Nanjing University of Posts and Telecommunications

Financial management
Report

Title: TESLA’S TECHNOLOGY

ENTREPRENEURSHIP AND INNOVATION
MANAGEMENT
Student No: F21110119; F21110222; F21110117 ;
F21110127
Name: Safae Mouqtadir ; Inaam Elyoubi ;
Hasana Bahadi ; Salaheddin Badraoui
Major: BBA
Date of submission: 20/05/2024
Score
School of Management
TESLA’S TECHNOLOGY ENTREPRENEURSHIP AND
INNOVATION MANAGEMENT
Abstract:
The following comprehensive report elaborates on the interaction of technology
entrepreneurship and innovation management factors and processes using the example of
Tesla, one of the archetypal manifestations of disruptive innovation in the scope of automotive
and energy sectors. Established in 2003 by Martin Eberhard and Marc Tarpenning, with Elon
Musk in his subsequent role as chairman and primary investor, the company set out to
“accelerate the world’s transition to sustainable energy” Tesla, n.d. a compiled of audacity and
tenacity supported by a firm belief in the feasibility of its objectives. The report begins by
providing background information on the formation of Tesla, emphasizing its transformation
from the “Silicon Valley startup” to a global-scale manufacturing corporation in the hands of
Musk’s leadership. Since the company was founded, its activities have been marked by a
confrontation with traditionalism and the development of breakthrough technologies: for
instance, the release of the Tesla Roadster, the first practical platform of fully electric vehicles
in 2008.

Image 1: Elon Mask

 Introduction
Tesla, a name synonymous with innovation and disruption, burst onto the scene in 2003, poised to
revolutionize not just the automotive industry, but also the way we harness and consume energy.
Founded by visionary entrepreneur Elon Musk, Tesla's journey from a Silicon Valley startup to a global
powerhouse has been nothing short of extraordinary. In just a little over two decades, Tesla has not only
redefined the automotive and energy sectors but has also become a symbol of technological prowess and
entrepreneurial spirit.

Company Overview
Tesla, Inc., former Tesla Motors, Inc., is a US-based mobility services and energy company, designing,
manufacturing and selling high-performance electric vehicles (EM) with the mission to "accelerate the
world's transition to sustainable energy.
Founded in 2003, Tesla claims to have developed the world's best and highest-selling pure Evs with a
high autonomy and zero tailpipe emissions. At the same time Tesla's automobiles are presented among
the safest and highest-rated cars in the world. A product unes for passenger transportation have been
launched, meaning that they are being produced and delivered:

Image 2: From Left to Right: Tesla Model S, X, 3, Y

 Tesla Model S - launched in 2012

 Tesla Model X - launched in 2015
 Tesla Model 3 - officially launched in 2018 with deliveries having started in 2017
 Tesla Model Y - launched in March 2020
It is not by chance that the combination of these models letters can be read as S3XY - model 3 was
actually supposed to be named Model E but due to a claim by automobile manufacturer Ford for having
produced a Model E already, Tesla had to rethink their endeavor.
Above models all incorporate different product line lengths with upgrade options essentially offering an
increase in range or performance as well as customization options offering features such as sell-parking,
navigation systems, tram light recognition, automatic city street driving, various exterior colors and
seating configurations, besides others.
Tesla, Inc. further announced the launch of 3 new models, all of which have been presented as a prototype
and have been tested for going into production.

 Tesla Roadster - pre-order-marketing until expected launch in late 2020

 Tesla Semi - pre-order-marketing until expected launch in late 2020
 Cybertruck - production start targeted for late 2021

Image3 : Tesla Roadster Image4 : Tesla Semi Image5 : Cybertruck

The Tesla Roadster is meant for passenger transportation while the Tesla Semi and Cybertruck open
access to new customer segments of the cargo transportation sector.
The company and its brand is strongly correlated with Elon Musk, who initially served as the company's
chairman of the board, having been responsible for 98% of the initial funding for the Tesla Motors, Inc.
which was founded by July 2003 by the 2 engineers Martin Eberhard and Marc Tarpenning. The brand's
name is a tribute to Nikolai Tesla, an electrical engineer, physics scientist and well-known inventor of
several technologies in the field of electrical energy. Musk, who laid down his position as a chairman
and nowadays is the CEO, said that his vision for Tesla Motors, Inc. is to become a technology company
and independent automaker that eventually offer EVs at prices that the average consumer can afford. As
of February 2017, Tesla Motors shortened its name to Tesla.
Tesla's strategic planning is composed of 2 main phases so far:
1. Build-up: Establish as a high-performance and high-quality producer of EVs with a high brand
awareness and a wide reach, producing cars for high-income customers.
The main goals were:
a) to create a low volume, expensive car,
b) to then develop a medium volume car at lower price,
c) to then create a high volume, affordable car,
d) and to provide solar power.
2. Hypergrowth: Invest all to establish as the long-term leader in the growing EV market, lengthening
the product line with products for customers with a low to mind-level income.
The main goals are:
a. to create solar roofs with seamlessly integrated battery storage,
b. to expand the EV product line to address all major segments,
c. to develop a self-driving capability 10x safer than manual by massive fleet learning,
d. to enable cars to generate money while unused.
The Build-up phase has just recently been completed with the launch and ongoing deliveries of the model
3 and Tesla already entered the Hypergrowth phase. This is already reflected in their statement to
investors: "...we also offer a smaller, simpler and more affordable mid-sized sedan, Model 3, which we
expect will truly propel electric vehicles into the mainstream."*
Tesla's Common Stock

Figure1: Tesla's Common Stock Evolution

Since Tesla's initial public offering in 2010 the company has seen an overall growth in common stock
value having reached its peak on February 17, 2020 with a value of $ 901 per share at close. Some
analysts, investors and forecasters around the world have interpreted this in an extreme overvaluation,
but in any way, point out that the short-term risk of investments in Tesla remains high due a potentially
high chunk of investors being short sellers. As can be seen in the graph below, the value dropped
significantly in the weeks after the peak and reached a new high on another upward trend with about
$548 at close on April, 8 2020. The difference of $353 (a drop by 39% from $901) is likely to have been
triggered by a rapid decline in the shareholders' and traders' valuation following the outbreak of the
Covid-19 pandemic and the consequently expected global economic decline affecting Tesla's ability to
sell their existing and new products as per initial schedule. The drop was then empowered by mentioned
short sellers betting on the decline.
Besides its market value, Tesla could not yet achieve any profitable year, only individually profitable
quarters such as Q3 and Q4 2018 as well as Q3 and Q4 2019.
Being headquartered in Palo Alto, California, US, Testa operates multiple production and assembly
plants, such as in California, Nevada, New York and Shanghai and further owns its own distribution
network with which it offers direct sales around the globe. Having established itself as a key player in
the market over time, Tesla was able to become a global EV manufacturer with further business models
in solar panel and solar roof tile manufacturing as well as in battery energy storage from home to grid
scale - thereby Tesla became the first and only fully integrated automobile and energy company in the
world. Tesla's global vehicle sales increased by half from about 245k in 2018 to about 367k units in 2019
and on March 9, 2020 Tesla produced its 1-millionth EV.
As will be seen in later chapters, Tesla has been digitizing the automotive industry both with regards to
the model offerings themselves and to the distribution and assistance channels.
Contrary to traditional car offerings, Tesla's offerings remain subject to continuous improvement after
the point of sale through over-the-air software updates and Internet connectivity. By keeping the products
open-ended, Tesla manages to expand the products' life cycle and ensure that these are continuously
tailored to the customers' needs as well as adjusted to new market trends.
Tesla has also been using digital tools to optimize the products' distribution channels and after-sale
assistance. Customers can customize and order their cars online using the company's website.
Furthermore, any issues that the customers may encounter when using the cars may sometimes be solved
remotely with no need for onsite assistance. For example, Model S can wirelessly upload data so
technicians can view and fix some problems online without ever needing to physically touch the car.
All these innovations, arsonist others, have been contributing to set Tesla apart from the traditional
automotive companies and to underpin some of its stock valuation, despite Tesla

