AUTOMOBILE

TESLA, INC.
PRINCIPLES OF
MANAGEMENT
Tuấn Kiệt
Mai Anh
Quỳnh Anh
Như Huỳnh
INTRODUCTION OF
TESLA COMPANY

01 02
COMPANY PRODUCT -
Founded in July 2003 as SERVICE
Tesla Motors Autopilot advanced safety
and convenience features
are designed to assist you

03 04
MISSION VISON
Tesla’s mission is to driving the world’s
accelerate the world’s transition to electric
transition to sustainable vehicles
energy
INTRODUCTION OF
TESLA COMPANY
Company:
● Tesla, Inc. (formerly Tesla Motors, Inc.) : is an American electric vehicle and clean energy company based in Palo
Alto, California. Founded in July 2003 as Tesla Motors, the company's name is a tribute to inventor and electrical
engineer Nikola Tesla.
● Elon Musk, who contributed most of the funding in the early days, has served as CEO since 2008.
● Tesla's current products include:
○ Electric cars, battery energy storage from home to grid scale.
○ solar panels and solar roof tiles, and related products and services.

● According to Musk, the purpose of Tesla is to help expedite the move to sustainable transport and energy, obtained
through electric vehicles and solar power.
● Tesla ranked as the world's best-selling plug-in and battery electric passenger car manufacturer in 2019
● Market share of 17% of the plug-in segment and 23% of the battery electric segment:
○ Tesla global vehicle sales were 367,849 units in 2019, a 50% increase over the previous year.
○ In 2020, the company surpassed the 1 million mark of electric cars produced.
○ The Model 3 ranks as the world's all-time best-selling plug-in electric car, with more than 500,000 delivered
INTRODUCTION OF
TESLA COMPANY
Company:
● Through its subsidiary SolarCity, Tesla is also a major installer of solar PV systems in the United States, and is one
of the largest global supplier of battery energy storage systems, from home-scale to grid-scale.
● Tesla installed some of the largest battery storage plants in the world and supplied 1.65 GWh of battery storage in
2019.
● Tesla is also one of the most shorted companies in history.
INTRODUCTION OF
TESLA COMPANY
Products/Service:
● Tesla Model S
○ Model S is built from the ground up as an electric vehicle, with high-strength architecture and a floor-
mounted battery pack allowing for incredible impact protection.
○ Autopilot advanced safety and convenience features are available Advanced noise engineering creates sound
dynamics comparable to a recording studio, while the standard Glass Roof provides a spacious interior
experience for every passenger.
○ It was designed for speed and endurance with incredible aerodynamics, ludicrous performance and
uncompromised aesthetics, automatic door handles, etc…
● Tesla Model 3 has its most important feature as safety.
○ The metal structure is a combination of aluminium and steel, for maximum strength in every area.
○ In a roof-crush test, Model 3 resisted four times its own mass, even with an all-glass roof.
○ Autopilot advanced safety and convenience features are designed to assist you with the most burdensome
parts of driving.
INTRODUCTION OF
TESLA COMPANY
Products/Service:
● Tesla Model X is the safest SUV ever.
○ Built from the ground up as an electric vehicle, the body, chassis, restraints and battery technology provide a
very low probability of occupant injury.
○ Autopilot advanced safety and convenience features are designed to assist you with the most burdensome
parts of driving.
● Tesla Model Y is designed to be the safest vehicle in its class.
○ The low center of gravity, rigid body structure and large crumple zones provide unparalleled protection.
○ Model Y is fully electric. They currently have over 14,000 Superchargers worldwide, with six new locations
opening every week. All new Tesla cars come standard with emergency braking, collision warning, blind-
spot monitoring and more.
○ It will have Full Self-Driving capability, enabling automatic driving on city streets and highways pending
regulatory approval, as well as the ability to come find you anywhere in a parking lot
INTRODUCTION OF
TESLA COMPANY
Mission:
● Tesla's mission is to accelerate the world's transition to sustainable energy.
● Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn't need to compromise to
drive electric – that electric vehicles can be better, quicker and more fun to drive than gasoline cars.
INTRODUCTION OF
TESLA COMPANY
Vision:
● Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to
electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling
mass-market electric cars to market as soon as possible.”
● Tesla used a transitional business model as its ecosystem grows.
