Tesla In 2023: Building A Radically Innovative Operating System

By Robert Burgelman, Raj Joshi
2023 | Case No. SM372 | Length 27 pgs.

For CEO Elon Musk, Tesla’s mission required not only new technologies to create electric vehicles, but innovation on the software that connected every aspect of the organization. Tesla was founded in 2003 with the goal of revolutionizing the automotive industry, by producing electric vehicles that would help accelerate the world’s transition to sustainable energy. Twenty years later, Tesla had achieved remarkable progress across multiple dimensions such as production capacity, innovative electric vehicles, customer experience, and financial performance.

The case study offers unique insights by Tesla leaders into the company’s journey to create a system and a process that would revolutionize the global automotive sector. To achieve its goals, Tesla had to deliver a dramatically different—and superior—customer experience to accompany the company’s innovative electric vehicles.

The case describes how Tesla’s IT team set about custom-building a vertically integrated system operating system (OS) that connected and bound every aspect of the company’s operations. In fact, the Tesla OS, a custom-built ecosystem, was far more expansive than a typical company’s OS in that it powered all aspects of business planning and customer experiences—this enabled Tesla to go directly to the consumer, and bypass the traditional automotive dealership networks.

Learning Objective

This case is designed to help students understand how factors behind an innovative product can play an outsized role in efficiency, supply chains, costs, and other critical areas. Students discuss how Tesla emphasized the need to develop its own unique operating system, and how the OS shaped Tesla’s success.
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