Mission, Strategy and Products-Markets

1. Vision and Mission

Since its creation in 2003, Tesla's mission was initially to create but now it is to accelerate the world's
transition to sustainable energy. Tesla has focused its strategy to develop high-performance Electric
Vehicles that are not only the world's best and highest-selling pure electric vehicles but also the safest
and most evolutive cars driven in the world. Starting with a unique roadster model, since 2011 Tesla
conquered the premium EV category globally with its model 'Model S' sedan and later Model X sports
utility vehicle. Lately, Tesla also entered the small premium category with Model 3, which will truly
propel electric vehicles into the mainstream.
In addition, with the opening of the Gigafactory and the acquisition of SolarCity, Tesla now offers a full
suite of energy products that incorporates solar, storage, and grid services. As the world's only fully
integrated sustainable energy company.
Tesla Vision is to be the leader in EV Technology, "second place should need a telescope to see us" said
Elon Musk in 2014. To achieve that vision, Tesla ambition is to grow vehicle, production and customer
support with a unique set of values summarized in their culture statement:

move fast, do the impossible constantly innovate, reason from "first principles",
think like owners, we are ALL IN

To materialize the vision, the company has put relentless focus on differentiation around three key pillars
#1 Master product development and innovation for EV

 Leadership on range to achieve maximum miles per single charge and free long distant driving
with EV.
 Leadership battery cost: battery pack cost in S/kWh
 Leads on oar on baler pay cost ny Vr battery module, Power electronics and motor
 Partnership with Panasonic (automotive cell), Daimler (battery packs/chargers) and Toyota (full
drive train for RAV 4)
#2 Lead manufacturing of Electric Vehicles
  First production platform for EV with blend of vehicle design (aerodynamic, trunk in front, low
center of gravity) and EV technology (electric powertrain, quick charge capacity, aluminum
body, connectivity) to drive better performance (300miles autonomy, fun to drive, acceleration)
 Unique design inspired by the endurance athlete, blend of aerodynamics and beautiful design,
incredible interior utility and cargo space.
 In house engineering creating all aluminum chassis construction, lightweight, low center if
gravity, safety 5 star.
 Powertrain engineering Integration to build a system that is greater than the sum of its parts and
highly scalable, superior cost dynamic and trade secret methodology.
#3 Transforming the customer experience with the best technology integration

 Reinventing sales with their own distribution centers

 Distribution and marketing combined and controlled
 Superior customer experience, streamlined purchase process online, capture retail mark-up and
more efficient
 Reinventing Service: best SERVICE with is NO valet loaner service, ranger remote service, no
scheduled maintenance
 Constant evolution of the product with unique software advanced engineering with software for
battery management, motor control, diagnostic, touchscreen and traction and stability control =
customizable and upgradable
2. Purpose and Value
Tesla’s purpose is essentially to create and mass produce zero emission and zero noise cars, allowing for
clean and quiet streets.
Coupled with that, Tesla also aims to allow people to produce their own electricity in their homes and
store it for later consumption. This can be attained through Tesla's solar roof and power walls.
In terms of its corporate values, Tesla focuses on sustainability as one of its core values. For example,
Tesla's gigafactories produce their own electricity through a vast number of solar panels installed on the
rooftop of the factory.
Tesla describes its corporate culture as accelerated, energetic and innovative. They also aim to provide
an all-inclusive working culture, ensuring that everybody can do its best at the job regardless of sex, race,
religion or each worker's past.
3. Strategy
From an early stage, Tesla’s basic strategy as documented in its Master Plan was divided into three stages
whereby:

 On stage 1, Tesla makes a small number of high value cars, in order to prove the concept and
show that electric cars are a viable alternative to traditional gasoline cars (in other words, electric
cars can be fast and long-range, thus they can be widely adopted in the market);
 On stage 2, Tesla produces a car that costs half as much (model 3); this way Tesla starts
expanding its customer base towards a more traditional type of customer, though still at the entry
level of the luxury level it had been focusing on;
 On stage 3, Tesla produces a very high volume, economy price model, whereby vehicles are
now affordable for the average household; in the long run, Fremont factory is meant to produce
this low cost, stage 3 car.
In a nutshell, Tesla’s strategy is to first focus on a premium segment in order to gain traction and start
increasing volume and capacity as new offerings are introduced for lower customer segments down in
the social pyramid. Each stage serves as an anchor for the next one, allowing the company to gradually
prune its technology and scale its operations in the face of an expanding demand.
At this moment, Tesla is still on stage 2 and looking to expand its production capacity, namely through
the construction or expansion of its GigaFactories. According to Tesla’s 2019 form 10-K97, a key focus
in 2020 will be efforts towards establishing and expanding capacity for vehicle production at volume
across three continents.
At the Fremont factory, Tesla commenced Model Y production earlier than anticipated and combined
with Model 3 the company has installed annual production capacity for 400,000 vehicles. They expect
to further increase that capacity to 500,000 vehicles through the installation of additional equipment.
At Gigafactory Shanghai, Tesla has installed annual production capacity for 150,000 Model 3 vehicles.
They have also started the construction of the next phase of that Gigafactory to add Model Y
manufacturing capacity at least equivalent to that for Model 3.
Finally, Tesla has selected Berlin as the site of their next factory for manufacturing vehicles for the
European market, due to its strong manufacturing and engineering presence. They are still at the very
early stages of the construction of that new Gigafactory.
Regarding Tesla’s sales objectives, the company’s operations in the Chinese market are a key strategic
element to ensure the envisaged expansion of demand. Indeed, production at Gigafactory Shanghai
allows Tesla to offer Model 3 in China at competitive local pricing and more quickly, which should drive
further demand and opportunity in the world’s largest market for mid-sized premium sedans, and they
expect a similar impact in China for Model Y when they begin production there of this offering in the
popular compact SUV segment.
Another key element has to do with technological improvement and product differentiation. Over time,
Tesla has been making its vehicles incrementally more compelling, including through a planned software
update for FSD-enabled vehicles to react to traffic lights and stop signs and navigate city intersections,
and additional functionality of both in-vehicle software and the Tesla mobile app.
Lastly, Tesla has also been looking to expand and invest in its servicing and charging locations and
capabilities to keep pace with customer vehicle fleets and ensure a convenient and efficient customer
experience. Without an adequate servicing and charging infrastructure, there will be no conditions to
sustain an increasing product demand.
4. Business Model
In order to provide an overview over Tesla's business model of the automotive business, we created a
business model canvas.
 Figure2: Business Model Canvas

