A. I believe that Tesla’s success comes from their ability to produce their own batteries
using their own lithium, which reduces the costs that would have gone to the supply
chain. Tesla’s most significant capability would have to be that they are able to produce
these luxury vehicles while also reducing costs of the supply chain. They were able to do
this by building a “gigawatt” battery production plant where they would not only make
their own batteries, but also work with Pure Energy to obtain their own lithium for the
batteries. When it comes to the resource of lithium, it meets the four standards to
suggest that this is a core competency. Lithium is valuable because it is a key
component in making the battery that these electric cars run on. Having access to this
resource at a reduced cost, made it very valuable. Lithium is also rare. In the case it
says that “Nevada (where the Gigafactory was located) had an ample source of lithium”,
but before that, lithium was being supplied from; Argentina, Chile, Bolivia, Australia, and
eastern China. That being said, it would require a United States company to purchase
the resource from across seas and then have it shipped to where the batteries were
being made. In addition, lithium is a significant cost to the company, and paying for your
own source of lithium would be a very costly endeavor. While the price of lithium has
decreased slightly, it still doesn’t compare to the cost associated with a regular gasoline
car. Not only is the resource itself on the pricey side, it also requires transportation costs
to get the raw material from point A to point B. Finally, Tesla was organized to exploit the
resource of lithium. They had a plan to take the lithium that was mined, and turn it into
the batteries that their electric cars would run on. Because of these four reasons, I
believe Tesla does have a competitive advantage in the industry of electric vehicles.
They are self dependent, and provide a high quality car that holds a certain status in
society. If someone who is able to pay the higher price, is looking for an environmentally
friendly automobile Tesla is almost certainly at the forefront of their mind. The fact that
Teslas are customizable, hold a high status, and run solely on electricity. Although there
are more and more cars coming out as ‘electric’, they will have a tough time competing
with all that Tesla has to offer.
B. I would say the main disadvantage for Tesla is that all cars are purchased online and are
customized by the customer. It mentioned several times in the case that the waiting
period from the time a customer places their order of a car, to the time they actually
receive the car. This is due to the fact that each Tesla is customized to the customers
order. The purchasing of Tesla automobiles is quite different than what the average
person is used to. Teslas are purchased online and are delivered to the customer. While
this could be viewed as something that sets Tesla apart from other automobile
manufacturers, it could also raise several problems. The first, being the fact that it isn’t
uncommon for there to be delays with orders. Another disadvantage to online ordering is
that customers were able to cancel their orders if their order was not delivered on time.
This would also cause the employees who manufactured the automobiles extra stress.
Thinking of the manufacturers makes me feel like they were held to very high standards
but were also forced to produce a product in a timely manner. These two reasons are
why online ordering would be seen as a competitive disadvantage for Tesla since their
competitors don’t offer the same services. Online ordering could be seen as a huge
advantage for Tesla, but if there are problems that arise in the production or delivery
process, these could turn to disadvantages really quickly.
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