This
application of new principles to a mature industry meant new ways of creating
and capturing value in the business model.
 The ecosystem and platform architecture of Tesla is the interface through which they manage their collaborations
in the partner network, ensuring that the core business processes are not compromised due to fundamental
design rules.

Moreover, on August 11, 2017, Tesla announced a new $1.8 billion unsecured senior note offering due in 2025 at an
interest rate of 5.3 per cent. investors accepted Tesla's sales pitch on the new debt. a day before the offering,
Tesla's stock closed at $355.33 a share. Four days later, it opened at $364.63 per share. During the 12 months
period leading up to the unveiling of the Model 3, Tesla's stock outperformed by substantial margins the share
prices of such competitors as GM, Daimler, BMW, Volkswagen, and Toyota. In April 2017, Tesla became the largest
U.S based automaker per market capitalization.
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