Environmental Analysis
I. SWOT Analysis of Tesla

Figure3: Tesla’s SWOT

 Strengths:
1. Innovative Technology: Tesla is renowned for its innovative technology, particularly in electric
vehicles (EVs) and renewable energy solutions. Its electric vehicles offer superior performance, long-
range capabilities, and cutting-edge features, setting them apart from traditional combustion engine
vehicles.

2. Brand Reputation: Tesla has built a strong brand reputation as a pioneer in the electric vehicle
industry and a leader in sustainable energy solutions. Its brand is synonymous with innovation, quality,
and environmental consciousness, attracting a loyal customer base and investors alike.

3. Vertical Integration: Tesla's vertical integration strategy, which includes manufacturing batteries,
electric drivetrains, and vehicle assembly in-house, provides greater control over product quality, cost,
and supply chain management. This integration enhances efficiency and enables Tesla to maintain a
competitive edge.

4. Supercharger Network: Tesla's extensive Supercharger network, consisting of thousands of charging

stations worldwide, provides convenient and fast charging for Tesla owners, alleviating concerns about
range anxiety and facilitating long-distance travel.
 Weaknesses:

1. Production Challenges: Tesla has faced numerous production challenges, including delays, quality
control issues, and supply chain constraints. These challenges have impacted Tesla's ability to meet
demand and fulfill customer orders in a timely manner, leading to customer dissatisfaction and negative
publicity.

2. High Production Costs: The high costs associated with electric vehicle production, particularly
battery manufacturing, have contributed to Tesla's financial challenges and narrow profit margins.
Additionally, the company's aggressive expansion plans and investments in research and development
have strained its financial resources.

3. Dependence on Government Incentives: Tesla's sales are heavily dependent on government

incentives and subsidies for electric vehicles, which vary by region and are subject to change. Any
reduction or elimination of these incentives could negatively impact Tesla's sales and profitability.

4. Limited Product Line: Tesla's product line is relatively limited compared to traditional automakers,
with a focus primarily on electric vehicles and energy products. While this specialization allows Tesla
to maintain a strong brand identity, it also limits its market reach and diversification opportunities.
  Opportunities:

1. Market Expansion: Tesla has significant opportunities for market expansion, including entering new
geographic markets, expanding its product line, and targeting new customer segments. By diversifying
its offerings and addressing unmet needs in the market, Tesla can capitalize on growing demand for
sustainable transportation and energy solutions.

2. Technological Advancements: Continued advancements in battery technology, autonomous driving

systems, and renewable energy infrastructure present opportunities for Tesla to further differentiate its
products and maintain its technological leadership. By staying at the forefront of innovation, Tesla can
enhance its competitive position and attract new customers.

3. Strategic Partnerships: Collaborating with other companies, such as technology firms, utilities, and
automotive manufacturers, can provide Tesla with access to new markets, resources, and expertise.
Strategic partnerships can also facilitate the development of complementary products and services,
driving revenue growth and market expansion.

4. Regulatory Support: Increasing government support for clean energy initiatives, such as carbon
emissions regulations and incentives for electric vehicles, creates favorable market conditions for Tesla.
By aligning its strategies with regulatory trends and leveraging government partnerships, Tesla can
capitalize on emerging opportunities in the sustainable energy sector.

 Threats:

1. Intense Competition: Tesla faces intense competition from traditional automakers, as well as new
entrants and startups in the electric vehicle and renewable energy industries. Competitors are increasingly
investing in electric vehicle technology and expanding their product offerings, posing a threat to Tesla's
market share and profitability.

2. Supply Chain Disruptions: Disruptions in the supply chain, such as raw material shortages,
production bottlenecks, and geopolitical tensions, can impact Tesla's manufacturing operations and
disrupt its ability to meet customer demand. Dependence on a limited number of suppliers also increases
Tesla's vulnerability to supply chain risks.

3. Economic Downturns: Economic downturns, recessions, and fluctuations in consumer spending can
adversely affect demand for Tesla's products, particularly luxury items like electric vehicles. Reduced
consumer confidence and purchasing power could lead to lower sales volumes and revenue for Tesla,
impacting its financial performance.
4. Regulatory Challenges: Regulatory challenges, including changes in environmental regulations,
safety standards, and trade policies, can create uncertainty and compliance costs for Tesla. Adverse
regulatory changes or legal disputes could hinder Tesla's operations, disrupt its supply chain, and damage
its reputation.
II. PESTEL Analysis
Automobile industry was started in the 1890s combining steam engine with road wagon technology to
serve the need of upper class society discovering new mobility vehicles. The early 1900s marked the
first boom of the car industry, France dominating the automobile industry quickly followed by the United
States and Germany. This countries remained the largest manufacturer and exporter of automobile till
the 1980s. The automobile originally manufactured to cater upper middle class became accessible to
every house hold (example of Ford T model sold over 15 million times) and technological evolution
enabled a race to produce automobiles in the least possible cost to make it accessible to all class level.
Today’s automobile industry is entering into a new era of technical innovation by producing smarter,
more eco-friendly and even driver less automobiles. In that context the analysis of the Political,
Economical, Social, Technological, Environmental and Legal factors can help to understand EV’s
growth momentum in response to the major trends in its environment.
Context Trend Impact on Demand Impact on supply
+ Demand of EV +Increased EV/HEV supply competition
Government regulation on CO2 emission
- Classic Diesel car Demand -heavy competition on battery supply
+Boom in demand of EV in China
Government incentives on EV & Charging +Rapid development of charging -Fluctuation of policy in Europe and China
Political infrastructure infrastructure globally

Chineese governments measures to improve -Proliferantion of low cost/quality cars in China

quality of EV +EV immatriculation demand +Reduce production cost with EV volume going up

