Doubling Down - Elon Musk's Big Bets in 2022

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R E V : M A Y 10, 2022
D A V ID Y O F F IE
D A NI EL F I S H ER
Doubling Down: Elon Musk’s Big Bets in 2022

Elon Musk, best known as the chief executive of Tesla and SpaceX, was on a roll in 2021. After years
of struggling to turn a profit, the electric vehicle (EV) manufacturer Tesla reported net income of $5.5
billion and achieved a market capitalization of $1 trillion, 1 while the private-owned rocket company
SpaceX raised money at a $100 billion valuation. 2 Musk owned roughly 50% of SpaceX and 20% of
Tesla.3 Although Tesla’s stock retreated somewhat in 2022, Tesla remained the world’s most valuable
car company, SpaceX the world’s most valuable space company, and Musk the richest person on Earth
(See Exhibit 1). To top off an amazing year, Time Magazine named Musk 2021 Person of the Year.4
Musk’s path to the super-rich had not been easy. In 2008-9, SpaceX, Tesla and Musk were on a path
towards bankruptcy. In 2018, Tesla was on the verge of bankruptcy again as it struggled to manufacture
its Model 3 sedan. Fortunately for Musk, demand for electric vehicles (EVs) exploded in 2020 and 2021.
While most car companies suffered during the pandemic, Tesla took off. In 2022, Musk planned even
bigger, riskier bets at Tesla and SpaceX, in addition to building other start-ups including The Boring
Company and Neuralink. In April 2022, he set out to make perhaps his biggest bet yet: a $44 billion
acquisition of Twitter, a social media platform where he posted incessantly. A former colleague
commented that “Elon thinks bigger than just about anyone else I’ve ever met.”5
Looking forward, however, Musk faced numerous headwinds. Competition for Tesla and SpaceX
was heating up. Tesla’s “Autopilot” system, which in theory made driving safer, had been activated
during numerous crashes, leading to a burst of lawsuits and investigations. 6 In addition, quality
problems forced Tesla to issue massive recalls in early 2022. 7 Musk’s bid for Twitter raised many
questions about whether he could successfully run five companies, or whether Twitter would distract
him from growing Tesla and SpaceX. On top of that, Musk seemed to enjoy antagonizing governments,
despite the fact that governments provided support for each of Musk’s companies. He even compared
Canadian Prime Minister Justin Trudeau to Hitler because of Canada’s Covid policies. (Musk realized
this was a step too far, and quickly deleted his tweet.8) For Musk, an obvious question was: should he
stay the course with multi-billion-dollar bets on spaceships, satellites, and gigantic factories, or should
he consolidate gains and fix his operational, legal, and political challenges? For Musk’s board and
shareholders, the question was slightly different: was Musk, as his biographer put it, “a being sent from
the future to save mankind from itself or a slick businessman dragging foolish investors along on grand
cash-burning bets?”9
Professor David Yoffie and Research Associate Daniel Fisher prepared this case. This case was developed from published sources. Funding for the
development of this case was provided by Harvard Business School and not by the company. The citation review for this case has not yet been
completed. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary
data, or illustrations of effective or ineffective management.
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This document is authorized for use only in Prof. Gurveer Jaswal's Corporate Strategy_06/28/2023 at SOIL Institute of Management from Jun 2023 to Dec 2023.
722-439 Doubling Down: Elon Musk’s Big Bets in 2022
Elon Musk’s Early Ventures

Elon Musk was born and raised in South Africa and made his way to Canada in 1989 at the age of
17. Staying with relatives and working odd jobs, Musk enrolled in Queen’s University in Ontario and
then transferred to the University of Pennsylvania, where he earned degrees in economics and physics.
He began a PhD program in applied physics at Stanford but dropped out in 1995 to start an online map
and directory firm called Zip2 with his brother. They sold the company to Compaq for $300 million in
1999, and Musk netted $22 million in the process. He used the money to launch another startup called
X.com, an online bank. In 2000, X.com merged with Confinity, another startup, which ran a money
transfer service called PayPal. Although Musk took the reigns as CEO of the merged company, the
board fired him in September 2000 over disagreements on the business model. After the company went
public under Peter Thiel, and was purchased by eBay, Musk netted $180 million, which he re-invested
in three ventures: SpaceX, Tesla, and SolarCity.10
SpaceX
Mission - declaring stmt why an org exist to serve its customer; included what do we do, who are our cx and
how do we do. Vision means direction of business and how they want to impact the cx. Vision is where and
mission is why.vision should be succinct but not brief, few or one vision, clear, easily communicable,
inspiring, memorable & should be motivating and pride feeling.
Mission -succint-statemetns should be value addition - describes key business including product, services -
describe how -should provide an identity to org- should represent a means in which the leaders can agree
upon a major purpose of org.
Why strategize with emp- enhanced commu. -improved understanding -greater commitment-more
effective result
Issue in stratezing- using political tools for personal gains-only doing formality-failing to commu to emp-
top managers not supporting -failing to involve all key emp in planning phase- resistance to change - busy
in daily firefight;
Strategy vs tactic -org create strategies to define longterm goals and how they intend to do them;
Tactics- describe the individual steps and actions that allow strategies to be carried out.
Strategy is all about planning- long term- why– large scale and difficult to copy.
Tactics is -doing- small scale- how- easy to copy- can be copied.
Operational efficiency alone is not a strategy- oe means performing similar activities then rival perform
them- Comp strategy is more about being unique- it requires trader off eg bmw vs maruti -establish a
difference that you can preserve-
OE+unique positioning = strategy
RBV- resource based views-org performance is determined by the resources available for use-resource
utilisation can provide distinct compt. Advantage;
Resources -all assets , capabilities, organizational process, firm attributes, info, knowledge etc controlled by a
firm that enable the firm to conceive of and implement strategies that improve its efficiency and
effectiveness.
Comp. advantage-when a firm create a strategy creating value that is not implemented simultaneously by
any other firm.
Comp view of strategy vs resource based view - comp view= positioning , a firm should think about
positioning itself in industry in such a form that provides it a comp. Advantage- can be seen as strategic fit
with the business environment - porter 5 force
RBV - core competencies -valuable, rare,inimitable and non -substituable resources are more reliable key to
success.- is explained by the distinctiveness of its capabilities
Doubling Down: Elon Musk’s Big Bets in 2022 722-439
2) VRIO
Theory of business - 3 parts- assumption about the environment of org, specific mission of org,
assumption about core comp. Required to accomplish the org mission.
Blue Ocean - book by W. Chan Kim and Renée Mauborgne,-

Red ocean - industry as its in existence today - known market spaces- boundaries are defined and
accepted-competitive rules are known -companies outperform rivals to grab share- as market gets
populated , profits get reduced- product become commodities leading to bloodbath.
Blue ocean - all industries not in existence today -
Why blue ocean is req- world is changing and affecting everything around us- supply is overtaking
demand in almost every segment -the neeed for new creative solutions- a global shift in future
demand and growth –
Starlink
Blue ocn strategy principle- grounded in data - prod differentiation and low cost -creates uncontested
market space -empowers you through tools and framework-provides step by step process– max
opportunity & min risk- builds execution in strategy -shows how to create win win strategy -value
innovation framework : reduce, eliminate, raise & create;
Steps for creating BO- buyer utility- price utility - cost utiltiy-adoption
To create blue ocean - product balance b/w settlers-migrators & pioneer. * Strategic Alliance and Joint
ventures:
Factors promoting the rise of Strategic Alliances Globally
Increase your market share. Gain access to a new market or beat others to that market. Quickly shore
up internal weaknesses. Gain a new skill or area of competence. Succeed although the company lacks key
resources. Rapidly move to decisively seize opportunities before they disappear. Respond more quickly
to change with greater flexibility.
5 Key Components: It should be tied to the success of the core business goal or objective. It should be
critical to the development or maintenance of a core competence or other source of competitive
advantage . Block a competitive threat . Create or maintain the strategic choices for the firm . Mitigate the
significant risk to the business. Research done by the authors shows that executives must analyze three
sets of factors before deciding on a collaboration option: the resources and synergies they desire, the
marketplace they compete in, and their competencies at collaborating.
When to Ally or Acquire: A company’s strategy lies in a dilemma, wrapped in a problem, inside a
challenge. As companies find it increasingly tougher to achieve and sustain growth, they have placed their
faith in acquisitions and alliances to boost sales, profits, and, importantly, stock prices. Research shows
that most companies simply don’t compare the two strategies before picking one. Consequently, they take
over firms they should have collaborated with and ally with those they should have bought, making a
mess of both acquisitions and alliances. The two strategies differ in many ways. Acquisition deals are
competitive, based on market prices, and risky; alliances are co- operative, negotiated, and not so risky.
So, companies habitually deploy acquisitions to increase scale or cut costs and use partnerships to enter
new markets, customer segments, and regions. Organizational barriers also stand in the way. In many
companies, an M&A group, which reports to the finance head, handles acquisitions, while a separate unit,
headed by the business development director or VP, looks after alliances. The two teams work out of
different locations, jealously guard turf, and, in effect, prevent companies from comparing the advantages
and disadvantages of the strategies.
Competition: SpaceX was not the only company building a LEO internet constellation. OneWeb,
for example, had received nearly $3 billion in funding from investors like Virgin Group and Softbank
8 “I”s for a great “We”- Collaborative Advantage.
Individual Excellence- Both partners are strong and have something to contribute to the relationship .
Importance- The relationship fits major strategic objectives of the partners, so they want to make it work
. Interdependence- The partners need each as they have complementary skills and assets . Investment-
The partners invest in each other through time management, equity swaps, cross-ownership .
Information- Communication is open and partners share information to make the relationship work .
Integration- The partners develop linkages for shared ways of learning . Institutionalization – The
relationship is given a formal status with clear responsibilities and decision . Processes. It extends
beyond people who formed it and cannot be broken at a whim. Integrity- The partners behave with each
other in an honorable ways that justify and enhance.
Starship
Non Equity Strategic Alliances Organizations create an agreement to share resources without
creating a separate entity or sharing equity. often looser and informal than a partnership involving equity
Types ()
Comarketing- includes marketing of a home and host country product together.E.g.- P&G with the
National Breast Cancer Foundation run a campaign Give Hope in the US
R&D contract- Includes a product prototype development in technical collaboration with a foreign
firm. E.g.- Ericsson-WIPRO. WIPRO provides R&D services to Ericsson
Turnkey Project- I contract under which a firm agrees to fully design, construct and equip a
manufacturing/ business/ service facility and turn the project over to the purchaser when it is ready
for operation for a remuneration. Infrastructure Projects are turnkey.
Strategic Supplier- Supplier who is the greatest risk to supply and profitability is a disruption with its
ability to fulfill orders. Semi conductor suppliers are strategic suppliers for Auto Industry
Strategic Distributor- Company entering a new country may appoint a single entity . Apple appointed
Redington when it entered India
Licensing/ Franchising : an arrangement between licensor and licensee where latter party would
acquire the right to use products and goods where the ownership remains with the licensor P&G,
HLL enter countries by getting into a Licensing agreement to manufacture products.
Equity Strategic Alliance: when one company purchases equity in another business (partial
acquisition), or each business purchases equity in each other (cross-equity transactions).e.g Tesla’s
relationship with Panasonic.
Competition: Joint Venture: A joint venture might involve two companies with different areas of
expertise working together to create a new product or provide a new service. The types are :
Leverage Resource advantage of the combined resources of both companies to achieve the goal of the
venture. Cost Savings: By using economies of scale. Combined Expertise: Two companies might each have
unique backgrounds.
Key Elements: Local Partner Selection, Negotiating Alliance Contracts, Ownership Structure
Exit Strategy for Joint Venture: Sale of the new business
Spinoff of operations
Employee ownership (Acq-Hiring)
Disadvantages of Joint Venture: contracts commonly limit the outside activities of participant
companies while the project is in progress. Each company involved in a joint venture may be
required to sign exclusivity agreements or a non-compete agreement. share control, work activities,
and use of resources are not always divided equally.
Other Ventures:
Hyperloop, OpenAI, The Boring Company, Neuralink, and Twitter
Hyperloop: Platform Strategies and Business Model:
Business Model : Retailer Model , Manufacturer Model , Subscription Model , Bundling Model ,
Franchisee Model , Distributor Model , Freemium Model
Business Model in the Internet Era: A business model isn’t a strategy, even though many people use
the terms interchangeably. Business models describe, as a system, how the pieces of a business fit
together. a good business model remains essential to every successful organization, whether it’s a
new venture or an established player.
OpenAI: Platform Businesses: A business creating significant value through the acquisition,
matching and connection of two or more customer groups to enable them to transact. E.g eBay, Uber,
Airbnb. Networks vs Platforms: Networks- systems of entities which are interconnected while
Platforms are interfaces. Rocket Model: Attract -> Match -> Connect -> Transact -> Optimise
The Boring Company: This building block encompasses the characteristics, features and
processes by which a platform is able to attract producers and consumers . Match: The quality of
the matching is critical to the success of the platform. In a world of abundance, the ability to filter
and present customers with the right choices creates value. Connect: This platform function also
increases the trust of the parties and reduces the ‘asymmetry of information’ that may get in the way
of the transaction. Transact : A transaction can take many forms depending on the market being
served
Neuralink: Platform Ecosystem: Bridge b/w Owner and provider.

