Running head: TESLA MOTORS 1
Tesla Motors Marketing Strategies: A Case Study and Response
Danielle Bowyer, Rebecca Katz, Deborah May, Leonisha Reed, Lonzell Simon, Justin Tarver
Liberty University
BMAL 504 – Leading Organizational Change
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Abstract
Tesla has redefined the vehicle market. In a time of increased focus on sustainability, Tesla has
set the stage for the market of luxury electric vehicles. Since the foundation of the company in
2003 (SOURCE), Tesla has been somewhat of an enigma, developing cars only the elite can
own, and providing service unlike any other vehicle before. They met their customers where they
already spent their time, at the mall, allowing them to sit down and design the vehicle of their
choice rather than having them trudge out to a lot and haggle over the best price. This did not
come easy for the company, and even so, they have decided to ditch this strategy altogether,
implement a change of online only shopping. This project intends to discuss the successes of
Telsa since it was established, the recent updates to their marketing strategy, and a proposal for
management.
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Telsa Motors Marketing Strategies
“Tesla Motors (Tesla) is a global enterprise that designs, produces, and markets electric-
powered vehicles and components (Mangram, 2012, 289).” To date, it has a monopoly on selling
zero-emission sports cars (p. 289). The company was established by Elon Musk in Silicon Valley
in 2003 and was done so with a “Silicon Valley” mindset, culture, and marketing approach (p.
296). In addition to the style of the vehicle, Tesla has made a major impact on the electric vehicle
market, with its selling strategies and infrastructure.
The Numbers
Mangram (2012) explains that Tesla started with a single store in 2008, steering away
from the traditional car dealership model and growing to nearly 20 by the time of his publication.
In the same time period, the company sold 1650 of its Tesla Roadsters worldwide (p. 296). In
2013, the company sold a total of 22, 477 cars across all models offered (Stolze, 2015). In
comparison, Ford sold 2.4 million units worldwide in 2018 alone, and Toyota finished the year
with 2.2 million units sold (Wagner, 2019). Even so, Tesla has continued to see a large increase
in gross profit year over year. This profit has quadrupled from 2015 to 2018 from just under
$1,00,000,000 to $4,042,021,000 over that four-year period (Tesla Financials, 2019). In just 12
years Telsa has been able capture a market share twice the size of Fiat Chrysler and half the size
of Ford or General Motors (Stringham, Miller, & Clark, 2015).
The Difference
The Experience
Telsa has turned the traditional car buying experience on its head. In the United States,
when one thinks about purchasing a new car, immediately the thought of a long day of haggling
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and negotiating at a car lot comes to mind. This franchise system for car dealing began in the
1950s and requires a large initial investment for inventory and property as well as a precarious
relationship with the franchisee and manufacturer (Stolze, 2015). Telsa established a new normal
for the car-buying process. They created stores, which are “compact, deliberately located in high-
traffic areas, and designed to invite potential customers” (Stolze, 2015, para. 9).
Electric versus Gas-Powered
The cars provided out of these new-era stores have a stark difference than those sold off
of an open lot. Firstly, the car is electric which is becoming increasingly important to consumers
with the rise of green-energy initiatives and lowering personal carbon footprints. Governments
are also putting added pressure on vehicle manufacturers to develop cars with lower emissions or
even fully electric vehicles (Mangram, 2012). Tesla has developed an electric battery which can
with a range of up to 300 miles (p. 292). Additionally, as previously mentioned, Tesla offers the
only electric sports car, which is a far cry from the slow-paced, awkwardly shaped cars which
many associate with the emergence of electric vehicles. Tesla’s vehicles have all of the
capabilities of one which is gas-powered (Mangram, 2012).
Quality
Style and sustainability are enhanced by the quality of vehicle that Tesla is able to
produce. Some of the top manufacturers, such as Honda and Toyota, can produce a vehicle in the
matter of hours. That same vehicle can be on a lot for sales within days (Mangram, 2012). In
contrast, a single Tesla can take two to four weeks to produce and deliver to the customer
(Mangram, 2012??). Coupled with the electric drive-train, the quality of the vehicle means that a
Tesla requires little to no regular maintenance (Stolze, 2015). There are Tesla owned service
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centers, but Elon musk had advised them “never to make a profit,” but rather use service as an
opportunity to “quell the fears about buying and maintaining an electric car” (Stringham, Miller,
& Clark, 2015, 95.
Infrastructure
Tesla has had to build, and must continue to maintain, an entire infrastructure of their
customers. Even with a range of 300 miles, drivers would not be able to take their cars on long-
distance trips without Tesla devising a plan for available charging stations. “As of 2015, Tesla
has built 445 stations that charge at zero marginal cost to the consumer” (Stringham, Miller, &
Clark, 2015, 95). There is further room for growth in this market space with the possibility of
partnerships with shopping centers, parking garages, restaurants, hotels, and more (Mangram,
2012).
Changing Strategy
Tesla revolutionized the car buying business upon its establishment in 2003. Now, they
are doing it again through a major change in their marketing strategy. They face a major
challenge of making their cars affordable for the general public in order to reach more potential
customers. The Model S was introduced in 2012 at a base price of $70,000, and the Model 3 with
a base price of $35,000 was introduced in 2017 (Stringham, Miller, & Clark, 2015). In early
2018, Elon Musk announced that the company intends to reduce the full-time staff by about
seven percent, in addition to boosting production of the Model 3 sedan (Browne, 2019). They
plan to introduce another new model, Model Y in 2020 as well as begin work on designing and
producing a fully electric pickup truck (Bigelow, 2019).
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Beyond adding additional models and shifting focus from the Roadster to more family-
friendly and affordable models, Tesla has decided to move further from the traditional sales
model. Tesla has decided to move from a “store” model to a fully online platform for selling cars
(NEED A REFERENCE FOR THIS FACT).
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