Tesla Case Questions

Tesla Case Questions

1. What are the key elements of Tesla Motors’ strategy?

Based on my findings in the case, I was able to discover the key elements of Tesla Motors’ strategy. The case stated that, “the company’s overriding strategic objective was “to drive the world’s transition to electric mobility by bringing a full range of increasingly affordable electric cars to market.” At it’s core, the company’s strategy was aimed squarely at disrupting the world automotive industry in ways that were sweeping and revolutionary.”

The case included many different strategies that Tesla Motors’ used, which were the key elements to Tesla Motors’ overall strategy. The different strategies that they used included the following:

Product Line Strategy: With this strategy Tesla has introduced two models that were rapidly advancing through the pipeline. The company’s strategic intent was to broaden its customer base by offering not only a bigger model variety but also by introducing substantially cheaper models. The two new models included The Tesla Roadster and The Model S. Each appealed to different consumers. The Tesla Roadster was the company’s first model and was a 2-Seat convertible that had several different warranty options, but sales for this model ended in December 2012 so that the company could concentrate exclusively on producing and marketing the Model S. The Model S sedan began shipments in June. This was a four door, five-passenger luxury sedan that costs around $128,500. Model S gives buyers the option of having third row with two rear-facing child seats, thus providing seating for five adults and two children. The Model S had gave the consumers many different choices of what they want included with their vehicle, including; 3 different battery-pack options, subzero weather package, parking sensors, upgrades to make the car more luxurious such as leather seats or wheel options. There is also Model X a crossover SUV that is designed to seat 7 adults, which will be slightly more than Model S. In 2017 Model 3 should be coming out in 2017 and will be sold at a much lower price point at $35,000.

Technology and Product Development Strategy: Since it’s founding Tesla has spent over $900 million on research and development (R&D) activities to design, develop, test, and refine the components and systems needed to produce top-quality electric vehicles, further, to design and develop prototypes of Tesla’s different models. Over time the spending on R&D was increased by 25% in order to accelerate product development efforts on Model S and Model X enhancements. The money used on R&D helped the company develop their core competencies in powertrain and vehicle engineering and that the company’s core intellectual property was contained in its electronic powertrain technology—the battery pack, power electronics, induction motor, gearbox, and control software that enabled these key components to cooperate as a system.