Innovation and Sustainability: A Report on Tesla's Practices

This report analyzes Tesla's approach to sustainable profit-making and innovation. It explores Tesla's strategies for minimizing environmental impact while maximizing profitability, including the use of renewable energy in manufacturing and the development of sustainable products like solar panels and energy storage solutions. The report delves into relevant literary sources that support Tesla's sustainability efforts and examines stakeholder analysis, including employees, customers, and government entities, and their interests in the company's corporate social responsibility. Furthermore, the report includes a sustainability benchmark, comparing Tesla to its competitors and assessing its environmental performance, along with recommendations for managers to enhance the company's sustainability initiatives and ensure long-term success. The report concludes by emphasizing the importance of sustainable practices for Tesla's continued growth and contribution to a sustainable society.

Sustainability and Innovation
1

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
2

INTRODUCTION
Sustainability is define as the process in which organizations figure outs the innovative
and creative ways to 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 define 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
3

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 (Dangelico, Pujari and
Pontrandolfo, 2017). 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. As per Fredrico
De Pin in his research - How Tesla integrates Shared Value principles with Ecosystem
Innovation to build sustainable competitive advantage - sustainability and innovation are two
intertwined issues that relentlessly impact each other. Tesla has been able to integrate both
shared value initiatives and ecosystem innovation for sustaining its long-term growth. Company
has been successful at building competitive advantage through a sustainable strategy that
includes and promotes business ecosystem innovation.
According to literature review of Alfred Akakpo and et.al, book - Foresight, Organization
Policies and Management Strategies in Electric Vehicle Technology Advances at Tesla, Tesla
has implemented a pragmatic strategy for production of electric vehicles at affordable prices.
This will enable 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 automakers. According to Sandy Rodrigues and et.al., article - Tesla
Powerwall: Analysis of its use in Portugal and United States – 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. According to the E. Musonera and C.
Cagle in their article, Electric Car Brand Positioning in the Automotive Industry:
Recommendations for Sustainable and Innovative Marketing Strategies, Tesla has established
must follow strategies for companies wanting to enter electric car market for customers are
increasingly getting attracted towards the sustainably innovative products and design. As per C.
P. Grey and J.M. Tarascon in their article, Sustainability and in situ monitoring in battery
development, solar batteries produced by Tesla will help in minimising ecological implications
associated with wider use of batteries that are capable of generating large amount of carbon
footprint. As per Frank Montabon, Mark Pagell and Zhaohui Wu in their article, making
sustainability sustainable, most of the firms practise profit before environmental and social
interest while companies like Tesla has integrated environmentally sustainable practices in their
product and supply chain portfolio such as producing combustion free engines.
4

Section 4 Stakeholders analysis and their interest in company’s corporate social
responsibility
Stakeholders are those individuals, parties or groups which are directly or indirectly
connected to the company’s operations. Relevant stakeholders for Tesla’s efforts towards
production or consumption are its employees, customers, creditors, suppliers, government,
community or society at large, etc. Tesla chooses its associates very carefully and every
stakeholder that Tesla is associated with, plays a part in fulfilling company’s corporate social
responsibility and behaves in manner that is according to company’s pre-decided policies
(Williams, 2015). For example, Tesla has a supplier code of conduct and Human Rights and
conflict Minerals Policy that has outlined all expectations that it has from its suppliers and
partners. As a part of its social responsibility, it continuously strives to make working conditions
in its supply chain safe and humane, in addition to ensure that their manufacturing process is
environmentally responsible.
Company’s line of operation is in accordance with the governmental policies and societal
demands that automakers should increase their energy efficiency and reduce their environmental
footprint caused by engines, as it already has placed target to accelerate the world’s transition to
sustainable energy as its mission statement. Company also places a high value in building a safe,
fair and inclusive culture for its employees (Brockhaus, S. and et.al., 2017). It employs staff from
diverse background and motivates and develops them to work together in the drive to accelerate
company’s vision forward.
Section 5 Sustainability benchmark
Sustainability report of the Tesla in order to identify its current business situations and
the further improvement which can be done for the purpose of comparing the company with its
competitors (Vaz, Rauen and Lezana, 2017).
5

Figure 1Tesla Sustainability and Safety. 2020
Figure 2Tesla Sustainability and Safety. 2020
Above mention are the two graphs which describe Tesla cumulative energy produced vs its
consumption and the injury rate in its car production.
From the first graph it has been identified that with the year its consumption and
production is increasing that is they are creating the most efficient EVs available. Close by this
stands a strong promise to source environmentally friendly power for assembling, with a
definitive objective being 100% environmentally friendly power for all tasks. The energy
delivered by Tesla sun powered organizations far exceeds the energy utilized in the
organization's processing plants.
6