+Growth opportunity and large EV +Opportunity for Global car manufacturer to grow outside legacymarkets
adoption -high investment needed for development
China offering large EV market volume
Economical -EV still higher price vs classic cars +Devlopment of SUV
Global economy rise 2015-2019 +Increase car sales globally + Range extension for middle class demand
+rise of middle class demand +Additional volume/margin improvement
Price of material for EV decline +more affordable EV
+Greener car demand +EV brand image
Millenial generation growth -Different ways to consume transport -Affordability vs thermic cars
Social +leasing boom -emergence of alternatives to car ownership
Shift of ways to consume car transport +Green EV taxi in big cities ex-Amsterdam
-Uberisation of transport +Autonomous car readiness
EV manufacturing requiring high level of investment -Relative high price to consumer -Drive consolidation of global market manufacturers to build scale
"-increase dependance with battery +Growth of supplier of powertrain
Battery storage technology advancement providers -emergence of rivals in China on battery storage
Technology "-Europe and China declared regional priority and manufacturinginvestment
Battery manufacturing strategic regional focus +increased autonomy for EV +increased productivity for EV
-decrease barrier to entry

+ strongest Brand echo to environment for pure EV player

Environmental EV best fit for sustainable transportation development +Increased EV car adoption -recycling challenge due to rapid obsolescence of models
-Barrier to entry
+Barrier to entry premium car category
+legislation focus on safety
Safety standards for cars constantly increasing +Safety at the heart of Evs
Legal +Sustainable growth supply
2030 objectives to be at 30% EV +Support of demand EV globally
+allow long term investment with 10+ year growth perspective
 Table1 : PESTEL summary table

 Political - Policies have major influences on the development of electric mobility

Globally, the automotive industry has been under Governments pressure introducing different
regulations forcing manufacturers to move towards more fuel efficient cars, promoting the development
of electric and hybrid engines and ultimately charging infrastructure.

This innovative sector of the industry is benefiting in certain countries of a specific tax credit for buying
an electric car. Policy approaches to promote the deployment of EVs typically start with a vision
statement and a set of targets. An initial step is the adoption of electric vehicle and charging standards.
Procurement programs kick-start demand and stimulate automakers to increase the availability of EVs
on the market, plus provide impetus for an initial roll out of publicly accessible charging infrastructure.

Another useful policy measure is to provide economic incentives, particularly to bridge the cost gap
between EVs and less expensive internal combustion engine (ICE) vehicles as well as to spur the early
deployment of charging infrastructure. Economic incentives are often coupled with other policy
measures that increase the value proposition of EVs (such as waivers to access restrictions, lower toll or
parking fees) which are often based on the better performance of EVs in terms of local air pollution.
Measures that provide crucial incentives to scale up the availability of vehicles with low and zero tailpipe
emissions include fuel economy standards, zero-emission vehicle mandates and the rise in the ambition
of public procurement programs.

Regulatory measures related to charging infrastructure include minimum requirements to ensure “EV
readiness” in new or refurbished buildings and parking lots, deployment of publicly accessible chargers
in cities and on highway networks, and are complemented by requirements regarding inter-operability
and minimum availability levels for publicly accessible charging infrastructure. So far only observed in
Norway, when the EV and charging infrastructure deployment evolves, some policy measures may need
to be adjusted as the markets and infrastructure mature. One example is how fuel and vehicle taxes are
adjusted and their contribution to government revenue.

Front running countries such as those involved in the Electric Vehicles Initiative are already making
progress from their initial phases of EV policy implementation (e.g. establishment of standards, public
procurement and early charging roll out, economic incentives). Many of these countries have regulatory
instruments in place and, to date, some advanced markets like Norway have started phasing out some
aspects of their EV support policies developed standards for chargers. Some (China, European Union,
India) are mandating specific standards as a minimum requirement; others (Canada, Japan, United States)
are not.
 Figure4 : Global Electric Car Sales and Market Share
 Key policy developments in 2018/19 include:

o In the European Union, several significant policy instruments were approved. They
include fuel economy standards for cars and trucks and the Clean Vehicles Directive
which provides for public procurement of electric buses. The Energy Performance
Buildings Directive sets minimum requirements for charging infrastructure in new and
renovated buildings. Incentives supporting the roll-out of EVs and chargers are common
in many European countries.

o In China, policy developments include the restriction of investment in new ICE vehicle
manufacturing plants and a proposal to tighten average fuel economy for the passenger
light-duty vehicle (PLDV) fleet in 2025 (updating the 2015 limits). The use of
differentiated incentives for vehicles based on their battery characteristics (e.g. zero-
emissions vehicle credits and subsidies under the New Energy Vehicle mandate).

o Japan’s automotive strategy through a co-operative approach across industrial

stakeholders, aims to reduce 80% of greenhouse gas (GHG) emissions from vehicles
produced by domestic automakers (90% for passenger vehicles) – including exported
vehicles – to be achieved by 2050 with a combination of hybrid electric vehicles (HEVs),
BEVs, PHEVs and fuel cell electric vehicles (FCEVs). Fuel economy standards for
trucks were revised and an update of fuel economy standards for cars was announced.

o India's announced the second phase of the “Faster Adoption and Manufacturing of
Electric Vehicles in India” (FAME India) scheme. It reduces the purchase price of
hybrid and electric vehicles, with a focus on vehicles used for public or shared
transportation (buses, rickshaws and taxis) and private two-wheelers.

European
China United States India Japan
Union
Regulation
(Vehicles)

Incentives
(Vehicles)
Targets
 ZEV mandate X X*
Fuel economy
X X X X X
standards
Fiscal
X X X X
incentives
X X X* X X

Subsidy X X
Hardware
X X X X X
standards
Building
X* X X* X
regulations
Fiscal
X X X* X
incentives
X X X* X X

Table2 : Comparison of different regions

1. Economical
Globalization of the car industry and the opening of new geographies with booming demand like China
has created opportunities of access to larger markets volume. Sales for electric cars have risen as the
global economy increased. In 2017, it was projected that the world economy would grow by 3.5 percent.
These rises, in Asia and Europe as well as the United States, led to more electric developments. In fact,
the sales of electric cars jumped over 30 percent between 2016 and 2017.
Consequently, the price of materials is actually on the decline for EV producers. Particularly, the cost
of batteries is lower, which is great for the company. The more popular their cars become to the public,
the lower materials prices may drop.
This allows for the possible creation of a more cost-effective vehicle for the public. That too can
positively impact the price of materials. Results depend on the respective country’s economy, of course.
Any country with a declining economy will slice into the company’s profits. In many countries though,
consumers are investing in luxury vehicles like SUVs and BMWs.

2. Social
The Automobile industry has played a key role in society up until now but the upper class baby boomer
doesn’t represent the biggest consumer pool anymore. People in developed countries has now started to
believe that automobile has adversely affected their health and environment, pushing millennials towards
healthier alternatives like cycle to travel short distance or new ways of travelling.
 Millennials, this “technology friendly” consumer
group is also influencing the automobile sector, they
are aware of the latest technology advancement and
can easily compare and evaluate offering. This is
considering that they still want to buy a car. In fact,
the biggest societal trend is the emergence of new
ways to “consume” car and transportation in general,
the example in Spain with Cabify offering car
booking service, Uber revolutionizing the taxi
industry, Blablacar digitalizing car pulling.

