Tesla Business Strategy Analysis

Generic Business Strategies

Teslas generic business strategy is broad differentiation, with a view toward integration of the various components of its business canvas. Its key businesses are automotive and energy generation and storage. It has key resources in terms of intellectual property (IP), engineering teams, and battery/solar production plants.

Cost

Teslas cost structure consists of the following: equipment 20%, body 12%, chassis 7%, drive 15%, battery 35% and other 11% (Li et al., 2021).

Differentiation

Tesla has multiple brands that service multiple customer needs and price points. It began with a very expensive, ultra-niche Roadster, before broadening production with the Model Sbut this still too expensive for the average consumer. It then went into the electric SUV market with the Model X, later displaced by the Model Y. The Model 3 was developed to be a low-cost EV for the average person. Tesla has also offered solar panels and solar cells to customers looking for more green energy solutions to their lifestyle demands.

Focus

Tesla has focused on creating a green energy identity linked to an innovative approach to production. It has relied on government subsidies around the world to promote sales and reduce costs, but it has also helped to spark the EV revolution in the automotive industry. More than that, Tesla has helped to steer the worlds leaders toward adopting a more green energy infrastructureat least that is the goal. How it will actually come about given the degree to which rare earth minerals and resources are in demand to make it all happen is another story. Currently, Tesla is relying on its brand and its success as the first-to-market EV manufacturer of the 21st century.

Business Strategy in Its Marketplace Approach

Teslas business strategy in its marketplace approach has been to apply focused differentiation to achieve profitability. Tesla entered the automotive industry with a view of bringing a new product to marketthe electric luxury vehicle. However, to scale, Tesla had to make that product affordable, which it attempted to do with the Model 3, a cheaper, smaller version of the Model S. The Model 3 was meant to take Tesla out of a narrow market segment by being an Everyman car for the 21st century. To do this, the company has relied upon the social media influence of CEO Elon Musk, who has 71 million followers on Twitter, and is a celebrity-style CEO. Musk has been able to drum up demand for the Model 3 by promoting a green energy mission and a tech-driven aesthetic (Kozinets, 2019).

Business Model

Core Products

The core products of Tesla are the Model S, the Model Y, and the Model 3. It has introduced a CyberTruck to that line-up, expected to go into production soon. Teslas other core products include energy storage systems and solar panels through its acquisition of Solar City.

How the Organization Makes Money

With the Model S, Tesla was able to keep its margins high and ensure profitability in spite of selling few cars. But with the Model 3, Teslas margins are slimmer, and the company has had to rely on the sale of carbon credits to non-EV companies in order to ensure profitability from quarter to quarter (Kolodny, 2020). Teslas solar energy division is not very large, and shareholders have sued CEO Elon Musk for acquiring Solar City, which was deep in debt at the time of the acquisition and allegedly did not make sense from a shareholder perspective. Solar City was operated by Musks brother Kimbal, however, and it is alleged Musk used Teslas equity to take on the companys debt to save his cousin and himself (a shareholder) from financial ruin (Kolodny, 2021).

Customer Value Proposition

Teslas...

…be that. At the same time, Tesla has not avoided the supply chain issues that have plagued other auto makers, and now delays on production of new models have been made public, and its share price has fallen substantially as a result. Tesla has been able to tap the capital markets thanks to its high equity valuationbut if its equity heads lower, and supply chain snarls persist, and its sale of carbon credits to other companies becomes less profitable, Tesla will find itself in danger of turning in negative quarters. This will not aid in the perception of a growth company for long, which is why the corporate strategy needs to move forward with stabilization for now. Its business strategy will be supported by a focus on stability, as that will enable the promise of product scope to be realized, and it will keep up Teslas brand appeal as an innovator and as a company that is still first-to-market on new visionary products and concepts.

Conclusion

Teslas future is dependent upon its ability to deliver on its promisesthe nearest one at hand is the CyberTruck, and this is the most important as Ford is coming quickly with its own EV version of the F-150. The CyberTruck will be a different sort of truck altogetherlike something out of a science-fiction movie of the 1980s, but that is its appeal for now. Tesla will have to continue to focus on innovation at the business level, but its corporate strategy has to be focused on stability. It has grown rapidly in previous years, but if it wants to maintain its competitive advantage it has to do more than rely on Musks social media standing. It has to bring new products to market that will enable it to compete with the other manufacturers that are now knocking…