Tesla, Inc.

Overview of Tesla, Inc

The automotive industry has seen some big changes in the last few decades. The advent of new sources has always been related to the need in finding new solutions, especially in periods in which the oil price was increasing, or new techniques or technologies were found to innovate how people get around. Lots of innovations that we can find in modern vehicles came directly from 19th century, but these were either used just for small lots of cars or dismissed ones, because the gasoline engine proved to be better with regard to building simplicity. Tesla Motors is an example of how a start-up company can revolutionize a traditional industry as the automotive one.

Tesla was founded by Jeffrey B. Straubel, Elon Reeve Musk, Martin Eberhard, and Marc Tarpenning on July 1, 2003 and is headquartered in Palo Alto, California, USA.

Tesla's mission statement is"to accelerate the world's transition to sustainable energy." It shows the shift towards innovative and sustainable business approaches that are more futuristic. sedan.

"Our goal when we created Tesla a decade ago was the same as it is today: to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible. If we could have done that with our first product, we would have, but that was simply impossible to achieve for a startup company that had never built a car and that had one technology iteration and no economies of scale. Our first product was going to be expensive no matter what it looked like, so we decided to build a sports car, as that seemed like it had the best chance of being competitive with its gasoline alternatives."

Quoted by Elon Musk, Tesla Chairman, Product Architect & CEO, 2013

Tesla provides vehicle service centers, supercharger station, and self-driving capability. It operates across two major target segments the automotive and energy generation and storage. The automotive segment represents the customer durables in the motor vehicle industry which includes the design, development, manufacture and sale of electric vehicles.The energy generation and storage segment include the design, manufacture, installation, sale, lease of stationary energy storage products, solar energy systems, and sale of electricity generated by its solar energy systems and related services to residential, commercial, and industrial customers. These are being utilized through its website, stores, and galleries, as well as through a network of channel partners. This segment also offers service and repairs to its energy product customers, including under warranty; and various financing options to its solar customers.It develops energy storage products for use in homes, commercial facilities and utility sites. This segment is also involved in the provision of non-warranty after-sales vehicle services, sale of used vehicles, retail merchandise, and vehicle insurance, as well as sale of products through its subsidiaries to third party customers. Also, it provides services for electric vehicles through its company-owned service location.In some areas, Tesla employs what it calls Tesla Rangersmobile technicians who make house calls. In some cases, the service is delivered remotely. The Model S is able to wirelessly upload data, so technicians can view and fix some problems without ever physically touching the car.

Tesla's vision is becoming smarter. Tesla's taking its camera-based "Tesla Vision" system to school. After a Tesla owner posted a tweet showing how the system now recognizes when a vehicle is at a stop with brake lights illuminated, CEO Elon Musk responded saying the technology will soon understand a whole lot more. Specifically, the cars will recognize hand gestures, emergency vehicle lights, vehicles with hazards on and turn signals. Tesla still faces its own challenges. Sales of its most profitable vehicles, the Model S luxury sedan and Model X S.U.V., have faltered and remain low. Federal safety regulators are also looking into suspension failures in those vehicles. The company also faces questions about the quality of its vehicles. And Tesla seemed to make little progress toward Mr. Musk's ambitious promise to have one million self-driving Tesla's by the end of 2020. The company has yet to show the world a car capable of operating without a driver. Tesla ramped up production at a factory in China, which has fueled sales growth in that country, the world's largest market for conventional and electric cars. Currently, Tesla isbuilding new factories in Austin, Texas and Berlin, Germanyto augment its production in Fremont, California and Shanghai, China. The company also makes battery components in Reno, Nevada and Buffalo, New York.

Despite the success of Tesla's mission, not all of Tesla's history has been smooth sailing. Over the years, and in the current media climate, Tesla has garnered criticism for being unable to follow through on promises. Yet they have shown that it is possible to keep growing amid challenges. In 2006, Elon Musk shared his secret of success Master plan by posting it on the Tesla website and stating with a tag (Between you and me) and this was two years just before the car was in production. In his post, Elon said 'the overarching purpose of Tesla Motors (and the reason I am funding the company) is to help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy, which I believe to be the primary, but not exclusive, sustainable solution.' Only a few companies in the world have gained so much attraction and adoration as Tesla. The automotive company has a long reputation for being unconventional. Maybe it's the reason why Forbes has named the company as the "Most Innovative Company." But other than its mainstream business, Tesla has a lot of things going on inside the company that makes the news.