Business
performance

Business Performance: Globally, Tesla's vehicle

deliveries reached between 367,000 and 368,000
units in 2019, making Tesla the leading producer
of plug-in electric vehicles. Concurrently, Tesla's
Model 3 has become the world's best-selling all-
electric vehicle model
Business
performance
For any organisation, performance management plays an important role in
monitoring and ensuring that the organisation meets all of its prescribed
goals and targets, as well as in communicating these achievements
effectively to its key external stakeholders (Robbins & Coulter, 2012).
In the case of Tesla, the company imposes various techniques and
measurement to keep track of the company’s performance, which is
primarily based on productivity. For example, the company measures its
manufacturing performance based on the number of cars produced a day;
for the customer service division, it considers the number of inquiries
resolved, emails answered, and complaints handled (Christopher, 2016).
In addition, Tesla also establishes Key Performance Indicators (KPI) to
monitor its production, inventory, and generally assess the success of
achieving the goals within the predetermined duration (Karamitsios,
2013)
COMPANY STRATEGY
MANAGEMENT
● Elon Musk and the company have since transitioned from a niche differentiator to a broad differentiator business
strategy through the implementation of lithium battery products and the acquisition of the company SolarCity.
Tesla’s investments in automation and research were a liability in early 2015, however, they became an asset in
2018–2019 due to their long term sustainable competitive advantage in terms of product quality.
● Tesla’s generic competitive strategy is broad differentiation. This generic strategy builds competitive advantage
based on the development of products that differentiate the company from other firms in the industry. For example,
Tesla Inc.’s products are competitive because they integrate advanced environmentally friendly technology,
considering that the vast majority of automobiles today use internal combustion engines. In using this generic
competitive strategy, the company broadly attracts all potential customers, who are now increasingly interested in
environmentally friendly products. Initially, Tesla used differentiation focus as its generic strategy for competitive
advantage. In applying the differentiation focus strategy, the company emphasized the uniqueness of its products,
but also focused mainly on early adopters in the high-end market for electric vehicles
COMPANY STRATEGY
MANAGEMENT
● Tesla’s Intensive Strategies (Intensive Growth Strategies) Market Penetration (Primary Strategy). Tesla, Inc. uses
market penetration as its current primary intensive growth strategy. This intensive strategy enables business growth
by increasing sales revenues in current markets. For example, with aggressive marketing, the company aims to
rollout and sell more of its electric cars in the United States. In this way, the corporation maximizes its revenues
from the markets where it currently operates. This intensive growth strategy relates with Tesla’s generic strategy by
developing competitive advantage based on increased market share. A strategic objective based on this intensive
strategy is to grow the company’s sales revenues through aggressive marketing.
● Product Development (Secondary Strategy). Product development is Tesla Inc.’s secondary intensive growth
strategy. In this intensive strategy, the company grows by developing new products that generate new sales. The
company applies this strategy by developing new products with advanced technologies for minimal environmental
impact.
● Market Development. Tesla, Inc. uses market development as a tertiary intensive growth strategy. This strategy
involves entering new markets to generate more sales and grow the global business
COMPANY COMPETIVE
EDGE
Major competitors for Tesla include traditional auto companies such as:

● Ford Motor Company (F), the multinational automobile manufacturer founded in 1903.3
● General Motors (GM), the U.S.-based automobile manufacturer founded in 1908.4
● Honda Motor Company (HMC), a multinational automobile manufacturer founded in 1948.5
● Navistar (NAV), commercial vehicle holding company.
● Oshkosh (OSK), truck and military vehicle manufacturer, founded in 1917.6
● PACCAR, truck manufacturer.
● Spartan Motors, a specialty chassis and vehicle manufacturer.
● Tata Motors, the largest automotive manufacturer in India.
● Toyota Motor Corp. (TM), a multinational automotive manufacturer.
● Wabco (WBC), manufacturer of systems for heavy-duty commercial vehicles
COMPANY
COMPETIVE EDGE

SUSTAINABILITY TECHNOLOGY
The facility’s sustainability eforts As a vertically integrated
include recycling 100% manufacturer

EMPLOYEES INNOVATION
Performance management was Few companies have attracted as
getting soft much scorn and adoration as Tesla

CUSTOMERS SOCIAL MEDIA

Tesla customers are more satisfied than Regard to auto brands' social
those of any other auto brand for the media marketing strategies.
third consecutive year
Winning. Failing. New initiatives.
 FOCUS ON CUSTOMERS
Tesla customers are more satisfied than those of any other auto brand for the third consecutive year,
according to Consumer Reports, which placed Tesla first on its 2019 list of auto brands ranked
by owner satisfaction.