IT makes building and scaling up platforms vastly simpler and cheaper, allows nearly friction- less
participation that strengthens network effects, and enhances the ability to capture, analyse, and exchange
huge amounts of data that increase the platform’s value to all.
Competing Against Free: A new competitor enters your market and offers a product very similar to yours
but with one key difference: It’s free, The “free” business models popularized by companies such as
Google, Adobe, and Mozilla are spreading to markets in the physical world, from pharmaceuticals to
airlines to automobiles. Some new competitors self-destruct because they can’t convert non-paying
customers into paying ones fast enough to cover costs or because they can’t find a third party that will
pay for access to their users
5
Twitter:
Global Strategy:
CAGE Framework: Cultural Distance: Different language, different ethnicities, different religions,
different social norms. Administrative Distances: Absence of colonial ties, political hostility, government
policies, Institutional weakness . Geographic Distance: Physical remoteness, lack of common border, size
of country, differences in climate, Economic distances: differences in consumers income, quality of
natural resources, financial resources, human resources, infrastructure.
Where to Grow Internationally – Cultural distance. individuals accept the existence of inequalities
between subordinates and superiors within a hierarchical structure. uncertainty avoidance: uncertainty
about the future. individualism: individualistic behaviors as opposed to collective ones.
long-term or short-term orientation: maintenance of the stability related to the past and the present
Where to Grow Internationally – administrative distance
NAFTA-> Historical, Political , Hostilities Decreased distance between U.S., Mexico, and Canada.
Increased distance between Cuba and U.S..91
Strategy of Difference- Institutional Arbitrage . Cultural Arbitrage: have in fact long exploited
differences in culture. Administrative Arbitrage: Taxes is a major form of arbitrage. Geographic
Arbitrage: Consider the case of air transportation Economic Arbitrage: costs of labor and capital Where
to Grow Internationally – Administrative distance FTA -> Import Laws -> Foreign corrupt Practices ->
Accounting Standards -> Intellectual Property Protection Where to Grow Internationally – GEOGRAPHIC
DISTANCE ( how far apart trading ) the size of the country, differences in climates, and nature of
transportation and information networks. in terms of the miles or kilometers that separate a company
from another market or supplier. Where to Grow Internationally - ECONOMIC DISTANCE Relating to
income, the distribution of wealth, Relative purchasing power of segments of a geographic market.
OLI Framework : J.H Dumming
Ownership -> Location -> Internalization : yes Foreign direct investment , no: remain domestic , produce at home
and export license.
Models of Multinational Enterprise (Peter Buckley & Mark Casson )
Traditional View: Nature of Firm Specific competition , Choice of Location of Production , Determination of the
boundaries of the firm.
New agenda focusses on : Uncertainty & Market Volatility , Flexibility & Value of Real time options , Cooperation
through Joint Venture & Business Networks , Entrepreneurship, Managerial Competence & Corporate Culture ,
Organizational Change including the mandating of subsidiaries and the empowerment of employees .
Strategy of Difference- Institutional Arbitrage
arbitrage is about much more than cheap capital or labour
Cultural Arbitrage : Arbitrage strategies have in fact long exploited differences in culture.
Administrative Arbitrage :Taxes is a major form of arbitrage. Facebook, Google route most of their earning
through Ireland and pay less tax. Geographic Arbitrage : the cost of which has declined more than 90% in real
terms since 1930, more sharply than older modes of transportation.
Economic Arbitrage: include differences in the costs of labor and capital
Bartlett and Ghoshal: Global Strategic Model
Multinational: Decentralized and self-sufficient, Local opportunities, knowledge retention
International: Sources of core competencies, adapting parent comp, Knowl transfer subunits
Transactional: Dispersed and interdependent, Differentiated subunits, knowl shared worldwide
BMI - Innovation becomes Business Model Innovation when two or more elements of a business
model are reinvented to deliver value in a new way. It results in a company that not only competes
on the value proposition of its offerings, but aligns its profit formula, resources, and processes to
enhance it.
Features: Uncovering Opportunities- Diagnose first the current model to understand its
limitations and once a company understands its choices, it is better positioned to brainstorm new
opportunities. Implementing the New Model- Scaling up is the most critical step for BMI i.e. rather
they are the first ones to successfully roll out ideas. Building the Platform and Skills - BMI requires a
distinct set of processes and capabilities to overcome an organization's short-term focus and also
sustain a BMI advantage on a continuous basis. Importance: BMI provide companies a way to break out
of intense competition, under which product or process innovations are easily imitated. It can help
address disruptions that demand new competitive approaches. IT can help address downturn – specific
opportunities, enabling companies, for example, to lower prices or reduce the risk and cost of ownership
for customers. It can deliver superior returns compared to just doing product or process innovation.
Challenges: Fixation on Ideation - Some organizations are able to churn out ideas endlessly but rarely
move on to piloting and scaling them up. Internal Focus- A company may sometimes focus too much on
the internal needs of the organization and fail to address the evolving needs of customers. Capture the
Opportunity - BMI that takes an inside-out approach frequently results in too little change too late and
fails to capture the opportunity. Historical Bias- Organization must resist the temptation to overvalue
past models and undervalue forward-looking, disruptive ideas and Organization would need a
courageous and visible leader to overcome this natural tendency . two essential element/ six
components of BMI. Value Proposition: Helps what are we offering to whom can be further classifies into:
Target Segments: Which of their needs do we seek to address such as trust premium. Product or
Service Offering: What are we offering the customers to satisfy their needs i.e., product as service or
outcome or product as an experience. Revenue Model: How are we compensated for our offering?
Operating Model: Helps to understand how are we profitably deliver the offering which can be classified
into Value Chain: such as integration of supply chain, direct distribution like ZARA,Nestle. Cost Model:
How do we configure our assets and costs to deliver on our value proposition profitably i.e. low cost
(TATA Motors),, Organization: How do we develop our people to sustain and enhance our competitive
advantage i.e. deconstruction.
Master Plan, Part Deaux

Social responsibility refers to actions an organisation takes beyond what is legally required to protect or enhance
the well-being of living things.
Sustainability refers to the extent that an organisations operations and actions protect, mend, and preserve
rather than harm or destroy the natural environment.
Business ethics can be defined as principles of conduct within organizations that guide decision making and
behaviour. Good business ethics is a prerequisite for good strategic management; good ethics is just good
business.
Importance of Business Ethics: Control Business Malpractices. Better Relations with Employees. Improves
ustomer satisfaction . Increases Profitability , Improves Business goodwill . Better decision making . Protection of
Society. Corporate Social Responsibility : The 2% rule: 2% of PBT of last 3 years , 80% spent not on what is not
related to the company , 20% can be spent on self, employees,, CSR Rules in India : The company shall constitute
a Corporate Social Responsibility Committee. Minimum 3 or more directors must form CSR Committee. Among
those 3 directors, at least 1 director must be an independent director.
An unlisted public company or a private company shall have its CSR Committee without any independent.
7
In case of a foreign company, the CSR Committee shall comprise of 2 persons of which includes
one person being resident in India authorized to accept on behalf of the foreign company and other
nominated by the foreign company.
Agency Theory: Agency theory attempts to explain and resolve disputes over the respective
priorities between principals and their agents. The shareholder is represented by principal because
the shareholder invests in an executive’s business. The agent represents the principal in a particular
business transaction. Principals rely on agents to execute certain transactions, which results in a
difference in agreement on priorities and methods. Resolving the differences in expectations is
called "reducing agency loss." Performance-based compensation is way used to achieve a balance
between principal and agent. Common principal-agent relationships include shareholders and
management, financial planners and their clients, and lessees and lessors.
“Social Audit - It is a formal review of a company's endeavors, procedures, and code of conduct
regarding social responsibility and the company's impact on society. A social audit is an assessment of
how well the company is achieving its goals or benchmarks for social responsibility. Activities done in a
Social Audit : Environmental impact resulting from the company's operations. Transparency in reporting
any issues regarding the effect on the public or environment. Accounting and financial transparency.
Community development and financial contributions. Charitable giving Volunteer activity of employees .
Energy use or impact on footprint.. Work environment including safety, free of harassment, and equal
opportunity.. Worker pay and benefits. Non-discriminatory practices .
Qualities needed for being the entrepreneur: Innovative, Knowledgeable, Open Minded, Ambitious,
Flexible, Perceptive, Risk Taker, Resilient, Keep up to date, Enthusiastic, Intuitive, Good Management
Skills, Passionate, Hungry, Street Smart.
Gap Analysis- A Gap analysis is used to compare where you are against where you would like to be. This
helps you identify the gaps between these two states, and come up with an action plan to close them.
Instant Delivery is too broad a term. Assess Your Strengths vs skills needed . Consider Niche Markets.
Customers Can Identify Market Gaps. Adapt an Existing Product or Service. Needs to be Viable and
Profitable. .
Core Team required for entrepreneurship: Know how you want to hire? Determine Which Type Of
Employee Is Best For Your Business. Hire Interns . Social Media: LinkedIn and Facebook. Employees
wearing multiple hats.
Branding Strategies : Brand Personality Framework: Sincerity – Down to earth, Honest, Wholesome,
Cheerful, Excitement – Daring, Spirited, Imaginative, up-to-date, Competence – Reliable, Intelligent,
Successful, Hard-Working, Sophistication – Upper Class, Charming, Glamorous, Feminine, Ruggedness –
Outdoorsy, Tough, Masculine,, Product Led Growth – It Is a business strategy that relies on using your
product as the main vehicle to acquire, activate, and retain customers.Unlike sales-led companies where
the whole goal is to take a buyer from Point A to Point B in a sales cycle, product-led companies flip the
traditional sales model on its head. Steps Involved: Acquire-Engage-Monetize-Expand Advantages of
Product Led Growth: • Shorter Sales Cycle: By letting users onboard themselves, you can significantly
reduce your prospect’s time-to-value and sales cycle • Better User Experience: Since your product is
built for people to onboard themselves, people can experience meaningful value in your product without
any hand-holding. • Lower Customer Acquisition Costs (CAC): A self-serve model lowers your cost of
acquiring customers by letting users upgrade on their own without interacting with the sales team. •
Higher Revenue Per Employee (RPE): Software was always built to scale well, but with a product-
led approach, you’re able to do more with fewer people on your team.
8
Tesla in 2022
Main Focus/Features of Product Led Growth:

Growth Rates - PLG businesses often have lower growth rates initially. Metrics that emphasize growth rate too
early could actually detract from the promising high-growth.
CAC Payback- Public PLG businesses spend 44% more than others on R&D costs as it is partially offset by lower
sales and marketing spend.
LTV/CAC.- This metric doesn’t work for PLG companies because it doesn’t take into account some of the core
pillars that makes PLG businesses attractive that is low churn and the chance for revenue expansion from
accounts.
Production Hell : Super link
What is innovation strategy? Why is innovation required?