Worldwide, 70,757 full-time employees work at Tesla and its subsidiaries. Tesla's employee count has grown by 47.36% since 2019, in which time the company has added 22,741 new employees. The average compensation at Tesla in the US is an estimated $153,755. Tesla employees working in the US on an H1-B visa receive a median base salary of $130,000. Recently, Tesla's handbook for employees got leaked on the internet, surprising many about the company's work ethics and culture. Written in a conversational tone, Tesla's Anti-Handbook is just a 4-page document that briefs the employees about the company's expectations from them. Tesla even mentions in it's handbook that they have no issues with people having employment outside of Tesla as long as it doesn't hamper with the productivity of the employee and that all employees are evaluated based on the same standards.The company lays down a lot of pointers for the leave and vacation of the employees. Commenting on the "No Show Policy" of Tesla, the document says, "Our assumption will be that if you don't call and don't show up for work, you're a jerk. You better have a really good reason for not letting us know why you didn't come in or you're out of here." The handbook has positioned Tesla as an outlier in the auto and tech industries.The handbook begins with, "We're Tesla. We're changing the world. We're willing to rethink everything. We're different and we like it that way. Being different allows us to do what no one else is doing; to do what others tell us is impossible." When it comes to handbooks, a lot has changed over the years. From being a long and dull document with a lot of legal issues to its transformation as a storytelling tool, handbooks have become a collection of the company's spirit, ethos, goals, and culture. And, Tesla is just winning this game.Tesla has even increased the bar in employee engagement for its employees by opening up an "Answer Bar" at its headquarters. Inspired by the Genius Bar in Apple stores, where you can ask any question about Apple products and services, Tesla's Answer Bar, however, allows employees to meet and greet HR staff and get answers to any and all questions, like benefits, or to provide feedback. The idea behind this is that the company wants to have an open dialogue with its employees, to foster their relationship - and thus boost employee loyalty - and to empower employees with knowledge.

Tesla products and the demand for its cars

Tesla is active in the energy production and storage sector, with the Tesla Energy brand as mentioned earlier. On the 30th April 2015 Musk announced the availability by the end of the year of a battery pack that allows to generate the energy required to power a house. This device takes energy from solar panels, or from the grid when the price of utilities is less expensive, and it stores this energy into lithium-ion batteries, energy that will be available whenever needed. Its functions are the following: it prevents power outages, by providing a backup electricity supply; it can be combined with other similar Powerwalls to provide more energy; it can make a home independent from the power grid; it is easy to install and needs no maintenance. The electricity stored from solar panels or taken from the energy network is converted through an inverter to make it possible to use it inside the house.

Tesla commercializes another version, the Powerpack, intended for industrial buyers, which can stock up to 100 KW of electricity. The Powerwall has been an instantaneous success, in fact it allowed Tesla to gain over $800 million in reservations just in the first week. After the presentation, two other producers decided to offer similar products: Daimler AG announced that its version will be on the market by the end of 2015, using a lithium-ion battery; BYD (a Chinese car and battery producer) announced the production of a 5 MW system, which will allow to power about 2,500 homes.

Another Tesla product is the Supercharger. Tesla operates 3,059 Supercharger stations in over 40 countries as of October 2021, it has added 1,652 new Supercharger stations. The US and China account for 65.54% of all Tesla Supercharger Stations While the Tesla Supercharger network extends to over 40 countries, the vast majority (86.6%) of stations are located in just 10 countries. It represents the fastest way to charge an electric vehicle at the moment, they are located near points of interest like shopping malls, restaurants, and cafes so that the customers can eat something or surf the net during the recharge process. All Superchargers have from 2 to 12 parking stalls, where the chargers guarantee that the batteries of an 85 KW Tesla Model S will be fully charged in 75 minutes, while a 50% charge takes just 20 minutes. Moreover, the recharge is free because Superchargers use the solar power or other renewable sources, so it is fully sustainable.