Tesla received 89 out of 100 possible points for its owner satisfaction rating, which represents an
average of all of an auto brand's models. Vehicle satisfaction scores are based on driving
experience, value, comfort, styling, audio, and climate systems.
Porsche and Genesis finished second and third on the list, with 86 and 85 points, respectively.
Consumer Reports compiled the list from surveys on over 500,000 vehicles.
Tesla's vehicles have received a wide range of feedback from Consumer Reports and its subscribers.
The automaker was rated 27th of 29 brands in the publication's 2018 ranking of the most
reliable auto brands. Consumer Reports said the Model 3 was reported to have average
reliability and placed Tesla's Model X SUV among its 10 least reliable vehicles.
The Model 3 topped Consumer Reports' 2019 owner satisfaction ranking for cars, and the
publication gave the vehicle its "Recommended Buy" rating in 2018 after Tesla released a
software update that addressed the publication's issues with the vehicle's braking distance.
Consumer Reports has complimented the vehicle's handling and acceleration, while criticizing
its touchscreen-based controls, ride stiffness, and rear seat comfort.
The Model 3 is the only Tesla vehicle that Consumer Reports recommends. It previously
recommended the Model S sedan, but the vehicle lost that recommendation due to reliability
issues, the publication said.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Vehicle batteries:
○ Unlike all other automakers, Tesla does not use individual large battery cells, but thousands
of small, cylindrical, lithium-ion commodity cells like those used in consumer electronics
○ Tesla uses a version of these cells that is designed to be cheaper to manufacture and lighter
than standard cells by removing some safety features; according to Tesla, these features are
redundant because of the advanced thermal management system and an intumescent
chemical in the battery to prevent fires
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Vehicle batteries:
○ Tesla vehicle chassis used in Model S and X, with the battery visible.
○ The batteries are placed under the vehicle floor. This saves interior and trunk space but
increases the risk of battery damage by debris or impact .After two vehicle fires in 2013 due
to road debris, the Model S was retrofitted with a multi-part aluminum and titanium
protection system to reduce the possibility of damage.
○ In 2016, former Tesla CTO Straubel expected batteries to last 10–15 years, and discounted
using electric cars to charge the grid with vehicle-to-grid (V2G) because the related battery
wear outweighs economic benefit. He also preferred recycling over re-use for grid once they
reach the end of their useful life for vehicles. As of April 2019, Tesla has filed paperwork to
recycle vehicle and test batteries using its own facilities at Giga Nevada.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Vehicle batteries:
○ Starting in 2016, Tesla established a 5-year battery research and development partnership at
Dalhousie University in Nova Scotia, Canada, featuring lead researcher Jeff Dahn. Tesla
acquired two battery companies in 2019: Hibar Systems and Maxwell Technologies. All
three are expected to play an important role in Tesla's battery strategy.
○ Panasonic is the sole supplier of the cells in the United States, and cooperates with Tesla in
producing 2170 batteries at Giga Nevada.[99] As of August 2020, Panasonic produces
35GWh per year of the 2170 batteries at Giga Nevada. Tesla's battery cells in China are
supplied by Panasonic and CATL, and are the more traditional prismatic cells used by other
automakers.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Vehicle batteries:
○ Some analysts believe that Tesla had a $42 ($158 versus $200) per kWh advantage over
other vehicle battery manufacturers in 2019 due to its advanced engineering and scale of the
Giga Nevada battery manufacturing.
● Next generation batteries:
○ During Tesla's Battery Day event on September 22, 2020, Tesla announced the next
generation of their batteries, featuring a tabless battery design that will increase the range
and decrease the price of Tesla vehicles. The new battery is named the "4680" in reference
to its dimensions: 46 mm (1.8 in) wide by 80 mm (3.1 in) tall.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Next generation batteries:
○ During Tesla's Battery Day event on September 22, 2020, Tesla announced the next
generation of their batteries, featuring a tabless battery design that will increase the range
and decrease the price of Tesla vehicles. The new battery is named the "4680" in reference
to its dimensions: 46 mm (1.8 in) wide by 80 mm (3.1 in) tall.
○ Musk announced plans to manufacture the 4680 batteries in the Tesla Fremont Factory.
Tesla expects to produce 10 GWh of the 4680 batteries per year "in about a year", 100 GWh
by 2023, and 3,000 GWh by 2030.
○ Tesla expects the new batteries will be 56% cheaper and allow the cars to travel 54% more
miles. This would be achieved by a more efficient production process, new battery design,
cheaper resources for the anode and cathode, and better integration into the vehicle.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Next generation batteries:
○ BloombergNEF estimates Tesla's battery pack (not cell) price in 2019 at $128 per kWh, so
that would mean a price of $56 per kWh in 3 years, if Tesla is able to achieve its goals.
