The reasons for Tesla’s success in the automotive industry
The automotive industry has been around for a long time and is continuously evolving with the technological evolution of the world. This industry contributes a massive income to the global economy. However, electric vehicles are the automotive industry’s most essential and livable invention.
Tesla gave shape to the ideas of Robert Anderson by launching the first electric car, the Tesla Roadster, in 2008. Since then, Robert Anderson invented the first electric car in 1832. He also wanted to establish an electric car. But no large company was ready to embark on this project. Although Tesla was unaware that it was way ahead of its time and too worthy to try it.
Some versatile people in the industry believe that if Tesla did not work on the development of the automotive industry, it could not become a trending topic. Yet Tesla hasn’t made a substantial profit in a year. But with profitable districts, it aims to make electric vehicles economical.
Alas, after seventeen years of establishment, on July 1, 2020, Tesla overtook Toyota, and its market capitalization was $206 billion. It became the largest producer of automatic cars in the world. But what are the reasons why Tesla rises to the top of the automotive industry? Stick with us till the end as in this article we will expand on that.
How Tesla came into being?
Martin Eberhard and Marc Tarpening are the founders and incorporations of Tesla. Originally known as Tesla Motors, and came into existence on July 1, 2003. GM’s failed electric vehicle venture swayed them in 2003 despite the expansive prospect and high efficiency of battery electric cars.
Also, the third employee was Tom Wright, and in February 2004, Elon Musk donated $6.5 million and became the chairman of the board because he contributed a lot. Therefore, his name is currently associated with Tesla. Martin Eberhard became the CEO of Tesla Motors, and in May 2004 JB Straubel joined Tesla. Thanks to a September 2009 lawsuit settlement, three original Tesla employees can run as co-founders of the company.
Initially, Tesla wanted to start producing high-end sports cars for early adopters. Then, making people fans of their inventions, they want to experience mainstream vehicles like sedans, luxury cars and trucks. Tesla Roadster, their very first car, was produced in 2008.
The four towers in which Elon Musk invested
First round of investment
In the first round, Elon Musk invested $6.5 million, and the Company Technology partners, alongside various projects and private investors, invested in February 2004.
Second round of investment
In the second round, the investment was nearly $13 million, and some new partners invested and became part of Tesla’s financing team.
Third round of investment
Elon Musk co-led the third round of $40 million investment alongside various technology partners in 2006. In this round, some companies like Google and eBay also contributed.
Fourth round of investment
In the fourth round of investment, the internal investment was $45 million and the total investment increased to $105 million after private financial contributions.
Approach behind Tesla’s business model
Tesla’s business model is totally dependent on direct revenue and the carrier, not franchised dealerships.
Tesla believes in the importance of paying special attention to the deployment of charging stations. This may be the biggest obstacle to mass adoption of electric cars.
Tesla has extended the commercial version to embody electric garage structures for homes and organizations
Direct negotiation with customers
Unlike other vehicle distributors, Tesla believes in dealing one-on-one with its customers in order to maintain long-term relationships. By adopting this strategy, Tesla believes it is gaining an advantage in increasing product development. Therefore, Tesla showrooms have no potential conflicts of interest. Customers deal directly with Tesla service and sales staff. It has 823 locations around the world to facilitate the shopping process for customers.
Tesla Home Service
Tesla’s success is totally due to the services it provides to its customers to facilitate them without encountering any difficulties. Tesla uses mobile service support that facilitates its customer on a single phone call, which helps in achieving customer satisfaction. It has an advanced Model S system that uploads data wirelessly so technicians can fix the problem without even a physical visit.
Tesla market and stocks
After Ford Motor Company, Tesla is the second US automaker to list its IPO (initial public offering) on NASDAQ. Additionally, Tesla’s market capitalization has grown to $104 billion, making it the second most valuable automaker. Later, on July 1, 2020, Tesla became the most valuable automaker due to a market capitalization of $202 billion.
Besides the above achievements, Tesla has yet to report an overall profit in a fiscal year. According to Tesla, at the end of 2019 they suffered a loss of $862 million on revenue of $24.6 billion.
What are the different strategies applied by Tesla?
Business strategy applied by Tesla
Tesla is following the exact business strategy as the tech sector targets early adopters, with high cost and is slowly reducing the cost while moving to larger markets. For example, Roadster, Tesla’s first car, had low volume and high price compared to Model X and Model Y.
Production strategy applied by Tesla
Tesla’s production strategy was similar to other Tesla projects having a high degree of vertical integration. Undoubtedly, companies prefer to outsource most parts to their suppliers, which is not common in the automotive industry.
Sales and marketing strategy applied by Tesla
Tesla prefers to sell its vehicles online through company showrooms rather than other automakers choosing the typical dealership network. This strategy aims to help customers personalize the vehicle they choose.
Tesla doesn’t advertise its products much because Elon Musk thinks those with the money to buy Tesla cars won’t be sitting in front of the TV.
Technology strategy applied by Tesla
For production, Tesla uses heavy electric technologies. So being a vertically integrated company, they design batteries, glass and motors and experiment with new designs like autopilots.
Models of vehicles sold by Tesla
Tesla sells four car models, Model S, Model X, Model Y, and Model 3. In the first half of 2022, Model Y will be its top-selling vehicle. According to Elon Musk, future models will be more economical than the last ones, but unfortunately Tesla must plan to introduce a motorcycle.
How did Tesla become the most successful electric vehicle brand in the world?
Although there are various car manufacturing companies around the world, what has made Tesla stand out is experimentation. Tesla is famous for its electric car models which paved the way for it to become the most successful electric vehicle brand in the world.
Tesla has taken small steps to achieve this milestone by initially launching a sample model with high-cost cars and few models. For a year they only produced 500 units because they knew it was a new invention, and yet people believe the myths about electric cars. Experimenting with something new was a wise decision, and Tesla was also responsible for some groundbreaking programs.
Therefore, the next Tesla model produced was priced lower than the first due to the significant change in manufacturing units. This model gave tough competition to other models of luxury car brands. Tesla sells its products directly to customers around the world online as a way to connect with them instead of selling through a typical dealer network.
Mainly, Tesla strives to improve customer shopping experience to win more customers and increase popularity. Likewise, they have a fantastic marketing strategy and have worked hard on their plan to sell their brand. These reasons allow Tesla to become the most successful brand of electric vehicles in the world.
Why does Tesla dominate the electric vehicle industry?
According to Morgan Stanley analyst Adam Jonas, Tesla’s electric vehicle sales are nearly 2.3 times that of other brands. The growth rate of no other brand in the electric vehicle industry is as high as that of Tesla. Considering Tesla’s market in the United States, it won’t be wrong to say that Tesla tops the charts there.
For example, considering the percentages, Tesla’s electric cars accounted for 79% of newly registered vehicles. While in the United States in 2020 and 69.75% of newly registered cars in 2021. Reviewing available facts and figures, analysts believe that Tesla will continue to top the EV industry charts for a few more years.
What are the problems with Tesla models, and what is Tesla’s future?
Therefore, Tesla introduces something new to the world and puts customer satisfaction first, but it faces some problems. A few to list are durability, handling, and repair cost, as repair and maintenance costs are not reasonable. Even Tesla model insurance costs are quite high.
Nevertheless, Tesla is the first brand to produce electric vehicles. EV models are worth the price and stand out from other brands’ models in their features. Tesla made the dream come true for many who wanted to drive electric vehicles on the roads with innovation.
As Tesla experienced at the right time, it now ranks at the top of the automotive industry across the world. By sticking with us till the end, you got important information about Tesla.