Strategic Alliances as the Foundation for Tesla Motors' Operations Founded in 2003, Tesla Motors, the manufacturer of electric vehicles, has formed many alliances as a means of competing during the early years of its life. For example, the company cre- ated a R&D partnership with Dana Holding Corporation initially for the purpose of jointly designing and producing a system capable of controlling the build-up of heat in its car batteries. Overall, Tesla has partnered with many companies working in the value chain that is used to produce its products. In this sense, alliances have been formed with suppliers, R&D experts, as well as original equipment manufacturers such as Daimler. One of the projects on which Daimler and Tesla are collabo- rating is the B-Class Electric Drive, an all-electric vehicle from Mercedes-Benz. Other partnerships that have been formed over the years include Tesla's nonequity strategic alliance with Sotira, a French company, and an equity alliance with Panasonic, a Japanese-based firm. The purpose of the partner- ship with Sotira is to manufacturer the carbon fiber bodies for its cars, while battery cells for the Tesla battery pack are produced through the collaboration with Panasonic. Interestingly, its on-going work with batteries and recent hints from founder and CEO Elon Musk suggest that Tesla may, at is core, become a battery company rather than an auto- mobile manufacturer. Appearing to support this possibility were comments indicating that Tesla intends to make and sell mega-batteries for homes and electric utility companies. The firm's decision to build and operate a 10-million-square-foot facility (dubbed the Gigafactory) to build batteries seems to reflect Tesla's capacity to build an array of batteries with dif- ferent functionalities. With an initial investment of $5 billion, this factory was to be the largest lithium-ion-battery plant in the world. One goal of the Gigafactory is to "make batteries so cheap that electric cars can compete with conventional gaso- line engines. Interestingly, the Gigafactory's size and scale allow Tesla to produce a quantity of batteries exceeding the firm's needs for its cars. In turn, analysts suggested that the company may seek additional partnerships as a way of continuing to develop innovative batteries and to sell some of the outputs from its plant. In early 2015, Apple announced an internal project that was aimed at developing an Apple-branded electric vehicle. With a code name "Titan," the initial work was oriented to designing a vehicle that resembles a minivan. Early assessments were that Apple intended to compete directly against Tesla if it decided to enter the electric vehicle market space. At the same time, the seriousness with which Apple is approaching this initial Doug Cheeseman/Getty Images design work is unknown, especially given the company's pat tern of going so far as developing product prototypes before deciding to abandon a potential innovation. Additionally, the complexity of designing and producing an electric vehicle is such that several years would be required for Apple to intro- duce its product to the market, even if it chose to do so. Still, Apple's large investable assets and its innovative successes suggest that Tesla executives would be well served to carefully observe the firm's progress with respect to the Titan project Shown here is a Telsa Roadster and the electric battery pack that powers the car. Other recent speculation regarding Tesla and Apple cen- tered on the possibility of Apple acquiring Tesla, at a rumored cost of roughly $75 billion. In contrast, some analysts were suggesting that "some sort of joint venture or collaboration remains the smartest bet for both companies" (Apple and Tesla). As Tesla looks to its future, might the possibility of collaborating with another innovative firm, but one with significant financial resources, be a viable option? And from a broad perspective, might "a collaboration between the two tech giants, each with enormous clout and credibility, go a long way to converting the electric car from niche curiosity to mass consumer good?" Sources: K. Finley, 2015, Tesla isn't an automaker. It's a battery company, Wired, www.wired.com, April 22; N. Gordon-Bloomfield, Move over Tesla: LG Chem now largest manufacturer of electric car battery packs thanks to Daimler deal, Transport Evolved, www.transportevolved.com, April 2, T. Lee, 2015, Apple, Tesla alliance still makes most sense for electric car, San Francisco Chronicle Online, www.sfchronicle.com, February 17, D. Wakabayashi & M. Ramsey, 2015, Apple gears up to challenge Tesla in electric cars, Wall Street Journal Online, www.wsj.com, February 13: C. Trudell & A. Ohnsman, 2014, Why the Tesla- Toyota partnership short-circuited, Bloomberg News Online, www.bloomberg. com, August. 7.