Tesla is a rising ?hampion in the automotive industry and
this paper fo?uses on analyzing what makes Tesla grow so signifi?ant in the
short amount of time and its strategy to ?ompete in the very ?ompetitive market.
industry is a red o?ean filled with strong ?ompetitors. Tesla whi?h is a new?omer
in the industry and just founded in 2003 entered a ni?he ele?tri? ?ar market
whi?h has big potential in the future automotive Industry.
In the ?urrent ele?tri? ?ar industry some of the
strong players su?h as BMW, Toyota, Volkswagen have the upper hand due to the
long experien?e in the automotive industry, ?ompared to them Tesla is still
Huge ?ar manufa?turer like Volkswagen have also started
produ?ing ele?tri? ?ar whi?h is E-Golf, an ele?tri? version of VW Golf. Volkswagen announ?ed that it
is going to double their produ?tion ?apa?ity in the VW fa?tory in Dresden.
Produ?tion will gradually in?rease from 35 to 70 vehi?les a day starting in Mar?h
2018, the automaker also announ?ed. The plant in Dresden will add a se?ond
shift to a??ommodate this ?hange. (Lambert and Lambert, 2018)
to Voigt, Buliga and Mi?hl (2017), until the year of 1990s, most big players
in automotive industry saw no big need to develop ele?tri? vehi?le te?hnology,
largely due to low oil pri?es and fa?ile environmental poli?ies. By the turn of
the millennium, some ?ar manufa?turers, for instan?e GM, made initial attempts
to introdu?e environmentally friendly vehi?les, su?h as the ?hevrolet S-10 Ele?tri?.
Su?h proje?ts mostly failed, due to a la?k of market driving fa?tors.
most signifi?ant among them was the la?k of good performan?e batteries and re?harging
stations. However, some of those proje?ts su??eeded. Some ele?tri? ?ars su?h as
the Nissan Altra, and hybrid ?ars su?h as the Toyota Prius and the Honda
Insight found a good position as the early adopters. The higher sales numbers
of hybrid ?ars ?ompared to purely ele?tri? ?ars were largely due to the higher
performan?e of the hybrid’s internal ?ombustion engine, these were able to redu?e
the biggest disadvantage of ele?tri? vehi?les whi?h is its short travel range
on one ?harge.
During a short period of time ?ompared to its
?ompetitors, Tesla has done mu?h more than any other ?ar manufa?turer has. One
of the proofs ?an be seen from a data obtain by M??arthy from Statista (2017) about
Tesla dominated the United States ele?tri? vehi?le sales share based on unit in
the period of January until June 2017.
1. US Ele?tri? Vehi?le Sales Share; Sour?e: M??arthy, 2017
In November 2017, Tesla laun?hed its new generation
two roadster. Tesla wanted to ?reate an ele?tri? roadster whi?h ?an beat gasoline
sports ?ar. He ?laimed the base model will do a??elerate from 0 to 60 in 1.9 se?onds
and the top speed will be above 250 miles per hour. The Roadster has a 200kWh battery
pa?k and a 620-mile range every ?harge, or over 1,000 kilometers. (J. Hawkins and Warren, 2017).
Tesla’s Se?ret for its
Tremendous Growth in a Short Time
The Tesla’s ?o-Founder, Martin Eberhard noti?ed
that people did not buy hybrid ?ars su?h as the Toyota Prius just to save money
on gas, but it is be?ause they ?are about positive environmental impa?t by
using the ?ar, they are shifting to more the e?o-friendly lifestyle. Tesla’s
founders ?ame to believe that they ?ould begin by addressing this potential in
the ni?he market segment and only subsequently address the mass market through
more affordable ele?tri? ?ars. If any Tesla ?ould have a ?han?e on the market,
it first had to rea?h early adopters, in order to make ele?tri? vehi?les desirable
to the mainstream. Tesla’s business model was therefore primarily triggered by an
emergent demand for high-performan?e ele?tri? vehi?les. At the same time, the
founders envisioned the ?ompany’s evolution towards mass-produ?ing ?ost-effe?tive
models. (Voigt, Buliga and Mi?hl, 2017)
2.1 Tesla’s Growth Driver Analyzed with VRIO Framework
What ?an be said, however, is that during short
period of time ?ompared to its ?ompetitor, Tesla has done mu?h more than any
other ?ar manufa?turer has.
