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Reasons Behind Tesla Success in An Automobile Industry

by Arif
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Automobile Industry has existed for a long time and is continuously evolving with the technologically changing World. This industry contributes a massive income to the global economy. However, Electric Vehicles are the most essential and livable invention of the Automobile Industry.

Tesla gave shape to the ideas of Robert Anderson by launching the first Electric Car, the Tesla Roadster, in 2008. Since Robert Anderson invented the first electric carriage in 1832. He also wanted to establish an Electric Car. But no big company was ready to start this project. Though Tesla ignored that it was much ahead of its time and was too worthy of giving it a try.

Some versatile people in the industry think that If Tesla was not working on developing Automobile Industry, it couldn’t become a trending topic. Still, Tesla has not made a substantial profit in a year. But with profitable quarters it aims to make Electric Vehicles economical.

Alas, after seventeen years of establishment, on 1st July 2020, Tesla surpassed Toyota, and its market capitalization was $206 Billion. It became the World’s largest worthy automatic car producer. But what are the reasons behind Tesla coming to the top in the automobile industry? Stick with us till the end because, in this write-up, we will elaborate on that.

How Tesla Came into Being?

Martin Eberhard and Marc Tarpening are the founders and incorporations of Tesla. Initially known as Tesla Motors, and came into being on 1st July 2003. GM’s failed venture at EVs influenced them in 2003 despite battery electric cars’ extensive perspective and great effectiveness.

Moreover, the third employee was Tom Wright, and in February 2004, Elon Musk gave away $6.5 Million and became the chairman of BOD as he contributed a lot. Hence, his name currently comes all together with Tesla. Martin Eberhard became the CEO of Tesla Motors, and in May 2004, JB Straubel joined Tesla. Thanks to a lawsuit settlement in September 2009, three original employees of Tesla can refer to themselves as co-founders of the corporation.

Initially, Tesla wanted to start producing premium sports cars for early adopters. Afterward, making people fan of their inventions, they want to experiment with mainstream vehicles like sedans, luxury cars, and trucks. Tesla Roadster, their first-ever car, was produced in 2008.

The Four Rounds In Which Elon Musk Invested
First Round Of Investment

In the first round, Elon Musk invested $6.5 Million, and Company Technology partners, alongside various projects and private investors, invested in February 2004.
Second Round Of Investment
In the second round, investment was almost $13 Million, and some new partners invested and became part of the Tesla funding team.
Third Round Of Investment
Elon Musk co-led the third round of investment of $40 Million alongside various technology partners in 2006. In this round, some corporations like Google and eBay also contributed.

Fourth Round Of Investment
In the fourth round of investment, the internal investment was $45 Million, and the total investment increased to $105 Million after private financial contributions.

Approach Behind Tesla’s Business Model

Tesla’s enterprise model is totally depending on direct income and carrier, not franchised dealerships.
Tesla believes in paying unique attention to rolling out charging stations. That can be the largest obstacle to the mass adoption of electric cars.
Tesla has stretched the business version to embody power garage structures for homes and organizations

Direct Customer Dealing
Unlike other vehicle distributors, Tesla believes in dealing one-to-one with its customers in order to retain long-term relationships. By adopting this strategy Tesla believes in gaining an advantage in increasing product development. Therefore, Tesla showrooms do not posses any potential conflicts of interest. Customers deals directly with Tesla’s service staff and sales employees. It has 823 locations all over the world to make the buying process easier for customers.
Tesla Home Service
Tesla’s success is totally due to the services it provides to its customers to facilitate them without facing any difficulties. Tesla employs mobile service support facilitates their customer over one phone call which helps in gaining customer’s satisfaction. It has an advanced model S system which uploads data wirelessly so that the technicians can fix the problem without even a physical visit.
Tesla Marketplace And Stocks

After Ford Motor Company, Tesla is the second American car company to introduce its IPO (initial public offering) on NASDAQ. Furthermore, Tesla’s market capitalization became $104 Billion making it the second most valuable automaker. Later on 1st July 2020, Tesla became the most valuable automaker due to a market capitalization of $202 Billion.
Besides the above achievements, Tesla is yet to witness overall profit in a financial year. According to Tesla, at the end of 2019, they suffered a loss of $862 Million on revenue of $24.6 Billion.

