Question

Tesla, founded in 2003, is a company that specializes in electric power technology. The firm sells its powertrain components to other car companies. At the same time, it is selling a high-performance electric Roadster and the Model S and Model X luxury cars. The company is serving two customers at the same time, both with a focused differentiation strategy: high-end car buyers and car manufacturers with electric cars in their portfolio. This has a potential conflict, creating potential competitors for the end-user businesses who have deeper pockets and a wider reach, which could slow our growth to car buyers. However, your founder, Elon Musk, believes that electric cars should be available for everyone.

Required:
Analyze the situation. Which strategy do you think Tesla should pursue moving forward to align with Mr. Musk’s goals?

Answer 1

Tesla should pursue a multi-tier strategy focusing on scaling up and cost reduction for electric cars, balancing innovation with affordability and competitiveness. They need to overcome challenges like high initial costs and charging infrastructure to promote widespread adoption of electric vehicles.

Step-by-step explanation:

To align with Elon Musk's goal that electric cars should be available for everyone, Tesla should consider a multi-tier strategy that focuses on scaling up and reducing the costs of their vehicles. This could include:

Continuing innovation in battery technology and powertrain components to bring down costs and improve efficiency.

Expanding the range of products to include more affordable models and thus targeting a broader market.

Collaborating with governments and other entities to incentivize electric vehicle purchases and develop charging infrastructure.

While continuing their focused differentiation strategy, Tesla can gradually shift towards a more cost leadership approach in the electric vehicle segment. They should leverage economies of scale, technological advancements, and their unique brand image to make electric vehicles more affordable while maintaining a competitive edge. Overcoming challenges such as high initial costs and grid infrastructure for charging will be key to widespread adoption.

Competition in the industry, much like the competitive pressure that improved American car production over decades, should encourage ongoing innovation and responsiveness to consumer demand. Tesla's strategy should therefore be multifaceted, aligning with Tesla's vision and addressing the practical realities of today's transport challenges.

Although Tesla is at risk of creating potential competitors by selling powertrain components to other manufacturers, this can also foster industry-wide advancement. Tesla, being a pioneer in the electric vehicle market, can continue to lead by setting the standard and sharing technology, while also reducing reliance on fossil fuels in transportation and contributing to a more sustainable future.

Answer 2

Choose to continue selling both cars as well as the technology to competitors

Step-by-step explanation:

Based on the information given since Elon is of the believes that electric cars should be made available for everyone which means that the strategy I think Tesla should pursue moving forward in order to align with Mr. Musk’s goals is to CHOOSE TO CONTINUE SELLING BOTH CARS AND THE TECHNOLOGY TO COMPETITORS in order to put an end to any conflict creating potential competitors for the end-user that may arise which may likely slow the company growth to car buyers.