An innovation strategy is a plan that outlines how an organization will create new products, services, or
processes that meet the needs of its customers and create a competitive advantage. It is important for businesses
to have an innovation strategy because it helps them to: *Stay ahead of the competition. In today's fast-paced
world, businesses need to constantly innovate in order to stay ahead of the competition. If a business does not
innovate, it will eventually be left behind. *Create new sources of revenue. Innovation can help businesses to
create new products and services that can generate new sources of revenue. This can be especially important for
businesses that are facing stagnant or declining sales. *Improve customer satisfaction. Innovation can help
businesses to improve customer satisfaction by providing them with new and better products and services. This
can lead to increased customer loyalty and repeat business. *Reduce costs. Innovation can also help businesses
to reduce costs by finding new ways to do things more efficiently. This can free up resources that can be used for
other purposes, such as investing in new products or services.
The Medici Effect – The Medici Effect is a term coined by Frans Johansson. It refers to the phenomenon of
innovation that occurs when people from different disciplines or cultures come together and share their ideas.
When ideas and talented people from different fields are brought together to collaborate, step-changes can
occur. By bringing together people and ideas from a range of diverse backgrounds, you increase the likelihood of
intellectual cross-pollination and through this, great leaps in innovation. Eg – silicon valley, Nalanda University.
Johansson suggests possible measures to create workplace culture within which all manner of intersections are
most likely to occur. *Draw inspiration from industries or cultures very different from your own *Hunt for
Intersections *Put up an Intersection wall (i.e., display of possibilities) *Introduce/engage one or two outsiders
in regular team meetings *Hold Intersection councils *Set up Intersection workrooms *Ensure diversity on your
team and in organization *Map out your background to bring your whole self to work *Atomize all of a word’s
various meanings, contexts, and related words *Make Medici visits outside your enterprise *Set up micro-teams
(i.e. fewer people in discussion modules) *Take an Intersectional journey (i.e., create a visual Intersection).
Theory of Innovation – Peter F Drucker
He defined innovation as "the task of endowing human and material resources with new and greater wealth-
producing capacity." Businesses that want to be successful in the long term need to be innovative. By
understanding the sources of innovation and the principles of innovation, businesses can create a culture of
innovation that will lead to new products, services, and processes.
Sources of innovation –
Unexpected Occurrences: Innovations can arise from unexpected events, anomalies, or disruptions that challenge
existing assumptions and ways of doing things. Organizations should be attentive to these occurrences and
explore how they might lead to new opportunities.
Incongruities: Inconsistencies or incongruities between what is and what should be can spark innovation.
Recognizing gaps or contradictions in the market, customer behavior, or internal processes can drive the
development of innovative solutions.
Process Needs: Identifying inefficiencies, bottlenecks, or shortcomings in processes can inspire innovation.
Addressing these needs can lead to the creation of more streamlined and effective methods.
Tesla’s Future
Industry and Market Changes: Shifts in the industry landscape, market trends, or customer
preferences can open up new opportunities for innovation. Organizations that monitor these changes can
adapt and introduce innovative products or services to meet evolving demands.
Demographic Changes: Changes in demographics, such as shifts in population age, gender, or income, can
create new markets or alter consumer behaviors. Innovations that cater to these changing demographics
can be successful. Changes in Perception: Innovations can result from changing the way people perceive
a product, service, or situation. This might involve reframing existing offerings to address new needs or
contexts. New Knowledge: Advances in science, technology, and knowledge can lead to breakthrough
innovations. Staying informed about cutting-edge developments can inspire novel ideas and solutions.
Types of Innovation Strategies.
Proactive - Companies with proactive innovation strategies tend to have strong research orientation
and first-mover advantage and be a technology market leader. They access knowledge from a broad
range of sources and take big bets/high risks. Examples include Dupont, Apple and Singapore Airlines.
The types of technological innovation used in a proactive innovation strategy arRadical – breakthroughs
that change the nature of products and services. Incremental – the constant technological or process
changes that lead to improved performance of products and services.
Active - Active innovation strategies involve defending existing technologies and markets while being
prepared to respond quickly once markets and technologies are proven. Companies using this approach
also have broad sources of knowledge and medium-to-low risk exposure; they tend to hedge their bets.
Examples include Microsoft, Dell and British Airways. Reactive - The reactive innovation strategy is used
by companies which are followers, have a focus on operations, take a wait-and-see approach, look for
low-risk opportunities. They copy proven innovation and use entirely incremental innovators. An
example is Ryanair, a budget airline which has successfully copied the no-frills service model of
Southwest Airlines. Passive - Companies with passive innovation strategies wait until their customers
demand a change in their products or services. Examples include automotive supply companies as they
wait for their products or services. Examples include automotive supply companies as they wait for their
customers to demand changes to specification before implementing these.
Testing for Innovation- McKinsey Model
Aspire - A far-reaching vision can be a compelling catalyst, provided it’s realistic enough to stimulate action
today.
Choose - Fresh, creative insights are invaluable, but many companies run into difficulty less from a scarcity of
new ideas than from the struggle to determine which ideas to support and scale.
10
Sales and marketing strategies
Discover - Innovation also requires actionable and differentiated insights—the kind that excite customers
and bring new categories and markets into being. innovation yields to other approaches besides
exceptional creativity.
Evolve - business-model innovation has become more urgent: established companies must reinvent their
businesses before technology-driven upstarts do.
Accelerate - Virulent antibodies undermine innovation at many large companies. There’s a balance to be
maintained: bureaucracy must be held in check, yet the rush to market should not undermine the cross-
functional collaboration, continuous learning cycles, and clear decision pathways that help enable
innovation
Scale - Explicitly considering the appropriate magnitude and reach of a given idea is important to
ensuring that the right resources and risks are involved in pursuing it. Resources and capabilities must be
marshalled to make sure a new product or service can be delivered quickly at the desired volume and
quality
Extend - companies in nearly every sector have conceded that innovation requires external collaborators.
Successful innovators achieve significant multiples for every dollar invested in innovation by accessing
the skills and talents of others. In this way, they speed up innovation and uncover new ways to create
value for their customers and ecosystem partner.
Strategy Implementation:
What is strategy implementation? - Sum total of the activities and choices required for the execution of a
strategic plan and the process by which strategies and policies are put into action through programs,
budgets, and procedures. It requires a firm to establish annual objectives, create policies, motivate
employees, and allocate resources so that formulated strategies can be implemented. It is often called
the action stage. Resources and Competencies - Strategy implementation depends on resources and
competencies possessed by the firm. These include Money in certain amounts, Particular types of
equipment, Specified numbers of people with Certain skills, capabilities, and competencies, Control and
reporting systems. Seven Actions of Implementing Strategy - Allocate resources, Institute policies,
Pursue best practices and continuous improvement, Information and operating systems, Rewards to
strategy and goals, Shape corporate culture, Apply leadership.
Annual Objectives - short-term objectives that organizations must achieve to reach long-term objectives,
should be measurable, quantitative, challenging, realistic, consistent, and prioritized, should be
established at the corporate, divisional, and functional levels in a large organization.
Annual objectives benefits - Represent the basis for allocating resources, Main tool for evaluating
managers, Major tool for monitoring progress toward achieving long-term objectives, Establish
organizational, divisional, and departmental priorities.
Policies - the means by which annual objectives will be achieved. It include guidelines, rules, and
procedures established to support efforts to achieve stated objectives. It is a tool for strategy
implementation. It clarifies what can and cannot be done in pursuit of an organization’s objectives.
Strategy Implementation Actions - Overall strategy broken down into manageable parts, Goals and
deadlines set for accomplishment, Appropriate resources allocated, Right numbers and types of people
assigned, Policies and procedures to guide their actions, One person assigned overall responsibility for
each part, Progress measured and tracked, Changes and adjustments when appropriate.
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Market Segmentation - Subdividing of a market into different divisions of customers according to

