Motives for Tesla’s Success in the Automobile Industry. The Automobile Industry has existed for a very long time and continues to develop as the world advances technologically. This industry is a significant contributor to the world economy. Nevertheless, Electric Vehicles are the most indispensable and livable innovation in the Automobile Industry.
In 2008, Tesla gave form to Robert Anderson’s concepts by releasing the first Electric Car, the Tesla Roadster. Since the invention of the first electric carriage by Robert Anderson in 1832. Additionally, he desired to build an Electric Car. But no major corporation was prepared to initiate this initiative. Even though Tesla disregarded that it was well ahead of its time and so unworthy of a trial, it was a noble endeavour.
Some industry experts believe that the Automobile Industry could not have been a trendy issue if Tesla had not been working on its development. However, Tesla has not generated a significant profit in the last year. With successful quarters, though, it hopes to make Electric Vehicles affordable.
Sadly, on 1 July 2020, seventeen years after its founding, Tesla exceeded Toyota in market valuation, surpassing it by $206 billion. It became the world’s biggest manufacturer of respectable automatic cars. But what factors have led to Tesla’s dominance in the vehicle industry? Stay with us until the finish because we shall elaborate in this article.
Table of Contents
How Did Tesla Come to Exist?
Martin Eberhard and Marc Tarpening are Tesla’s founding fathers and incorporators. Initially known as Tesla Motors, the company was founded on July 1, 2003. GM’s failure with EVs affected them in 2003 despite battery-powered vehicles’ vast potential and efficacy.
Additionally, the third employee was Tom Wright, and in February 2004, Elon Musk donated $6.5 million and became chairman of the board of directors (BOD) due to his substantial contributions. Consequently, his name is presently synonymous with Tesla. Martin Eberhard became CEO of Tesla Motors, and JB Straubel joined the company in May 2004. In September 2009, a legal settlement allowed three founding Tesla workers to identify themselves as the company’s co-founders.
Initially, Tesla intended to begin manufacturing high-end sports vehicles for early adopters. After making people fans of their creations, they want to experiment with conventional vehicles such as sedans, luxury automobiles, and trucks. In 2008, Tesla Roadster, their first automobile, was manufactured.
The Four Investment Rounds In Which Elon Musk Participated First Investment Round
In February 2004, Elon Musk, Company Technology partners, other projects and private investors participated in the first funding round.
Second Investment Round
In the second financing round, about $13 million was contributed, and additional investors joined the Tesla funding team.
Third Investment Round
In 2006, Elon Musk co-led a $40 million investment round with several technical partners. Some firms, including Google and eBay, donated to this round.
Fourth Investment Round
In the fourth investment phase, the internal investment was $45 Million, while private donations brought the total investment to $105 Million.
The Methodology Behind Tesla’s Business Model
Tesla’s business strategy relies only on direct revenue and delivery, not franchised dealerships.
Tesla feels that deploying charging stations requires special care. This may be the most significant barrier to adopting electric vehicles.
Tesla has expanded its business model to include electric garages for homes and businesses.
Direct Customer Contact
Unlike other car distributors, Tesla believes in maintaining long-term connections with its clients via one-on-one interactions. Tesla thinks adopting this technique will acquire a competitive edge in product development. Consequently, Tesla showrooms have no possible conflicts of interest. Customers interact directly with Tesla’s sales and service personnel. It has 823 sites worldwide to facilitate the purchasing procedure for clients.
Tesla Residential Service
Tesla’s success is solely attributable to the services it gives to its consumers to make their lives easier. Tesla’s mobile service assistance assists customers with a single phone call, contributing to customer happiness. It boasts an innovative model S system that wirelessly transmits data, allowing professionals to resolve the issue without making a physical visit.
Tesla Marketplace And Stocks
Tesla is the second American automaker to launch its IPO (initial public offering) on NASDAQ, behind Ford Motor Company. In addition, Tesla’s market value increased to $104 billion, making it the second-most valuable carmaker. Due to a market value of $202 billion as of the 1st of July 2020, Tesla became the most valuable carmaker.