As the electric vehicle market is changing fast, with Tesla among those leading the way, there is clearly a demand for Tesla cars. Every month the company seems to set new sales records. But despite the demand, there is a bottleneck in production, creating a waitlist for backordered vehicles that is growing steadily. Unlike established car companies, Tesla does not have the manufacturing capacity to meet the current demand all at once. Because the demand exceeds the current supply, basic economics suggests that the price would be bid up. Tesla seems to be constrained by production, not demand. The demand is fuelled in part by the green energy movement. Because Tesla cars are all-electric, they do not consume greenhousegas-emitting gasoline and do not directly create carbon dioxide. It remains true, however, that CO₂is a by-product of the electrical generation needed to charge the car's batteries. Demand is also driven by Tesla's sleek, modern design and its high-tech driver interface and dashboard that features an impressive all-digital, touch-sensitive display. Tesla cars are expensive, but that hasn't stopped people from lining up to buy them.Batteries to store and use electrical powerare the most expensive single component of these cars. One of management's main goals has been to reduce the battery costs per kilowatt-hour for its cars, and the company has made some significant headway toward that goal.

Tesla brands, market prices and customers

In June 2012, the company released the Tesla Model S, a vehicle aimed at the luxury brand segment of the market costing between $50k up to $90k. By 2015 they had sold over 100,000 Model S cars. The Model X, a hybrid SUV with the falcon wing doors followed in 2015. In Mid-2017, production of the Tesla 3 began, with over 300,000 being sold by late 2019. The Tesla 3 is aimed at the mass market and is labeled as a family car. The launch of the Tesla 3 aligns perfectly with Elon Musk's vision and business model to build more affordable cars over the years.

In mid-2020, the average sticker price for an electric vehicle was a hefty $19,000 higher than the average for a gasoline-powered car.1Small-scale production simply costs more. But the gap is beginning to close. The 2021 Tesla Model 3 starts at $37,900, while the Model S base price is $69,420 and the Model X is $79,900. This reflects Musk's initial assertion that his company had to start out with a luxury offering in order to get established before ramping up to include (relatively) more affordable models. The other main reason for Tesla cars' high sticker price is the very high cost of the electric battery packs that supply these vehicles with power. The market analysis before the launch of Tesla Model S indicated that the market segment that was targeted had been identified as primarily males ages 25-60. They tended to have good jobs, are at a comfortable stage in their lives, and have an annual household income of $100,000 or more. They live in urban or urban fringe areas. Some of them can have up to 2-hour commutes to work and want a luxury vehicle to make the long ride enjoyable. Many of Tesla's target customers were parents. They wanted a high-performance luxury vehicle for themselves but needed the room and the safety for their families as well. In addition to being responsible for their family consumption effect on environment. It was analyzed that Tesla's customers had a "West Coast" mentality concerning their attitude towards the environment and being on top of trends. In regard to the product diffusion curve the Model S targeted innovators, a group of well-informed customers who were willing to take a risk on an unproven product. This group made up 2.5% of customers. While Tesla targeted its sales on the innovators its marketing efforts also focused on educating the early adopters who made up the next 13.5% of customers.

However, Tesla has developed a line of luxurious electric vehicles that harbor both performance and style, while still maintaining a competitive price to its target market. Customers wanted to stop paying for gasoline, especially if prices continue to rise. There was also a trend with U.S. customers wanting to reduce their carbon footprint and live more eco-friendly lives.

Tesla positioning and competition

Tesla Motors is unique in that it has essentially positioned itself in its own industry. There are no other companies on the market that offer both the fully electric capabilities and the luxurious features that Tesla offers. To market the Model S, Tesla will be competing in both the luxury automobile market as well as the electric vehicle market. The electric vehicle industry will be defined as any vehicle that utilizes electricity to supplement the use of gasoline.The category includes luxury minivans, SUVs, convertibles, and sedans. The original target of the Tesla Roadster included the upper-class business executives and others who were looking for a high-end luxury car. The Tesla Roadster required a large down payment and cost over $100,000, leading it to be unavailable to most customers who were looking at higher-end cars, or below. The segment of this market focused on males who were looking for a luxury sports car that also had an electric motor. The segment was dominated by males because of the sports car aspect of the brand and the availability. The Tesla Roadster was not only efficient, it was also fast and drove like a true sports car. Since there is little price sensitivity in the luxury car market, companies must compete primarily on product differentiation. The key success factors for the luxury car industry are comfort, innovation, quality, and safety. Customers are willing to pay more for one luxury car over another because of the perceived value and prestige of owning a car with such attributes as the latest technology, the most comfortable driving experience, the performance to handle all conditions, and superior safety that is shown in the crash test high ratings.