Tesla is a promising new ?ompany
in ele?tri? vehi?le industry. We ?an prove it by looking at its uniqueness and
its ?ompetitive advantages by using the VRIO framework. VRIO is used to assess
the situation inside the ?ompany and its resour?es,and
whi?h part of it has possible potential for improvement.
The tool whi?h is ?alled VRIO framework was originally developed by Barney, J.
B. (1991). VRIO framework is one of many frameworks or tools whi?h ?an be suitable
to identify what makes su??essful growth of the ?ompany.
?ostly to Imitate
Produ?ts (Ele?tri? ?ar &
Sustainable ?ompetitive Advantages
Potential ?ompetitive Advantages
Sales Team and Pro?edure
Potential ?ompetitive Advantages
Management of TESLA
Sustainable ?ompetitive Advantages
Table 1: VRIO Framework on Tesla’s Resour?e; Sour?e: Author’s
Value: Tesla’s resour?es are all valuable. Tesla’s
produ?tion plants ?an produ?e high te?h ele?tri? ?ar and effi?ient battery.
This battery whi?h is produ?ed with the help of Panasoni?’s te?hnology are able
to ?hange the way of ?urrent ?ommon industry whi?h still heavily rely with
fossil fuels, its ?lean energy produ?ts ?an be?ome perfe?t with improved te?hnology
and solve energy demand problems for the entire world. Their sales pro?edure is
sell and produ?e by order. Due to high demand, they need to in?rease the produ?tion
Rarity: Tesla’s high end te?hnology su?h as battery whi?h
is patented and ongoing R and also produ?tion plant to develop innovative
and improved alternative energy produ?ts su?h as ?ars and batteries ?an be ?onsidered
Imitability: It is ?ostly and diffi?ult to imitate Tesla’s
unique te?hnology,manufa?turing strength, R&D ?apabilities and it is not easy
to find the ?EO whi?h has leadership skill like Elon Musk. Tesla has spent huge
amount of resour?es and effort to rea?h this ?urrent stage whi?h is going to be
diffi?ult to ?opy by other ?ompetitor in the automobile industry.
Organization: Tesla’s utilization
of its battery effi?ien?y and the intangible resour?es like the ?orporate ?ulture
lead by the ?EO are good enough however the produ?tion plan and sales team are
not fully organized yet, as we all know they have problems with supply and demand
of the ele?tri? ?ars. In the future when they are as big as Volkswagen or Toyota,
they ?an be a real giant in this industry and they ?an mass produ?e their ele?tri?
?ar. Tesla’s strong leadership, organizational ?ulture and pra?ti?es indeed make
the ?ompany ?apable to obtain sustain ?ompetitive advantage by exploiting opportunities
in the alternative energy segment. To sum up, their produ?ts and management ?ulture
are sustainable ?ompetitive advantages but their produ?tion plants and sales team
need to be improved.
2.2 Tesla’s Business Model
Proposition : Tesla offers something
more than the ?ompetitor ?an offer whi?h is Luxury ele?tri? ?ar with high
performan?e (high speed, long battery life, fast ?harging, infrastru?tures su?h
as ?harging stations distributed in various lo?ations.
Key Partner and A?tivity
: Panasoni? and Tesla has partnered sin?e the beginning of 2017, the partnership
aims to produ?e new batteries
whi?h are slightly larger size in size than the ones it has been using in order
to in?rease effi?ien?y and lowering the ?ost. (Fehrenba?her, 2017)
Resour?es : Tesla Gigafa?tory, Tesla
with the help of Panasoni? planned produ?tion rate of 500,000 ?ars per year by
2018, High Te?h Resear?h and development in Sili?on Valley.
?ustomer Relationship: Personal Assistan?e, strong engagement
?ustomer Segments: Ni?he market for the ele?tri? luxury ?ar
?hannels and Revenue
Streams: Tesla has Online store in the tesla
website for the ?ustomer in order to pur?hase the ?ar, a??essories or even apparels.
Tesla gained the revenue streams for these.
2.3 Tesla’s Strategy Observed by Porter’s Generi?
Porter’s Generi? Strategy des?ribes how a ?ompany
pursues ?ompetitive advantage a?ross its ?hosen market s?ope. There are ?ost leadership
(narrow/fo?us or broad), and differentiation (narrow/fo?us or broad).
Figure. 2 Porter Generi? Strategy; Sour?e: Author’s
own Illustration (using Porter’s Generi? Strategy ?anvas ?reated in 1980.)
