Tesla Motors is one of few car brands Millennials and Post-Millennials are crazy about. Like if constructing the first electric roadster in the world wasn’t enough, they also managed to build up their most-sustainable-startup reputation, by leading several big projects that will push solar energy into homes and offices and by taking car sales from the hands of greedy dealerships in more than 22 states.
Tesla’s Early History
Tesla story started in the Martin Eberhard’s garage, where this eco-conscious engineer succeeded in building the first electric roadster, with the help of Marc Tarpenning, a friend he met while working in the Silicon Valley.
Not so long after Tzero’s engines “roared” for the first time, these two met with Elon Musk, who by then already made millions and was well known in the Valley as PayPal co-founder. Musk entered the company with his funds, managerial and business skills and took this car brand and our reality to another level.
What Makes Tesla’s Business Strategy so Effective
In this article, we decided to closely inspect what makes Tesla Motor’s business strategy so effective. Although it is obvious that combination of Eberhard’s engineering skills and Musk’s sense for business can’t result in anything less than the highly successful startup, when it comes to Tesla, greatness is in details. These are some of the most ingenious decisions Tesla Motors management made over the years:
Great Invention and Touch of Influence Pulls Plenty of Funding
Tesla Motors drastically changed after Elon Musk funded Eberhard’s and Tarpenning’s Series A round with $7,5 million. They were the sports car lovers who made a technically perfect machine that can leap from 0 to 60 mph in only four seconds. If we take into consideration that before TZero, only golf carts had an electric drive, we can realize why this concept completely changed automotive industry.
Elon Musk was thrilled with the roadster, but as an experienced entrepreneur, he had more commercial models in mind. Since he was the controlling investor in the company from the first round, his influence was huge, and as a successful businessman, who was well known to the public, many other investors followed his lead and started pouring money into company funding.
Some of the well-known individuals and organizations who invested in the Tesla projects are: Sergey Brin and Larry Page of Google, Jeff Skoll from eBay, Nick Pritzker from Hyatt and many investment funds including Bay Area Equity managed by JPMorgan Chase.
Financing That Supports Price Decline
Tesla Motors has a three step strategy that proved to be one of the most successful ones in the automotive industry. The first generation of Tesla roadster came at a very high price and was made in low volumes, but company succeeded to sell them big time due to advanced technology and great marketing.
Second S model’s production was financed from the money company earned selling the Roadster and it came with mid price and was made in mid volume. The company sold around 35,000 units of the S model, which was more than enough for the third generation funding.
With a wise marketing strategy and each model coming with almost half the price of the previous one, Tesla Motors has more to offer with every new generation cycle and their further success is guaranteed.
Investing Money in Various Sustainable Projects in Different Niches
One of the main drive trains of Tesla Motors’ marketing success is their strategy to invest lots of funding into various sustainable projects. Tesla also builds batteries for some of their main competitors in the auto market, creating the image that sustainability is their prime and utmost concern.
Last year Elon Musk also announced that Tesla Motors will release their patents into the public domain, for the individuals and companies that want to use them in good faith. This is a very brave move and although it comes with certain risks, it will definitely make Tesla the undisputable leader of sustainable development. In addition to this, Tesla Motors also participated in several major sustainable projects including:
- Tesla Powerwall Home Battery – Tesla Motors is currently developing a powerful rechargeable lithium-ion battery meant for home use. Powerwall will have a large storing capacity and it will store energy accumulated during the day, and release it after the sunset. Tesla partnered with powerful brands such as: Amazon, Target, SunRun, Southern California Edison etc. in order to put this battery into regular sales and start an evolution of home solar service.
- Powerpack battery system – this system made by Tesla, also comes with large energy storage and it was meant for business use. It is already installed in 24 different office buildings run by The Irvin Company real estate firm in Southern California.
- Several other solar panels and battery systems.
- Shipping container showrooms – While promoting their S model, Tesla Motors organized pop up showrooms on several different continents. These were made from shipping containers and provide the same feel and experience as regular brick and mortar Tesla galleries. In addition to that, they are also the most sustainable showrooms ever made.
Improving Business to Consumer Relations through Direct Sales
Car dealerships have a very bad rep in the United States. From American Graffiti onwards car dealers are viewed as dishonest and sleazy, which is why Tesla’s decision to sell their vehicles in their own showrooms brought them a lot of public sympathies. Currently, the company is running its store-galleries in 22 American states. Their customers can learn more about Tesla Motors and their vehicles.
As the number of Tesla galleries grew, dealerships and dealership associations fought back with numerous lawsuits, some of which were filled by states themselves. Apparently, in 48 states there’s a ban or a limit for manufacturers to sell their own cars.
Both public and Federal Trade Commission stood on Tesla Motors’ side, but in more than half of American states direct sales from manufacturers are still forbidden. The most restrictive out of all are Texas, New Jersey, and Michigan. In spite of that, Tesla Motors is slowly winning this “war” with a firm support from the public and the Millennial generation, followed by large sales increase for all of its models.
Tesla Motors did something we all thought was impossible. They made an electric car that is totally market competitive and it brought future into lives of billions of people. Future, that will bring more sustainability and eco-awareness and where lobbyist and monopolist won’t rule our habits.
That’s why the Tesla story is a story of the whole generation because this company wouldn’t be where it is now, without a strong support from the public.