needs and buying habits. It is widely used in implementing strategies. Market segmentation
decisions directly affect marketing mix factors: product, place, promotion, and price. Market
segmentation permits a firm to operate with limited resources because mass production, mass
distribution, and mass advertising are not required.
Potential Implementation Problems - Original plan poorly considered, Takes more time than
planned, Poor coordination of activities, Assigned employees lacked necessary skills, Insufficient
allocation of resources, Uncontrollable external environmental factors, Poorly defined key tasks and
activities. ~
By pushing for the “computer on wheels,” Tesla got far ahead of a transformative shift in the car
industry. Experts agreed that many innovations in car technology would be driven by software: New
cars in 2022 featured dozens of computerized devices and ran millions more lines of code than their
recent predecessors.200 Because Tesla had bet big and early on software, one analyst estimated in
2020 that traditional automakers were three to five years behind. 201 Peter Rawlinson, CEO of the EV
manufacturer Lucid Motors and a former chief engineer at Tesla, agreed. “Even Porsche does not
develop its core technology in house, and that is the differentiator…That is why Tesla is the most
valuable car company on the planet.”202
Tesla’s most visible software project was Autopilot, first released in 2015. The feature had four
functions: “Autosteer,” which kept the vehicle in its lane and avoided rear collisions by managing
speed; “Auto lane change,” which automatically changed lanes on the highway when safe;
“Autopark,” which automatically parallel-parked the vehicle; and “Side-collision warning,” which
warned the driver if another vehicle was too close.203 Tesla vehicles could steer, accelerate, and brake
on their own on highways, but it was only considered a “Level 2” autonomous vehicle, which required
constant driver engagement. Drivers had to be reminded to keep their hands on the wheel at all times;
if they received too many warnings, Autopilot would disengage. Tesla was trying to limit its legal
liability if a Tesla vehicle crashed when Autopilot was on. While Musk claimed Tesla with Autopilot
was safer than an ordinary car, an MIT study showed that drivers using driver-assistance system
watched the road less, making them less likely to catch the system’s mistakes.204
Almost every year, Musk made unrealistic claims about the timeline for fully-autonomous “Level
5” Teslas, including his 2019 prediction that Tesla would have one million “robotaxis” on the road by
2020, carrying passengers around without anyone in the driver’s seat.205 Internally, he pushed
aggressively to develop a system that did not need high definition mapping and used cameras without
the assistance of radar or lidar (lasers) sensors. Most of Tesla’s competitors believed radar and lidar
were required for a safe autonomous vehicle. By 2022, Tesla had reached the point of launching “Full
Self-Driving” (FSD), which expanded Level 2 Autosteer and Auto lane change-like functionality from
highways to city streets. It cost consumers $12,000 to buy FSD in 2022, despite Musk admitting that
FSD was “not great imo [in my opinion].” 206 Indeed, many viewed FSD as unsafe,207 including the
National Highway Traffic Safety Administration (NHTSA) which was investigating Autopilot to see
whether the company was responsible for a dozen or so crashes that had occurred while the feature
was activated.208 Nonetheless, Tesla, by some measures, was a leader in the world of driver-assistance
features.209 Musk remained confident that Tesla’s FSD was “trending to a very small number of
interventions per mile” and that “several profound improvements” were going to be made to the
software. He claimed that he “would be shocked” if Tesla did not achieve “full self-driving safer than
a human” by the end of 2022. 210 Musk hoped that FSD would eventually allow drivers to play video
games and watch Netflix on Tesla vehicles’ touch screens, and Tesla could, like Apple, take a cut of
revenues generated by its platform.211
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Sales and Marketing Strategy: Musk said on Twitter in 2019, “Tesla does not advertise or pay
for endorsements. Instead, we use that money to make the product great.”212 Indeed, according to
Tesla’s 2020 10-K, the company’s marketing, promotional, and advertising costs were “immaterial”
between 2018 and 2020 (See Exhibit 11).213 But it was not strictly true that Tesla engaged in no
marketing. For years, Tesla offered free Supercharging miles in exchange for customer referrals, though
it axed the program in 2021 due to cost concerns.214 Furthermore, as one Forbes editor argued, Musk’s
infamous Twitter commentary was a “$40 million marketing platform” unto itself.215
In addition to avoiding marketing spending, Tesla sold its cars directly to customers. Customers
could purchase a Tesla at one of its hundreds of stores across the world or order one online, and they
could either pick up their new car at one of Tesla’s delivery centers or have it delivered directly to
them. Musk observed in 2020: “Tesla is…an order of magnitude more vertically integrated than other
car companies…[W]e have to create our sales and service and distribution system in…[roughly] 40
countries… other car companies do not own their sales and service...” 216 In 2022, Tesla began to shift
its retail strategy by moving out of high-rent locations in upscale malls to delivery centers in mall
parking lots and warehouses. Going forward, it planned to work with customers remotely online, and
to allow customers to test drive cars at delivery centers without in-person assistance.217 Tesla focused
on online sales in large part due to cost concerns, but in the U.S. it also needed to account for dealer-
protection laws, which made it difficult to open physical stores in many states.
Service: In addition to selling vehicles directly to end customers, Tesla also offered maintenance
and repair services. As sales took off, supply of services lagged, and customers frequently complained
of long wait times and poor service quality. Tesla responded by increasing its physical service footprint
and hiring more mobile technicians, but management did not prioritize the issue. CFO Zachary
Kirkhorn noted on a 2021 earnings call: “the best service is no service…we have been incredibly focused
as a company both on the initial quality of our vehicles and reliability of our vehicles.”218
The Supercharger Network: To enable Tesla drivers to take longer trips, Tesla maintained a
“Supercharger” network of more than thirty thousand EV-charging stalls in North America, Europe,
and Asia. (By comparison, there were more than 150,000 gas stations in the U.S., plus another 100,000
each in China and Europe.219) Tesla’s Supercharger stations cost around $20,000 each to install.220
Superchargers were “Level 3” chargers (also called “DC fast chargers”) that could add three to twenty
miles of charge to a battery each minute, which was significantly faster than either 240V Level 2
chargers (35-50 miles of charge per hour) or 120V Level 1 chargers (three to five miles of charge per
hour).221 The average cost to charge at a Supercharger station was $0.25 per kWh, or $22 for a full
charge.222 Following reports of long lines at Supercharger stations in multiple states, Tesla announced
plans to triple the size of the network between 2022 and 2024.223
Musk repeatedly talked about eventually allowing drivers of non-Tesla EVs to use the Supercharger
network, and in November 2021, it did do so for the first time, albeit at just ten stations in the
Netherlands.224 Because standardized charging cable connectors were mandatory in Europe, non-Tesla
EV drivers needed only to download an app to use the Superchargers. But in the U.S., Tesla used
proprietary connectors, which meant adaptors would be required for non-Tesla EVs. If Tesla wanted
to receive a portion of the $7.5 billion in federal funds being distributed to states to build charging
stations, Tesla charging stations would be required to be available to all EVs.225
Insurance: In August 2019, Tesla began offering its own insurance product to Tesla drivers in
California, and it planned to expand to other states before moving its focus to Europe. 226 Musk believed
that Tesla could sell cheaper plans than the competition by using data gathered by its vehicles to make
more accurate assessments of individual drivers. Warren Buffet, chief executive of Berkshire
13
Value Chain Analysis for Tesla, explaining how each aspect applies to the case study:
1. Inbound Logistics:
Tesla's inbound logistics involve sourcing raw materials like lithium, cobalt, and other components required for its electric
vehicle (EV) batteries. The case study mentions Tesla's strategy of reducing battery costs, which heavily depends on securing
a reliable supply of these materials. The company's global supply chain and gigafactories ensure a steady flow of components,
allowing Tesla to maintain production and meet customer demand.
2. Operations:
Tesla's operations include the assembly of electric vehicles and energy products. The company has embraced advanced
manufacturing techniques and automation, highlighted in the case study's reference to its production of Model 3 and Model Y
vehicles. This operational efficiency enables Tesla to scale production, ensure consistent quality, and continually innovate in
the EV and energy sectors.
3. Outbound Logistics:
Tesla's outbound logistics involve distributing its vehicles to various channels, including its stores, delivery centers, and
directly to customers. The Supercharger network plays a role in the outbound logistics strategy, providing customers with
access to fast-charging infrastructure. Additionally, Tesla's unique direct-to-consumer sales model eliminates the need for
traditional dealerships and streamlines the distribution process.
4. Marketing and Sales:
Tesla's marketing strategy is characterized by its emphasis on word-of-mouth, social media, and the charismatic persona of
Elon Musk. The case study showcases how Musk's announcements and Twitter activity serve as a form of marketing. Tesla's
marketing message revolves around its technological leadership, sustainability, and innovative features, attracting customers
who align with these values.
5. Service:
Tesla offers maintenance and repair services to cater to customer needs. The case study acknowledges that Tesla has faced
challenges related to service, with customers expressing concerns about wait times and service quality. Tesla's commitment
to improving quality and reliability ties into its efforts to minimize the need for service while expanding its service centers
and mobile service teams to enhance customer satisfaction.
6. Procurement:
Tesla's procurement involves sourcing raw materials and components from suppliers globally. The case study mentions
Tesla's emphasis on battery costs and its strategy to secure key resources like lithium-ion batteries. The company's
partnerships and collaborations with suppliers contribute to its ability to maintain a reliable supply chain and support its
ambitious production goals.
7. Technology Development:
Tesla heavily invests in research and development to innovate across its products, as highlighted in the case study. The
company's focus on software updates and over-the-air upgrades is a testament to its commitment to technological
advancements. This aligns with Tesla's strategy to continually enhance the features and capabilities of its vehicles,
positioning itself as a leader in electric and autonomous driving technology.
8. Human Resource Management:
Tesla's workforce includes engineers, designers, technicians, and software developers who contribute to product innovation.
The case study underscores Elon Musk's role in attracting top talent through his visionary leadership and the compelling
nature of Tesla's projects. Musk's unique management style, as described in the case study, adds to the company's ability to
attract and retain employees who share his passion for innovation.
9. Firm Infrastructure:
Tesla's firm infrastructure includes its organizational structure, leadership, and corporate culture. The case study provides
insights into Elon Musk's influence on the company's direction and operations. Tesla's expansion of gigafactories, entry into
new markets, and unique projects reflect its commitment to developing a robust infrastructure to support its growth and
innovation.
In summary, the Value Chain Analysis of Tesla showcases the company's holistic approach to value creation. Tesla's ability to
innovate in technology, supply chain, marketing, and direct sales, all under the leadership of Elon Musk, has positioned it as a
leader in the electric vehicle and energy sectors. The company's strategic emphasis on vertical integration, innovation, and
sustainability contributes to its competitive advantage and ongoing success.
SWOT analysis for Tesla based on the information provided in the case study:
Strengths:
Innovative Technology: Tesla's cutting-edge electric vehicle (EV) technology, including batteries and autonomous driving
features, positions it as a pioneer in the automotive industry.
Strong Brand and Leadership: Elon Musk's visionary leadership and the Tesla brand's association with innovation,
sustainability, and luxury contribute to customer loyalty and strong market positioning.
Vertical Integration: Tesla's vertical integration, from manufacturing to energy storage solutions, allows greater control over
the supply chain and production process, potentially reducing costs and improving quality.
Direct-to-Consumer Sales: Tesla's unique direct sales approach bypasses traditional dealerships, allowing the company to
maintain more direct control over customer relationships and branding.
Supercharger Network: Tesla's Supercharger network provides a competitive advantage by offering fast-charging
infrastructure, enhancing the appeal and practicality of its EVs.
Weaknesses:
Quality and Service Challenges: Tesla has faced issues with service quality and customer satisfaction, potentially impacting its
reputation and customer loyalty.
Production Delays: Musk's tendency to set aggressive deadlines has led to production delays and unmet targets, potentially
causing dissatisfaction among investors and customers.
Reliance on Musk: The company's success is closely tied to Elon Musk's leadership and influence, raising concerns about
succession planning and sustainability without his direct involvement.
Supply Chain Risks: Tesla's dependency on key materials like lithium and cobalt could pose supply chain risks if prices
fluctuate or if sourcing becomes challenging.
Opportunities:
Growing EV Market: The global shift towards electric vehicles presents an opportunity for Tesla to capture an increasing
share of the market, particularly as more countries implement stricter emission regulations.
Energy Storage Solutions: The energy storage market is expanding, providing Tesla with the chance to leverage its battery
technology for residential, commercial, and grid-level applications.
Autonomous Driving: The development of autonomous driving technology could open up new revenue streams and disrupt
traditional transportation models.
Global Expansion: Tesla's international expansion, including new gigafactories and markets, allows the company to tap into
new customer bases and reduce delivery costs.
Threats:
Competition: Established automakers and tech companies entering the EV market could intensify competition and erode
Tesla's market share.
Regulatory Challenges: Changes in government regulations related to emissions standards, safety requirements, and
autonomous driving could impact Tesla's operations and costs.
Battery Supply: Fluctuations in the supply and cost of battery materials, as well as competition for resources, could impact
Tesla's production and profitability.
Quality and Safety Concerns: Any issues related to the quality, safety, or performance of Tesla vehicles, particularly
concerning autonomous driving, could lead to legal challenges, regulatory scrutiny, and damage to the brand.
In conclusion, Tesla's strengths lie in its innovative technology, brand, and direct-to-consumer approach. However, the
company faces challenges with quality, production delays, and supply chain risks. Opportunities include the growing EV
market, energy storage solutions, and autonomous driving, while threats include competition, regulatory changes, and
potential quality and safety concerns. Strategic management of these factors will play a crucial role in Tesla's ongoing success.
According to the authors themselves, W. Chan Kim & Renee Mauborgne, the blue ocean strategy has 8 core
principles:
• It’s grounded in data
• The strategy pursues differentiation and low cost
• It creates uncontested market space
• It empowers you through tools and frameworks
• Another principle is it provides a step-by-step process
• It maximizes opportunity while minimizing risk
• It builds execution into strategy
• Lastly, the blue ocean strategy shows you how to create a win-win outcome
Tesla's strategic moves align with the principles of the Blue Ocean Strategy:
1. Focus on Electric Vehicles (EVs):
Tesla's core strategy revolves around the shift from traditional internal combustion engine vehicles to electric vehicles (EVs).
This move created a new market space by addressing growing concerns about environmental sustainability and reducing
dependence on fossil fuels. Tesla's commitment to producing high-performance electric vehicles with long ranges positioned
it as a pioneer in the EV segment, differentiating it from traditional automakers.
2. Innovative Battery Technology:
Tesla's emphasis on battery technology was a game-changer. By developing its proprietary lithium-ion battery technology,
Tesla increased energy density and reduced costs, enabling longer driving ranges and affordability. This innovation created a
competitive advantage, as it allowed Tesla vehicles to outperform their counterparts and alleviate consumer concerns about
EV range limitations.
3. Direct Sales Model:
Tesla's decision to sell directly to consumers rather than through dealerships disrupted the traditional automotive sales
model. This approach provided several advantages: greater control over customer experience, transparent pricing, and direct
communication with buyers. This unique distribution strategy removed the middleman, reducing costs, and allowed Tesla to
foster a loyal customer base.
4. Autopilot and Autonomous Driving:
Tesla's focus on autonomous driving technology set it apart from other automakers. While many competitors were hesitant
to invest heavily in autonomy, Tesla embraced it early on. The introduction of the Autopilot feature demonstrated Tesla's
commitment to creating safer, more efficient transportation, aligning with the Blue Ocean Strategy's emphasis on value
innovation.
5. Supercharger Network:
Tesla's creation of the Supercharger network addressed a critical challenge for EV adoption: charging infrastructure. This
move added value to Tesla's vehicles by offering fast and convenient charging solutions. By investing in this network, Tesla
differentiated itself from other EV manufacturers and contributed to changing consumer perceptions about the practicality of
electric vehicles.
6. Energy Storage Solutions:
Tesla's foray into energy storage solutions was another unique move. By offering products like the Powerwall and
Powerpack, Tesla extended its brand beyond automotive into the energy sector. This diversified product portfolio allowed
Tesla to capture opportunities in both residential and commercial energy markets, expanding its revenue streams.
7. Vertical Integration:
Tesla's vertical integration strategy, from battery production to vehicle manufacturing, reduced dependency on external
suppliers. This approach enabled tighter control over quality, reduced costs, and accelerated innovation. By integrating
various stages of the value chain, Tesla positioned itself as an end-to-end solution provider in the EV market.
8. Autonomous Driving Revenue:
Tesla's introduction of autonomous driving features as optional add-ons created a new revenue stream. This move aligns
with Blue Ocean Strategy's principle of value innovation, as it provided customers with advanced features while generating
additional income for Tesla.
9. Social Media Engagement:
Elon Musk's use of social media, particularly Twitter, to engage directly with customers, provide updates, and share insights,
was unconventional but effective. This strategy allowed Tesla to build a strong community of brand advocates and
enthusiasts, contributing to word-of-mouth marketing and brand loyalty.
10. Risky Innovation:
Tesla's willingness to take risks and explore new technologies, such as the Tesla Bot and entering the cryptocurrency market,
reflects the company's commitment to pushing boundaries. These moves demonstrate Tesla's pursuit of innovation and align
with Blue Ocean Strategy's focus on creating new market spaces through unique and unconventional approaches.
In summary, Tesla's strategic moves align with the principles of Blue Ocean Strategy by creating new market spaces, offering
innovative products and services, and differentiating itself from traditional automakers. Through a combination of EV focus,
innovative technology, direct sales, autonomous driving, energy solutions, vertical integration, and risk-taking, Tesla has
successfully established itself as a trailblazer in the automotive and energy industries.
Porter's Five Forces Analysis for Tesla based on the provided case study:
1. Threat of New Entrants (Low to Moderate):
The threat of new entrants in the electric vehicle (EV) industry is relatively moderate. While the traditional automotive
industry has high entry barriers due to capital requirements, supply chain complexities, and brand loyalty, the EV sector has
attracted new players due to the potential for disruptive innovation. Tesla's first-mover advantage, strong brand, and
extensive charging infrastructure act as deterrents to new entrants. However, as the industry grows and technology becomes
more accessible, new players could pose a threat.
2. Bargaining Power of Suppliers (Moderate to High):
The bargaining power of suppliers in the EV industry can be moderate to high, primarily due to the concentration of key
suppliers for components like batteries and electronic systems. Tesla's dependence on suppliers for critical components, such
as battery cells, gives suppliers some leverage. However, Tesla's strategy of vertical integration, battery gigafactories, and
partnerships helps mitigate this power by reducing reliance on external suppliers.
3. Bargaining Power of Buyers (Moderate):
The bargaining power of buyers in the EV market is moderate. While customers have a range of options, Tesla's strong brand,
innovative technology, and unique features give it a competitive advantage. However, as the market becomes more saturated
and traditional automakers expand their EV offerings, buyers may gain more bargaining power.
4. Threat of Substitute Products or Services (Low to Moderate):
The threat of substitute products in the EV industry is moderate. While traditional internal combustion engine vehicles are
substitutes, the global push for sustainability and regulatory support for EV adoption has reduced the attractiveness of
traditional vehicles. Tesla's strong emphasis on performance, range, and technology differentiation makes it less susceptible
to substitution by non-electric alternatives.
5. Intensity of Competitive Rivalry (High):
The competitive rivalry in the EV market is high. Traditional automakers are rapidly entering the EV space, intensifying
competition. Additionally, companies like NIO, Rivian, and Lucid Motors are challenging Tesla's market share. Rapid
technological advancements, innovation in battery technology, and the pursuit of autonomous driving features further
heighten competition. Tesla's strong brand, unique features, and first-mover advantage give it a competitive edge, but the
industry's growth attracts aggressive competition.
In conclusion, Tesla operates in an industry with moderate to high competitive pressures, as it faces challenges from
traditional automakers, new entrants, and suppliers. However, its innovative technologies, strong brand, and strategic moves
like vertical integration, charging infrastructure, and energy solutions have positioned it as a market leader and allowed it to
maintain a competitive advantage in the evolving electric vehicle and sustainable energy markets.
The VRIO framework assesses a company's resources and capabilities to determine its competitive advantage.
1. Visionary Leadership and Innovation (Valuable, Rare, Inimitable, Organized):
Valuable: Elon Musk's visionary leadership and innovative mindset have been crucial to Tesla's success. His ability to redefine
industries, set ambitious goals, and drive technological advancements has been a key resource.
Rare: Visionary leaders like Musk are rare in the business world. His unique combination of skills, risk-taking attitude, and
focus on disruptive technologies sets him apart.
Inimitable: While others can attempt to emulate visionary leadership, replicating Musk's exact combination of qualities and
strategic vision is extremely difficult.
Organized: Musk's leadership is well-organized within Tesla, shaping the company's direction, driving innovation, and
aligning the organization.
2. Strong Brand and Customer Loyalty (Valuable, Rare, Inimitable, Organized):
Valuable: Tesla's brand is synonymous with innovation, sustainability, and high-performance electric vehicles. This strong
brand identity attracts customers and investors.
Rare: Tesla's brand has a unique position in the market, distinct from traditional automakers and other EV companies.
Inimitable: Developing a similarly strong and unique brand would be challenging for competitors due to Tesla's pioneering
role in the EV sector.
Organized: Tesla has effectively cultivated and managed its brand identity through consistent messaging, product quality, and
customer experience.
3. Battery Technology and Gigafactories (Valuable, Rare, Inimitable, Organized):
Valuable: Tesla's expertise in battery technology is crucial for EV performance and range. Its investments in gigafactories for
battery production are key resources.
Rare: Tesla's deep knowledge of battery technology and extensive gigafactory network is relatively rare within the industry.
Inimitable: Developing a comparable battery technology and gigafactory network requires substantial investments, time, and
expertise, making it difficult for competitors to replicate.
Organized: Tesla's battery research and production capabilities are well-organized, supported by partnerships and its
vertically integrated supply chain.
4. Supercharger Network and Charging Infrastructure (Valuable, Rare, Inimitable, Organized):
Valuable: Tesla's Supercharger network provides a competitive advantage by addressing EV charging challenges and
reducing range anxiety.
Rare: A comprehensive and proprietary charging network is unique to Tesla's offerings.
Inimitable: Building a similar network requires significant investment, time, and coordination, making it difficult for
competitors to replicate quickly.
Organized: Tesla has strategically expanded its Supercharger network, aligning with its vehicle sales and growth strategy.
5. Software and Autopilot Technology (Valuable, Rare, Inimitable, Organized):
Valuable: Tesla's advanced software capabilities, including Autopilot, enhance user experience and pave the way for
autonomous driving features.
Rare: Tesla's combination of software integration and vehicle hardware is relatively unique in the automotive industry.
Inimitable: Developing a similar software ecosystem that seamlessly integrates hardware and autonomous features is
complex and resource-intensive.
Organized: Tesla's software development is organized within the company's focus on enhancing vehicle capabilities and
safety.
In conclusion, Tesla possesses several resources and capabilities that are valuable, rare, inimitable, and organized, providing
the company with a sustainable competitive advantage. Elon Musk's visionary leadership, strong brand, battery technology,
charging infrastructure, and software innovations collectively contribute to Tesla's market leadership and differentiation
within the electric vehicle and sustainable energy sectors.
Value Innovation Framework as applied to Tesla:
1. Eliminate:
Traditional Dealerships: Tesla eliminated the need for traditional dealerships by adopting a direct-to-consumer sales model.
This eliminated the markup that dealerships typically add to vehicle prices, resulting in cost savings for customers.
Additionally, it streamlined the buying process, allowing customers to configure, order, and receive their vehicles online or
through Tesla stores, enhancing the overall customer experience.
2. Reduce:
Battery Cost: Tesla's reduction in battery costs played a pivotal role in making electric vehicles more affordable. The company
achieved this by developing its battery technology, optimizing manufacturing processes, and establishing massive
gigafactories for mass production. As a result, the cost of electric vehicle batteries decreased significantly, making Tesla's
offerings more accessible to a broader range of consumers.
Charging Time: Tesla addressed a key concern of electric vehicle users by significantly reducing charging time through its
Supercharger network. By developing high-speed charging stations that can add substantial range in a short period, Tesla
increased the convenience and practicality of electric vehicles. This reduction in charging time made EVs a more viable option
for long-distance travel, broadening their appeal.
3. Raise:
Performance and Range: Tesla raised the bar in electric vehicle performance and range, defying the stereotype of EVs being
less powerful and having limited range. Models like the Tesla Model S and Model 3 showcased exceptional acceleration and
top speeds, rivaling or surpassing their gasoline-powered counterparts. Additionally, Tesla's focus on battery technology
increased the range of its vehicles, addressing "range anxiety" concerns.
Autonomous Driving: Tesla differentiated itself by investing heavily in autonomous driving technology. The Autopilot feature,
which offers advanced driver-assistance capabilities, positioned Tesla as a frontrunner in the race toward fully autonomous
vehicles. This raised the value of Tesla's vehicles by providing safety enhancements and the promise of a future where cars
can drive themselves.
4. Create:
Gigafactories: Tesla's creation of gigafactories marked a significant departure from traditional manufacturing approaches.
These massive factories are dedicated to producing batteries and electric vehicles at an unprecedented scale. The economies
of scale achieved through gigafactories contributed to lower costs, making electric vehicles more affordable. Tesla's ability to
manufacture its own batteries also gave the company a competitive advantage.
Ecosystem Integration: Tesla's approach of tightly integrating hardware and software in its vehicles created a unique
ecosystem. Over-the-air software updates allowed Tesla to continuously improve vehicle performance, and safety features,
and even introduce new functionalities without requiring physical visits to service centers. This integration increased the
value of Tesla vehicles over time, as owners received enhancements without additional costs.
Overall, Tesla's execution of the Value Innovation Framework has been instrumental in its success. By challenging
conventional norms, addressing customer pain points, and introducing innovative solutions, Tesla has created a distinctive
market space that combines high-performance electric vehicles with enhanced customer experiences. This strategy aligns
with the principles of both value creation and cost reduction, resulting in a competitive advantage and a reimagined
automotive industry landscape.
how the C.A.G.E. framework applies to Tesla's case:
1. Cultural Distance:
Cultural compatibility and differences were significant considerations for Tesla's international expansion.
Cultural Compatibility: Tesla's emphasis on cutting-edge technology, innovation, and sustainability resonated well with
cultures that valued progress and environmental consciousness. For instance, countries like Norway, with a strong focus on
renewable energy and environmental protection, embraced Tesla's electric vehicles (EVs) as a symbol of sustainability.
Cultural Barriers: However, in some cultures, preferences for luxury and status symbols pose challenges. In markets where
high-end gasoline-powered vehicles were seen as status symbols, Tesla had to work on positioning its premium EVs as
equally prestigious. Moreover, the concept of EVs was relatively new in some markets, requiring Tesla to invest in
educational campaigns to overcome consumer scepticism.
2. Administrative Distance:
Administrative differences and regulatory challenges varied across countries.
Regulatory Challenges: Different countries have varying safety standards and regulations for EVs and autonomous driving
technology. Tesla needed to ensure its vehicles met these standards, which often required modifications to its technology and
features. For instance, navigating China's regulations on autonomous driving required Tesla to modify its software.
Government Incentives: Tesla strategically entered markets where government incentives favoured electric vehicles. For
example, countries like the Netherlands and Germany offered significant tax incentives and subsidies for EV buyers,
providing a favourable environment for Tesla's market entry and adoption.
3. Geographic Distance:
Geographic distance influenced Tesla's operational strategies and infrastructure development.
Distribution and Logistics: Tesla had to establish charging infrastructure, service centers, and delivery networks across vast
geographical areas. In densely populated regions like Europe, the challenge was to ensure a sufficient number of charging
stations and service centres for convenient access.
Time Zone Challenges: Operating in multiple time zones affected various aspects, including customer support and software
updates. Coordinating activities across regions while ensuring timely responses and updates required efficient management
and operational processes.
4. Economic Distance:
Economic differences played a role in pricing, value proposition, and market positioning.
Affordability: Tesla's premium pricing was accessible in markets with higher income levels and purchasing power. In markets
where incomes were lower, the high upfront cost of Tesla vehicles posed a barrier. This prompted Tesla to explore options
like introducing lower-cost models to cater to a broader consumer base.
Value Proposition: Tesla had to adjust its value proposition based on economic contexts. For instance, in countries with high
fuel prices, Tesla emphasized the long-term cost savings due to the lower operational and maintenance costs of EVs. This was
a crucial selling point in markets where consumers were more cost-conscious.
Overall Analysis:
The C.A.G.E. framework emphasizes that Tesla's international expansion was not a one-size-fits-all approach. The company
had to consider the cultural, administrative, geographic, and economic dimensions of each market it entered. By doing so,
Tesla could tailor its products, marketing strategies, and operational approaches to address the unique challenges and
opportunities presented by each dimension. The framework highlights the complexity of global expansion and underscores
the importance of adaptability and strategic alignment with local contexts.
The OLI Framework, also known as the Eclectic Paradigm, was developed by John Dunning to explain why firms engage in
foreign direct investment (FDI) and how they can achieve competitive advantages in international markets. Let's apply the
OLI Framework to Tesla's case:
Ownership Advantage (O):
Tesla possesses several ownership advantages that contributed to its international expansion:
Technological Innovation: Tesla's cutting-edge electric vehicle technology, battery innovations, and autonomous driving
capabilities gave it a significant ownership advantage. These technological differentiators attracted global attention and
allowed Tesla to enter foreign markets with a strong competitive edge.
Strong Brand Image: Tesla's brand image was associated with innovation, sustainability, and luxury. This brand advantage
enabled Tesla to attract a loyal customer base in various international markets, allowing it to command premium pricing and
build a strong market presence.
Location Advantage (L):
Tesla's choice of location for production and distribution played a crucial role in its international strategy:
Global Gigafactories: Tesla strategically established gigafactories in different regions, including China, Germany, and the
United States. These locations allowed Tesla to reduce production costs, improve supply chain efficiency, and comply with
local regulations. The choice of factory locations also aligned with the growing demand for EVs in those markets.
Proximity to Markets: Locating gigafactories closer to key markets reduced shipping costs and delivery times. For example,
Tesla's factory in China enabled it to tap into the world's largest EV market while benefiting from cost-efficient production.
Internalization Advantage (I):
Tesla's internalization strategy involved directly owning and controlling its manufacturing, distribution, and service
operations:
Direct Sales and Service: Tesla's direct-to-consumer sales model allowed it to maintain control over the customer experience,
pricing, and branding. This internalization strategy facilitated efficient communication with customers, streamlined
operations, and faster response times.
Charging Infrastructure: Tesla's Supercharger network provided a unique advantage in terms of customer convenience and
accessibility. By internalizing the development and expansion of this charging infrastructure, Tesla differentiated itself from
competitors and promoted the adoption of its vehicles.
Overall Analysis:
The OLI Framework offers insights into why Tesla pursued international expansion through foreign direct investment and
how it achieved competitive advantages in foreign markets. Tesla's ownership advantages, such as technological innovation
and brand image, gave it a strong foundation for global expansion. The company strategically chose factory locations and
established a direct sales model to capitalize on location advantages and internalization benefits. By leveraging these OLI
factors, Tesla successfully navigated the complexities of international markets and established itself as a leader in the electric
vehicle industry.
how the CAGE Distance Framework applies to Tesla's case:

