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Tesla Motors Case Solution

Solution Id Length Case Author Case Publisher
1181 1053 Words (4 Pages) Frank T. Rothaermel McGraw-Hill Education : MH0032
This solution includes: A Word File A Word File

The alternative power car, also known as the EV, was still a young industry at the time of the case as most cars in the US ran on gasoline. Hence, Tesla can be said to have come up with breakthrough electric products (vehicles). The competition at that time was primarily with Nissan that had just a single model to compete in the electric vehicle segment.

However, with the passage of time, and due to the success of Tesla Roadster, more car manufacturers based in the US began to develop alternative power and switch to electric vehicles. The alternative power car manufacturing industry was complex as sophisticated engine technology was required. The industry primarily had two trends: developing totally new electric cars or converting the existing technology cars from gasoline to electric. In addition, due to the success of Tesla’s Model S and Tesla Roadster, competitive manufacturers were encouraged to develop similar cars.

Following questions are answered in this case study solution

  1. Analyze the alternative power car manufacturing industry at the time of the case.

  2. In your opinion, does Tesla have a sustainable competitive advantage? Why or Why not?

  3. Has Tesla departed from established industry practices?

  4. What short-term objectives are required for Tesla to survive?

Case Analysis for Tesla Motors

On the other hand, the major share of automobile manufacturing in the United States still belonged to conventional cars being run on gasoline. However, luxury and sporty car manufacturers such as Mercedes, Audi, and BMW were soon catching up with Tesla’s superior car performance. The growth of the alternative power car (EV) was also due to changing preferences with the rise in fuel prices. Hence, the alternative power sector could see good growth in the near future. At the time of the case, however, the industry was still in its early stages.  

2. In your opinion, does Tesla have a sustainable competitive advantage? Why or Why not?

In my opinion, Tesla does not have a competitive advantage that is sustainable. While the case has highlights that point out how Tesla’s practices were away from the whole car manufacturing industry, there is no indication that competition is much far behind in technology. Hence, the company’s competitive advantage in the form of a superior drive, fuel economy, comfort, and speed is not sustainable. Such features can be duplicated in the long run by the likes of Nissan, Toyota, and Ford Motor Company.

The CEO of Tesla was proud of the company’s competitive advantage. According to the top management of the company, Tesla was close to its customers, had great service for repair and maintenance, and was concerned both about the concentrated and mass-market vehicles. Hence, the higher-ups at Tesla were cognizant of the likes and dislikes of their customers. The competitive advantage in the form of improved RPM is again not sustainable as it largely depends on improved technology.

The industry trends already depicted rising competition and more manufacturers moving to EV. This is because EV ensured less pollution and mishap risk, factors that were important for the customer. The competitive advantage can be sustainable if Tesla continues to provide superior customer service at the dealers’ level. However, this will not be an easy task as both Mercedes and BMW have strong customer service elements in the form of a comprehensive dealers’ network. On the whole, such a competitive advantage is not sustainable for Tesla. 

3. Has Tesla departed from established industry practices?

There is strong evidence in the case that Tesla has departed from established industry practices. For example, Tesla completely relied on electric technology to produce its vehicles. In the initial stages, all vehicles, especially the Tesla Roadster and Model S were built as EV and no attention was paid to gasoline. This policy worked well for Tesla as fuel prices were rising, and customers were not too pleased with gasoline cars. In addition, the electric car was seen as unconventional which attracted the buyers of luxury and sporty cars.

Secondly, it took Tesla a lot of time and practice to master customer service and the dealership. However, both the customer service and dealership service delivery were superior to the competition. This is because one of the practices of the company, away from the established industry practice, was to develop its service outlets. Most of the other car manufacturers heavily relied on established dealerships to market and sell their vehicles.

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