What Are The Various Strategies Applied By Tesla?

Business Strategy Applied By Tesla
Tesla follows the exact business strategy as the technology sector targets early adopters, with a high cost and slowly lowers the cost while moving towards big markets. For example, Roadster, Tesla’s first car, had a low volume and high price compared to Model X and Model Y.
Production Strategy Applied by Tesla

Tesla’s production strategy was similar to Tesla’s other projects having a high degree of Vertical Integration. Undoubtedly, companies prefer to outsource most of the parts from their suppliers, which is not frequent in the automobile industry.
Sales And Marketing Strategy Applied by Tesla
Tesla prefers to sell its vehicles online through the company’s showrooms rather than other car companies choosing the typical dealer network. This strategy is to help customers customize the vehicle they choose.

Tesla does not heavily advertise its products because Elon Musk thinks those who have the money to buy Tesla cars won’t be sitting in front of the television.
Technological Strategy Applied By Tesla
For production, Tesla uses heavy electrical technologies. Hence being a vertically integrated corporation, they design batteries, glass, and motors and experiment with new models like Autopilots.
Vehicle Models Tesla Sells

Tesla sells four car models, Model S, Model X, Model Y, and Model 3. In per first half of 2022, Model Y will be its bestselling vehicle. According to Elon Musk, the models in the coming future will be more economical than the latest ones, but unfortunately, Tesla has to plan to introduce a Motorbike.

How did Tesla become World’s Most Successful EV Brand?

Though there are various car manufacturing companies around the globe, what allowed Tesla to stand out was experimenting. Tesla is famous for its EV model cars which have paved the way for it to become the World’s most successful EV brand.

Tesla took baby steps to achieve this milestone by initially launching a sample model with cars with a high cost and few models. For a year, they only produced 500 units because they knew that it was a new invention, and still, people believe in myths about EV cars. Experimenting with something new was a wise decision and Tesla was also responsible for some revolutionary programs.

Hence, the following Model Tesla produced was of a lower price than the first because of the significant change in the manufacturing units. This Model gave tough competition to other luxury car brand models. Tesla sells its products directly to customers globally online because it is a way to connect with them instead of selling through a typical dealer network.

Primarily, Tesla puts effort into improving customer buying experience to gain more customers and increase its popularity. Likewise, they have a fantastic marketing strategy and have worked a lot on their plan to sell their brand. These reasons enable Tesla to become World’s most successful EV brand.

Why does Tesla Dominate The EV Industry?

According to Morgan Stanley analyst Adam Jonas, Tesla’s EV sales are almost 2.3 times more than other brands. No other brand’s growth rate in the EV industry is as high as Tesla’s. If we consider the Tesla market in the US, it will not be wrong to say that Tesla tops the chart there.

For example, considering the percentages, the EV cars of Tesla accounted for 79% of the newly registered vehicles .Whereas, in the US during 2020 and 69.75% of the newly registered cars in 2021. Looking at the available facts and figures, analysts estimate that Tesla will continue topping the charts in the EV industry for some more years.

What Are the Problems with Tesla Models, And What Is the Future of Tesla?

Therefore, Tesla is introducing something new to the World and prioritizing customer satisfaction, yet it faces a few problems. A few to list are durability, handling, and cost of repairing, as the repairing and maintenance costs are not reasonable. Even the insurance costs of Tesla models are pretty high.

Nevertheless, Tesla is the first brand to produce electric vehicles. The EV models are worth the price and stand out from other brands’ models due to their features. Tesla made the dream of many who wanted to drive electric vehicles on the roads with innovation.

As Tesla experimented at the right time, now it ranks at the top in the automobile industry across the World. As you stayed with us till the end, you gained important information about Tesla.

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