Cultural Distance:
Cultural differences play a significant role in Tesla's international operations:
Language and Communication: Tesla operates in diverse markets with different languages and cultural nuances. Effective
communication is crucial for marketing, customer support, and user interfaces. The company has to translate materials, adapt
advertising campaigns, and ensure clear communication with customers from various backgrounds.
Consumer Preferences: Different cultures have distinct preferences when it comes to vehicle design, features, and driving
experiences. Tesla has to customize its offerings to meet these preferences. For example, while the Model S and Model 3 are
popular globally, specific design elements and features may vary based on cultural preferences.
Administrative and Political Distance:
Varying government regulations and policies create administrative and political challenges for Tesla:
Regulatory Compliance: Different countries have different regulations for vehicle safety, emissions, and manufacturing
standards. Tesla must ensure its vehicles meet these standards to be legally sold in each market. Navigating through varying
compliance requirements adds complexity to its operations.
Government Incentives: Political support and incentives for electric vehicles differ across countries. Tesla's decision to
establish a Gigafactory in China was influenced by the Chinese government's push for EV adoption and willingness to offer
incentives. These factors impact Tesla's investment decisions and market entry strategies.
Geographic Distance:
Physical distance affects Tesla's supply chain and distribution strategies:
Supply Chain Challenges: Tesla's supply chain has to account for transportation across long distances, customs procedures,
and potential disruptions. The choice of suppliers and production locations is influenced by the need to minimize costs and
lead times while managing logistical challenges.
Distribution Network: Geographic distance impacts the location of Tesla's showrooms, service centers, and Supercharger
stations. The company must strategically position these facilities to ensure efficient vehicle delivery, maintenance, and
charging infrastructure availability.
Economic Distance:
Economic disparities between countries impact Tesla's pricing and market potential:
Price Localization: Economic differences affect pricing strategies. Tesla has to adjust its prices to match local purchasing
power and account for currency fluctuations. The Model 3's price in different countries is an example of adapting pricing to
economic conditions.
Market Potential: Tesla evaluates the economic potential of markets based on factors like GDP per capita, disposable income,
and willingness to adopt electric vehicles. The decision to enter markets like China and Europe was influenced by the
potential for premium electric vehicles in regions with a strong economy.
Overall Analysis:
The CAGE Distance Framework underscores how cultural, administrative, political, geographic, and economic factors
influence Tesla's international business decisions. To succeed globally, Tesla must address these challenges:
Localization and Adaptation: Tesla must tailor its offerings, marketing, and communication to fit cultural preferences and
local regulations.
Regulatory Expertise: The company needs to navigate various regulatory landscapes, ensuring compliance with safety,
environmental, and manufacturing standards.
Supply Chain Optimization: Efficient supply chain management is critical to mitigate challenges posed by geographic distance
and logistical complexities.
Pricing Strategy: Tesla's pricing must reflect economic conditions to remain competitive and capture the target market's
purchasing power.
Market Selection: Economic potential and market readiness influence Tesla's choice of countries for expansion.
By considering these distance factors, Tesla can make informed decisions, mitigate risks, and capitalize on opportunities in its
global expansion efforts.
What were the key challenges faced by the company in the given scenario?
In the given scenario, Tesla faced several key challenges as it pursued its ambitious goals and strategies:
Battery Cost and Technology: Tesla aimed to make electric vehicles (EVs) more affordable and accessible, but the high cost of
lithium-ion batteries was a significant barrier. The company needed to reduce battery costs to achieve price parity with
traditional internal combustion engine vehicles while ensuring advancements in battery technology to improve performance
and range.
Production Scale and Capacity: Tesla's rapid expansion plans, including new gigafactories, required massive production scale
and capacity. Ensuring the efficient operation of these facilities while maintaining product quality and supply chain stability
posed a challenge.
Global Expansion and Market Penetration: Tesla's global expansion, particularly in markets with different regulations,
cultural preferences, and economic conditions, presented challenges. The need to adapt to local market conditions, navigate
diverse regulatory environments, and establish efficient distribution networks was crucial for success.
Autonomous Driving and Safety: Tesla's push for autonomous driving technology, while innovative, faced challenges related
to regulatory approvals, safety concerns, and public perception. Balancing the development of advanced driver-assistance
systems with ensuring safety and regulatory compliance was a complex task.
Quality Control and Reliability: As Tesla scaled up production, maintaining consistent product quality and reliability became a
challenge. Ensuring that vehicles met high standards and addressing issues related to initial quality and customer satisfaction
was vital.
Supercharger Network Expansion: Expanding the Supercharger network to support long-distance travel for electric vehicles
required managing installation, accessibility, and compatibility with various charging standards, especially in regions with
different infrastructure development levels.
Service and Support: As Tesla's vehicle fleet grew, ensuring efficient and effective customer service and support became
challenging. The company needed to address complaints about service quality, wait times, and availability of spare parts.
Financial Sustainability: Tesla's aggressive expansion plans required substantial capital investment. Balancing the need for
continuous innovation, production growth, and profitability while managing cash flow and investor expectations was a
delicate balance.
Competition and Market Dynamics: Traditional automakers and new entrants in the electric vehicle market posed
competitive challenges. Tesla needed to differentiate its offerings, maintain a technological edge, and defend its market share
against increasing competition.
Public Perception and Reputation: CEO Elon Musk's public statements and behavior sometimes generated controversy and
impacted Tesla's public image. Balancing Musk's unconventional approach with maintaining a positive reputation was a
challenge.
Environmental Impact and Sustainability: As a leader in the electric vehicle industry, Tesla faced scrutiny regarding its
environmental impact, particularly related to energy sources for manufacturing, charging infrastructure, and supply chain
sustainability.
Regulatory and Policy Changes: Changes in regulations, incentives, and policies related to electric vehicles, energy storage,
and autonomous driving in different markets had implications for Tesla's strategic planning and operations.
In navigating these challenges, Tesla needed to demonstrate adaptability, resilience, innovation, and a clear understanding of
the complex interplay between technology, markets, regulations, and public perception.
How did the company's strategic decisions impact its performance and market position?
Tesla's strategic decisions had a profound impact on its performance and market position, contributing to its rise as a
dominant player in the electric vehicle and renewable energy industries. Here's how these decisions influenced its outcomes:
Innovative Electric Vehicles: Tesla's focus on designing and producing high-performance electric vehicles differentiated it
from traditional automakers. Its early adoption of lithium-ion battery technology and electric powertrains allowed it to offer
vehicles with impressive acceleration, longer ranges, and lower operating costs. This strategy established Tesla as a pioneer
in EVs and attracted a dedicated customer base.
Direct-to-Consumer Sales Model: Tesla's decision to sell vehicles directly to consumers disrupted the traditional dealership
model. This approach provided greater control over customer experience and pricing, allowing the company to convey its
value proposition directly to buyers. It also facilitated the collection of valuable customer data for product improvement and
marketing.
Gigafactories and Vertical Integration: The construction of massive gigafactories enabled Tesla to control its supply chain and
production process, reducing reliance on third-party suppliers. This vertical integration gave the company greater flexibility
in scaling production, optimizing costs, and ensuring consistent quality.
Autonomous Driving Technology: Tesla's emphasis on autonomous driving technology aimed to revolutionize transportation.
While the rollout of advanced driver-assistance features garnered attention, it also faced criticism due to safety concerns and
regulatory challenges. Nevertheless, Tesla's strategy to be a leader in self-driving technology positioned it at the forefront of a
transformative trend in the automotive industry.
Energy Storage and Solar Integration: Tesla's foray into energy storage solutions and solar power aligned with its vision of a
sustainable future. This diversification expanded its business beyond vehicles and enabled cross-selling opportunities.
However, challenges in scaling production, installation delays, and pricing adjustments impacted its growth trajectory in
these areas.
Innovative Business Models: Tesla's introduction of the Model 3, a more affordable EV, aimed to broaden its customer base.
The introduction of subscription-based software updates and Full Self-Driving packages provided additional revenue streams
and monetization opportunities beyond vehicle sales.
Global Expansion: Tesla's expansion into international markets allowed it to tap into new customer bases and diversify its
revenue streams. However, it also brought challenges related to varying regulations, consumer preferences, and
infrastructure development levels.
Unconventional Leadership: CEO Elon Musk's unconventional approach and public statements both garnered attention and
posed risks to the company's reputation. While his bold vision and ability to drive innovation were assets, his actions
occasionally led to legal and public relations challenges.
Charging Infrastructure: Tesla's investment in the Supercharger network addressed a critical concern for EV adoption—
charging infrastructure. This strategic move made Tesla vehicles more appealing to consumers for long-distance travel and
positioned the company as a leader in charging technology.
Financial Sustainability: Tesla's ability to raise capital and manage its finances impacted its ability to fund growth and
innovation. Successful capital raises allowed the company to invest in new facilities, technologies, and product development.
Overall, Tesla's strategic decisions allowed it to disrupt traditional industries, establish a strong brand identity, and attract a
passionate customer base. While facing challenges and controversies along the way, the company's bold and innovative
strategies ultimately propelled it to become a leading force in electric vehicles, renewable energy, and technological
innovation.
What external factors contributed to the success or challenges faced by the company?
Success Factors:
Growing Environmental Awareness: Increasing concerns about climate change and environmental sustainability created a
favorable environment for Tesla's electric vehicles and renewable energy solutions. Consumer demand for greener
alternatives boosted Tesla's appeal and positioned it as a leader in the industry.
Government Incentives and Regulations: Supportive government policies, such as tax incentives for electric vehicle purchases
and stricter emissions regulations, incentivized consumers and automakers to transition to electric vehicles. These policies
provided a tailwind for Tesla's growth and expansion.
Advancements in Battery Technology: Technological advancements in battery technology, particularly in energy density and
cost reduction, enabled Tesla to offer vehicles with longer ranges and more competitive prices. This technological progress
aligned with Tesla's strategy and contributed to the viability of electric vehicles.
Investor Confidence and Capital Inflows: Strong investor confidence in Elon Musk's vision and Tesla's potential led to
significant capital inflows. Tesla's ability to raise funds through stock offerings and other financial instruments supported its
expansion, research, and development efforts.
Media and Public Attention: Tesla's innovative products, ambitious goals, and Elon Musk's charismatic personality attracted
extensive media coverage. This heightened visibility helped generate interest in Tesla's offerings and fostered a community of
loyal supporters.
Challenges Faced:
Infrastructure Limitations: The availability of charging infrastructure significantly impacted electric vehicle adoption. While
Tesla invested in its Supercharger network, charging infrastructure gaps, especially in certain regions, remained a challenge
for potential customers.
Competitive Landscape: Established automakers entered the electric vehicle market, intensifying competition. Tesla faced
competition from companies with existing manufacturing capabilities, supply chains, and brand recognition.
Regulatory Uncertainty: Evolving regulations related to autonomous driving and electric vehicles posed challenges for Tesla's
innovative technologies. Navigating regulatory hurdles and safety concerns slowed the rollout of autonomous features.
Battery Supply Chain Dependencies: As demand for electric vehicles grew, securing a stable supply of batteries became
crucial. Dependencies on specific battery materials and suppliers exposed Tesla to potential disruptions in the supply chain.
Safety and Regulatory Scrutiny: Tesla's Autopilot and Full Self-Driving features attracted regulatory scrutiny and concerns
about safety. Accidents involving Tesla vehicles using these features raised questions about their reliability and readiness for
public use.
Global Economic Conditions: Economic downturns or uncertainty in key markets could impact consumer spending on
premium products like electric vehicles. Tesla's growth trajectory was influenced by economic conditions in different regions.
Geopolitical Factors: Geopolitical tensions and trade policies could affect Tesla's global supply chain and sales. Political
relationships between countries could impact Tesla's expansion plans and access to critical markets.
Public Perception and Reputation: Elon Musk's public statements and behavior occasionally led to controversy and impacted
Tesla's reputation. Public perception of Musk and the company could influence consumer sentiment and investor confidence.
In summary, external factors such as regulatory support, technological advancements, and changing consumer preferences
contributed to Tesla's success, while challenges related to infrastructure, competition, regulations, and public perception
posed hurdles along the way. Tesla's ability to navigate these external factors and adapt its strategies played a pivotal role in
determining its trajectory in the electric vehicle and renewable energy industries.
What lessons can be learned from the company's experiences for future decision-making and strategic planning?
Bold Vision and Innovation: Tesla's success underscores the importance of having a clear and ambitious vision for the future.
Organizations should not shy away from pursuing audacious goals and pushing the boundaries of innovation.
Adaptability and Agility: The ability to pivot and adapt to changing market dynamics is crucial. Companies should stay agile in
responding to technological advancements, regulatory changes, and shifting consumer preferences.
Focus on Core Competencies: Tesla's focus on electric vehicles and renewable energy solutions aligned with its core
competencies. Businesses should concentrate their efforts on areas where they have expertise, rather than diversifying too
widely.
Long-Term Perspective: Tesla's long-term perspective allowed it to weather challenges and setbacks. Companies should
prioritize sustainable growth over short-term gains and be prepared for the journey to success to take time.
Customer-Centric Approach: Tesla's emphasis on customer experience and delivering value resonated with consumers.
Prioritizing customer needs and preferences can foster loyalty and drive growth.
Innovation in Business Models: Tesla's unique business models, such as direct sales and over-the-air software updates,
disrupted traditional norms. Companies should explore innovative business models that differentiate them from competitors.
Rapid Iteration and Learning: Tesla's willingness to iterate and learn from failures was evident. Embracing a culture of
experimentation and learning from mistakes can drive continuous improvement.
Diverse Revenue Streams: Tesla's approach of diversifying its revenue streams through energy solutions and software
services reduced its reliance on vehicle sales alone. Organizations should explore complementary offerings to enhance
stability.
Strong Leadership and Talent: Elon Musk's leadership style, though unconventional, played a pivotal role. Cultivating strong
leadership and attracting top talent are critical for executing visionary strategies.
Ecosystem Thinking: Tesla's approach to integrating energy storage, charging infrastructure, and vehicles showcased
ecosystem thinking. Businesses should consider how their products and services fit into a broader ecosystem for greater
impact.
Global Market Understanding: Tesla's global expansion required an understanding of diverse markets and regulatory
environments. Companies should invest in market research and adapt strategies to local nuances.
Transparency and Communication: Tesla's communication with customers, investors, and the public, while sometimes
controversial, highlighted the importance of transparency. Open communication builds trust and credibility.
Balancing Risk and Innovation: Tesla took calculated risks in pursuing innovative technologies, but also faced criticism and
legal challenges. Companies should carefully evaluate risks while fostering innovation.
Supply Chain Resilience: Tesla's supply chain vulnerabilities underscore the need for robust supplier relationships and
diversification to mitigate disruptions.
Ethical Considerations: Tesla's influence on environmental and social aspects calls for ethical considerations. Companies
should align their strategies with values that positively impact society.
Incorporating these lessons into future decision-making can help organizations navigate challenges, seize opportunities, and
build a foundation for sustainable growth and innovation.
Intellectual Property: In 2014, Musk pronounced that Tesla would “not initiate patent lawsuits against
anyone who, in good faith, wants to use our technology… Technology leadership is not defined by
patents…but rather by the ability of a company to attract and motivate the world’s most talented
engineers,” he said.229 He elaborated several months later: “You’ve got to incorporate [IP] into the
design...you’ve got to tool things up, and then you have to go to production. Probably the first time you see
companies—anyone using our IP, it would be about three years after we announced.”230
Despite Musk’s pledge to be open, Tesla voraciously defended its trade secrets. It required
employees to sign an “Employee Nondisclosure and Inventions Assignment Agreement,” which
barred them from sharing “technical data, trade secrets, know-how, plans, designs…methods,
processes, data, programs, lists of or information relating to, employees, suppliers, financial
information and other business information.”231 It used this agreement to sue competitors, like when
it accused EV startup Rivian of recruiting former Tesla employees and pressuring them to share trade
secrets.232
Tesla Bot: At the very end of a fairly dry talk on AI in 2021, Musk announced the Tesla Bot, a
general-purpose humanoid robot that would eventually replace human labor. 233 Some walked away
from the presentation believing it was a weird joke, 234 but Musk promised that Tesla would release a
prototype in 2022. He noted: “The car is kind of a robot on four wheels, so we could probably put that
same technology and put it in a humanoid robot and have that robot be useful...I don’t know exactly
when we will get this right, but we will.”235 Some robotics experts believed that Tesla might deliver a
functioning prototype within a few years, but that it was unlikely to perform useful tasks.236
Cryptocurrency: In February 2021, Musk announced that it had purchased $1.5 billion of bitcoin
in order to “maximize returns on our cash.”237 He also said that Tesla would soon accept bitcoin as a
form of payment, which boosted the combined market value of bitcoin and Tesla by $100 billion on the
same day.238 At that time, Tesla’s was the second-largest holding of the digital currency of any publicly-
traded company, behind only MicroStrategy.239 Musk had endorsed cryptocurrencies for years: when
he tweeted, “No highs, no lows, only Doge” in February 2021, the price of Dogecoin, a cryptocurrency
initially created as a joke, soared 80%.240 After Musk announced in December 2021 that Tesla would
accept Dogecoin for some purchases, the currency’s price rose again, by 19%.241 He said that his
support of Dogecoin was based on what he had heard from employees. 242 As promised, Tesla began
accepting Dogecoin for certain merchandise in January 2022.243 (Tesla stopped accepting bitcoin
because of the energy requirements for bitcoin “mining.”244) A few weeks later, in its 10-K filing for
2021, it reported a $101 million impairment loss due to its investment in bitcoin.245
such as when he hosted Saturday Night Live (SNL) in 2021 and revealed in his opening monologue: “I
don’t always have a lot of intonation or variation in how I speak… which I’m told makes for great
comedy. I’m actually making history tonight as the first person with Asperger’s to host SNL.”249
14
While Musk could be inspiring, his management style often caused problems. Musk had a well-
deserved reputation for over-promising and under-delivering. He rarely met publicly announced
deadlines, and in Tesla’s case, the final price of new models were almost always higher than he
originally promised. Musk could also be authoritarian: when he announced that Tesla would move its
headquarters to Austin, Texas, he had not informed most of his team.250 And during “production hell,”
Musk’s erratic behavior led senior executives to leave in droves.251 One former high-ranking executive
said, “People used to tell me to hunch down lower in my seat during meetings. Elon reacted better to
people when he was sitting higher than them.” 252 In 2019, annualized turnover for executives reporting
directly to Musk was 44%, which was four times higher than similarly-sized tech firms.253 Nonetheless,
he attracted top talent, who wanted to work for a visionary CEO.254
Musk’s tweeting and public exhibitions were occasionally outrageous, skirting the bounds of
legality. For example, in August 2018, he tweeted “funding secured” to take Tesla private at $420 per
share. (The number was a popular coded reference to smoking marijuana. He picked it because he
thought his then-girlfriend would find it funny.255) Shortly after, the Securities and Exchange
Commission (SEC) charged Musk with securities fraud, alleging he had not, in fact, secured the funding
to take Tesla private at that price. The SEC also charged Tesla with “failing to have required disclosure
controls and procedures relating to Musk’s tweets.” 256 Musk and Tesla settled: each would pay a $20
million fine, Tesla had to appoint two new directors to the board, Tesla’s in-house counsel was required
to review Musk’s tweets before he posted them, and Musk had to step down as chairman of Tesla until
at least September 2021. 257 When Musk continued to tweet without legal review, the SEC launched a
new investigation in early 2022. 258 Except for China, where he treaded lightly, he enjoyed attacking
government authorities on Twitter, calling the NHTSA the “fun police” for banning drivers playing
games when using autopilot, and California politicians as “fascists” for their Covid policies.259
Conclusion
In 2002, Elon Musk embarked on a mission to save humanity. Along the way, he became the richest
person in human history. When Time announced Musk as their Person of the Year, it described him as
a “clown, genius, edgelord, visionary, industrialist, showman, cad; a madcap hybrid of Thomas Edison,
P.T. Barnum, Andrew Carnegie and Watchmen’s Doctor Manhattan.”260 Indeed, by 2022, Musk had
already changed the world: he convinced a skeptical public and even more skeptical industry that EVs
were the future, and he had re-awakened a global desire to return to outer space. Musk had made big
bets that few others would be willing to make. But in the process, he also imported the Mark
Zuckerberg mindset of “move fast and break things.” He pushed the limits on almost every strategic
move, breaking industry norms, safety protocols, and occasionally the law.
Following a banner year, early 2022 was a time for Musk to reflect on his past and his future. After
putting virtually all of his fortune at risk by staying fully invested in Tesla and SpaceX, he cashed out
$12 billion in stock in 2021, while retaining a 21.2% share in Tesla.261 But rather than slow down, he set
out to purchase his favorite social media platform, putting his personal fortune and Tesla at risk. It was
still possible to pull out (for $ 1 billion). Might it be better to slow down and focus on key projects like
improving quality and safety at Tesla or executing Starship at SpaceX? Or should he continue to push
the envelope, and if so, in what directions?
15
Exhibit 1 Musk’s “Empire” as of Early 2022
Source: Created by casewriter using data from Capital IQ and Crunchbase.
Exhibit 2 SpaceX Revenue and Operating Income (Estimates and Projections, 2019-2040)
Source: Created by casewriter using data from: Adam Jonas et al., “SpaceX Escape Velocity...Who Can Catch Them?,” Morgan
Stanley analyst report, October 18, 2021, pp. 10-11.
Note: 2019-2020 data are estimates. 2021-2040 data are projections. Projections for SpaceX’s launch business assume a launch
cadence of 365/year, revenue/launch of $67 million, and an operating margin of 20%. Projections for Starlink assume
$21 of monthly revenue per subscriber and $100/terminal cost by 2040.
16
Exhibit 3 Objects Launched into Orbit (2000-2021)
Source: Created by casewriter using data from: Jonathan’s Space Report, https://www.planet4589.org/, accessed March 2022.
Exhibit 4 Tesla Financial Info (2017-2021)
($ millions) 2015 2016 2017 2018 2019 2020 2021