Many analysts believe that a battery pack price of $100 per kWh is the point at which the
purchase price of electric cars is likely to be lower than comparable gasoline-powered cars,
which will be an important milestone.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Motors:
○ Tesla makes two kinds of electric motors. Their oldest currently-produced design is a three-
phase four-pole AC induction motor with a copper rotor (which inspired the Tesla logo),
which is used as the rear motor in the Model S and Model X. Newer, higher-efficiency
permanent magnet motors are used in the Model 3, Model Y, the front motor of 2019-
onward versions of the Model S and X, and is expected to be used in the Semi. The
permanent magnet motors increase efficiency, especially in stop-start driving.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Autopilot: Tesla Autopilot in operation
○ Tesla makes two kinds of electric motors. Their oldest currently-produced design is a three-
phase four-pole AC induction motor with a copper rotor (which inspired the Tesla logo),
which is used as the rear motor in the Model S and Model X. Newer, higher-efficiency
permanent magnet motors are used in the Model 3, Model Y, the front motor of 2019-
onward versions of the Model S and X, and is expected to be used in the Semi. The
permanent magnet motors increase efficiency, especially in stop-start driving.
○ Autopilot is an advanced driver-assistance system developed by Tesla. Tesla states that
Autopilot is "designed to assist drivers with the most burdensome parts of driving" in order
to make Tesla cars "safer and more capable over time."Tesla states that current (as of July
2020) Autopilot features require active driver supervision and do not make the vehicle
autonomous.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Autopilot: Tesla Autopilot in operation
○ Starting in September 2014, all Tesla cars are shipped with sensors and software to support
Autopilot (initially hardware version 1 or "HW1"). Tesla upgraded its sensors and software
in October 2016 ("HW2") to support full self-driving in the future. HW2 includes eight
cameras, twelve ultrasonic sensors, and forward-facing radar. HW2.5 was released in mid-
2017, and it upgraded HW2 with a second graphics process unit (GPU) and, for the Model 3
only, a driver-facing camera. HW3 was released in early 2019.
○ In April 2019, Tesla announced that all of its cars will include Autopilot software (defined
as just Traffic-Aware Cruise Control and Autosteer (Beta)) as a standard feature moving
forward. Full self-driving software (Autopark, Navigate on Autopilot (Beta), Auto Lane
Change (Beta), Summon (Beta), Smart Summon (Beta) and future abilities) is an extra cost
option.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Autopilot: Tesla Autopilot in operation
○ On April 24, 2020, Tesla released a software update to Autopilot. With this update, cars
recognize and automatically stop at stop signs. The cars also automatically slow down and
eventually stop at traffic lights (even if they are green), and the driver indicates that it is
safe to proceed through the traffic light. Tesla acknowledges that the software is still in a
beta test phase and far from being finished.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Full self-driving:
○ On April 24, 2020, Tesla released a software update to Autopilot. With this update, cars
recognize and automatically stop at stop signs. The cars also automatically slow down and
eventually stop at traffic lights (even if they are green), and the driver indicates that it is
safe to proceed through the traffic light. Tesla acknowledges that the software is still in a
beta test phase and far from being finished.
○ Full self-driving (FSD) is an optional upcoming extension of Autopilot to enable fully
autonomous driving. At the end of 2016, Tesla expected to demonstrate full autonomy by
the end of 2017. The first beta version of the software was released on October 22, 2020 to
a small group of testers. The release of beta FSD has renewed concern regarding whether
the technology is ready for testing on public roads.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Full self-driving:
○ Tesla's approach to achieve full autonomy is different from that of other companies.
Whereas Waymo, Cruise, and other companies are relying on Lidar, highly detailed
(centimeter-scale) three-dimensional maps, and cameras (as well as radar and ultrasonic
sensors) in their autonomous vehicles, Tesla's approach is to use coarse-grained two-
dimensional maps and cameras in addition to radar and ultrasonic sensors. Tesla claims that
although its approach is much more difficult, it will ultimately be more useful, because its
vehicles will be able to self-drive without geofencing concerns. Tesla's self-driving software
has been trained based on 3 billion miles driven by Tesla vehicles, as of April 2020. In
terms of computing hardware, Tesla designed a self-driving computer chip that has been
installed in its cars since March 2019.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Full self-driving:
○ Most experts believe that Tesla's approach of trying to achieve full self-driving by
eschewing Lidar and high-definition maps is not feasible. In a March 2020 study by
Navigant Research, Tesla was ranked last for both strategy and execution in the autonomous
driving sector.
