Tesla Motors was the first start-up company to enter volume automobile manufacturing in the U.S. since the 1930s. Under the leadership of meteoric and eccentric entrepreneur, Elon Musk, Tesla goal was to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible. Teslas first model, the Roadster, launched in 2007 was the first all-electric, plug-in, highway-capable car to be marketed in the U.S. during the 21st century. By mid-2018, Tesla is far from becoming a financially viable, large-scale automaker: during the first half of 2018, it struggled to achieve its weekly production goal of 5,000 Model 3 cars and earned on operating loss of $1.2 billion on sales of $6.3 billion. However, its three current modelsthe S, the X, and the 3had generated an enthusiasm from reviewers and customers was unique in the automobile industry. The case allows a consideration of the rationale behind Teslas strategy and an assessment of its prospects in an industry dominated by volume automakers with huge R&D budgets. Tesla had adopted a business model that is radically different form that of the incumbent automakers. It features a high level of vertical integration that includes backward integration into battery manufacture, forward integration into owning its own retail outlets, and establishing its own, proprietary network of charging stations. Tesla has also been unorthodox in its technology strategy. After initially protecting its intellectual property, in 2014, Musk shocked the industry by announcing that Tesla would make available patents to anyone who wanted to use Teslas technology. The case offers insights into how a pioneer of innovation can establish itself in an industry dominated by much better resourced firmsincluding building the excitement and anticipation that can attract finance, talented designers and engineers and customers to the company. It also points to the risks of challenging huge incumbents in an industry as complicated as automobiles.

What is the strategy of Tesla Motors? How does its business model differ from that of the leading automakers?

In the market for plug-in electric vehicles, how do the resources and capabilities of Tesla compare to those of the established automakers?

Explain the rationale for Teslas strategy. To what extent does this represent an optimal response to Teslas strengths and weaknesses relative to the established automakers?

Assess Teslas decision to make available its patents to other companies?