Sustainability and Innovation in Tesla: A Case Study

Sustainability and Innovation
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Table of Contents
INTRODUCTION...........................................................................................................................................3
Part B...........................................................................................................................................................3
Section 2 Tesla’s approach to sustainable profit-making.........................................................................3
Section 3 Relevant literary sources that explain how Tesla pursue sustainability in its offering.............4
Section 4 Stakeholders analysis and their interest in company’s corporate social responsibility............5
Section 5 Sustainability benchmark.........................................................................................................5
Section 6 Recommendations for Mangers...............................................................................................7
CONCLUSION...............................................................................................................................................8
REFERENCES................................................................................................................................................9
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INTRODUCTION
Sustainability is defined as the process in which organizations figure out the innovative
and creative ways in order to target the potential customers in the new marketplace (Adams and
et.al., 2016). It has been identified that sustainable innovation is much more than introducing or
launching the new product in the marketplace that is focus is on commercialization of technology
and the new processes at social level. Moreover it is defined as the process in which focus is on
the growth and development of the organization by creating new innovative products while
considering the environmental improvement. The organization taken for this report is Tesla, Inc.
The company is based in California which deals in electric vehicles and clean energy. The
company is established by Elon Musk and his friends with the motive to focus on growth of
sustainable energy. The topics covered in the report are sustainability offering by the company,
its profitability approach, their action toward CSR activities, sustainability benchmark and the
business recommendations for the managers of the company.
Part B
Section 2 Tesla’s approach to sustainable profit-making
Tesla is an electric vehicle manufacturing company and has always aimed at development
using sustainable energy. Although, majority of emission is generated in product-use phase,
company has made various changes in its manufacturing process as it is fully aware of its
environmental responsibility (Alghalith, 2018). For example, it has increased proportion of
renewable energy usage at its factories in Nevada, Shanghai, Berlin, etc. to minimise its carbon
footprint. They believe that to create a lasting impact on environmental sustainability, company
needs to achieve financial sustainability and that the notion of sustainable future without
economic feasibility is no longer valid as it has declared a positive free cash flow (operating cash
flow less capex) of more than $1 billion for the first time in 2019 (Impact Report, 2019)
Tesla has made development of sustainable products as main aim of its product portfolio
and believes in maximising profit by minimising its environmental impact and enabling others to
minimise their impact as well. For example, Tesla also manufactures a set of energy products
that produces and manages renewable energy production, storage and consumption, with the help
of sunroof or solar panels. These solar panels store energy in Powerwall, which then provides
energy during day, night and also, during power grid outages. Homeowners, businesses and
utilities can purchase such packs depending upon their requirement and size of the project.
Sustainability is at the heart of its business strategy can be seen from it’s the strategical
decision-making from its leadership (Schaltegger, Lüdeke-Freund and Hansen, 2016). It takes a
lot of time to develop a new product for it has aimed a transition to a carbon neutral economy
and developing business model for transportation industry which is based on zero emissions. For
example, its cars have all the latest designs and technologies that ICE cars of Volkswagen or
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Toyota have but are electricity based which are far less polluting than ICE cars’ engines in
generating harmful green-house gases. Charging Tesla cars can be a source of generation of
carbon footprint. Therefore, it has developed renewable energy-based home system and promotes
its usage to reduce foot print in charging as well. This way company is not generating just
generating profits without harming environment rather, it has made sustainable development as a
part of its product portfolio development. Company is a market leader in its segment and with its
sustainable leadership approach has proved that it is possible to achieve long-term profits by
contributing in building a sustainable society that is not harmful to the resources of the planet.
Section 3 Relevant literary sources that explain how Tesla pursue sustainability in its offering
Tesla has environmental sustainability at its heart of development. This is not just proved by
company during its operations but has also been observed by various researchers that have
researched on company’s operations.
Building ecosystem innovation to create competitive advantage - Sustainability and
innovation are two intertwined issues that relentlessly impact each other As per De Pin, Tesla
understands the importance of integrating shared value initiatives and ecosystem innovation for
sustaining its long-term growth. Using it, company has been successful at building competitive
advantage through a sustainable strategy that includes and promotes business ecosystem
innovation. Company works in renewable energy sector and encouraging its raw material
suppliers to go green will help it create a better sustainable offering chain.
Organization Policies and Management Strategies in Electric Vehicle Technology -
According to Alfred Akakpo and others Tesla has implemented a pragmatic strategy for
production of electric vehicles at affordable prices. This enables company to produce low-cost
electric cars with no fumes, noise or dirt. All this is not just profit-efficient business strategy but
also producing an innovative and sustainable business model to the auto-makers. Company needs
to continually research on clean energy sources and develops engine capacities that offers no
fumes and pollutants.
Renewed clean technology – Tesla has been researching to expand its clean technology
horizon for example, Powerwall. As per Sandy Rodrigues and others (2016), Tesla has created a
product that is not just powerful investment from the technological point of view for users but
also from the billing and environmental sustainability point of view. Powerwall is a good
diversion in Tesla's product offering by using solar power but still there are room for
improvement. For example, Tesla can produce batteries which gets charged from solar energy
while being driven or parked under sun. This would save charging time and will provide another
competitive advantage to Tesla.
Using brand positioning – Tesla is placed at one of the leading position in automotive
industry and leads electric auto-makers. Its positioning entrusts upon it to develop such policies
that inspire others to develop sustainable product offerings. E. Musonera and C. Cagle (2019),
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