From what is look like, Tesla’s generi? ?ompetitive strategy
is using differentiation strategy (Initially it uses narrow or fo?us differentiation
and now it is starting to move to broad differentiation strategy). Tesla has a
big ?ompetitive advantage by developing ele?tri? ?ars and also luxury ele?tri? ?ars
whi?h differentiate the ?ompany from other firms in the automotive industry.
Tesla’s ele?tri? ?ars are also has a huge ?ompetitive advantage
be?ause they are using ele?tri? as the energy sour?e whi?h is more environmental
friendly te?hnology ?ompared to ?ombustion engine te?hnology in ordinary ?ars
By using this Porter’s generi? strategy to observe Tesla’s
mission, we ?an see that Tesla is able to attra?t potential ?ustomers espe?ially
the guys who are interested in environmentally friendly produ?ts. Initially,
Tesla used to ?hoose differentiation fo?us as its generi? strategy before, the ?ompany
fo?used on the uniqueness of its produ?ts whi?h are ele?tri? ?ars and the battery.
It also spe?ialized as the early adopters in the mid to luxury ?ar market. As this paper is written, Tesla has grown
tremendously and it has potential to redu?e produ?tion ?osts. Tesla’s Porter generi?
?ompetitive strategy will possibly shift to ?ompletely broad differentiation.
The de?lining produ?tion ?osts after doing more sales until it passes the breakeven
point and get profits. In addition to that point, Tesla’s in?reasing brand
popularity whi?h attra?ts more investors and buyers will open a new door for the
?ompany to produ?e ele?tri? ?ars in higher quantity and broadly target ?ustomers
in the automobile market.
to Blo?k and Harrison (2014), the in?reasing growth of ele?tri? ?ars during the
beginning phase will have a lot of ?hallenges upon the ?ost of vehi?le, vehi?le
mileage between ?harging, vehi?le maintenan?e, battery life, availability of ?harging
stations, ?harging duration, infrastru?ture, standards, and permitting, and also
publi? knowledge and edu?ation. These are what
Tesla has been developing in a short time and keep on improving.
As it is written above, Tesla is a rising ?hampion in the automotive
industry, spe?ialized in ele?tri? ?ar manufa?turing. Tesla use broad differentiation
as it is strategy and utilize its resour?es
we ?an see from the Value whi?h is offered by Tesla, it offers premium quality ele?tri? ?ar with
high performan?e (high speed, long battery life, fast ?harging, infrastru?tures
su?h as ?harging stations distributed in various lo?ations. Tesla has strong key resour?es partners and will obtain
more in the future. Some of the ?hallenges whi?h Tesla needs to over?ome right
now are su?h as the produ?tion ?apa?ity to fulfill the demand of the battery and
the ?ars from the market.
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from http://evt?.fse?.u?f.edu/ reports/EVT?-RR-01-14.pdf.
Voigt, K., Buliga, O. and Mi?hl, K. (2017). Business
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J. Hawkins, A. and Warren, T. (2017).
Tesla’s new se?ond-generation Roadster will be the qui?kest produ?tion ?ar ever
made. online The Verge. Available at: https://www.theverge.?om/2017/11/17/16669024/tesla-roadster-2017-fastest-?ar-world
A??essed 1 Jan. 2018.
Lambert, F. and Lambert, F. (2018).
VW is doubling its e-Golf ele?tri? ?ar produ?tion following strong domesti? demand.
online Ele?trek. Available at: https://ele?trek.?o/2017/12/27/vw-doubling-e-golf-ele?tri?-?ar-produ?tion-strong-demand/
A??essed 30 De?. 2017.
Barney, J. (1991). Firm Resour?es and
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M??arthy, N. (2017). Infographi?:
Tesla Dominates The U.S. Ele?tri? Vehi?le Market. online Statista Infographi?s.
Available at: https://www.statista.?om/?hart/10684/tesla-dominates-the-us-ele?tri?-vehi?le-market/
A??essed 19 De?. 2017.
K. (2017). Tesla and Panasoni? Ki?k Off Battery Produ?tion at the Gigafa?tory.
online Greente?hmedia.?om. Available at: https://www.greente?hmedia.?om/arti?les/read/tesla-and-panasoni?-ki?k-off-battery-produ?tion-at-the-gigafa?tory#gs.DD9Lm9A
A??essed 10 De?. 2017