Tesla: Business & Operating Model Evolution (Abridged)
2022 | Case No. OIT124 | Length 7 pgs.
This case study traces Tesla’s ascent from an ambitious startup to the world’s leading electric vehicle (EV) manufacturer, highlighting its innovative evolution in business and operating models. Guided by Elon Musk’s strategic vision, Tesla began with high-end electric sports cars, using this foundation to develop more accessible models and promote sustainable energy. The study examines Tesla’s early challenges, such as manufacturing complexities with the Roadster, and its pioneering shift to lithium-ion batteries. Tesla’s distinctive direct-to-consumer sales approach, bypassing traditional dealerships, redefined customer engagement in the automotive sector. The evolution continued with the Model S and X, showcasing Tesla’s commitment to integrating software for ongoing vehicle improvement and exploring the nuances of scaling production capabilities, particularly at the NUMMI factory. The transition to mass-market EVs with the Model 3 emphasizes Tesla’s operational challenges and innovations, including battery manufacturing and open-source initiatives. The case provides insights into Tesla’s journey in reshaping industry standards and consumer expectations in the EV market. With expansions into solar power, energy storage, and autonomous fleets, what business model change should Tesla pursue next?
Learning ObjectiveThis case traces the evolution of Tesla’s business and operating model over time. Students will explore how the priorities, capabilities, and challenges of the automaker changed during each stage of business model development. Students will also analyze the key innovations and strategic decisions that enabled Tesla’s success. Finally, students will discuss Tesla’s future opportunities for business and operating model development.
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