COMPANY COMPETIVE
EDGE
● Focus on technology: As a vertically integrated manufacturer, Tesla has had to research and
develop components in multiple technology domains, including batteries, motors, sensors, glass,
and artificial intelligence:
● Glass:
○ In November 2016, the company announced the Tesla glass technology group. The group
produced the roof glass for the Tesla Model 3 and for use in the roof tiles announced in
October 2016. The roof tiles contain an embedded solar collector, and are one-third lighter
than standard roof tiles.
COMPANY COMPETIVE
EDGE
● Focus on social media: Our report has a heap of results with regard to auto brands' social media
marketing strategies. Winning. Failing. New initiatives.
○ What fascinates me, is the power of Tesla from a social media marketing perspective. It's a
brand founded in 2003. Compared to auto giants, it doesn't make a fortune. It wears its
crown on social media. It's in the top 3 – outperforming Volkswagen, Ford and Toyota.
○ We’ve done a great deal of industry social media analyses, and as a general rule, bigger
companies outperform their smaller rivals. No great surprise there. More resources - money,
employees, etc. Of course, there are exceptions, but for a company that is almost 30 times
smaller than its rivals to perform so well is impressive.
○ Below is a graph showing the total mentions across social channels of 29 of the world’s
biggest car brands:
○ Auto brands' performance with regard to mentions - inclusion of brand name.
○ Social marketing strategy - data source: Facebook, Instagram, Twitter 23 July - 19 August,
2017.
COMPANY COMPETIVE
EDGE
● Focus on innovation: Few companies have attracted as much scorn and adoration as Tesla.
○ To understand Tesla’s strategy, one must first separate its two primary pillars: headline-
grabbing moves like launching the Cybertruck or the Roadster 2.0 (which the company
claims will accelerate faster than any production car ever made) and the big bets it is
making on its core vehicles, the models S, X, 3, and Y. These efforts aim to achieve
different things — winning the resources to commercialize vs. actually commercializing the
idea — but they come together to achieve a central goal: bring a new innovation to market.
○ Let’s start with the first part of the strategy. In our view, efforts like the Cybertruck aren’t
really about making money; they are about getting attention and proving that Tesla is one of
the world’s most innovative companies, specifically for the purpose of building Tesla’s
ability to win support from stakeholders — what we call innovation capital.
COMPANY COMPETIVE
EDGE
● Focus on innovation: In our work reviewing academic research, interviewing over 100 innovators,
and conducting both quantitative and qualitative analysis of innovative companies, we’ve
explored how innovators build up their innovation capital. Innovation capital consists of four
factors:
○ Who you are (innovation-specific human capital) — your capacity for forward thinking,
creative problem-solving, and persuasion
○ Who you know (innovation-specific social capital) — your social connections with people
who have valuable resources for innovation
○ What you’ve done (innovation-specific reputation capital) — your track record and
reputation for innovation
○ The things you do to generate attention and credibility for yourself and your ideas (what we
call impression amplifiers). Politicians with political capital can get others to join them in
pursuing their objectives; in a similar fashion, business leaders with innovation capital can
attract the resources needed for innovation to flourish.
COMPANY COMPETIVE
EDGE
● Focus on innovation: Based on our case study of Tesla, we’ve observed that Elon Musk is a master
of building and using innovation capital to win support for his ideas.
● Not only does he leverage his past success at Paypal and Space X to win support for future
projects, he also uses what we call “impression amplifiers” to get stakeholders on board. For
example, when Musk stands on stage and reveals the Cybertruck, he doesn’t just talk about the
new idea, he materializes it, putting it into physical form to convince skeptics (he also did this
when he parked a Space X rocket in front of the National Air and Space Museum). He also
broadcasts the idea through big media launches like the demo for the Cybertruck, which gets third
parties talking about the company and generating buzz.
● Similarly, when Musk tweets to his 29 million followers that a “Roadster will include ~10 small
rocket thrusters,” he probably isn’t serious when he says that “Maybe they will even allow a Tesla
to fly.” But he is creating a positive impression for Tesla by leveraging another impression
amplifier: comparing, or drawing a connection between his innovation and some other successful
one. This comparison creates an impression between the technical superiority of a Tesla and …
rocket science, literally. These techniques aim to build Musk and Tesla’s innovation capital so
they can continue to win support from investors, customers, and employees to keep Tesla
operating.
