Assignment 1

Strategic Positioning Of Tesla Motors

Creating an e-car business encounters several difficulties in the competitive market. The

challenges include a limited driving range and increased car prices. Companies operating in

this industrial sector need to generate value and look for a way to cope with this issue. Many

new car manufacturing companies are attempting to join this industry because of the scarce

resources, the latest innovations, and the high need for conservation. Hence, Tesla has

effectively positioned itself in the industry by choosing a niche segment. It has dramatically

transformed its lack of understanding into a competitive advantage by providing the most

recent train for its electric-driven automobiles and bringing direct consumer exclusive sales

model. By doing so, the corporation has supplied its user with an incomparable experience

that no other car vendor can offer to its customers. The critical driver of Tesla's

accomplishment is its advancement in the manufacturing and innovative supply chain. The

Gigafactory arrangement for the production of lithium-ion cells on a massive scale has

enabled Tesla to become a predominant cell producer in the US and a leading supplier to the

remaining EV car manufacturers.

Investors seem excited and optimistic about Tesla's initiatives and innovations and perceive it

as a leader in the future of the automotive EV business. Tesla has developed an intense

exclusive and value chain environment for its vehicles, bringing added value and advanced

encounters to end-users and buyers. Tesla has expanded its manufacturing capacity to support

mass production and reduce manufacturing time. They have set precise regulatory

requirements to increase the use of advanced technologies that make other corporations

dependent on them. Tesla has organized and positioned superchargers regarding other car

manufacturers and has empowered its brand through a global marketing campaign.
Tesla has emerged as a highly competitive player in the automotive sector because it

deployed technology primarily to facilitate the development of electric vehicles (EVs). Such

cars have boosted the company’s global standing because they consumed cleaner energy, as

opposed to gasoline that is linked to harmful emissions. In particular, Musk identified the

need for developing automobiles that could save the world from the detriments of pollution

and climate change as central towards fostering sustainable development. The company’s EV

car designs appeared at a time when global dignitaries were calling for the embracement of

eco-friendly means of production to save the environment from global warming.

Tesla was founded in 2003 by a group of engineers who wanted to prove that people didn’t

need to compromise to drive that electric vehicles can be better, quicker and more fun to

drive than gasoline cars. Today, Tesla builds not only all-electric vehicles but also infinitely

scalable clean energy generation and storage products. Tesla believes the faster the world

stops relying on fossil fuels and moves towards a zero-emission future, the better.

Tesla took a unique approach to establish itself in the market. Instead of trying to build a

relatively affordable car that it could mass-produce and market, it took the opposite

approach, focusing instead on creating a compelling car that would create a demand for

electric vehicles.

Once Tesla established its brand and had produced and delivered its concept car to the

marketplace, it reinforced its business model. Tesla's business model is based on a three-

pronged approach to selling, servicing, and charging its electric vehicles. 

Unlike other car manufacturers who sell through franchised dealerships, Tesla sells directly

to consumers. 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.

Tesla has created its own network of 30,000+ Global Superchargers where drivers can

charge their Tesla vehicles in about 15 minutes for a quarter of the price of gasoline. The
purpose, of course, is to speed up the rate of adoption of electric cars by making it cheaper

and easier to keep them running.

On an international level, the strategy of Tesla is a transnational one. This means they are

present in a number of different countries and benefit from Tesla’s global structure but can

adapt the product and sales approach to local requirements.

Tesla is transforming not only the way we think about transportation but renewable energy as

well. The representatives offered a look at the house of tomorrow as Elon Musk sees it: Solar

Roofing that is akin to traditional shingle or slate roofing aesthetically, with the exception of

having the same capabilities of solar panels. A Power wall that will act as a home energy

storage system that can seamlessly be integrated with the Solar Roof. The combined

capabilities of these innovations can more than meet the power needs of the modern

household in addition to charging a Tesla or other electric vehicle.

