Tesla Motors Company: Analysis of Success Milestones and Strategies

This report provides an in-depth analysis of Tesla Motors' success, examining the company's journey from its inception to its current position as a leader in the electric vehicle market. The report highlights key milestones, including the development of innovative technologies like battery electric vehicles and the expansion of its product line with models such as the Model S and Model 3. It explores Tesla's unique business strategies, such as direct sales, service centers, and the supercharger network, and their impact on customer experience, brand value, and market share. The methodology includes document analysis and data presentation using figures, graphs, and tables to illustrate the findings. The report discusses how Tesla's focus on user-friendly technology, direct sales, and brand building has contributed to its growth, despite challenges such as high production costs and competition from established automotive companies. The study concludes by emphasizing the importance of emulating Tesla's business model to foster innovation and achieve success in the automotive industry.

Running head: TESLA MOTORSCOMPANY SUCCESS MILESTONES 1
Tesla Motors Company success milestones
Student’s Name
Institutional Affiliation

TESLA MOTORSCOMPANY SUCCESS MILESTONES 2
Contents
Contents...........................................................................................................................................2
1.0 Executive summary...................................................................................................................4
2.0 Introduction................................................................................................................................4
3.0 Problem statement.....................................................................................................................5
4.0 Research aim..............................................................................................................................5
5.0 Research question......................................................................................................................5
6.0 Literature review.....................................................................................................................5
6.1 Direct sales............................................................................................................................6
6.2 Service...................................................................................................................................7
6.3 Supercharger network:.......................................................................................................7
6.4 World’s car makers by market value...........................................................8
7.0 Methodology:.............................................................................................................................9
7.1 Data collection.......................................................................................................................9
7.2 Data analysis and presentation...............................................................................................9
8.0 Study findings..........................................................................................................................10
8.2 Broadening the network through direct sales.....................................11
8.3 Heightening brand value...................................................................................11
9.0 Discussion of findings.............................................................................................................12
9.1 Simple user friendly technology..........................................................................................12

TESLA MOTORSCOMPANY SUCCESS MILESTONES 3
9.2 Broadening the network through direct sales.....................................13
9.3 Heightening brand value...................................................................................14
10. Conclusion...............................................................................................................................15

TESLA MOTORSCOMPANY SUCCESS MILESTONES 4
1.0 Executive summary
The aim of this paper is to access different new technologies associated with success of
automotive industries. Tesla Motors Company was used as a case study. The company has gone
viral in the global market amidst a number of challenges warranting a need to establish its top
secrets leading to such a tremendous growth despite stiff competition from other motor vehicle
companies .The paper seeks to answer questions like; how Tesla has become so successful in the
industry after going through hard times, and establish Tesla’s continuous innovating and
improving technology.The problem that prompted the study is automotive industries are faced
with large fixed costs diminishing their profit margins. Most companies therefore spend a lot of
money in innovative technologies to maintain their status quo at the expense of their budgets
Data was generated using document analysis and analyzed through discussion. Descriptive
statistics was used to record the findings of the study. A review of literature on automotive
companies was done to measure different components with respect to the aim of the study.
2.0 Introduction
sTesla Motors Company has created a new dimension to the mechanical industry
following its tremendous innovative technology. The company has survived major challenges
such as high production cost, and network effects. It is therefore a perfect choice in this study
since it gives a true reflection of new technologies used within automotive industries to cut on
the costs and increase product worth. To overcome insurmountable economic problems, Tesla
invented battery electric vehicles which replaced fuel vehicles (Oak Ridge National Laboratory,
United States, & United States, 2011). The company is continuously improving the energy sector
into green energy. This initiative has made Tesla to gain much popularity having high-end
encroachment marketing strategy against giant players in the market like Toyota, Ford, Honda,

TESLA MOTORSCOMPANY SUCCESS MILESTONES 5
Mercedes, BMW, Volkswagen and so on(Hardman et al., 2014). The Space X technology has
also helped Tesla to reduce the cost of space travel. These milestones define the success of Tesla
Motors Company (Hardman & Steinberger, 2015).
3.0 Problem statement
The problem that prompted the study is automotive industries are faced with large fixed
costs diminishing their profit margins. Most companies therefore spend a lot of money in
innovative technologies to maintain their status quo without making further improvement on
their current market products. Such a move causes a stretch on their budgets (Liu & Bloomberg
News (Firm), 2013). Some have even lost network with their potential clients due to poor records
of financial management and bankruptcy.
4.0 Research aim
The aim of this paper is to access different new technologies associated with success of
automotive industries specifically, product improvement, customer control and networking.
5.0 Research question
What strategies can be used to cut down on fixed costs in automobile industries?
6.0 Literature review
Tesla Motors is an electrical car making company based in Palo Alto, California under
the flagship founder of Elon Musk and Martin Eberhard. It came into existence in 2003. Its major
success dates back to 2016 when it received a global recognition after delivering approximately
22,200 vehicles (Knox & McCarthy, 2012).Since then, the company has been on top of the
market share towards power trains in passenger vehicles. The company is well known for its

