E-business Report: Analyzing Tesla's Digital Innovation and Strategies

This report provides an in-depth analysis of Tesla Motors' e-business strategies and digital innovation within the automotive industry. It examines the company's transition to electric vehicles, the disruption of traditional business models, and the implementation of direct sales, service centers, and supercharging stations. The report assesses Tesla's current market position, identifies competitors, and analyzes the challenges faced, such as balancing production with customer demand and navigating increasing competition. Furthermore, it offers recommendations for digital innovation, emphasizing the importance of empowering consumers, adopting new business models, and leveraging data analysis. The report concludes by highlighting the need for robust digital strategies to navigate industry disruptions and maintain a competitive edge.

Running head: E-BUSINESS
E-business for Tesla Motors
Name of student-
Name of University-
Author’s Note-

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Executive Summary
Business from small to large are going digital shifts or are facing digital transformation. With the
development of new business models the companies are undergoing digital innovation. This
helps to compete with other companies and helps to create different market opportunities and
helps to serve their customers in a better way. There are new workloads and new network
requirements that challenges for the businesses. The organization finds difficult to find proper
digital strategies that would help them to work efficiently. Digital innovation helps to make a
rapid change with the help of digital technology and helps to enhance the services, products,
processes as well as traditional models. This report states the digital innovation of Tesla and the
e-commerce strategies that have been carried out in the company to create a benchmark in the
market.

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Table of Contents
Section 1: Introduction....................................................................................................................3
Section 2: Case Background............................................................................................................3
Section 3: Assessment of current situation......................................................................................5
Section 4: Recommendations..........................................................................................................9
References......................................................................................................................................15

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Section 1: Introduction
Digital Innovation is considered as the core of all organization. All the operations that are
carried out in an organization are to be digitalized for making its working process better. Digital
Innovation includes using the digital technology as the applications for improving the processes
of the existing business and increase the workforce efficiency of the organization (Mendix 2020).
Digital Innovation also helps to increase the experience of customer and helps to launch
innovative products as well as business models in the organization.
This report explains the digital innovation that was taken by Tesla Motors Inc. to have
innovation in the cars. This report discusses the digital innovation that Tesla bought to
automobile industry. This report also describes the business model disruption that took place in
Tesla Motors in digital era and the e-business strategies that the company took to increase their
sales production. The change in the automobile manufacturing companies are mentioned in this
report providing recommendation for digital innovation that are to be carried out.
Section 2: Case Background
With popularizing the electric cars in the market, Tesla had become the market leader in
the automobile industry. Due to its digital innovation and the updated technology, Tesla is
considered as lead in the market. When Tesla started making electric cars, no manufactures in
the automobile industry started making it. Thus it gained a high popularity in the market with the
involvement of digital innovation and digital technology.
Tesla Motors Inc. was founded by Martin Eberhard and Marc Tarpenning in the year
2003. The mission statement that Tesla has is that it sells as well as designs high performance
and efficient electric sports cars and does not include any compromises. The cars sold by Tesla

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Motors combines the style, capable of handling advanced technologies and includes acceleration
that makes their cars most energy efficient on the road. The vision statement that Tesla has is
creating itself a compelling car company by 21st century and drive a transition in the world to use
electric cars.
Figure 1: Electric car
(Source: Cunningham 2020)
Tesla included some marketing objectives that stated there is a need to meet the greater
demand of the generation by the company and leads of marketing team is to be helped. The
objective that Tesla included is making a brand image and wants to make brand awareness in the
new customer group (Cunningham 2020). There is also a need for customer management through
customer referrals and customer loyalty. Tesla also objects to encourage the customer feedback
by developing the products the customers wants.

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With innovation in the digital market, Tesla faced strength as well as weakness in its
marketing strategy. There are opportunities and threats that are faced by the company in
developing the digital revolution. The problem that Tesla faced in digital innovation is liquidity
problem. Tesla sold Model S cars and instead of huge sales, they had a loss because of high debt
amount and the demand of customers were low and there were no controlling cost (Nambisan
2018). The manufacturing capacity of the company was also limited and customer demand were
not expected to meet in future. And as Tesla was a new company, it had no strong history like
other manufacturing companies.
Figure 2: Interior design of electric car
(Source: Ruoff 2020)
Section 3: Assessment of current situation