In addition to the accomplishments above, Tesla has not yet posted a profit for a full fiscal year. According to Tesla, the company lost $862 million on $24.6 billion in sales at the end of 2019.
What Different Strategies Does Tesla Employ?
Tesla’s Business Methodology
Tesla has the same business approach as the technology industry, which targets early adopters at a premium price and gradually decreases the price as it moves toward large markets. Compared to Model X and Model Y, Roadster, Tesla’s initial vehicle, had limited production and a high price.
Production Methods Employed by Tesla
Similar to Tesla’s earlier projects, Tesla’s manufacturing approach included a high degree of vertical integration. Companies want to outsource most of their components to their suppliers, which is uncommon in the automotive sector.
Applied Sales And Marketing Strategy By Tesla
Unlike other automakers who favour the conventional dealer network, Tesla chooses to sell its automobiles online through its showrooms. This method assists clients in customizing their chosen automobile.
Elon Musk believes that individuals with the financial means to purchase Tesla automobiles will not be watching television.
Tesla’s applied technological strategy
Tesla employs hefty electrical technology for manufacturing. As a result of their vertical integration, they create batteries, glass, and motors and experiment with novel models such as Autopilots.
Vehicle Models Tesla Sells
Tesla offers four automobile types, Model S, Model X, Model Y, and Model 3. In the first half of 2022, Model Y will be the company’s most popular car. According to Elon Musk, future models will be more fuel-efficient than their contemporary counterparts, but Tesla will introduce a motorcycle.
How did Tesla become the most successful EV brand in the world?
Tesla’s experimentation allows them to stand apart despite several automobile manufacturers worldwide. Tesla’s electric vehicle models have enabled it to become the most successful EV brand in the world.
Tesla made modest steps to reach this milestone by first releasing a prototype model with expensive and limited vehicle options. They only manufactured 500 units for a year since they recognized it was a new product, and many still believe in EV vehicle myths. Tesla was also responsible for specific innovative initiatives and the prudent choice to experiment with something novel.
As a result, the second Model Tesla created had a lower price than the first due to the significant shift in production units. This Model provided other premium automobile brand models stiff competition. Instead of selling via a traditional dealer network, Tesla sells its goods directly to clients worldwide using the Internet to connect with them.
Tesla focuses primarily on enhancing the client purchasing experience to boost its customer base and appeal. Similarly, they have an excellent marketing strategy and have invested significant effort into their plan to promote their brand. These factors help Tesla to become the most successful EV brand in the world.
Why does Tesla rule the electric vehicle industry?
According to Adam Jonas, an analyst at Morgan Stanley, Tesla’s EV sales are over 2,3 times more than those of other brands. Tesla’s growth pace in the EV business is unmatched by any other brand. If we analyze the Tesla market in the United States, it is not incorrect to declare that Tesla is the market leader.
Considering the percentages, Tesla’s electric vehicles accounted for 79% of newly registered automobiles. In contrast, in the United States, 69.75% of newly registered automobiles in 2020 and 69.75% in 2021 will be electric vehicles. Based on the current data, researchers anticipate that Tesla will continue to dominate the EV business for many more years.
What are the issues with Tesla’s models, and what is Tesla’s future?
Consequently, Tesla offers something new to the world and puts consumer pleasure first, but it confronts specific challenges. Durability, handling, and cost of repair are a few since the prices of repair and maintenance are unreasonable. Even insurance prices for Tesla vehicles are relatively high.
However, Tesla is the first manufacturer of electric automobiles. Due to their characteristics, the EV models are worth the cost and distinguish themselves from those of other companies. Tesla’s invention made a reality the desire of many to drive electric automobiles on the road.
Because Tesla experimented during the optimal period, it today ranks first in the global vehicle sector. As you remained with us to the end, you learned valuable knowledge about Tesla.