Tesla business strategy can be broadly classified as product differentiation. Accordingly, the

electric automaker differentiates its vehicles on the basis of sustainability, performance and

design. Tesla business strategy aims to accomplish this mission via Focus on electric cars,

Ownership of distribution, Low cost of ownership and Unconventional way of doing business
 Strategy into action

Tesla is playing the long game with Research and Development, focusing on Automation,

Material Costs, and Software Updates. Electric vehicles are being adopted by many other

companies as well, and Tesla wants to sustain their competitive advantage by making their

products hard to imitate. The heavy spending in Research and Development is aimed to

develop more sophisticated technology for their products, increasing the barrier to entry in the

electric vehicle and battery markets. The significantly higher amount of investment in R&D

compared to other companies in the market granted Tesla the position of being the innovator

and the leader of the market, which keeps Tesla in the niche position of having a sustainable

competitive advantage in the market of (electric) motor vehicles.

Heavy spending allows Tesla to keep updating its Neural Networks and AI algorithms,

enhancing Tesla’s autopilot feature which differentiates itself from the current automobile

market. Within the Diamond Strategy, the staging of software update packages lowers the

perceived age of Tesla car models. Software iterations differentiate their products from the

market by enabling a customizable UI interface for the end-user, plus add the side benefit of

self-parking and self-driving features.

According to Tesla’s career page, its main mission is “to accelerate the world’s transition to

sustainable energy” by hiring the world’s best and brightest people that share the same

passions in changing the world and are willing to work in their fast-paced and innovative

culture. Tesla instils an organizational culture that encourages its employees to keep being

creative and innovative to improve their technological capabilities in which employees are

rewarded and compensated.

The company aims to expand its market worldwide by establishing new offices and facilities

upon which as part of its strategy of being a global leader in the automotive industry. In their
career page, they state that they aim to solve the world’s problems by hiring talented

individuals worldwide and building an inclusive environment.

Tesla uses the four P’s (product, place, promotion and price) in their marketing strategies to

achieve their corporate objectives in their business.

Their strategy is entering the global market. They are opening new locations, expanding their

promotions and they are developing new unique products that will attract customers and

generate sales. They are currently forming new relations with other companies to expand their

business ventures. Tesla avoids the use of intermediaries as they prioritize the Direct-to-

Consumer strategy to aim better service delivery and cost minimization.

Case study: tesla’s strategies

Globalisation permitted organisations to gain access to new markets and to foster the flow of

technologies and scientific knowledge. This can be leveraged to stimulate the manufacturing

of cutting-edge products which can enhance peoples’ living standards. In the case of Tesla

Motors, the organisation developed as a technologically advanced company, who

significantly indulged into research and development to deliver the most sophisticated

electric vehicles and batteries. Recent innovations in the motor industry centred on the fight

against pollution, by developing more environmentally friendly electric vehicles.

Tesla’s mission is “to accelerate the advent of sustainable transport by bringing compelling

mass- market electric cars to market as soon as possible.” The mission statement clearly

indicates that the company has realised that the opportunities ahead is dependent on green

and sustainable energy. This proactive tactic taken by the organisation has allowed them to

take a first mover attitude to come up as a mainstream electric automotive organisation. It

seeks to boost the evolution of the industry from fossil fuel to green energy and to try to stand

in the front of the shift process.

The vision of the company is to create the most compelling car company in this century by

driving the world’s transition to electric vehicles. Tesla Motors also pursues to grow its

product line up to accommodate a wider demographic range of the population. Their vision

also incorporates expanding the production of the lithium ion cells to reduce the energy cost

and to make the world a sustainable place.

The eco system or the environment in which the company operates plays a significant role in

its business. The mission of the company is to create a sustainable environment where the ill
effects of fossil fuel-based vehicles on the environment can be reduced as much as possible.

Thus, the existing deteriorating condition of the environment due to the pollution has

encouraged the company to take major steps in the development of green energy-based

vehicles. The government policies and regulations have allowed the company to run its

operations in a favourable environment.

For Tesla, having a defined and attainable strategy for the future can determine its success or its

failure especially taking into consideration that the company is small, and does not have the

capabilities like the older and bigger car manufactures have. Tesla’s strategy has followed what

is considered the natural trend of technological innovations, entering the market with high-end

expensive products and as demand increases, prices for said technologies drop. Initially, Tesla

entered the automaker industry with an expensive, high-end product targeted at affluent buyers.