According to second graph it has been identified that company has understand the factor
that employees or workers prefer to work effective in safe environment. Hence company take
proper measures in order to ensure that its workforce is satisfied with the company. From the last
few years they have zero injuries.
Competitors- The company is providing tough competition to its competitors as they are
among one of the best car producers across the globe which meet the needs of customers and
focuses on improving environment (Goodman, Korsunova and Halme, 2017). The competitors of
the company are Li auto, Nio, Nikola group, Workhorse group and many more. As main focus of
the company is to grow sustainable due to which they are able to attract large number of
customers. The electronic vehicles are quite convenient for the people as they expenses are low
in comparison to petrol or diesel vehicles. Moreover they are focusing on its employee safety
which is providing them great results as they are work more effectively and efficiently in order to
meet the goals and objectives of the organization. Tesla is using differentiation focus strategy in
order to accomplish competitive advantage where by providing unique and innovative
product(electric vehicles) it is able to attract the market where customers are welling to purchase
newly introduced products. In terms of quality they are able to stand on the terms and conditions
of customers. They are able to get success in the business because with the use of differentiation
strategy they are focusing on long them objectives in electric automobile , battery technology
and eco friendly products. Their main motive is to use the sustainable energy in its business and
to promote it.
Suitable factors related to environment sustainability- The company have come up with
unique concept of providing electronic vehicles which helped in reducing the level of air
pollution. The company designs, manufactures and distributes electric cars which are safe for the
environment that is electricity based vehicles helps in reducing the carbon footprints. Tesla's
corporate social responsibility endeavors are palatable in tending to the interests of
the overwhelming majority of its partners. In any case, the organization can improve its
CSR projects to enhance its exhibition in supporting networks and financial
specialists/investors (Inigo, Ritala and Albareda, 2020). As an example , to enhance CSR
viability in fulfilling networks, Tesla, Inc. can execute new network improvement programs.
Additionally, the organization must expand its endeavors in global extension to deal
with the interests of investors/financial specialists in profiting by the car business. These
suggestions are relied upon to upgrade Tesla's corporate social obligation standing.
Section 6 Recommendations for Mangers
The recommendation for the managers of Tesla would be that they should be more
passionate and responsible as with this attitude they would be able to make its workforce more
responsible and efficient. They should take feedback form their client on regular bases in order to
identify at what they are lacking and further what they need to improve. They are taking steps in
order to provide save working environment to its employees which is helping them in retaining
the skilled and capable employees. Moreover they should set the realistic goals which helps them
7

in accomplishing desire results as the employees will function according to the set target which
helps in increasing the productivity of the business. Furthermore they should provide appraisal
and rewards to employees on the bases of their work which lead to motivate other employees to
work more efficiently.
CONCLUSION
From the above study it has been concluded that it’s essential for the organizations to
focus on the sustainable innovation in order to accomplish the effective results in near future.
With the increase in the level of pollution and damage to the environment business organizations
should focus on introducing environment friendly products. Moreover with the increasing level
of competition the business unities need to come up with new innovative and creative business
ideas and products in order to maintain its position in the marketplace. Maintainable business
techniques or sustainable business strategies are ones that accomplish monetary execution
through ecologically and socially mindful plan and working practices that push us toward a
cleaner and more beneficial.
8

REFERENCES
Books & Journal
Adams, R. and et.al., 2016. Sustainability‐oriented innovation: A systematic
review. International Journal of Management Reviews, 18(2), pp.180-205.
Vaz, C.R., Rauen, T.R.S. and Lezana, Á.G.R., 2017. Sustainability and innovation in the
automotive sector: A structured content analysis. Sustainability. 9(6). p.880.
Goodman, J., Korsunova, A. and Halme, M., 2017. Our collaborative future: Activities and roles
of stakeholders in sustainability‐oriented innovation. Business Strategy and the
Environment. 26(6). pp.731-753.
Inigo, E.A., Ritala, P. and Albareda, L., 2020. Networking for sustainability: Alliance
capabilities and sustainability-oriented innovation. Industrial Marketing
Management, 89, pp.550-565.
Alghalith, N., 2018. TESLA: INNOVATION WITH INFORMATION
TECHNOLOGY. International Journal of Business Research and Information
Technology. 5(1). pp.37-51.
Brockhaus, S. and et.al., 2017. Motivations for environmental and social consciousness:
Reevaluating the sustainability-based view. Journal of Cleaner Production. 143.
pp.933-947.
Dangelico, R.M., Pujari, D. and Pontrandolfo, P., 2017. Green product innovation in
manufacturing firms: A sustainability‐oriented dynamic capability perspective. Business
strategy and the Environment. 26(4). pp.490-506.
Schaltegger, S., Lüdeke-Freund, F. and Hansen, E.G., 2016. Business models for sustainability:
A co-evolutionary analysis of sustainable entrepreneurship, innovation, and
transformation. Organization & Environment. 29(3). pp.264-289.
Williams, E., 2015. Green giants: How smart companies turn sustainability into billion-dollar
businesses. Amacom.
Online
Tesla Sustainability and Safety. 2020.[online].available through:<
https://www.tesmanian.com/blogs/tesmanian-blog/tesla-impact-report-2019 >
Impact Report, 2019. 2020. [Online]. Available through:<
https://www.tesla.com/ns_videos/2019-tesla-impact-report.pdf >
9