Tesla: Testing a Business Model at its (R)evolutionary Best
(7 pages of text)
Case (Pub Mat)
Tesla Motors, Inc. (Tesla), the electric car company, unveiled its Model 3 in late July 2017 as its stock price continued to appreciate. The Model 3 was priced to sell to the mass market and to potentially compete with the mass-market leaders such as Toyota. The stock market had also responded favourably to Tesla’s decision in 2016 to acquire SolarCity, a manufacturer of solar cells, and its decision to build the Gigafactory, the world’s largest lithium battery plant. Could Tesla justify its sky-high stock price multiple by simply selling electric cars, or should Tesla become a battery company that could fundamentally change the energy storage industry—or for that matter, some other type of company?
This case is intended for senior undergraduate, MBA, and EMBA courses in strategy, entrepreneurship, and marketing, and has been used successfully at all of these student levels. After completion of this case, students should be able to
- identify how Tesla avoided the common mistakes made by many start-ups, namely, running out of cash;
- explain how Tesla understood the profit logic of its business model and built the capability needed to execute it;
- analyze how Tesla co-opted numerous stakeholders, including customers, regulators, and competitors to succeed;
- assess how Tesla adjusted its business model to conform to the changes in the industry and innovation itself; and
- explain how the business model itself became a dynamic tool by which Tesla, to a significant degree, shaped its own future.
United States, 2017
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