COMPANY COMPETIVE
EDGE
● Focus on innovation: What about the other part of Tesla’s strategy: the existing vehicles — the
model S, 3, X and Y — which form the core products and require the most investment? These big
bets aim to transform an industry, and they require paying attention not just to the product, but to
the entire product ecosystem.
● What makes this part of the strategy truly unique is not just that Tesla produces electric vehicles,
but that it introduced a new hardware and software architecture (the way you put the car together).
For example, a Tesla has more software than the average vehicle and it is integrated around a
single central software architecture. Although most gas-powered cars have software too, they
typically have less software and operate on a different architecture making it more challenging to
imitate Tesla’s ability to update software and optimize vehicle performance.
● Tesla’s hardware architecture — a flat pack of batteries at the base, two electric engines (front and
rear), no transmission, etc. —also gives it an advantage over competing electric vehicles built on
traditional vehicle architectures, such as a lower center of gravity, greater energy density, and
more efficient battery management. This means that pound-for-pound, Tesla tends to beat out
competitors who try to leverage parts of the old internal combustion vehicle architecture, for
example, by putting batteries in the trunk rather than in a flat pack at the bottom.
COMPANY COMPETIVE
EDGE
● Focus on innovation: Tesla’s hardware architecture — a flat pack of batteries at the base, two
electric engines (front and rear), no transmission, etc. —also gives it an advantage over competing
electric vehicles built on traditional vehicle architectures, such as a lower center of gravity, greater
energy density, and more efficient battery management. This means that pound-for-pound, Tesla
tends to beat out competitors who try to leverage parts of the old internal combustion vehicle
architecture, for example, by putting batteries in the trunk rather than in a flat pack at the bottom.
● On the surface, building a new architecture may seem an easy strategy to imitate, but prior
research shows it can be very difficult: it can take time and effort for incumbents since it often
requires abandoning old ways of doing things and developing new capabilities. In the words of a
senior auto executive I interviewed, “It’s just hard for us because historically we have been great
mechanical engineers, not great software engineers. But we need to become software engineers.”
COMPANY COMPETIVE
EDGE
● Focus on innovation: Tesla’s ecosystem strategy also considers the level of individual components
for its products. Why? We know from past research that the profits in an industry tend to flow to
the bottlenecks — the components that limit the performance of the system. In the case of electric
cars, even though batteries are made of commodity materials, because their power capacity limits
the performance of most applications, especially cars, they are a bottleneck to the performance of
the whole system. By investing in batteries —producing them at scale and in better ways — Tesla
is betting that they will control the bottleneck, and thus the profit center, for the future of the
industry.
● Tesla’s strategy also accounts for the system level: the entire set of complements needed for a
consumer to use its product. This is why Tesla has built out a charging network for its cars across
the country. Acting early enabled Tesla to be the only electric car that could drive long distances
because there was an infrastructure in place for charging. In the future, this advantage may erode
if other auto makers build charging networks and piggyback off their existing dealership networks
to potentially offer more convenient service. But for now, Tesla has the advantage and looks to be
extending it by creating inter-operability with new networks like EVgo.
COMPANY COMPETIVE
EDGE
● Focus on innovation: Regardless of your views of Tesla’s future success, the company has
developed a fascinating multi-pronged strategy for fundamentally changing an industry. The core
strategy has unique elements at each level of the ecosystem: overturning the core product
architecture, positioning themselves in key bottleneck components, and resolving system-level
limitations that slow the adoption of the technology. At the same time, they have applied an
effective approach to build their innovation capital so they can win the resources and support to
execute on their vision. Investors are seeing the potential of Tesla’s future as the company’s
market value now exceeds the combined market value of GM, Ford and FiatChrysler. Innovators
should take note.
COMPANY COMPETIVE
EDGE
Focus on sustainability:
● SUSTAINABLE ENERGY
○ The facility’s sustainability eforts include recycling 100% of any recyclable wood that
comes into the plant, as Teslall as reusing or recycling 90% of the plastic pallets provided
by suppliers. Tesla is also working with local recyclers to develop a more robust recycling
program that will continue to be implemented as the facility’s production grows.
