TESLA STRATEGIC HR 2
Strategic HR Assignment: Tesla Inc.
Many high-performing organizations approach human resource management (HRM)
from a strategic perspective. Although strategic HRM has significantly grown in popularity,
organizations have been slow to fully transform their HR functions to truly strategic (Mello,
2010). HRM is necessary for organizations to manage their workers and navigate external forces
like government regulations (Valentine et al., 2020). Mello (2010) states that traditional HRM is
reactive while Strategic HR is proactive. The following will analyze Tesla Inc. through Strategic
HR's scope and recommend improving its HR practices.
Company Profile
Founded in 2003 by Elon Musk, Martin Eberhard, JB Staubel, Mar Tarpenning, and Ian
Wright, Tesla Inc. manufactures some of the best Electric Vehicles (EVs) available (Liu, 2021).
Tesla’s stated mission is to drive the world towards sustainable energy. Aside from EVs, Tesla
has also made significant investments in the research, development, and deployment of energy
generation and storage systems and a supercharging network to support its EVs (Tesla Inc.,
2024). Tesla has built a reputation for producing innovative and reliable products, becoming the
predominant EV manufacturer and one of the top automakers (Thomas & Paine, 2019). Tesla
uses a vertically integrated business model that has allowed it to leverage its engineering
expertise and focus on improving the customer experience to separate itself from the competition
(Tesla Inc., 2024).
Corporate Strategy
Tesla’s initial corporate strategy has become somewhat of an urban myth. Elon Musk
planned to use the first vehicle, the Tesla Roadster, to build brand awareness and revenue and to
create more affordable cars. The Tesla Roadster was very expensive to produce as it relied on
TESLA STRATEGIC HR 3
converting Lotus bodies to fit the EV drivetrains, it was pricey. This slow and expensive process
made it nearly impossible to mass produce. The second vehicle, the Model S, was more
affordable and was produced en masse. The popularity, brand recognition, and revenues derived
from Model S production were used to produce the Model 3, which is offered at an entry-level
price of around $35,000 (Khan, 2021). Tesla’s vertical integration strategy has significantly
contributed to its success because it involves several parts of its market. Aside from
manufacturing, it is also involved in the energy market, retail sales, and customer service,
distinguishing it from other automotive manufacturers (Khan, 2021).
Revenue Base and Financial Performance
According to Hoovers (2023), about 90% of sales come from Tesla’s automotive vehicle
segment, with the remaining from its solar power generation and storage segment. In 2021, Tesla
reported a 71% increase in revenue, totaling $53.8 billion. Some of this increase in sales was due
in part to increased production at the Fremont and Shanghai facilities that were building the
affordable Models 3 & Y (Hoovers, 2023). The energy generation segment increased by 40% to
$795 million. This increase could also be attributed to increased manufacturing practices.
Tesla's performance showcased remarkable achievements across its global manufacturing
operations. The Austin facility set a new benchmark by producing over 3,000 Model Y vehicles
weekly. This signifies a significant scaling of production capabilities, highlighting Tesla's
commitment to meeting growing vehicle demand. In conjunction with vehicle assembly, Tesla's
production process yielded an impressive output of more than 4,000 battery cells weekly. This
indicates the company's focus on enhancing its battery manufacturing capacity to support
transportation electrification. Tesla commenced the pilot production phase of its Semi-Truck,
marking progress towards the commercialization of this highly anticipated vehicle segment.
TESLA STRATEGIC HR 4
Assembly lines in California and Nevada were involved in this phase, demonstrating Tesla's
multi-facility approach to new product introductions (Tesla Inc., 2024).
