Careers at Tesla Motors
Tesla Motors’ mission is to accelerate the world’s transition to sustainable energy.
In 1997, engineers Martin Eberhard and Marc Tarpenning recognized the growing trend in mobile products (laptops, PalmPilots, cell phones, etc.). They decided to develop an offering that would appeal to that customer base – electronic books. They founded a company called NuvoMedia, and in 1998 released their first eBook. In 2000, they sold the firm to Gemstar-TV Guide for $187 million.
That same year Eberhard completed a divorce. He thought about improving his mood by getting a sports car, but decided against it because of its low fuel-efficiency. He sought out vehicles with alternative power sources, and determined electric cars provided the most efficiency. He tested out a version produced by boutique firm AC Propulsion, the tzero, and was surprised by how fast it was.
Inspired, Eberhard considered partnering with AC Propulsion to turn its hobbyist vehicle into a production-level car. However, recognizing his ambitions might be too big for the firm, he decided to launch his own startup. He determined that his vehicle would solve one of the main problems with electric cars, battery power, by using lithium-ion batteries, which improve in quality every year.
By 2002 he had re-partnered with Tarpenning, and they planned to launch with a two-seater sports car that would appeal to niche audiences, later broadening out to mainstream markets. Their efforts were made easier by the fact that they did not need to manufacture a car from scratch – they could just buy a kit car to build on top of, and buy its various parts from manufacturing partners.
In 2003 they founded a firm to develop the product, called Tesla Motors – a reference to engineer Nikola Tesla, who invented the AC induction motor they planned to use. They then got SpaceX founder Elon Musk on board as an investor. They released the Tesla Roadster in 2008, which caused a stir due to its high performance; went public in 2010; and unveiled the famed Model S in 2013.
Business model of Tesla Motors
Tesla Motors has a mass market business model, with no significant differentiation between customer segments. The company targets its offering at any consumer who wants an electric car.
Tesla offers five primary value propositions: innovation, customization, convenience, risk reduction, and brand/status.
The company embraced innovation from the beginning. It has introduced a number of industry firsts, including the world’s first premium electric sedan (Model S) and the world’s fastest four-door production car (the P85D, which can accelerate from 0 to 60 mph in 3.2 seconds).
The company enables customization by allowing buyers to personalize the features of their car when making an order. Specific areas with options include car speed, sound system, and interior materials.
The company offers convenience by making its products easy to use. Car owners can charge their vehicles anywhere there is an outlet -- all they have to do is plug in. Tesla also maintains the Tesla Supercharger Network, a network of charging stations strategically placed along well-traveled highways. Each station has between four and 10 Superchargers, and full charging takes about 30 minutes. As of 2016 there are 705 stations across North America, Europe, and Asia with 4,359 Superchargers. Lastly, the company is also working with various hospitality locations such as hotels and restaurants to expand the adoption of wall connectors that can be used by patrons to charge their vehicles. As of December 2015, more than 1,800 locations had over 3,100 connectors installed.
The company reduces risk by maintaining high safety standards. Its Model S features an electric drivetrain that rests under the car’s aluminum occupant cell in its own subframe. This positioning lowers the car’s center of gravity, which enhances handling and reduces rollover risk. Eight airbags protect occupants and the high voltage power source instantly disconnects in case of an accident.
The company has established a powerful brand due to its success. It has over 50,000 vehicles on the road globally and has sold over 140,000 cars since its inception. Also, the Model S ranks as the second best-selling plug-in car of all time after the Nissan Leaf, and was the top-selling plug-in vehicle in 2015. Lastly, the Model S was selected as 2013 “Car of the Year“ by Motor Trend.
Tesla’s main channel is its website, through which it acquires most customers. It also sells products through a network of over 208 company-owned stores, galleries, and “Service Plus” facilities in major metropolitan markets. The company promotes its offering through its social media pages.
Tesla’s customer relationship is primarily of a personal assistance nature. The company assists customers in the following ways:
- Vehicle Services – When a customer’s car is delivered, a Delivery Experience Specialist provides care advice to the new owner. Also, Tesla provides repair and maintenance services for its vehicles at its company-owned service centers. Furthermore, it maintains Tesla Rangers, a mobile team that can perform services for the car from a customer’s residence or other remote location. Service is provided as part of its Limited Warranty and maintenance/extended service plans.
- Financial Services – The company provides leases and loans for its vehicles largely through financial institutions. It also provides financing arrangements directly through its local subsidiaries.
Despite this orientation, there is a self-service component. The company’s website features video walkthroughs and answers to frequently asked questions. There is also a community element in the form of a peer forum where customers can receive advice.
Tesla Motors’ business model entails designing, developing, and manufacturing its vehicles and energy storage products for its customers.
Tesla’s cars use more than 3,000 purchased parts, which it purchases from more than 350 suppliers worldwide. The company maintains a portal through which suppliers can obtain useful information.
Tesla’s main resource is its intellectual property, namely its electric powertrain, which consists of of its battery pack, motor, gearbox, power electronics, and control software.
It depends on its engineering staff to design, develop, and manufacture its products, its salespeople to sell them, and its customer service staff to provide support.
The company manufactures its offerings at its facilities in Lathrop and Fremont in California; Tilburg, Netherlands; and its Gigafactory in Reno, Nevada.
Tesla has a value-driven structure, aiming to provide a premium proposition through significant personal service and frequent product enhancements.
Its biggest cost driver is cost of revenues, a variable expense that includes costs of automotive revenues (material and labor costs, direct parts, manufacturing overhead, and shipping/logistics costs) and cost of service revenues. Other major drivers are in the areas of sales/administration and research/development, both fixed costs.
Tesla has two revenue streams:
- Automotive Revenues – Revenues generated from the sales of Tesla’s vehicles.
- Service and Other Revenues – Revenues generated from maintenance and repair services, merchandise sales of electric vehicle powertrain components and systems to other manufacturers, Tesla Energy products, sales of pre-owned Tesla vehicles, and net sales of non-Tesla vehicle trade-ins.
info: Elon earned Bachelor’s degrees in Physics and Business at the University of Pennsylvania. He previously served as a Co-Founder of PayPal and Zip2. He is currently the CEO and Chief Technology Officer of SpaceX and Chairman of SolarCity.
info: JB earned a Bachelor's degree in Energy Systems Engineering and a Master's degree in Energy Engineering at Stanford University. He previously served as Co-Founder and CTO of aerospace firm Volacom and as a propulsion engineer at Rosen Motors.
info: Jason earned a Bachelor's degree in Finance at Colorado State University and an MBA at Harvard Business School. He previously served as the Vice President of Finance at Alphabet Inc. and as a management consultant at Booz Allen Hamilton.
info: Marc earned a Bachelor’s degree in Computer Science at UCLA, Berkeley. He previously served as the Co-Founder of NuvoMedia and held a number of executive positions at Packet Design and Gemstar-TV Guide.
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