As the company matures, its products, and costumer’s acceptance matured, the company started

to switch into a larger, more competitive markets at lower price points, where the company

would have to compete for people who own less disposable income and are much more price

sensitive. Musk constantly maintained from the beginning that “Tesla’s long term strategic goal

was to create affordable mass market electric vehicles” (Fehrenbacker), and the company is on

track to fulfil the vision of Mr Musk. But, as Tesla grows it must have a defined strategy that

will help it maintain its position as the clear market leader in the EV market.

Tesla Inc.’s primary growth strategy is market penetration which enables growth by

increasing sales in the existing markets. This is only possible through aggressive marketing

which facilitates a rollout and sale of more electric cars in the home country, United States. It

maximizes its revenues from the market areas where it currently operates, and this strategy is

consistent with the company’s generic strategy that aims at increasing competitive advantage
by increased market share. Aggressive marketing by the company has made this strategy

work in favour of the car manufacturer.

Another intensive growth strategy of the company is product development whereby the

company develops by manufacturing new products to create a new revenue line. Product

development manifests itself through the development of new products using technologies

that have a minimal environmental impact. For example, the company produces solar panels

and the Tesla Roadster using a unique technology that makes clients attracted to the products.

It is an intensive growth strategy that aims at maintaining investments in development and

research.

Other than a generic competitive advantage, Tesla Inc. uses intensive strategies that ensure

the growth of its business channels. Its growth strategies evolve with time, a reflection of its

improved profitability and popularity along with robust business strengths identified through

SWOT analysis. The company makes strategic adjustments over time to ensure it remains

resilient despite numerous technological advancements and changes in customers’ tastes and

preferences. The generic strategy gives the company a competitive edge over its competitors

and attracts different opportunities in the automobile market. The growth strategies support

the development of the organization based on increased sales revenue from Tesla Inc.’s

current markets. The company achieves operational effectiveness of the company through

joint implementation of intensive growth strategies and competitive strategies.

Tesla Inc. employs different marketing tools and strategies aimed at targeting the existing and

potential customers. Its marketing communication tools involve the use of conventional and

contemporary marketing platforms ranging from direct selling, international auto shows,

service networks, and social media marketing. The mix of marketing communication tools

enables the company to improve its brand recognition, improve brand loyalty, popularity, and
competitive advantage. The company uses the marketing communication tools selective to

save cost and to minimize any chance of any negative aspect of their products spreading fast.

Direct selling in the company’s stores and galleries makes it possible for the company to get

rapid feedback and deliver a unique experience which strengthens its relationship with its

clients. To promote its brand recognition and competitiveness, Tesla Inc. employs the use of

word of mouth marketing. It is an important cost-saving factor and a very effective tool in

increasing brand availability.

Tesla has an unparalleled position in the automobile market because it is in the business to

transform how people drive through its innovative technological advancements. It has

dominated the market for long range and luxury cars. The electric car’s market, where Tesla

operates, is different from the one for less expensive electric cars. Besides, the company has a

robust sales growth that has taken place over the last few years. The motor industry consists

of several well-established firms such as Ford, Opel, Volkswagen, Mercedes, Toyota, These

brands are continually looking for new ways to nurture competitive advantage by developing

new products with appealing value propositions. However, the product line of Tesla Motors

presents unique products that offer both power and electric driving, without compromising

the aesthetic appeal. As a result, this has made it quite attractive for customers. Vehicle

manufacturers rely on raw materials supplied to them by Suppliers providing quality

components thus have a higher bargaining power. To reduce the dependence on suppliers,

Tesla Motors have created their own battery factory that enables them to achieve vertical

integration in the supply chain, thereby achieving higher competitive advantage.

Before, Tesla Inc. used differentiation technique to focus on its competitive advantage.

Through this, the company stressed on the unique features of its products and concentrated

only on adopting the affluent market segment for electric vehicles. The focus then was to
target rich clients who tend purchasing newly introduced cars. Today, the company is more

popular, and its production costs have reduced thereby shifting its competitive strategy to

broad differentiation. Through increasing popularity and declining production costs, the

company can target a broad market segment. The strategic objectives for the company aimed

at increasing the amount invested in research and development. Through this, it can develop

new products that meet the demands of the market for enhanced renewable energy solutions

and broadening the market reach to generate more revenue and support brand popularity.