Tesla's Business Model Analysis and Recommendations

The assignment requires a thorough examination of Tesla's business model, including its strengths and weaknesses. It also involves analyzing the current market situation and providing suggestions for improving the company's relationships with suppliers, customers, and dealership networks. Additionally, it is recommended to increase resources and partners to expand operations in foreign countries.

Running head: BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
Name of the Student
Name of the University
Author Note

1BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
Executive Summary
The analysis in the report is based on the discussion of the business model implemented by
Tesla Motors. This is an organization of American origin which operates in the field of
automobiles and is known for manufacturing electric cars which are environment-friendly in
nature. The relationships between the various parts of the business model has been analysed
in the report. The reasons behind the success of the company in the industry are analysed in
detail. The risks and issues that are faced or will be faced by the company are discussed, The
changes that can be implemented in the business of the company is discussed in the report.

2BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
Table of Contents
About the company........................................................................................................3
Business model canvas of Tesla Motors........................................................................3
Key relationships between the nine building blocks......................................................6
Critical success factors of the company.........................................................................6
Risks related to the operations of Tesla Motors.............................................................7
Recommended changes in the business model of Tesla................................................8
References......................................................................................................................9

3BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
About the company
Tesla Inc. which is also known as Tesla Motors is a company of American origin
which specializes in the manufacture of electric vehicles, solar panels and energy storage
devices. The organization is based in Palo Alto, California and was founded in the year 2003.
The major devices that are manufactured by the organization include, electric cars,
photovoltaic panels for residential towers, energy storage related devices. The additional
products that are sold by Tesla Motors include, Tesla Powerpack and Powerwall batteries,
solar roof tiles and solar panels. Tesla was envisioned as a technology company by CEO Elon
Musk. The electric car manufactured by the organization named Model S had become the
best-selling in the world in the year 2015 and 2016. The sales of the model had reached a
milestone of 200,000 units in the last quarter of the year 2017. The production of the
organization further increased in the month of February in the year 2018. The company has
multiple numbers of production plants and assembly plants in the world. The main
manufacturing unit of the organization is located in Fremont, California. The facilities of the
company are located in many other countries including, Europe, Canada, Asia and Australia.
The major partners of the organization in the industry are, Toyota, Daimler AG, Airbnb,
Panasonic and Liberty Mutual. Tesla offers the services to their customers in the various
service centres and they also provide mobile services with the help of the group of mobile
technicians (Ojasalo & Ojasalo, 2015).
Business model canvas of Tesla Motors
Key Partners
 Tesla has
greater than
150
suppliers in
the world
who supply
2000
Key Activities
 Electronic
services of
manufacturin
g model
related to
production.
 Tesla builds
Value Proposition
 Production of
luxury
vehicles and
high-end
sports cars
with highest
rating in
Customer
Relationships
 Software
related
updates
provided
over the air
for the
Customer
Segments
 The
environmen
t conscious
and high-
end luxury

4BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
different
parts.
 Chei Mei
OptoElectro
nics
Displays in
car, Google
Earth map,
navigation
systems by
GARMIN,
NVIDIA
TEGRA 3
processor
for
operating
the
electronics
in the cars
(Beckett &
Dalrymple,
2017).
 Panasonic
is also a
strategic
partner who
develop the
battery
packs.
and designs
bulk of the
PCB related
assemblies in
the cars.
 Manufacture
s the electric
sports cars
and the all
the
components
related to
these cars.
 Managing its
chain of the
dealership of
cars in the
world.
 Tesla has
made
significant
investment in
the
developing
stations built
for charging
in the United
States. The
supercharger
stations have
the ability to
swap the
batteries
within an
amount of
time which is
less than that
taken to fill
the tank of
the gas
(França et
al., 2017).
 The recent
activity is
related to the
development
of
gigafactory
in Nevada.
environment
friendliness.
 Longest
range of
driving of
more than
200 miles.
 The
innovative
designs of
the company.
vehicles.
 Setting up
the
charging
stations in
the entire
world
(Romero,
Villalobos
& Sanchez,
2015).
cars and
sports cars
segment of
customers.
 The new
customer
segment is
related to
the sale of
battery
packs for
domestic
use.
Key Resources Channels

5BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
 The patent
holding of
the company.
 The location
related
facilities
along with
organizations
like, Google,
Apple, HP in
San
Francisco
which helps
in
innovation.
 The excellent
management
team hired
by the
company
(Muzellec,
Ronteau &
Lambkin,
2015).
 Direct sales
with the
help of the
network of
self-owned
dealerships
of cars in
the entire
world.
Cost Structure
 The manufacturing costs are the largest overheads
for the operations of Tesla.
 Federal loans taken for the purpose of providing
environment-friendly products.
 Subsidies provided by the government to the
manufacturers of electric cars.
 Batteries of the cars (Antikainen & Valkokari, 2016).
Revenue Streams
 Licensing the agreements with
Mercedes and Toyota.
 Sales of the electric cars with the help
of dealership networks.
 The main competitor of Tesla in electric
car making industry is Nissan.
 The electric cars like, Chevrolet Volt
and Toyota Prius are decreasing the
market share of Tesla.
Key relationships between the nine building blocks
The nine building blocks of the business model canvas of Tesla are related to each
other and support the functionalities of each other in the industry. The partners of the

6BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
company help them in expanding and managing their operations in the various countries in an
effective manner. The activities of the organization are important in improving the products
that are manufactured and supply them to the customers. The manufacture of cars and various
components required in the cars are all the key activities of the organization. The outsourcing
of activities to the technology companies also help in deciding the time within which the
products will be supplied to the customers (Schaltegger, Hansen & Lüdeke-Freund, 2016).
The resources that are owned by the organization help in increasing the innovation process in
Tesla. The excellent management team also plays a major role in the management of
activities related various organizational processes. The value proposition of the organization
deals with manufacturing and producing the environment-friendly cars with high ratings
related to safety. The unique features of the cars manufactured by Tesla Motors help in
attracting customers to the organization. The company maintains relationship with the
customers by providing updates for their software over the air. The charging stations are also
set up according to the convenience of the customers. The costs related to manufacture are
related to the type of products that are manufactured by the company (Dorantes-Gonzalez et
al., 2015). The revenues of Tesla Motors are related to the agreements that are made by the
company with other organizations in the industry. The segments of the customers are further
related to the high-end products that are manufactured by Tesla. The nine building blocks of
the organization are therefore related and dependent on each other.
Critical success factors of the company
The critical success factors related to the operations of Tesla are as discussed further.
The technology that is applied by Tesla is high-end and this has helped them in creating a
different position in the market. The Model S named product of the company has been the
technological marvel that has been introduced by the company. The organization has been
able to prove its importance to the government and has received a massive loan for the

7BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
environment-friendly products manufactured by Tesla. The organization had been able to
create a monopoly in the market with the help of its various innovative products (Jenkins &
Fife, 2016). The management team that has been assembled by the CEO of Tesla is the main
reason behind their huge success. The team of the organization has been effective in the
management and technology related operations in Tesla. The distribution network formed by
Tesla has been able to increase their sales and revenue in the market. The expansion of their
facilities have been able to increase the volume of sales.
Risks related to the operations of Tesla Motors
Tesla has been facing some major challenges in the various markets which has
become a major reason of concern for the organization. The Asian market of the company has
been under threat due to the local manufacturing units in China. The organization had to
increase their operations in Asia to capture the market in an effective manner. Tesla had to
face major issues in expanding their operations in the Chinese market as compared to the
American market (Euchner & Ganguly, 2014). The competition that has been faced by Tesla
Motors from the other automobile organizations has also been a major risk towards the sales
of the organization. The competition has been given by Audi and Mercedes who are
established players in the industry. The issues related to wages of the workers and unions that
have been taking place within the organization has been an issue related to risk of operations
of Tesla (Onken & Campeau, 2016).
Recommended changes in the business model of Tesla
The business model of Tesla Motors has been quite successful for the operations of
the organization in the automobile industry. The company has been able to create a different
position for their products in the market with the help of this business model. However, the
organization has been recently facing many issues in the market related to fall of sales and

8BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
revenue and the value of their stocks as well. The major changes that can be made in the
business model of Tesla are, the increase in the resources and the partners of the company.
This will enable Tesla in easily expanding their operations in the foreign countries. The
relationships of the organization with the suppliers can help in increasing the speed of
production. The company also needs to improve their relationship with the customers so that
they are able to create a loyal customer base. The channels and networks of the organization
also needs to be improved for the purpose of creating an effective network. The costs related
to the manufacture of products can also be decreased by outsourcing the activities. The
dealership related network of the organization needs to be improved so that they can increase
their sales in the other organizations as well. The organization also needs to increase its
product offerings to attract more customers and increase their revenues in the international
market.

9BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
References
Antikainen, M., & Valkokari, K. (2016). A framework for sustainable circular business
model innovation. Technology Innovation Management Review, 6(7).
Beckett, R. C., & Dalrymple, J. (2017, December). Business Model Value Capture: an
Activity Theory Perspective. In ISPIM Innovation Symposium (pp. 1-13). The
International Society for The Best Electric Car - Model S | Tesla. (2018). Tesla.com.
Retrieved 24 March 2018, from https://www.tesla.com/modelsInnovation
Management (ISPIM).
Dorantes-Gonzalez, D. J., Küçükaydın, H., Özlem, Ş., Bulgan, G., Aydın, U., Son Turan,
S., ... & Teixeira, F. F. (2015). Improved Business Model Representation of
Innovation Concepts. In Proceedings of the 2015 World Conference on Technology,
Innovation and Entrepreneurship, Istanbul, Turkey, May (pp. 28-30).
Euchner, J., & Ganguly, A. (2014). Business model innovation in practice. Research-
Technology Management, 57(6), 33-39.
França, C. L., Broman, G., Robèrt, K. H., Basile, G., & Trygg, L. (2017). An approach to
business model innovation and design for strategic sustainable development. Journal
of Cleaner Production, 140, 155-166.
Jenkins, J., & Fife, T. (2016). 4. Designing for disruption: strategic business model
innovation. International Perspectives on Business Innovation and Disruption in
Design, 75.
Muzellec, L., Ronteau, S., & Lambkin, M. (2015). Two-sided Internet platforms: A business
model lifecycle perspective. Industrial Marketing Management, 45, 139-150.

10BUSINESS MODEL CANVAS ANALYSIS OF TESLA MOTORS
Ojasalo, K., & Ojasalo, J. (2015). Adapting business model thinking to service logic: an
empirical study on developing a service design tool. THE NORDIC SCHOOL, 309.
Onken, M., & Campeau, D. (2016). Lean Startups: Using the Business Model
Canvas. Journal of Case Studies, 34(1), 95-101.
Romero, M. C., Villalobos, J., & Sanchez, M. (2015, September). Simulating the business
model canvas using system dynamics. In Computing Colombian Conference
(10CCC), 2015 10th (pp. 527-534). IEEE.
Schaltegger, S., Hansen, E. G., & Lüdeke-Freund, F. (2016). Business models for
sustainability: Origins, present research, and future avenues.