Two notable competitors, the Chevrolet Bolt and the Nissan Leaf, failed to gain early traction because of high retail prices and limited driving range. The Nissan Leaf starts at $27,400 before incentives, with a range of up to 226 miles, as of October 2021. The 2022 model of the Chevrolet Bolt, starting at $31,000 before incentives, with a range of 259 miles, offers more than the 220-mile range of Tesla's standard Model 3, as of October of 2021. Other companies plan to enter the electric car market in the next few years, including Mercedes-Benz, Volkswagen, Subaru, Ford and BMW. If this happens, then Tesla's market share may start to suffer because of the crowded market. Some tech companies may also join the fray; Apple, Inc. believe they can challenge Tesla in the transportation industry, and Google has also placed bets on the auto industry. Tesla is admittedly concerned about businesses with broader existing customer bases.

Moreover, the eccentric CEO has proved a lightning-rod for scandal, there are now nine pending class action lawsuits against Tesla and Musk, relating to a 2018 tweet in which Musk falsely announced plans to take the company private. The tweet is alleged to have been an effort to manipulate Tesla's share price, a violation of federal securities laws. Musk's impulsive behavior also has real-world consequences. During the COVID-19 pandemic, Musk repeatedly aired misinformation about the pandemic, and criticized lockdown restrictions as "fascist" in earnings call with Tesla investors. He later defied public health authorities by reopening Tesla's Bay Area plant, causing a cluster of 450 infections.

Unlike other car manufacturers who sell through franchised dealerships, Tesla sells directly to customers. It has created an international network of company-owned showrooms and galleries, mostly in urban centers. By owning the sales channel, Tesla believes it can gain an advantage in the speed of its product development. More importantly, it creates a better customer buying experience. Unlike car dealerships, Tesla showrooms have no potential conflicts of interest. Customers deal only with Tesla-employed sales and service staff. Including the showrooms, Service Plus centers (a combination of retail and service center), and service facilities, Tesla has 438 locations around the world as of the end of 2021. Like its rival automakers, Tesla offers financial services including vehicle loans and leases. For some of the loan programs, it has a resale value guarantee provision. This provided some downside protection on a vehicle's value should the customer want to resell it. The bottom line is the biggest obstacle to the mass adoption of electric vehicles: It cannot happen without the infrastructure to charge on the go. Tesla did not invent the electric car or even the luxury electric car but Tesla did invent a successful business model for bringing compelling electric cars to the market. Part of the strategy was building a network of charging stations to solve one of the greatest obstacles facing the adoption of electric vehicles: re-fueling on long trips. Tesla's unique business model, which includes keeping control over sales and service, is one reason its stock has soared since its initial public offering.

Tesla sales and value

In 2020, Tesla generated $31.54 billion in annual revenue. That's an increase of 28.31% compared to 2019. In the first six months of 2021, Tesla's revenue is already $22.35 billion. Tesla's market capitalization reached 641 billion U.S. dollars at the end of March 2021, over six times its market cap of March 2020, at 96 billion U.S. dollars. Tesla was the leader in the automotive industry for market capitalization, dwarfing second-in-the-ranking Toyota. Tesla has manufactured 386,759 vehicles in the first two quarters of 2021 alone. Tesla's revenue in Q1 and Q2 of year 2021 was $22.35 billion. Tesla's worldwide sale is at the top 10 of car manufacturers between January and August 2021 and which were 473,136 followed by the sales of SGMW, BYD, Volkswagen, BMW, Mercedes, SAIC, Volvo, Audi, and Kia.The main factors that led to the rise of the stock price may be due to Tesla's offering of "green products" which is aligned with the current global trend that sees an increasing demand for such products; the management at Tesla has a proven record of past success and they are passionate about making the company an important player in the industry. Tesla's recent expansion in Asian markets and the latest news on pollution in that area will probably lead to an increase in the demand of such products, making Tesla one of the most real alternative to traditional vehicles, which will lead Tesla's sales to rapidly grow and thus make more profits. The value of the brand has risen so dramatically that CEO Elon Musk became the richest person in the world as a result. For a company that spends zero dollars on marketing, it is astounding to see how much public attention Tesla receives for their range of vehicles. In 2020, Tesla's stock price rose over 700%, booming the value of the brand to exceed600 billion dollars.

