Tesla Strategic Analysis - Alternatives ** In-text citation ** A P A format ** The week 6 Project is a section with a heading of "Alternatives" - you need to have at least 3 options that might resolve or be part of a solution for the problem you identifi

Tesla Strategic Analysis

MBA 695 Strategic Management

Park University

Anthony Crowdus

Introduction

Tesla Inc. is a public U.S. based company that deals in solar panel manufacturing, energy storage, and auto-making; it is headquartered in Palo Alto, California. Tesla Inc. specializes in the designing, manufacturing, and selling of electric vehicles and products for storing energy. Subsequently, the company operates in the Energy storage and Automotive industries. Tesla Inc., originally known as Tesla Motors, was founded in July 2003 by Marc Tarpenning and Martin Eberhard. It was named after the Serbian inventor and engineer, Nikola Tesla, whose original AC Motor design was modified to develop the company's first vehicle, the Tesla Roadster (Baer, 2014). Tesla Motors was originally formed to develop an electric car, and it was not till 2008 that the company released its first vehicle. The company went public and launched its IPO in June 2010. In 2015, Tesla Motors began its second product line: home use battery. Tesla Motors officially changed its name in February 2017 to Tesla Inc.

The company's products are a reflection of its vision and mission statements which are: "to create the most compelling car company of the 21st century by driving the world's transition to electric vehicles" and "to accelerate the world's transition to sustainable energy" respectively (About Tesla, n.d., para. 3). The company which has 33,000 employees globally, at the end of the financial year 2016, reported its worldwide revenue to be $ 7 Billion and a Net loss of $773 Million (Tesla Inc., 2017). Tesla's competitive advantage is as a result of its exclusive focus on electric vehicles which allows it to sell directly to customers thus reducing overhead costs. Similarly, it has been able to deliver a vast network of superchargers to its product users in the U.S. who have not been rivaled by any other players in the industry. The convenience provided by this charging network makes it a preferred brand by consumers of electric vehicles. The fact that Tesla has been the first automaker to offer this free-for-life service will make it difficult for others seeking to compete with it. Tesla Inc. aims to produce and sell 500,000 vehicles annually by 2018 (Tesla, Inc., n.d.a).

Problem Statement

The problem at TESLA is how to meet market demands for its electric car over the next 2-5 years. A shortage of lithium batteries used in the manufacturing of electric cars is the main critical issue facing Tesla Inc. This deficiency in battery supply is particularly important given the company's goal of producing 500,000 cars by 2018, which according to Tesla, will require the entire current global lithium-ion battery supply (Tesla, Inc., n.d.b). Increased use of lithium-ion batteries to produce electric vehicles, smartphones and laptops among other things have caused a shortage in the supply (Novio Litio, Ltd., 2017). In the first half of the year, Tesla was not able to meet its production target because of a shortage of lithium battery packs (Disis, 2017). The company only managed to produce and sell slightly over 47,000 cars which according to the company was well below its target.

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