Figure5: Generations share in population

The boom of leasing industry like in Germany demonstrates consumers reluctance to own a car on the
long run with further consequences on the car second hand market being flooded with these vehicles.
Generation z, native tech. consumers, could be the first generation without the need of a driving licence.
The development of autonomous cars industry seemed to be at a cornerstone with recent safety
limitations observed in a number of programs. Nevertheless, the automotive industry is made to adopt
newest technology and the “part autonomous car” is already around the corner.
On the other hand, it doesn’t take much for technology to become obsolete. We, as people, are constantly
creating, developing, and advancing what we already have. In a year’s time, the newest gadgets and apps
can be absolutely useless thanks to upgrades and updates.

3. Technological
Technology advances are delivering substantial cost reductions for batteries recent technology progress
for battery storage in general has been boosted by high demand for batteries in consumer electronics.
Structural elements indicate not only that continued cost reductions are likely, but that they are strongly
linked to developments underway in the automotive sector, i.e. changes in battery characteristics
(chemistry, energy density and size of the battery packs) and the scale of manufacturing plants.
Strategic importance of the battery technology value chain is increasingly recognized Policy support has
been extended to the development of manufacturing capacity for automotive batteries. This reflects the
dynamic development of battery technologies and the importance of EVs to achieve further cost
reductions in battery storage for a multitude of applications. It also recognizes the strategic relevance
that large-scale battery manufacturing can have for industrial development (due to the relevance of its
value chain in the clean energy transition). Examples of policy measures related to battery manufacturing
include:

• In China, policy support aims to stimulate innovation and induce consolidation among battery
manufacturers, giving preference to those that offer batteries with the best performance.
• In the European Union, the Strategic Action Plan for Batteries in Europe was adopted in May
2018. It brings together a set of measures to support national, regional and industrial efforts to build a
battery value chain in Europe, embracing raw material extraction, sourcing and processing, battery
materials, cell production, battery systems, as well as reuse and recycling. In combination with the
leverage offered by its market size, it seeks to attract investment and establish Europe as a player in the
battery industry.
Increase in battery efficiency allows now EV’s to perform 400km+ autonomy together with the high
developing rate of the battery charging station in key market is a positive for the firm.

4. Environmental
People love the idea of an electric car. Especially people who have eco-friendliness in mind. An electric
vehicle eliminates the need to use as much fuel as a traditional vehicle. And that’s far better on the
environment. Not to mention an electric car is supposed to be cheaper to use than a traditional car (over
time).
A Tesla is environmentally sustainable. It’s also new. Very few cars on the market boast the power and
luxury Tesla does. The company has done an amazing job maintaining their place in people’s mind as
that electric car. This makes it more difficult for other, similar vehicles, to come onto the scene. Because
when you think electric, you expect a Tesla.

5. Legal
Automobile safety has been one of the biggest fields for legislation around the world. Regulations are
constantly evolving globally putting automobile manufacturers under continuous pressure.
Most recently, the diesel gate generated additional legislation pressure to limit automobile carbon
emission. The scandal of Volkswagen in Germany had a global impact in terms of re- enforcing law in
that matter.
Outlooks indicate a rising tide of electric vehicles. Dynamic developments in policy implementation and
technology advances underpin the projections to 2030 in the New Policies Scenario, which aims to
illustrate the consequences of announced policy ambitions. Projections in the EV30@30 Scenario are
underpinned by proactive participation of the private sector, promising technology advances and global
engagement in EV policy support. It is aligned with the goal of the EVI EV30@30 Campaign to achieve
a 30% market share by 2030 for EVs in all modes except two-wheelers (where market shares are higher).
 Figure6: Electric Vehicle Sales

In the New Policies Scenario, China leads with the highest level of EV uptake over the projection period
(see Figure 5). It is followed by Europe, where the EV sales share reaches 26% in 2030, and Japan, one
of the global leaders in the transition to electric mobility with a 21% EV share of sales in 2030. In North
America, growth is particularly strong in Canada (where EV market shares reach 29% by 2030), as well
as in California and US states that have adopted zero-emissions vehicle (ZEV) mandates and/or have
stated an intention to continue to improve vehicle fuel economy. Other parts of the United States are
slower to adopt EVs, bringing the overall EV sales share to 8% of the US vehicle market in 2030.

Competitors
As described in the PESTEL analysis, the historical automotive makers have to respond four macro
trends. First the electrification driven by policy makers around the globe who are pushing hard in a
response to global climate change and urbanization forcing car makers to massively invest in
electrification both in terms of R&D and production. Second, China, the epicenter of automotive growth
for the last decade, wants to build the next global car maker champion. In the last decade the historical
Europeans, Japanese and American leaders captured most of the growth, but now local authorities are
taking advantage of the technological electrification leap to change the game with the proliferation of
new local entrants. Third, consumers, with millennials taking the lead in terms of global size of consumer
groups, automotive makers have to constantly adapt to new technology putting further constraints on the
speed of development cycle for new models. Finally, partnership with battery suppliers is crucial for
most of the historical players with the risk of becoming irrelevant if not done in a timely manner. Let’s
see first how global leaders are positioned to respond to the four challenges and how Tesla acts as a
gamechanger.
To better understand the competitive landscape of Tesla we’ve analyzed automotive players with current
sales higher than 1 million car per year concentrating 90% of global automotive sales. Over the last
decade, historical markets have restructured due to overcapacity in Europe, America and Japan and the
necessity shift resources in the growing Chinese market.
 Figure7: Rivalry amongst Existing Competitors

Overview of Tesla and Its Innovations

 Company Background:

Tesla, founded in 2003 by Martin Eberhard and Marc Tarpenning, with Elon Musk joining shortly after
as chairman and primary investor, embarked on a mission to accelerate the world's transition to
sustainable energy. Musk's vision for Tesla was not just to build electric cars but to fundamentally
reshape the automotive industry and pave the way for a future powered by renewable energy sources.
The company's mission statement, "to accelerate the world’s transition to sustainable energy," reflects
its commitment to driving positive change on a global scale.
From its early days, Tesla faced numerous challenges and skeptics who doubted the viability of electric
vehicles. However, the company persevered, leveraging cutting-edge technology and innovative thinking
to overcome obstacles and push the boundaries of what was possible. In 2008, Tesla made waves with
the introduction of the Tesla Roadster, the world's first high-performance electric sports car. This
milestone achievement not only demonstrated the potential of electric vehicles but also showcased
Tesla's ability to combine style, performance, and sustainability in a single package.
  Key Innovations:

1. Model S: One of Tesla's most significant innovations, the Model S, was introduced in 2012 and
quickly became a game-changer in the automotive industry. With its sleek design, long-range capabilities,
and industry-leading performance, the Model S set a new standard for electric vehicles. Its innovative
features, such as over-the-air software updates and a large touchscreen interface, redefined the driving
experience and propelled Tesla to the forefront of the electric car market.
2. Supercharger Network: Recognizing the need for a robust charging infrastructure to support long-
distance travel in electric vehicles, Tesla embarked on the ambitious task of building its own network of
Superchargers. These high-speed charging stations allow Tesla owners to recharge their vehicles quickly
and conveniently, making long road trips feasible and alleviating concerns about range anxiety. The
Supercharger network has since expanded globally, with thousands of stations strategically located along
major highways and in urban areas.
3. Autopilot: Tesla's Autopilot technology represents a significant leap forward in automotive safety
and convenience. Using a combination of cameras, sensors, and advanced algorithms, Autopilot enables
semi-autonomous driving capabilities, including adaptive cruise control, lane-keeping assistance, and
automatic lane changes. While not fully autonomous, Autopilot has the potential to significantly reduce
the risk of accidents and make driving more efficient and enjoyable.
4. Battery Technology: Central to Tesla's mission is the development of advanced battery technology
to power its electric vehicles and energy storage solutions. Over the years, Tesla has made significant
strides in battery technology, increasing energy density, reducing costs, and improving longevity. The
company's Gigafactories, sprawling manufacturing facilities dedicated to battery production, play a
crucial role in scaling up production and driving down costs to make electric vehicles more accessible
to a broader audience.
5. Solar Products: In addition to electric vehicles, Tesla has expanded its portfolio to include solar
energy products aimed at revolutionizing the way we generate and consume electricity. Tesla's solar
panels and Solar Roof tiles seamlessly integrate with homes and businesses, enabling them to harness
the power of the sun to generate clean, renewable energy. Coupled with Tesla's energy storage solutions,
such as the Powerwall and Powerpack, these solar products offer a comprehensive approach to
sustainable energy management, empowering consumers to reduce their reliance on fossil fuels and
contribute to a greener future.

Innovation Theories and Frameworks

 Introduction to Innovation Theories:

Innovation theories provide frameworks for understanding the dynamics of how new ideas, products,
and technologies emerge, evolve, and impact industries and societies. In the context of Tesla, a company
known for its disruptive innovations and groundbreaking technologies, several key innovation theories
are particularly relevant in explaining its success and guiding its innovation strategies.
1. Disruptive Innovation (Clayton Christensen):

Clayton Christensen's theory of disruptive innovation posits that new technologies or business models
can disrupt existing markets and industries by initially targeting underserved or overlooked customer
segments. Over time, these disruptive innovations improve in performance and reliability, eventually
displacing established incumbents. Tesla's entry into the automotive industry exemplifies disruptive
innovation, as it introduced electric vehicles that initially targeted niche markets but have since gained
mainstream acceptance and posed a significant threat to traditional automakers.
Tesla's disruptive innovation extends beyond its electric vehicles to include its energy products and
technologies. By offering energy storage solutions like the Powerwall and Powerpack, Tesla has
disrupted the traditional utility and energy storage industries, enabling consumers to generate and store
their own renewable energy. Furthermore, Tesla's focus on vertical integration and software-driven
innovation has enabled it to disrupt traditional automotive business models and challenge industry norms.

2. Open Innovation (Henry Chesbrough):

Henry Chesbrough's concept of open innovation emphasizes the importance of leveraging external
sources of knowledge and collaboration to drive innovation. Rather than relying solely on internal R&D
efforts, companies can tap into a broader ecosystem of partners, suppliers, and customers to accelerate
innovation and create value. Tesla's approach to open innovation is evident in its partnerships with
suppliers, research institutions, and other companies to develop new technologies and bring products to
market more efficiently.
For example, Tesla collaborates with battery suppliers like Panasonic and LG Chem to develop advanced
battery technologies for its electric vehicles and energy storage products. Additionally, Tesla has
embraced open-source principles by releasing some of its patents to encourage innovation and
collaboration within the electric vehicle industry. By adopting an open innovation approach, Tesla has
been able to access external expertise, accelerate product development, and maintain its competitive edge
in rapidly evolving markets.

3. Diffusion of Innovations (Everett Rogers):

Everett Rogers' theory of diffusion of innovations explores how new ideas, technologies, and products
spread through society over time. According to Rogers, the diffusion process follows a bell-shaped curve,
with innovators and early adopters leading the way, followed by the early majority, late majority, and
laggards. Tesla's innovative products, such as electric vehicles and solar energy solutions, have followed
a similar diffusion trajectory, initially appealing to tech enthusiasts and environmentally conscious
consumers before gaining broader acceptance.
Tesla has employed various strategies to facilitate the diffusion of its innovations and accelerate market
adoption. For instance, the company has invested in building a network of retail stores and showrooms
to educate consumers about the benefits of electric vehicles and provide hands-on experiences.
Additionally, Tesla's marketing efforts, word-of-mouth referrals, and social media presence have helped
generate buzz and cultivate a loyal customer base, further driving the diffusion of its innovations.

4. Blue Ocean Strategy (W. Chan Kim & Renée Mauborgne):

W. Chan Kim and Renée Mauborgne's Blue Ocean Strategy advocates for creating uncontested market
space by simultaneously pursuing differentiation and low cost. Rather than competing in overcrowded
and commoditized markets (red oceans), companies can create new market segments or industries (blue
oceans) by offering unique value propositions. Tesla's entry into the electric vehicle market exemplifies
a blue ocean strategy, as it differentiated itself from traditional automakers by focusing on innovation,
design, and sustainability.

By pioneering electric vehicles with long-range capabilities, sleek designs, and advanced technology
features, Tesla created a new market segment that transcended the limitations of traditional gasoline-
powered cars. Additionally, Tesla's direct-to-consumer sales model, bypassing traditional dealership
networks, enabled it to reduce costs and streamline the customer experience, further enhancing its
competitive advantage. Through its blue ocean strategy, Tesla has established itself as a leader in the
rapidly growing electric vehicle market and continues to chart new territories in sustainable
transportation and energy.

Relevance to Tesla:
These innovation theories provide valuable insights into Tesla's innovation strategies and help elucidate
the factors driving its success. By embracing disruptive innovation, open innovation, diffusion of
innovations, and blue ocean strategy principles, Tesla has been able to challenge incumbents, create new
market opportunities, and accelerate the transition to sustainable energy. As Tesla continues to push the
boundaries of innovation and reshape industries, these theories will remain essential frameworks for
understanding and guiding its future endeavors.
Innovation can also be defined as the force that drives economic growth; it plays a key role in the success
of a number of companies like Apple, Google, Amazon, Honda, P&G and more. Innovations have shaped
the modern market and constantly define the leader companies in each market segment. However, it is
extremely difficult for a company to be continuously innovative. The challenge that companies face
today is to be able to manage the constant changes that take place in technology and in the industries and
to be able to stimulate innovativity and creativity. It is important not only to be able to have new ideas
but to be able to take advantage of these ideas commercially (Rothaermel, 2010).