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The major competitors competed with Tesla includes all other automobile manufacturing
companies such as Ford Motor Company, General Motors, Honda Motor Company, NAV
Companies, Nasdaq Kandi technologies, Oshkosh, Toyta company and many more. All these
traditional car manufacturing companies increased their offerings by implementing gasoline
electric cars and manufacturing electric vehicles. Tesla is facing competition from these
companies as they have started making electric cars in most of the models they make.
The Tesla shares a market as well as sells the cars through own network of all the retail
stores those are located in North America, Asia as well as Europe. Instated of having high
demand of electric cars, Tesla was not profitable because it has been investing a huge amount of
money in the infrastructure.
The Model 3 car of Tesla was one of the lowest electric vehicle and its competitor
Volkswagen is planning to manufacture an electric cars with cheaper rate compared to Tesla.
The challenges that were faced by Tesla Motors are:
1. Balancing the production with customer demand: The first car Model 3 of Tesla was
basically aimed to have mass production (Hess and Andiola 2018). Tesla faced risk in handling
the balance of manufacturing cars in handling the demand of the customers.
2. More competition in the auto mobile manufactures: Tesla is not one the company who
manufactures electric cars. There is a high competition in the electric vehicles having high end
model of cars. There were also low end electric car models that was manufactured by
Volkswagen.

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3. The X Factor of China: After establishment of trade with China, Tesla included
improved trade relation with China. One of the manufacturing company in China had started
making electric cars which can ramp up Tesla from China.
The market including the electric vehicles is growing day to day and the reasons that lies
behind the growth is involvement of new regulations for safety as well as vehicle emissions.
There should also be technological advances and shifting need of the customer and target to meet
the expectation of the customers. Taking a unique approach of manufacturing electric cars in the
market, Tesla was not able to build affordable cars (Chen and Perez 2018). The sport cars that
was first designed by Tesla was expensive and was a high performance electric car named as
Roadster. After establishing the brand, Tesla then reinforced the business model which it was
working on. The business model included three approach; selling, providing service and charging
the electric vehicles.
Direct sales: The selling approach that is taken by Tesla is direct selling approach. Tesla
created international network with the showrooms and with the galleries mostly in the urban
areas. Implementing the sales channel, the company believed that it can gain advantage with
increasing the speed of developing the product. It also created good buying experience of the
customers. Tesla also have included internet sales in its direct sales approach. The customers has
the ability to customize their cars and can purchase them online.
Service: With the new business model, Tesla has included sales centers along with
service centers. Tesla believed that with a service center in a new area would enable them to
have high customer demand (Thomas and Maine et al. 2019). The customers will be able to
charge their vehicles and get service from the service centers. In some of the areas, Tesla
employed Tesla Ranger who were able to provide service to the customers from their house.

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Model S also had wireless feature to upload the data of the car so that the technician can view
them and fix them online.
Charger network: Tesla also included supercharging station in its business model. A
number of such station were built by Tesla where drivers could charge the batteries of the
vehicles in 30 minutes and to for free. This strategy was taken by Tesla to increase the buying
number of electric cars by the customers. With no facility to charge the car, the electric cars
would be in problem and that could also be an obstacle in mass production.
With the Tesla e-business strategy, Tesla was able to include a strategic planning for
achieving its goals and will help to improve the position in the market. With e-business, Tesla
had responsive web design where the customers were free to customize their own car and
provide feedback for the cars they buy from Tesla. Tesla also included good picture of the cars
that would help to attract the attention of the customer to visit the page and buy them if needed.
Section 4: Recommendations
The main problem that most of the companies face is that they do not undertake
transformation. But the companies should include innovation for changing the competitive
positioning in their market (Kosobutskaya et al. 2019). Digital innovation in automotive
industries mainly comes with individual initiatives. Those initiatives helps to transform the
automotive industry and it is recommended to have three fundamental feature in the digital
innovation.
1. Providing power to consumers: There is a change in the services provided by the
companies to the customer and the change in service is because of the growth of the digital