COMPANY COMPETIVE
EDGE
Focus on sustainability:
● GIGAFACTORY:
○ Sustainability is at the heart of everything Tesla do. In the same way our customers are
adopting zero-emissions lifestyles by using solar energy systems, battery storage and all-
electric vehicles, Tesla is also installing sustainable energy systems at our own facilities to
utilize renewable energy generation and storage where possible. As Tesla continue to ramp
production of Tesla products, Tesla are committed to making significant progress towards
our goal of operating global Tesla manufacturing, vehicle charging and other operations
using 100% renewable energy
COMPANY COMPETIVE
EDGE
Focus on sustainability:
● RESPONSIBLE SOURCING:
○ Tesla is committed to only sourcing responsibly produced materials. The Tesla Supplier
Code of Conduct (Code) and our Human Rights and Conflict Minerals Policy outline our
expectations of all suppliers and partners who work with us. Tesla is committed to making
working conditions in our supply chain safe and humane, ensuring that workers are treated
with respect and dignity and that manufacturing processes are environmentally responsible.
Tesla suppliers are required to provide evidence of management systems that ensure social,
environmental and sustainability best practices in their own operations, as well as to
demonstrate a commitment to responsible sourcing into their supply chains.
COMPANY COMPETIVE
EDGE
Focus on sustainability:
● DRIVEN BY SUSTAINABILITY:
○ Sustainability is what drives us at Tesla, and it’s not just about our products — it’s the values,
manufacturing and mission of our business. It’s at the core of everything Tesla do and what drives us in the
work that Tesla do. To achieve a zero-emissions future, Tesla’ve implemented several programs and
initiatives at our manufacturing facilities and in the communities in which Tesla operate, providing clean
energy, partnering with local schools and nonprofits and everything in betTeslaen. Tesla’re a company of
sustainability ambassadors — looking for ways to continue to set concrete sustainability goals and the paths
Tesla intend to take to achieve them — which will be shared in future Tesla Impact Reports.
○ Tesla are proud of the work Tesla have done thus far and look forward to sharing how our continued
sustainability eforts make a diference in the world and to accelerate the world’s transition to sustainable
energy.
COMPANY COMPETIVE
EDGE
Focus on employees:
● Just when you thought performance management was getting soft, along strolls Tesla hitting the
headlines with its no excuses approach.
● If you believe the hype, Tesla has been managing its extreme growth and aggressive goals as an
old-school taskmaster.
● Tesla stands out amongst its tech star peers for a less cushy approach to performance management
process. Here's what we know about it.
● From employee development to stack ranking
● Back in 2016, when Juliana Bednarski was HR Business Partner and Louis Efron was Head of
Global Employee Engagement, the picture looked quite different. In a presentation for Talent
Week, Bednarski and Efron outlined Tesla’s dynamic approach to leveraging the best talent.
COMPANY COMPETIVE
EDGE
Focus on employees:
● They recognized the importance of engaged employees and their impact on customer engagement.
In response, they created the Tesla360 Summary. This was essentially a staff survey that used the
Maslow Hierarchy of Needs to guide performance management. The survey was a massive
success and achieved an impressive 91% participation rate.
● So it's strange that during the tenure of Gaby Toledano, the Chief People Officer who left late last
year, Tesla appears to have embraced an entirely different approach. Details are thin, but it seems
that they've gone back to using a traditional annual review to determine promotions, demotions
and firings.
● That's a stark switch up from their previous engagement-focused approach aimed at helping
employees reach the top of the self-actualization pyramid.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 1. Design of Goods and Services. In this strategic decision area, operations managers focus
on how the organization’s products influence costs, quality objectives and resources. In this
company analysis case, Tesla Inc. addresses this concern through concurrent innovation,
which involves simultaneous innovation in various parts of the automotive, battery, and
solar panel business. For example, to ensure productivity in manufacturing advanced
electric vehicles, the company continuously innovates its products and supply chain
systems. This decision area of OM links to Tesla Inc.’s generic strategy and intensive
strategies, which emphasize product differentiation and product development as approaches
to grow the global business. It is notable that the company focuses on electric vehicles. As a
result, Tesla’s operations management is also focused on the innovation and manufacture of
electric automobiles, such as through optimization of organizational capacity for innovating
electric cars and car parts.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 2. Quality Management. Satisfying customers’ quality expectations is the main objective in
this strategic decision area of operations management. Tesla Inc. addresses this strategic
objective through regular quality checks, quality improvement initiatives, and research on
the automotive/transportation and energy solutions market. In addition, the company
continues to enhance its products and processes to satisfy high standards for quality and
productivity. For example, Tesla’s operations managers regularly conduct quality reviews
of, and implement enhancements to manufacturing processes. Moreover, in response to
quality issues with suppliers of automobile parts, Elon Musk shifted the company toward
manufacturing more of its own vehicle parts instead of sourcing from parts manufacturers.
