Nikola Tesla Case Analysis

1017 Words 5 Pages
Introduction of the Organization Incorporated in 2003 and named for genius, Nikola Tesla, who invented the AC induction motor used in the Tesla Roadster, Tesla, Inc. was the brainchild of Silicon Valley engineers. The founding partnership between Martin Eberhart and Marc Tarpenning expanded to include fellow engineer, Ian Wright and product designer, Malcolm Smith. Several rounds of significant capital funding began when Elon Musk provided the initial financial investment, and became the chairman of the board in 2014. The team “wanted to prove that people didn’t need to compromise to drive electric – that electric vehicles can be better, quicker, and more fun to drive than gasoline cars” (Tesla, Inc., 2017). Since 2003, Tesla Motors’ mission …show more content…
The firm does not use dealerships like most other auto companies, preferring to cut out the proverbial middle-man and sell directly to customers. Combined with the direct sales facilities is Tesla’s service component of its business model in its Service Plus locations. Finally, with its Supercharger stations, Tesla provides convenient, free charging options for customers, in hopes of helping the EV concept catch on with the masses. In an effort to support the mission of speeding the transition to sustainable energy, the original model has evolved to include the introduction of the Powerwall home and business energy storage system, solar roof panels, financial services similar to those offered by other car companies, and its Gigafactory battery production facility. The firm, however, has been criticized for trying to be all things to all people. “It is trying to be a low-cost operator through ramping up production and lowering prices, while at the same time attempting to provide a differentiated, brand-name product. However, Tesla is at risk of achieving neither of those things, since production targets may not be met, while its differentiated brand could be eroded as it tries to become a mass producer” (Zucchi, 2015). However, the company, whose initial public offering in June, 2010, made it the first auto manufacturer to …show more content…
“Over time, big industries tend to get flabby and uncreative and risk-averse—and if the right outsider company has the means and creativity to come at the industry with a fresh perspective and rethink the whole thing, there’s often a huge opportunity there” (Urban, 2017). In the maturity phase of its life cycle, the industry’s seemingly insurmountable barriers to entry make it nearly impossible for new entrants to break in. Large amounts of capital are required to buy or build factories, even before any product can be manufactured or sold. In order to be profitable, units must be sold in large quantities, and cars are high-cost for the consumer and low-margin for the manufacturer. One of the most significant barriers to entry, however, is the fierce competition from existing industry giants like Ford, Chevy, Toyota, Nissan,

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