Revenues:
Automotive: 3,432 5,589 8,535 17,632 19,358 24,604 44,125
Regulatory credits: - - - - 594 1,580 1,465
Leasing: 309 762 1,107 883 869 1,052 1,642
Solar and energy storage: 14 181 1,116 1,555 1,531 1,994 2,789
Services and other: 291 468 1,001 1,391 2,226 2,306 3,802
Total Revenue: 4,046 7,000 11,759 21,461 24,578 31,536 53,823
Cost of Goods Sold 3,123 5,401 9,536 17,419 20,509 24,906 40,217
R&D 718 834 1,378 1,460 1,343 1,491 2,593
SG&A 922 1,390 2,477 2,835 2,646 3,188 4,517
Operating income (loss) -717 -667 (1,632) (253) 80 1,951 6,523
Net income (loss) -889 -773 (1,962) (976) (862) 721 5,519
EBITDA -294 320 4 1,635 2,172 4,273 9,333
Cash and ST investments 1,197 3,393 3,368 3,686 6,268 19,384 17,707
Total assets 8,068 22,664 28,655 29,740 34,309 52,148 62,131
Total debt 2,898 8,588 12,131 13,828 14,576 13,337 8,904
Net debt -1,701 5,195 8,763 10,142 8,308 (6,047) (8,803)
Total liabilities 6,984 16,750 23,023 23,427 26,199 28,469 30,548
Total shareholders’ equity 1,084 4,753 5,632 6,313 8,110 23,679 31,583
Total debt/equity 267.4% 145.4% 215.4% 219.0% 179.7% 56.3% 28.2%
Gross margin 22.8% 22.8% 18.9% 18.8% 16.6% 21.0% 25.3%
R&D/total revenues 17.7% 11.9% 11.7% 6.8% 5.5% 4.7% 4.8%
Return on equity -89.1% -22.1% -38.8% -17.8% -10.7% 5.4% 20.4%
Market value (at filing) 23,638 40,222 59,469 52,791 145,799 828,757 937,743
Source: Created by casewriter using data from Capital IQ and Tesla Form 10-K filings, 2015-2021.
17
Exhibit 5 Tesla Selected Cash Flow (2017-2021)
2015 2016 2017 2018 2019 2020 2021

