Tesla Motors

Case assignment - Tesla Motors

How did Tesla Motors disrupt the automobile industry? How is it different from traditional car manufactures with respect to value proposition, resources, customer interface and business model?

Tesla disrupted the automobile industry because they offered incrementally higher performance at higher prices. Moreover holders typically have low incentives to adopt the disruptive innovation even though all the big companies had already begun to develop electric cars for several years. In this way, Tesla had to stand out in the market so they highlighted due to its technological innovations especially in electric vehicles, battery systems and electric powertrains in comparison with other great companies.

The company was different from traditional car manufactures with respect to value proposition since it combined existing automotive, electric motor and battery technologies with new innovation. They did not create the company to make alternative, simple,slightly better or cheaper cars, it was designed to create superior cars. Also Tesla´s engineers were constantly changing the design of the factory so they can improve, develop and learn as much as possible. In this way, they were considered leaders in electronic vehicles.

Tesla builds electric cars, but it also builds batteries making this one of their main resources. Also with their Supercharger network provide high speed electric charging that allows them to be the most innovator company on electric storage and battery solution. Moreover the battery design for the electric vehicles has required various safety testing and innovation in order to achieve the product that is finally offered.

Because Tesla was a new entrant in the market, did not outsource its sales. For this reason, the way they interacted with clients was directly through his web page or showrooms. This strategy helped Tesla to lower costs and attract accurately the customer segment they were looking for, which were people who are experts in technology. Moreover gain advantage in the speed they developed their products and created a better customer experience. In terms of the service provided, Tesla combined their sales with service centers so their customers could charge or service their cars in this service center.

Finally the business model is different because Tesla was created to “accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible”. Also the company “would provide an energy storage system that would change the fundamental energy infrastructure of the world”. Moreover Tesla’s business model is differentiated with other companies since it has a direct sale strategy that allows to maintain control over the prices and customer service.

What do you think of the current market valuation of Tesla? would you buy or sell stock and why? Do you believe that they will remain an important player in the EV market in the future?

Tesla’s market valuation stands around $59.7 billion. Their stock have hit a record in the past two months, it reached a record of $370 and traded as