Despite labor shortages, Tesla's operations in China maintained total production capacity
for most of the quarter. The Shanghai gigafactory was a pivotal hub for exporting vehicles to
markets beyond North America, underscoring Tesla's global supply chain resilience (Tesla Inc.,
2024). The Berlin/Brandenburg factory in Germany achieved a significant milestone by reaching
a production rate of over 3,000 vehicles each week. This facility also introduced two new color
options, quicksilver, and midnight cherry red, enhancing customer choice and personalization
options. Overall, Tesla's performance reflects its relentless pursuit of manufacturing excellence
and innovation as the company continues to expand its production footprint, optimize processes,
and deliver high-quality electric vehicles to customers worldwide.
Employee Base
In 2021, Tesla employed 99,290 individuals, surging to 127,855 in 2022, indicating a
notable growth of 28.77%. This expansion underscores Tesla's dynamic workforce scaling to
meet its evolving needs and production demands. Regarding the demographic composition,
women comprise 22% of Tesla's workforce, while men comprise 78%. This data suggests an
ongoing effort toward gender diversity within the company, although there may be opportunities
for further improvement. Ethnically, Tesla's workforce exhibits diversity, with the majority,
52%, identifying as white. Following this, 24% identify as Hispanic or Latino, and 11% identify
as Asian. This diverse representation reflects Tesla's commitment to fostering an inclusive
workplace environment that embraces individuals from various cultural backgrounds (Tesla Inc.,
2024).
TESLA STRATEGIC HR 5
Additionally, insights into the average age and tenure of Tesla employees offer valuable
context. The average age of a Tesla employee is 30 years, indicating a youthful workforce that
may bring fresh perspectives and energy to the company. The typical tenure at Tesla is
approximately 3.7 years, suggesting a relatively stable employment environment where
employees have opportunities for career growth and development within the organization. These
demographic and workforce metrics provide a snapshot of Tesla's employee base, highlighting
its commitment to diversity, inclusion, and talent development as key pillars of its organizational
culture and success.
Ownership Structure
Tesla Inc. operates as a publicly traded company, with approximately 28% of its shares
held by the general public. The ownership breakdown indicates that retail investors or
institutions own around 51% of Tesla's shares, while individual stakeholders, including founder
Elon Musk, hold the remaining 21%. Musk is the largest individual stakeholder, owning 13% of
the company's shares. His significant ownership stake aligns his interests closely with those of
the company and its shareholders. The Vanguard Group is the largest shareholder among
institutional investors, with a substantial 6.5% ownership stake in Tesla. This equates to more
than two hundred million shares, indicating significant confidence in Tesla's long-term growth
prospects from one of the world's largest investment management companies (Tesla Inc., 2024).
Other notable institutional shareholders include BlackRock, SSgA Funds Management,
and Geode Capital Management, reflecting diversified institutional support for Tesla's business
and vision. Overall, Tesla's ownership structure demonstrates a blend of retail and institutional
investor participation, with Elon Musk's significant ownership stake underscoring his continued
influence and commitment to the company's success.
TESLA STRATEGIC HR 6
Product and Service Mix
Tesla's operations are structured around two primary business segments: automotive and
energy generation and storage. The automotive segment encompasses the design, development,
manufacturing, sales, and leasing of electric vehicles (EVs). Tesla's current vehicle lineup
includes the Model 3, a four-door mid-size sedan; Model Y, a compact SUV; Model S, a four-
door full-size sedan; and Model X, a mid-size SUV (Tesla Inc., 2024).
Tesla plans to expand its vehicle lineup by introducing new models, such as the
Cybertruck, a revamped Tesla Roadster, and new Tesla semi-trucks. These additions aim to cater
to various market segments and further establish Tesla's presence in the automotive industry.
Furthermore, Tesla is advancing its technology and artificial intelligence capabilities through
initiatives such as its proprietary "Full-Self Driving" (FSD) technology. FSD is being developed
as a software platform that aims to enable vehicles to autonomously navigate using vision-based
sensors, enhancing safety and convenience for drivers.