Net cash flow from operating activities (525) (124) (61) 2,098 2,405 5,943 11,497
Net cash flow from investing activities (1,674) (1,081) (4,196) (2,337) (1,436) (3,132) (7,868)
Net cash flow from financing activities 1,524 3,744 4,415 574 1,529 9,973 5,203
Net increase in cash (709) 2,533 198 312 2,506 13,118 (1,757)
Cash at beginning of period 1,906 1,197 3,393 3,368 3,686 6,268 19,384
Cash at end of period 1,197 3,393 3,368 3,686 6,268 19,384 17,707
Source: Created by casewriter using data from Capital IQ.
Exhibit 6 Tesla Capital Raises (2010-2021)
Source: Created by casewriter using data from: Dana Hull, “Tesla Raising Up to $5 Billion in Third Share Sale This Year,”
Bloomberg, December 8, 2020.
18
Exhibit 7 Tesla Stock Performance (2017-2021)
Source: Created by casewriter using data from Capital IQ
Note: The MSCI World Automobile Index is composed of the top 22 automaker stocks.
Exhibit 8 EV Sales as a Percentage of Total Vehicle Sales (2015-2040)
Source: Created by casewriter using data from BloombergNEF.
19
Exhibit 9 Average Lithium-ion Battery Price per Kilowatt-Hour (2013-2030)
Source: Created by casewriter using data from BloombergNEF.
Exhibit 10 Lithium-ion EV Battery Pack Market Shares 2021
Source: Created by casewriter using data from: Scooter Doll, “CATL continues reign as the world’s largest EV manufacturer
for a fifth straight year,” Electrek, February 8, 2022.
Note: BYD Company was a Chinese manufacturer of batteries and EVs. SK was a South Korean petroleum producer and
battery manufacturer
20
Exhibit 11 R&D and Advertising Spend Comparison (2010-2021)
2010 2015 2019 2020 2021

R&D ($ millions) 93 718 1,343 1,491 2,593
Advertising ($ millions) 3 58 0 0 0
Tesla Deliveries 1,500 50,580 367,500 499,550 936,172
R&D per delivery $62,000.00 $14,195.33 $3,654.42 $2,984.69 $2,769.79
Advertising per delivery $2,000.00 $1,146.70 $0.00 $0.00 $0.00
————— ————————————
R&D ($ millions) 5,000 6,700 7,400 7,100 7,600
Advertising ($ millions) 4,100 4,300 3,600 2,800 3,100
Ford Deliveries 5,695,000 6,635,000 5,386,000 4,187,000 3,942,000
R&D per delivery $877.96 $1,009.80 $1,373.93 $1,695.72 $1,927.96
Advertising per delivery $719.93 $648.08 $668.40 $668.74 $786.40
————— ————————————
R&D ($ millions) 6,962 7,500 6,800 6,200 7,900
Advertising ($ millions) 5,100 5,100 3,700 2,700 3,300
General
Deliveries 2,348,391 5,876,000 4,209,000 3,370,000 2,859,000
Motors
R&D per delivery $2,964.58 $1,276.38 $1,615.59 $1,839.76 $2,763.20
Advertising per delivery $2,171.70 $867.94 $879.07 $801.19 $1,154.25
Source: Created by casewriter using data from Capital IQ.
21
Endnotes
1 See: https://www.nasdaq.com/market-activity/stocks/tsla/price-earnings-peg-ratios, accessed February 20, 2022; and:

https://companiesmarketcap.com/tesla/marketcap/, accessed February 20, 2022.
2 Kate Duffy, “SpaceX raised a total of $1.5 billion this year, following $337 million of fundraising in December,” December 30,
2021, available at: https://bit.ly/3Lquiqj.
3 Al Root, “How SpaceX and Tesla Could Make Elon Musk a Trillionaire,” Barron’s, October 20, 2021, available at:
https://www.barrons.com/articles/elon-musk-net-worth-trillionaire-51634679420?tesla=y.
4 “Time 2021 Person of the Year: Elon Musk,” Time, December 13, 2021, available at: https://bit.ly/3a9QVT6.
5 Former PayPal COO David Sacks, quote in: Josh Friedman, “Entrepreneur Tries His Midas Touch in Space,” Los Angeles
Times, April 22, 2003.
6 Minyvonne Burke, “Tesla driver charged with manslaughter in deadly Autopilot crash raises new legal questions about
automated driving tech,” NBC, January 21, 2022, available at: https://www.nbcnews.com/news/us-news/tesla-driver-
charged-manslaughter-deadly-autopilot-crash-raises-new-le-rcna12987; Keith Barry, “Federal Government Opens Safety
Defect Investigation Into Tesla Autopilot Crashes,” Consumer Reports, September 1, 2021, available at:
https://www.consumerreports.org/autonomous-driving/nhtsa-safety-defect-investigation-tesla-autopilot-crashes-
a6996819019/#:~:text=The%20government’s%20top%20auto%20safety,17%20injuries%20and%20one%20death.
7 Sean O’Kane, “Tesla Falls in Consumer Reports Ranking After Design Changes,” Bloomberg, February 17, 2022, available at:
https://www.bloomberg.com/news/articles/2022-02-17/tesla-tumbles-in-consumer-reports-ranking-after-design-changes.
8 Neal Freyman, “Elon Musk ramps up attacks on US regulators,” Morning Brew, February 17, 2022, available at:
https://www.morningbrew.com/daily/stories/2022/02/17/elon-musk-ramps-up-attacks-on-us-regulators.
9 Ashlee Vance, “Elon Musk’s Wild Ride,” Bloomberg, October 12, 2016, https://www.bloomberg.com/features/2016-elon-
musk-companies/?cmpid=BBD101216_BIZ, accessed October 13, 2016.
10 Ashlee Vance, (2015). Elon Musk: How the Billionaire CEO of SpaceX and Tesla is Shaping Our Future. HarperCollins
Publishers, p. 89,
11 Daniel Terdiman, “Elon Musk at SXSW: ‘I’d like to die on Mars, just not on impact’,” CNET, March 9, 2013, available at:
https://www.cnet.com/news/elon-musk-at-sxsw-id-like-to-die-on-mars-just-not-on-impact/.
12 See Jim Cantrell’s answer to this Quora question: https://www.quora.com/Is-it-true-that-Elon-Musk-was-spat-on-by-one-
of-the-Russian-chief-rocket-designers.
13 Eric Berger, Liftoff (William Morrow, 2021), p. 20.
14 Ashlee Vance, “Elon Musk’s Space Dream Almost Killed Tesla,” May 14, 2015, Bloomberg, available at: https://www.
bloomberg.com/graphics/2015-elon-musk-spacex/. (“At a time when the cost of sending a 550-pound payload into orbit
started at $30 million, Musk promised that the Falcon 1 would be able to carry a 1,400-pound payload for $6.9 million.”)
15 Tariq Malik, “SpaceX Successfully Launches Falcon 1 Rocket Into Orbit,” Space, September 28, 2008, available at:
https://www.space.com/5905-spacex-successfully-launches-falcon-1-rocket-orbit.html.
16 Aaron Rowe, “SpaceX Successfully Delivers Satellite into Orbit,” Wired July 14, 2009,
https://www.wired.com/2009/07/spacexlaunch/, accessed September 16, 2016.
17 Denise Chow, “First Commercial Spaceship to Launch to Space Station April 30,” Space, March 15, 2012, available at:
https://www.space.com/14923-spacex-dragon-launch-space-station.html.
18 Denise Chow, “First Commercial Spaceship to Launch to Space Station April 30,” Space, March 15, 2012, available at:
https://www.space.com/14923-spacex-dragon-launch-space-station.html.
19 Darell Etherington, “SpaceX Makes History with Successful First Human Space Launch,” TechCrunch, May 30, 2020,
available at: https://techcrunch.com/2020/05/30/spacex-makes-history-with-successful-first-human-space-launch/.
20 Julio-cesar Chaves and Steve Gorman, “First all-civilian crew launched to orbit aboard SpaceX rocket ship,” Reuters,
September 16, 2021, available at: https://www.reuters.com/lifestyle/science/spacex-set-make-history-with-first-all-civilian-
crew-launched-into-orbit-2021-09-15/.
22
185 Fred Lambert, “Tesla announces plans to triple the size of Supercharger network within 2 years,” Electrek, October 21, 2021,
available at: https://electrek.co/2021/10/21/tesla-plans-triple-supercharger-network/.
186 Andrew J. Hawkins, “Tesla is letting non-Tesla EVs use its Supercharger network for the first time,” The Verge, November
1, 2021, available at: https://www.theverge.com/2021/11/1/22757159/tesla-supercharge-ev-pilot-netherlands.
187 White House press release, “FACT SHEET: The Biden-Harris Electric Vehicle Charging Action Plan,” available at:
https://bit.ly/3xQMdlb.
188 Todd Haselton and Lora Kolodny, “Tesla starts selling its own car insurance in California,” CNBC, August 28, 2019,
available at: https://www.cnbc.com/2019/08/28/tesla-starts-selling-its-own-car-insurance-in-california.html; “Event Brief of
Q4 2021 Tesla Inc Earnings Call – Final,” VIQ FD Disclosure, January 26, 2022, via Factiva.
189 Todd Haselton and Lora Kolodny, “Tesla starts selling its own car insurance in California,” CNBC, August 28, 2019,
available at: https://www.cnbc.com/2019/08/28/tesla-starts-selling-its-own-car-insurance-in-california.html.
190 “Q2 2020 Tesla Inc Earnings Call – Final,” CQ FD Disclosure, July 22, 2020, via Factiva.
191 Elon Musk, “All Our Patent Are Belong To You,” Tesla blog post, June 12, 2014, available at:
https://www.tesla.com/blog/all-our-patent-are-belong-you.
192 “Q4 2014 Tesla Motors Inc Earnings Call – Final,” CQ FD Disclosure, February 11, 2015, via Factiva.
193 Samantha Strimling, “Tesla v. Rivian: Electric Competition Over Trade Secrets,” Jolt Digest, October 25, 2021, available at:
http://jolt.law.harvard.edu/digest/tesla-v-rivian-electric-competition-over-trade-secrets.
194 Bibhu Pattnaik, “Elon Musk’s Tesla Accuses Rivian of Poaching Employees, Stealing Battery Secrets,”
https://www.msn.com/en-us/money/news/elon-musks-tesla-accuses-rivian-of-poaching-employees-stealing-battery-
secrets/ar-AAP6gWE?ocid=a2hs, accessed June 23, 2022.
195 Jackson Ryan, “Elon Musk unveils Tesla Bot, a humanoid robot that uses vehicle AI,” CNET, August 20, 2021, available at:
https://www.cnet.com/news/elon-musk-unveils-tesla-bot-a-humanoid-robot-utilizing-vehicle-ai/.
196 James Vincent, “Don’t overthink it: Elon Musk’s Tesla Bot is a joke,” The Verge, August 20, 2021, available at:
https://www.theverge.com/2021/8/20/22633958/tesla-bot-elon-musk-ai-day.
197 Wall Street Journal, “‘Tesla as the World’s Biggest Robot Company:’ Elon Musk on AI and U.S. Innovation | WSJ,”
YouTube Video, December 6, 2021, available at: https://www.youtube.com/watch?v=lSD_vpfikbE.
198 James Vincent, “Don’t overthink it: Elon Musk’s Tesla Bot is a joke,” August 20, 2021.
https://www.theverge.com/2021/8/20/22633958/tesla-bot-elon-musk-ai-day, accessed February 21, 2022.
199 Charley Grant, “Tesla Buys $1.5 Billion in Bitcoin—What Could Go Wrong,” Wall Street Journal, February 9, 2021, via
Factiva; Nathaniel Popper, “Musk Adds Momentum To Cryptocurrency Boom,” The New York Times, February 9, 2021, via
Factiva.
200 Charley Grant, “Tesla Buys $1.5 Billion in Bitcoin—What Could Go Wrong,” Wall Street Journal, February 9, 2021, via
Factiva; Nathaniel Popper, “Musk Adds Momentum To Cryptocurrency Boom,” The New York Times, February 9, 2021, via
Factiva.
201 Nicolas Rivero, “The biggest corporate holder of bitcoin is not Square or Tesla,” Quartz, January 28, 2022, available at:
https://qz.com/2118492/the-biggest-corporate-holder-of-bitcoin-is-not-square-or-tesla/.
202 Caitlin Ostroff and Paul Vigna, “Musk Rallies Cryptocurrency Dogecoin,” Wall Street Journal, February 8, 2021, via Factiva.
203 Anna Hirtenstein, “Banking & Finance: Dogecoin Surges 19% After Musk’s Support,” Wall Street Journal, December 15,
2021, via Factiva.
204 Taylro Locke, “Elon Musk on his crypto portfolio: I only own bitcoin, ether and dogecoin,” CNBC, October 25, 2021,
available at: https://www.cnbc.com/2021/10/25/elon-musk-on-his-crypto-portfolio-and-why-he-supports-dogecoin.html.
205 “Tesla starts accepting once-joke cryptocurrency Dogecoin,” BBC, January 15, 2021, available at:
https://www.bbc.com/news/business-60001144.
206 Paul R. La Monica, “Tesla still owns $2 billion in bitcoin, but crypto volatility has taken a toll,” CNN, February 7, 2022,
available at: https://www.cnn.com/2022/02/07/investing/tesla-bitcoin/index.html.
33
207 Paul R. La Monica, “Tesla still owns $2 billion in bitcoin, but crypto volatility has taken a toll,” CNN, February 7, 2022,
available at: https://www.cnn.com/2022/02/07/investing/tesla-bitcoin/index.html.
208 Tom Hals and Sierra Jackson, “Musk tells SolarCity trial that Tesla would ‘die’ if he wasn’t CEO,” Reuters, July 12, 2021,
available at: https://www.reuters.com/business/musk-testify-defense-teslas-26-bln-deal-solarcity-2021-07-12/.
209 Tom Huddleston Jr., “Elon Musk: CEO is a ‘made-up title,’ so he’s Tesla’s ‘Technoking’ instead,” CNBC, December 7, 2021,
available at: https://www.cnbc.com/2021/12/07/elon-musk-ceo-is-made-up-title-prefers-tesla-technoking.html.
210 “Q4 2020 Tesla Inc Earnings Call – Final,” CQ FD Disclosure, January 21, 2021, via Factiva.
211 “Elon Must Reveals He Has Asperberger’s on SNL,” May 9, 2021, available at: https://www.bbc.com/news/world-us-
canada-57045770, accessed March 5, 2022.
212 Romy Varghese and David R. Baker, “Musk’s Texas Move Surprised Even Staff, California Official Says,” Bloomberg,
October 26, 2021, available at: https://www.bloomberg.com/news/articles/2021-10-26/musk-s-texas-move-surprised-even-
staff-california-official-says.
213 Sara Salins, “Tesla keeps losing senior leadership—here are some of the key departures this year,” CNBC, September 8,
2018, available at: https://www.cnbc.com/2018/09/07/tesla-executive-departures-in-2018.html.
214 Charles Duhigg, “Dr. Elon & Mr. Musk: Life Inside Tesla’s Production Hell,” Wired, December 13, 2018, available at:
https://www.wired.com/story/elon-musk-tesla-life-inside-gigafactory/.
215 Mark Matousek, “Tesla leaders reporting to Elon Musk are far more likely to quit than similar executives at Facebook,
Amazon, and Uber,” Business Insideer, August 15, 2019, available at: https://www.businessinsider.com/tesla-executives-who-
report-elon-musk-high-turnover-rate-2019-8.
216 Faiz Siddiqui, “Tesla is like an ‘iPhone on Wheels. And Consumers are locked into its ecosystem.,” Washington Post, May
14, 2021, available at: https://www.washingtonpost.com/technology/2021/05/14/tesla-apple-tech/.
217 Benjamin Bain, “Elon Musk Wanted to Impress Girlfriend With $420 Price, SEC Says,” Bloomberg, September 27, 2018,
available at: https://www.bloomberg.com/news/articles/2018-09-27/musk-picked-weed-linked-price-to-impress-girlfriend-
sec-says.
218 United States Securities and Exchange Commission, “Elon Musk Settles SEC Fraud Charges; Tesla Charged With and
Resolves Securities Law Charge,” September 29, 2018, available at: https://www.sec.gov/news/press-release/2018-226.
219 Emily Flitter, “JPMorgan says Tesla owes it $162 million because of an Elon Musk tweet.,” The New York Times, November
16, 2021, available at: https://www.nytimes.com/2021/11/16/business/tesla-jpmorgan-elon-musk.html; Russ Mitchell,
“Judge deems Musk’s Tesla ‘funding secured’ tweet false,” Los Angeles Times, April 15, 2020, available at:
https://www.latimes.com/business/story/2020-04-15/tesla-musk-funding-secured-trial.
220 Rebecca Elliot and Dave Michaels, “SEC Subpoenas Tesla Seeking Information Linked to Elon Musk Settlement,” Wall
Street Journal, February 7, 2022, available at: https://www.wsj.com/articles/sec-subpoenas-tesla-seeking-information-linked- to-
elon-musk-settlement-11644248873.
221 Andrea Nedelea, “Elon Musk Likens NHTSA To The “Fun Police” After Boombox Recall,” Inside EVs, February 17, 2022,
available at: https://insideevs.com/news/568189/elon-musk-nhtsa-fun-police/; Lauren Feiner, “Elon Musk says orders to
stay home are ‘fascist’ in expletive-laced rant during Tesla earnings call,” CNBC, April 29, 2020, available at:
https://www.cnbc.com/2020/04/29/elon-musk-slams-coronavirus-shelter-in-place-orders-as-fascist.html.
222 Molly Ball, Jeffrey Kluger, and Alejandro De La Garza, “Time 2021 Person of the Year,” December 13, 2021, available at:
https://time.com/person-of-the-year-2021-elon-musk/.
223 Simon Alvarez, “Tesla’s Elon Musk held 21.2% stake in TSLA as of the end of 2021, reveals SEC filing,” Teslarati, February
15, 2022, available at: https://www.teslarati.com/tesla-elon-musk-tsla-stake-update/.
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Doubling Down: Elon Musk’s Big Bets in 2022

Elon Musk’s Early Ventures

Blue Ocean - book by W. Chan Kim and Renée Mauborgne,-

8 “I”s for a great “We”- Collaborative Advantage.

Neuralink: Platform Ecosystem: Bridge b/w Owner and provider.

Master Plan, Part Deaux

Main Focus/Features of Product Led Growth:

Production Hell : Super link

What is innovation strategy? Why is innovation required?

Sales and marketing strategies

Market Segmentation - Subdividing of a market into different divisions of customers according to

how the CAGE Distance Framework applies to Tesla's case:

Exhibit 1 Musk’s “Empire” as of Early 2022

Source: Created by casewriter using data from Capital IQ and Crunchbase.

Exhibit 3 Objects Launched into Orbit (2000-2021)

Exhibit 4 Tesla Financial Info (2017-2021)

($ millions) 2015 2016 2017 2018 2019 2020 2021

Exhibit 5 Tesla Selected Cash Flow (2017-2021)

2015 2016 2017 2018 2019 2020 2021

Source: Created by casewriter using data from Capital IQ.

Exhibit 6 Tesla Capital Raises (2010-2021)

Exhibit 7 Tesla Stock Performance (2017-2021)

Source: Created by casewriter using data from Capital IQ

Exhibit 8 EV Sales as a Percentage of Total Vehicle Sales (2015-2040)

Source: Created by casewriter using data from BloombergNEF.

Exhibit 9 Average Lithium-ion Battery Price per Kilowatt-Hour (2013-2030)

Source: Created by casewriter using data from BloombergNEF.

Exhibit 10 Lithium-ion EV Battery Pack Market Shares 2021

Exhibit 11 R&D and Advertising Spend Comparison (2010-2021)

2010 2015 2019 2020 2021

Source: Created by casewriter using data from Capital IQ.

1 See: https://www.nasdaq.com/market-activity/stocks/tsla/price-earnings-peg-ratios, accessed February 20, 2022; and:

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