Tesla's partnerships and innovation

At the end of 2012, Tesla had entered into two partnership contracts, one regarding the Mercedes-Benz Smart Fortwo E-Cell and the other regarding the Toyota RAV4. Hence, the methodology of coopetition can be used to bargain the fixed cost and unit powertrain component cost between Tesla and Daimler/Toyota, influence the future sales of allied firms and outsiders such as GM and Ford, and predict how and when the learning-by-doing effect will foreshorten and finally end temporary strategic partnerships.

Tesla has strategic partnerships with big players of the automotive industry, Daimler and Toyota, who have helped develop batteries and engines used in their production cars and Panasonic, in the batteries sector, since 2010, who has been the only supplier of the battery cells necessary to build battery packs in the batteries sector. In 2011, the next-generation batteries were born from the partnership between the two companies. In 2013, Panasonic signed another agreement to build 1.8 billion batteries for Tesla until 2017. Tesla may be in position to disrupt industries well beyond the realm of traditional auto manufacturingas It's not just cars. Teslas strategy is different from that of any other traditional carmakeras it can be compared to the relationship between Apple and Foxconn, where the former builds all the key parts for its products, while the latter is responsible for the production of batteries, displays and processors. Although Tesla has to bear high monitoring costs when supervising and guiding powertrain component assembly in Daimler and Toyota, Tesla experiences positive feedback from coopetition with Daimler and Toyota, gaining extra USD 18.21 million or a 6.80% increase in profit in its electrical vehicle (EV) market by selling powertrain components to Daimler and Toyota.

By opening Tesla Initial public (IP) portfolio, the company invites other car makers to jointly tackle the carbon crisis through enhancing the technology and develop the EV market compared to the gasoline powered automobiles which is minimal these days. Within the rather traditional automotive industry, this decision caused an industry wide stir as innovation and IP are recognized as crucial competitive factors for a company to survive.

Recently, Elon Musk announced the launch ofTesla Pi phoneby the end of this year. The mobile has a satellite connectivity, that has four cameras, solar charging, and changes color in a futuristic design. In addition, the Model Pi is also rumored to have a brain-phone interface from Neuralink.

The company is developing ultra-high bandwidth brain-machine interfaces to connect humans and computers through this new smart phone. With this new phone Tesla step into a new market which is the smart phone industry and is expected to bring a revolutionary impact in the phone universe.

Questions

1. It was quite challenging from Tesla, Inc to have a proactive vision about the future, technology and sustainability combined together.Discuss the main schools of management adopted at Tesla, Inc that fostered the use of innovation, advanced technology and sustainability.

2. The personal brand ofElon Muskcontributed to the strength and marketing of Tesla's corporate brand by which the brand values of Tesla are matching with the values of Elon Musk himself.Discuss this statement to explain the brand promise, brand characteristics and brand value of Tesla, Inc. used in its marketing approach.

3. The 'diffusion of innovation' theory introduced by "Everett Rogers" described the process by which an individual adopts a new idea. Based on the news about launching Tesla's new smart phone,assess the market potential for the introduction of this type of revolutionary smart phones and global effects of Tesla's innovation on the smart phone business.

4.Strong rivalry may hinder firms from making profits. Firms have various ways to evaluate the state of competition and take specific competitive moves, however, Tesla used coopetition.Analyze the widely used Porter forces of competitive rivalry to explain how Tesla embodied coopetition to reduce the rivalry of the existing competition.

5."Tesla's human resources management & organization culture help the company gain a sustainable competitive advantage through the strategic utilization of people".Discuss how Tesla's human resources planning must be integrally linked to its corporate strategy and what role might the company's mission, vision and values play in the selection of its employees.