The mission of Tesla is to “accelerate the world’s transition to sustainable energy.” The company builds electric vehicles (EV’s) it believes can be better and quicker than gasoline cars. Tesla also produces scalable clean energy generation and storage. The company envisions a zero-emission future for our fossil fuel-reliant world, yet must manage multiple deliverables to achieve this aim.
In 2003 Tesla was founded and incorporated by engineers Martin Eberhard and Marc Tarpenning. SpaceX founder Elon Musk joined as Chairman in 2004 and currently serves as CEO. In 2009 the company received a $465 million USD loan from the United States Department of Energy – as part of the Advanced Technology Vehicles Manufacturing Loan Program. This led to Tesla becoming the first car corporation since Ford Motors (1956) to launch an IPO (2010) – offering 13.3 million shares ($17 per share) on NASDAQ and raising over $226 million.
In 2006, the Tesla strategy was to enter at the high end, where customers pay premiums, then accelerate the market downward to higher unit volume and lower prices with each successive model. Like most fast-growing tech (automotive) companies, all of Tesla’s excess cash flow was plowed back into Research & Development (R&D) to drive down costs and bring subsequent products to market. For example, when consumers purchased the Tesla Roadster sports car, their payment helped develop low-cost family cars.
In sum, the Tesla strategy was to:
1. Build a luxury sports car (Tesla Roadster) at a premium
2. Use the sports car revenue to build an affordable (family) car
3. Use the affordable car revenue to build an even more affordable (family) car
4. While doing the above, provide zero emission electric power generation options
Tesla initially increased investment in research and development (R&D) to meet market demand to enhance renewable energy. However, over time, their differentiation broadened via lowered production costs which allowed them to innovate (within) markets (e.g., EV, solar, etc.) as opposed to merely competing within existing automotive markets.
The cultural aim of Tesla’s strategy is to increase the popularity of low-carbon lifestyles, increase public preference for renewable energy, and improve wealth distribution throughout developing markets; whereas its environmental aim is to promote its electric vehicles based on climate change, environmental expansion, and waste disposal reform. In sum, Tesla’s electric car, battery and solar panel production advances business sustainability toward the resolution of relative social and environmental problems.
Though not the founder, Elon Musk is Tesla’s most visible leader. Notorious for developing PayPal and founding SpaceX, Musk earned a reputation as a visionary for a transformative web, fossil fuel energy conversion, and interplanetary life expansion. A 22% shareholder in Tesla, Musk was recently charged with securities fraud after a series of false and misleading tweets about a potential transaction to privatize Tesla. The SEC also charged Tesla with “failing to have required disclosure controls and procedures relating to Musk’s tweets” – a charge Tesla has settled for $40 million along with the removal of Musk as Chairman of their board of directors.
Tesla revolutionized the automotive market with its unique approach to electronic vehicle manufacturing. Leveraging the capital of luxury car enthusiasts toward the development of affordable, energy efficient automotive lines Tesla seemed poised to lead the vanguard of post-fossil fuel automotive culture. By creating a “give and take” relationship between business and environment, Tesla has helped unify the planet via the economization of mass transit and solar energy.