Each company follows a different strategy when pursuing innovation. Miller and Olleros (2007) suggest
that the logic behind innovation strategies consists of the following key elements:

 Patent-driven discovery
 Cost-based competition
 Systems integration
 Systems engineering and consulting
 Platform orchestration
 Customized mass-production
 Innovation support and services

Companies should have a clear vision which separate innovation strategies they are going to pursue and
how they are going to combine the different innovation strategies (Miller and Olleros, 2007).

In addition, Tidd and Bessant (2005) underline that, when talking about innovation, essentially we are
talking about change. Francis and Bessant (2005) focus on four broad categories (the 4P’s of innovation):
 Product innovation – changes in the things (products/services) which an organization offers;
 Process innovation – changes in the ways in which they create and deliver;
 Position innovation – changes in the context in which the products/services are introduced;

 Paradigm innovation – changes in the underlying mental models which frame what the
organization does.
Closed and Open Innovation

According to Chesbrough (2003), firms from high-end technology industries have fundamentally
changed the way they innovate. Those firms have transformed their innovation strategies from a Closed
Innovation model to an Open Innovation model. After that, a lot of researchers have paid significant
attention to this paradigm shift from a closed to an open innovation model (Herzog, 2011).

Figure8: Closed Innovation flowchart (Chesbrough, 2003).

There are several logical facts that brought open innovation theory to the surface. First of all, a lot of
good ideas are widely spread nowadays. Also, innovation is not anymore being done within a single firm,
but within networks of firms instead. Finally, firms have realized that they cannot employ all the highly
skilled employees in the world (Chesbrough, 2003)

Open Innovation
Nowadays, open innovation constitutes one of the main topics in innovation management. The basic
condition of open innovation is disclosing the innovation process. In general, it is defined as: “the use of
purposive inflows and outflows of knowledge to accelerate internal innovation, and to expand the
markets for external use of innovation, respectively” (Chesbrough et al., 2006).
 Figure9: Open Innovation flowchart (Chesbrough 2003).

Table3: Contrasting principles of Closed to open innovation (Chesbrough 2003).

  Process Classification

The concept of open innovation is quite broad and there are several approaches of categorizing it. There
are two major types of open innovation in the aspect of the innovation process of a firm. Inbound open
innovation which is based on an outside-in process, and outbound open innovation which is based on an
inside-out process (Chiaroni et al., 2010).
The outside-in process aims to increase the knowledge of a company bringing together customers,
suppliers and knowledge coming from external sources (Enkel et al., 2009). On the other hand, the inside-
out process aims to make the firm more profitable by coming up with innovative ideas, commercializing
intellectual property (IP) rights and extending technology by interacting with the outside environment
(Enkel et al., 2009).
The combination of the above processes constitutes the coupled innovation process where inbound and
outbound processes are applied at the same time. This can be achieved mostly by the cooperation of
supplementary partners (joint ventures, alliances) (Enkel et al., 2009).
This study focuses on the coupled process since this is applied in the case study, which is examined. In
the following chapter the coupled process is described in more detail.

 Elements of Coupled innovation process

Coupled innovation refers to innovation in cooperation with supplemental partners. These partnerships
can be formulated as joint ventures and alliances. Through coupled innovation processes, companies
obtain inter-firm relationships. This way, their R&D departments cooperate in order to develop
complementary technology (Mazzola et al., 2012).
Through the inter-organizational collaboration of their R&D departments, firms are able to explore new
opportunities and technologies (Ebersberger et al., 2010). Technological collaborative networks and
R&D alliances, constitute a significant factor for firms in their attempt to achieve better results in product
innovation (Nieto and Santamaria, 2007).
In addition, Lecocq and Looy (2009) state that according to a recent study, which was based on a broad
review of quantitative empirical studies, the R&D alliances seem to be a more effective strategy than
mergers and acquisitions in terms of improving the firm's innovative performance.
 Figure10 :The target of Collaboration (Miemis, 2010).

However, despite the increase of the financial outcomes, R&D inter-organizational collaborations
contain several risks as a result of opportunistic behaviors and also increase the coordination costs
(Faems et al., 2010). Belderbos et al. (2010) state that according to a study of 68 firms, the possible
advantages of alliances for technological outcomes might not overweight the potential disadvantages
such as the coordination costs’ increase. Unlike in-bound processes, in coupled processes, companies
have to share the outcomes with their collaborating partners. Hence, the collaboration might help firms
to achieve better results in innovation performance, however it might reduce the skill of the firm to
benefit from such activities (Ring and Ven, 1994).

Corporate Entrepreneurship

Corporate entrepreneurship proved to be crucial for today’s corporations in successfully creating,

developing and implementing new ventures that renew their technology and product portfolios since
markets as well as their existing products mature (Dess and Lumpkin 2005).
A lot of existing corporations, including large automotive manufacturers, have problems in
implementing corporate entrepreneurship. According to a research of Garvin and Levesque (2006),
existing corporations are planed to ensure their established businesses’ success including current
structures, customers, products and technologies. Also, Wolcott and Lippitz (2007) state that
corporations are mainly focusing on those innovations that can fit their current business activities. That
way, they might miss opportunities due to the fact that they fail to realize the importance for new business
models. In addition, corporate entrepreneurship can be obstructed by new technologies that may be
considered as “not invented here” and therefore menacing the existing power structures of a company
(Freeman and Engel, 2007).

Alliances
Reuer et al. (2011) state that entrepreneurial alliances, including also the green- technology ones, are
crucial for the new forms of innovation, organization and competition. A lot of collaborative paradigms
are used by many firms in order to identify, improve and ensure their sustainable competitive advantage
and develop new strategies
(Dyer et al., 2001). In addition, partnerships can be effectively used as a tool for firm learning; more
particularly when radical technologies with uncertainty are taking place and when a lot of different
systems and subsystems have to be aligned with each other. A learning tool like that mainly focuses on
“exploratory partnerships to generate joint knowledge, where collaboration with partners on issues that
are defined in the course of the collaboration takes place” (Aggeri et al., 2009).
Also, strategic partnerships are getting increased in terms of number and importance. Nowadays, they
constitute a core strategic competitive component in many industries and green-technology
entrepreneurial firms across the U.S. and E.U. (Holmberg and Cummings, 2009).
In many U.S. and international markets, the competitive paradigm has been changed from a firm-to-firm
to a network-to-network competition by strategic partnerships and networks of partnerships (Lorenzoni
and Baden-Fuller, 1995).
According to Beaume and Midler (2009), the green-technology vehicle market is an example of growth
in alliance-based competition and innovation. Moreover, alliance- based innovations can fundamentally
shift the customer’s value proposition. That way, those disruptive technology innovations can be a
significant influence of single firm’s competitive advantage (Aggeri et al., 2009). A few examples of
that context are hybrid vehicles and plug-in EVs, media and publishing distribution, banking and
investing, smart phones, digital TV and Apple’s portable devices (iPhone, iPod, iPad).
Finally, Holmberg (2011) suggests that firms can benefit by positioning themselves at the center of large
inter-organizational alliances and follow more strategically designed alliance portfolios that can be
changed dynamically over time. This entrepreneurship strategy is significant for new entrepreneurial
ventures and EV corporate entrepreneur