TESLA MOTORSCOMPANY SUCCESS MILESTONES 6
diverse products ranging from Tesla Model S, Tesla Model 3, Tesla Roadster, and Tesla Model
X. The company’s products are aimed at customers in the high-end market sphere. This company
has established its markets in North America, Asia and Europe (Oak Ridge National
Laboratory, United States, & United States, 2015). In 2016, Tesla’s Model S was at the lead as
the best sold car in the United States of America after selling 29,421 units. It was closely
followed by model X with 17,129 units. In 2016 alone, the two models generated 4.2 billion US
dollars to the company. These models remain outstanding up to date in Norway and the United
States. However, Tesla faced a stiff completion from BMW which sold 20,576 units in the same
year (Bohnsac, Pinkse & Kolk, 2014).
The company operates its own power train segment and Toyota RAV4 electric vehicles.
In July 2014, Tesla was ranked as the largest battery factory in the US. It is also known for
developing driverless cars. Statistics show that the demand of electrical cars is projected to rise
over from $84billlion to $272 billion in 2019 ( Mangram, 2012). This has been enhanced by
increased need of environmental friendly cars, infrastructure improvements, and increase in
gasoline prices. With such a projection, automotive companies should be at pace to reap big from
the projection. This can be enhanced through emulating Tesla’s business model categorically
placed into selling, servicing, and charging electric vehicles (Oak Ridge National Laboratory,
United States, & United States, 2014).Tesla commands a huge market due to its overwhelming
innovative technology and networking strategies achieved through; direct sales, service, and
supercharger network (Mangram, 2012).
6.1 Direct sales
Unlike other car industries that rely on franchised dealers to sale their brands, Tesla
invests in direct sales via international show rooms and galleries (Halderman, 2010). In doing so,

TESLA MOTORSCOMPANY SUCCESS MILESTONES 7
Tesla enjoys product development, better customer buying experience, and no conflict of
interest. Customers deal with Tesla staff one on one creating a mutual understanding. Equally,
Tesla Motors sales its products to customers via online platforms.
6.2 Service
Chaston (2017) identifies that Tesla uses its service centers to deal with customer needs.
For example, the newly opened Service Plus initiative allows customers to charge or service their
vehicles. Mobile technicians are also standby to offer assistance in areas where need arises
(Pride, 2017). The high tech in the Module S cars that supports wireless internet access, gives
clients an easy time since problematic issues can be uploaded to technicians and offer solutions
online without physically touching the car.
6.3 Supercharger network:
Supercharger network stations help drivers to charge their vehicles faster at no fee. The
initiative encourages most people into engaging with the company thus a strong brand loyalty.
However, these stations are not enough in United States, Europe, and Asia which commands a
huge population of electric car users (Gilles, 2012).

TESLA MOTORSCOMPANY SUCCESS MILESTONES 8
6.4 World’s car makers by market value
Table 6.4 showing automobile industries market value comparison (Chris, 2015)
According to figure 6.4 above, Tesla runs along the top 3 world car makers by market
capitalization ahead of other competitors such as BMW, General Motors, and Ford Motor
Company. The company’s value stands at $59.7 billion after Toyota Motor Corp at $172billion
and Daimler AG at $78 billion. The success has been attributed to new technological
advancements and improvements on the current market products (Eberhard &Tarpenning, 2006).
Tesla’s technology has beaten other automotive companies by far in that other car
companies rely on it. For example, Daimler General Motors depend on Tesla for battery packs.
Mercedes-Bend uses Tesla’s power train (Doeden, 2015). According to consumer reports, the S
model is a technological marvel associated with numerous benefits ranging from cost, class,
comfort, and durability. The company is further expanded this concept with the

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Model S to its third-generation car, the Model 3 which equally attracted a
massive market share.
7.0 Methodology:
7.1 Data collection
Data collection is gathering empirical evidence in order to gain new insights about a
situation and answer questions that prompt undertaking of the research (Carlson & Robertson,
2014).The study used document analysis and questionnaires to establish market trends of
automotive industries in the past years with Tesla in sight as a major case of study. Majorly,
market analysis on competition, production processes and policies, innovative technologies, and
costs of operations were well anchored from companies’ archives and websites (Berdichevsky,
Kelty, Straubel &Toomre, 2006). Both qualitative and quantitative approaches were used to
obtain data for a period dating from July 1st to August 14th 2017. The methods were efficient
since they allowed the researcher to access all possible factors of growth in a locomotive
industry.
7.2 Data analysis and presentation
Data analysis is the process of systematically searching, arranging, organizing, and
breaking data into manageable units, synthesizing the data, searching for pattern, discovering
what is important and what is to be learned (Carlson, 2015).Data was presented in figures,
graphs, and tables. Percentages were equally calculated followed by brief explanations to
describe the numerical figures obtained.

TESLA MOTORSCOMPANY SUCCESS MILESTONES 10
8.0 Study findings
This includes non-linear text presented in form of graphs, statistical figures, tables and
percentages based on the study objective.
8.1 Simpler user friendly technology
The figure shows Tesla’s profit margin witnessed after the company introduced Module S
cars that are user friendly and easy to operate. This attracted more unit sales with increase in time
from 25 in 2011 to 261.33 in 2014. The X axis represents time in years and the Y axis represents
total average units sold.
Figure 8.1 Graphical representation of Tesla’s profit margin (Source, author, 2017)

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8.2 Broadening the network through direct sales
Figure 8.2: Impact of direct sales on buying experience, product development and conflict of
interest (Source, author, 2017)
8.3 Heightening brand value
RESPONSE N/A AVERAGE GOOD BAD TOTAL
TOTAL 8 5 23 4 40
PERCENTAGE 19% 13% 58% 10%

TESLA MOTORSCOMPANY SUCCESS MILESTONES 12
Table 8.3: Response rate on contribution of adding value to brand (source, author ,2017)
Figure 8.3: Response rate to contribution of adding value to the brand (Source, author, 2017)
9.0 Discussion of findings
9.1 Simple user friendly technology
From figure 8.1 (Graphical representation of Tesla’s profit margin), it is clear that Tesla
Motors Company has maintained a steady growth in its revenue since 2011. Specifically, Tesla’s
success is attributed to the’ one thing at a time’ strategy echoed by the management where one
product is dealt with at a time. According to the U.S. National Highway Safety Traffic
Administration, Model S outscored Buick, Jaguar, Porsche, Fiat, Land Rover, and other cars in