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innovation. With the increase in use of social media and with the increase of owners impact on a
certain service or product have increased the selling rate of the product.
2. New business model is to be included: It is also recommended to have new business
models for the companies as new business model will help to include digital innovation in the
business.
3. Development to a standard platform and consider data flows: Analyzing of data has led
to rise of e-business and digital revolution. It is recommended to have a standard platform of
rules and regulations in the automotive industries and should analyze the flow of new data in the
organization.
The companies are expected to improve the working process that are included in the
manufacturing process of vehicles. They are expected to be more efficient so that they can
implement the strategies faster compared to any other competitors in the same industry (Hinings,
Gegenhuber and Greenwood 2018). The companies should also provide training associated with
automobile so that the employees in the showrooms can help the customers to buy a particular
model more efficiently. It is also the duty of the government to promote manufacturing in the
country and help small companies to export their vehicles. The government should take initiative
to expand their domestic market.
Creative thinking is an important role to bring digital innovation. Creativity includes
personal, economic, social benefits and increases creative invention. Innovation in digital sectors
includes different strategies that are to be included in the organization. Multilevel strategies are
to be implemented that deals with different IT tools, social media as well as different themes.
This helps to structure as well as manage the production groups who are working for the

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companies. The developers and the inventors are to be given with opportunities so that they can
develop their manufacturing skills and can mix the IT concepts in their manufacturing process.
Motivation is to be provided to the developers so that they feel enthusiastic to work and invent
new things in the manufacturing industry.
It is not possible for the automobile industries to predict the disruption as well as
disintermediation that might occur in the industry (Nambisan et al. 2017). For handling this, the
industries should have a robust digital strategy so that they can move securely as well as can
keep their profit. The strategies that the automobile companies are recommended to implement
includes:
1. Taking their company to a broader digital area: A company in the automobile industry
should first review its position and then make strategic planning to include digital innovation in
its business process. The technology and the digital effect that is included in the company will
affect all the sectors and will help to benchmark themselves with the digital practices.
2. Recognizing the expectations of the customers: This is the most important touch point
that the automotive companies are to keep in mind. Sometimes in excitement of the new
technology, the customers are ignored. The strategies that the manufacturers take in their digital
revolution is ensuring the need that customer expects from them and their functioning should
include digital functioning.
3. Promote future agility: With the digital evolution, the environment for the automobile
industries changes fast and companies in automotive industry should envision their future and
also look at the practical method that are presently carried out in the company and those will be

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carried out in future. Practical planning is much needed in the digital strategy of the companies.
A company is called as innovator only if it delivers futuristic vision.
4. Expect Digital disruption: This is considered to be the final touch point of the
automobile manufacturers (Hamad, Elbeltagi and El‐Gohary 2018). The services that are
provided by the manufacturers are selling cars, manufacturing them, repairing them, providing
service and design the product for the customers. The automobile manufacturers needs to have a
grip on the disruption and the disintermediation of the customers.
With the help of digital revolution, the companies get a wide number of opportunities and
the case is same in the automotive industry. Buying a car is a long term investment that are made
by the customers so sometime, the customer do not prefer online buying of cars. The automotive
companies should implement a proper e-commerce solution so that they can overcome the
challenges and have a good competitive market. The e-commerce solution that the companies
might include are:
1. Enhanced processing of orders: E-commerce helps in enhance ordering process of
the products. There are wide number of components that are sold by the automotive industries
and large customization is needed for cars and other items that are to be sold. E-commerce
provides the customers to get an advance process of ordering so that they can simplify them, and
reduce those as per their need.
2. Seamless exchange of information: E-commerce can provide the customer with real
time access of the inventory information, the details of the product and the information of client
because of the ERP that is integrated in the inventory of the company. This helps to facilitate the
work of sales agent and the customers.

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3. Proper product search: The customers are to be helped with their search to get the
auto parts and that is challenging for most of the industries. It is very difficult to narrow down
the vast number of products that are present in the catalogue (Sambhanthan and Good 2016).
Finding a small part from the large number of product is effort consuming and is takes time.
With the e-commerce, integration of the store of the company can be done with the online store
and thus the customers can find a particular product either small or big very easily. They only
need to search for the product they want to buy and that would help to save the time and effort
both for the customer.
4. Proper promotion strategy: A good platform of e-commerce provides wide number
of opportunities for the automotive industry. They can cross sell as well as upsell the products
and can boost the sales number. Having an integrated online store, they can link their products
with the ERP of the company. All their products can be sold online and customer can view their
store not visiting physically in their showrooms.
5. Reduce the payment error and shipping error: There are many rules and regulations
that the customer needs to follow for making payment in an automotive company and there are
many shipping requirements as well. While placing a bulk order, lots of custom work are to be
done and that might be a headache for the customer. With roper implementation of e-commerce
in the industry, there can be freedom and flexibility for the customers and provide necessary
information at the time of checkout. This helps to minimize the shipping errors and the payment
errors.

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