Technology Entrepreneurship at Tesla

 Entrepreneurial Vision:
Elon Musk's visionary leadership has been instrumental in shaping Tesla's entrepreneurial culture and
driving its success. Musk's overarching vision for Tesla goes beyond merely building electric vehicles;
it encompasses a broader mission to accelerate the world's transition to sustainable energy. This
ambitious goal serves as a guiding principle that permeates every aspect of Tesla's operations and
decision-making processes.
Musk's entrepreneurial vision is characterized by boldness, innovation, and a relentless pursuit of
excellence. He challenges conventional wisdom and pushes the boundaries of what is possible, inspiring
Tesla employees to think big and pursue audacious goals. Musk's hands-on approach and willingness to
lead from the front have fostered a culture of empowerment and accountability at Tesla, where employees
are encouraged to take ownership of their work and embrace innovation.

 Startup Mindset:

Despite its rapid growth and global presence, Tesla has managed to maintain a startup mentality that
prioritizes agility, creativity, and disruption. This mindset is rooted in the company's early days as a
scrappy Silicon Valley startup, where resourcefulness and innovation were essential for survival. Even
as Tesla has grown into a multi-billion-dollar company, it has retained the ethos of a nimble startup,
fostering an environment where new ideas are encouraged, and bureaucracy is kept to a minimum.
Tesla's startup mentality is evident in its organizational structure, which emphasizes flat hierarchies and
cross-functional collaboration. Decision-making is decentralized, allowing teams to move quickly and
adapt to changing market conditions. This agility enables Tesla to iterate rapidly on product development,
respond to customer feedback, and stay ahead of competitors in a fast-paced industry.

 Risk-Taking and Experimentation:

Tesla's willingness to take risks and experiment with new technologies and business models is a
cornerstone of its entrepreneurial culture. From the outset, Elon Musk has embraced a philosophy of
"failing fast and iterating," recognizing that innovation requires experimentation and a tolerance for
failure. This mindset encourages Tesla employees to push the envelope, explore unconventional ideas,
and pursue ambitious projects that have the potential to reshape industries.
One of the most notable examples of Tesla's risk-taking is its investment in advanced battery technology
and electric vehicle manufacturing. At a time when many doubted the viability of electric cars, Tesla bet
big on the future of clean energy and embarked on a mission to revolutionize the automotive industry.
Despite numerous challenges and setbacks, including production delays and technical issues, Tesla
persevered and ultimately succeeded in bringing electric vehicles into the mainstream.
Tesla's willingness to take risks extends beyond product development to include business model
innovation and market expansion. For instance, Tesla's decision to sell cars directly to consumers,
bypassing traditional dealership networks, was a bold move that challenged entrenched interests and
disrupted the automotive retail industry. Similarly, Tesla's foray into energy storage and solar energy
solutions represents a strategic bet on the future of renewable energy and decentralized power generation.

Tesla’s Risks:
Tesla employs a comprehensive strategy in managing risks related to innovation and technological
entrepreneurship to ensure it remains a leader in electric vehicles and renewable energy industries. At
the heart of this approach is a significant commitment to investing in research and development,
guaranteeing Tesla remains at the forefront of technological progress, particularly in areas like battery
technology and autonomous driving features. In order to tackle production obstacles and uphold top-
notch standards, Tesla utilizes strict quality control procedures and cutting-edge manufacturing methods,
as showcased by its Gigafactories, aimed at enhancing production efficiency and cutting down expenses.
In order to minimize supply chain risks, Tesla broadens its supplier pool and establishes strategic
alliances, especially with Panasonic for battery cells, decreasing reliance on one supplier and boosting
supply chain resilience. Safeguarding its innovations is another crucial element, involving a substantial
commitment to obtaining patents and trademarks, as well as vigilantly overseeing and enforcing
intellectual property rights to avoid unauthorized use or violation.
Tesla also keeps a close eye on regulatory changes and adapts to meet requirements, advocating for
policies that promote the use of electric vehicles and renewable energy projects. Tesla focuses on
educating consumers and being transparent to promote the adoption of new technologies like
autonomous driving and energy storage solutions in the market. The company keeps its financial
flexibility in order to back ongoing innovation, allowing for continued investment in cutting-edge
projects while preserving financial stability.
Furthermore, Tesla enforces strict cybersecurity protocols to protect its extensively connected
technologies, defending against potential breaches that may disrupt operations or undermine consumer
confidence. Tesla places a high importance on attracting and retaining top talent by creating an
innovative work environment that attracts skilled professionals, ensuring the company stays at the
forefront of technological entrepreneurship.

Conclusion
In conclusion, Tesla's journey from a Silicon Valley startup to a global leader in electric vehicles and
renewable energy solutions exemplifies the power of innovation and entrepreneurship. Through
disruptive technologies, strategic approaches, and a culture of creativity, Tesla has reshaped industries,
challenged norms, and accelerated the transition to a sustainable future.

By applying key innovation theories such as disruptive innovation, open innovation, diffusion of
innovations, and blue ocean strategy, Tesla has successfully differentiated itself in highly competitive
markets and maintained its position as a pioneer in technology and sustainability.

Tesla's commitment to innovation extends beyond its products to its organizational culture, where risk-
taking, experimentation, and collaboration are encouraged. By fostering a culture of innovation and
empowering employees to pursue bold ideas, Tesla continues to push the boundaries of what is possible
and inspire change on a global scale.

Looking ahead, Tesla faces challenges such as market competition, supply chain disruptions, and
regulatory changes. However, with its innovative spirit, strategic vision, and unwavering commitment
to sustainability, Tesla is well-positioned to navigate these challenges and continue driving innovation
and positive impact for years to come. As Tesla continues to innovate and lead, its legacy as a catalyst
for change in the automotive and energy industries will endure, inspiring future generations to dream big
and make a difference.

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TEAM’S NAMES:

Safae Mouqtadir F21110119

Inaam Elyoubi F21110222

Hasna Bahadi F21110117

Salaheddin Badraoui F21110127