This shift increases managerial workload, but improves quality control and overall product
quality. Such control is among the strengths shown in the SWOT analysis of Tesla Inc.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 3. Process and Capacity Design This operations management decision area focuses on
business processes, along with related investments, resources, and standards. Tesla, Inc.
integrates automation for this concern. For example, the company automates manufacturing
processes combined with human intervention. This condition helps Tesla achieve high
productivity through operational efficiency in the automotive and energy solutions business.
Also, Tesla Inc.’s organizational structure influence and is influenced by this area of
operations management. For instance, some parts of the corporate structure depend on
relevant process and capacity requirements in the business.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 4. Strategy Logistics and nearness to markets, resources and suppliers are considered in this
strategic decision area of operations management. In terms of resources, Tesla’s operations
managers utilize its global reach. For example, suppliers in the United States, Europe, and
Asia provide some of the basic components for the company’s electric automobiles and
other products. Tesla Inc.’s marketing mix or 4Ps also involves company-owned stores and
galleries in malls and other key locations to maximize sales personnel productivity and
access to the target market. This OM approach involves high-density areas for displays and
sales transactions, considering the company’s relatively high prices and specialization in
electric vehicles and energy products.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 5. Layout Design and Strategy. In this strategic decision area, operations management is
concerned with achieving optimal flow of resources and information. In Tesla’s case,
layouts are designed to maximize capacity utilization of facilities, especially buildings used
for manufacturing electric vehicles. Also, the company employs advanced computing and
networking technologies for internal communications. These approaches increase
productivity in Tesla’s operations. The company also minimizes distances among
intermediary processes in its manufacturing operations. An example of such minimization is
the Nevada Gigafactory, which helps reduce production costs along with vertical
integration.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 6. Job Design and Human Resources. Adequacy of effective human resources is the
objective in this strategic decision area of operations management. Tesla, Inc. satisfies this
objective through a competitive compensation strategy to attract effective and competent
workers. This approach is especially important in the market, where many companies
compete for high quality human resources. Tesla’s corporate culture’s focus on innovation
and problem solving contributes to the definition of this OM decision area. Also, the
company’s operations management ensures effectiveness and high productivity of personnel
through regular training, as well as leadership development programs. For example,
leadership development is used to fulfill Tesla’s leadership needs to grow its automotive
business.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 7. Supply Chain Management. In this strategic decision area, operations managers focus on
adequate supply and an effective and efficient supply chain. Tesla has a global supply chain
aimed at supporting its manufacturing processes. For example, high productivity of the
company’s manufacturing plants in the U.S. benefits from timely shipment of materials
from overseas. Tesla’s social responsibility and corporate citizenship ideals are applied in
this OM area, in considering the effects of the business on suppliers and associated
communities. As an automaker that focuses on manufacturing in the United States, Tesla’s
operations management automates major areas of the supply chain, while constantly
looking for strategic partners in the industry
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 8. Inventory Management. Inventory decisions, costs and support for production are
considered in this strategic decision area. At Tesla, inventory decisions are based on
operations management principles that emphasize quality. For example, managers require
that inventory holding does not affect the quality of materials used for the company’s
electric vehicles. On the other hand, for high productivity and minimized inventory costs,
Tesla’s operations management approach involves just-in-time inventory for some
materials. For instance, some materials for automobile production are used as soon as they
arrive at the company’s manufacturing facilities. Automation is also applied, partly in
response to the trends shown in the PESTEL/PESTLE analysis of Tesla, Inc. This approach
helps minimize the company’s inventory costs.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 9. Scheduling. This strategic decision area focuses on short-term and intermediate schedules
for resource utilization. Operations managers at Tesla, Inc. address these concerns through
market-based scheduling, combined with automated processes for maximum efficiency. In
market-based scheduling, the company monitors actual market demand and uses the
resulting data as basis for scheduling automobile production. On the other hand, Tesla’s
operations management supports scheduling activities with automation to minimize errors
and delays, thereby enhancing productivity.
MANAGERIAL DECISION
MAKING
● Analyse how managers make decision in the Selected company
○ 10. Maintenance. Adequacy of resources and production capacity are the objectives in this
strategic decision area of operations management. Tesla ensures resource adequacy through
regular inventory monitoring that readily responds to shifts in market demand. The
company addresses the objective of adequate production capacity through a small but
significant degree of redundant processes and production resources. For example, Tesla
maintains excess production capacity in some of its facilities. Such redundancy allows the
company to rapidly increase its production in response to spikes in market demand for
electric vehicles. These operations management approaches create resilience and
responsiveness in Tesla’s productivity.
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