Manchester Module 7 Tesla Aims for the Mass Market Case Study
Question Description
I’m working on a management case study and need a sample draft to help me learn.
Tesla Aims for the Mass Market
Elon Musk co-founded Tesla in 2003 with the vision of making electric cars that could rival, and even replace, traditional gas-engine cars in the consumer marketplace. At the start of the 21st century, the external environment was beginning to show favorable signs for the development of electric cars: people were becoming more concerned about the environment and their carbon footprints, and gas prices were beginning a steep climb that had already spurred the sales of hybrid gas-electric cars such as the Toyota Prius.
The automobile industry was not responding to these environmental trends, instead of relying on the fact that trucks such as the Ford F-150 and Chevrolet Silverado were still the two top-selling vehicles in America in 2003. Musk saw a different future for vehicles, and Tesla introduced the all-electric Roadster in 2008. Four years later, the more practical Model S was introduced, and Tesla sales began to climb.
As a new entrant in the automobile industry, though, Tesla faced several challenges. Manufacturing and distribution in this industry are extremely expensive, and Tesla had to develop the capability of efficiently manufacturing large quantities of cars. Tesla also had to establish dealerships for its cars, although it also decided to sell cars online, taking advantage of tech-savvy consumers comfort with online shopping. Perhaps Teslas greatest challenge was convincing consumers to trust the new technology of all-electric cars. Range anxiety became an actual term, describing peoples fear that their car batteries would run out before they reached their destinations. To combat this, Tesla developed an extensive network of charging stations so consumers could be confident that they could charge their cars conveniently.
Elon Musk has been a master of raising money to fund Teslas efforts to successfully enter the mainstream automobile manufacturing industry; so far, Teslas entry has cost billions of dollars. Tesla has also taken advantage of tax incentives to develop its charging stations and to sell its cars, because Tesla customers receive tax credits for the purchase of their cars. Tesla cars are not inexpensive, however, and that has limited their marketability. Most Americans cannot afford the Model S or more recent Model Xs high prices (up to and exceeding $100,000).
In 2017, Tesla launched the Model 3, designed to transform the car industry by being its first mass-market, affordable model. The company started taking reservations for the model in 2016, promising that it would arrive with a $35,000 price tag. By mid-2017, the reservations list had reached half a million customers, creating a new problem for Tesla. How could it possibly manufacture that many cars when production levels for all of 2016 were less than 84,000 cars?
In 2- 3 pages, review and answer the following questions. To support each answer, I ask that you refer (and reference) the chapter reading and at least two additional sources. Note: A bibliography should be submitted as well.
Module 7 – Case Study Questions:
- What PESTEL factors supported Teslas success? Which factors posed challenges?
- How has Teslas strategic position changed since it was founded in 2003?
- What kind of responses would you expect from Teslas rivals in the automobile manufacturing industry to the Model 3s popularity?