Tesla's second business area focuses on energy storage and generation solutions. This
includes power and a lithium-ion battery storage solution for smaller setups, such as residential
homes or modest retail outlets, to meet their energy needs. Megapack: A larger-scale lithium-ion
battery storage solution targeting industrial and substantial commercial facilities to address their
energy requirements. Solar Roof: An innovative roofing system that integrates solar technology
into roofing materials to generate energy from sunlight (Tesla Inc., 2024).
These energy storage and generation products reflect Tesla's commitment to sustainable
energy solutions and its broader mission to accelerate the world's transition to renewable energy.
Overall, Tesla's diverse product offerings in the automotive and energy sectors demonstrate its
TESLA STRATEGIC HR 7
commitment to innovation, sustainability, and addressing evolving consumer needs in
transportation and energy.
Competitive Position
Tesla's entry into the Chinese market in 2018 marked a significant milestone for the
company and the local electric vehicle sector (Liu, 2021). Tesla's technological innovation and
market influence have played a pivotal role in driving the industry's growth in China, influencing
competition and consumer preferences (Hu et al., 2024).
In the competitive landscape, Tesla faces competition from more than 20 automobile
manufacturers, including notable rivals such as Ford Motor Company, General Motors
Company, and Toyota Motor Corporation. Despite these competitors' higher annual sales figures,
Tesla maintains a superior position in the electric vehicle market and outperforms them in
several key financial metrics (Hoovers, 2023). These metrics include days sales outstanding,
inventory turnover, asset turnover, and days cost of goods sold in inventory, highlighting Tesla's
operational efficiency and financial performance.
Location of Operations
Headquartered in Austin, Texas, Tesla operates multiple manufacturing facilities known
as gigafactories across various locations: The Fremont, California, facility serves as Tesla's main
vehicle manufacturing plant, producing models such as the Model 3, Model Y, Model S, and
Model X. The Sparks, Nevada facility, dedicated to producing energy storage products, plays a
crucial role in Tesla's energy generation and storage segment. The Buffalo, New York site is
focused on manufacturing solar products, aligning with Tesla's commitment to renewable energy
solutions.
TESLA STRATEGIC HR 8
The Gruenheide, Germany gigafactory, located in Brandenburg, near Berlin, is Tesla's newest
manufacturing facility in Europe. It aims to produce vehicles, including the Model Y, for the
European market. The Shanghai, China, gigafactory is a key production hub for Tesla, serving
the Chinese market and contributing significantly to the company's global sales.
Geographically, the United States represents Tesla's largest market, accounting for nearly
half of its sales. China follows closely behind, contributing approximately 30% of Tesla's sales,
while the remaining sales are distributed worldwide (Tesla Inc., 2024). This diversified sales
distribution underscores Tesla's global presence and market penetration strategies.
HR Assessment
In its Human Capital Resource statement, Tesla emphasizes its commitment to
maintaining a positive relationship with its workforce and reports no labor-related work
interruptions. The primary human capital goals outlined by Tesla in managing its operations
include Recruitment, Development, and Retention of Talent (Tesla Inc., 2024).
Tesla prioritizes recruiting outstanding individuals with the skills, expertise, and passion
to contribute to the company's mission and goals. By attracting top talent, Tesla aims to
strengthen its workforce and drive innovation and excellence across all areas of its operations.
The organization is also dedicated to nurturing the growth and development of its employees.
The organization invests in training programs, professional development opportunities, and
career advancement initiatives to empower its workforce and enable them to reach their full
potential. By supporting its employees' ongoing learning and skill enhancement, Tesla aims to
enhance overall organizational capabilities and adaptability (Wang et al., 2022).
Tesla recognizes the importance of retaining top talent to sustain its competitive
advantage and drive long-term success. The company implements strategies to create a fulfilling
TESLA STRATEGIC HR 9
and rewarding work environment, offering competitive compensation, benefits, and opportunities
for career progression. By prioritizing employee satisfaction and well-being, Tesla aims to foster
loyalty and commitment among its workforce, reducing turnover and retaining valuable human
capital. Furthermore, Tesla emphasizes the importance of embedding principles of diversity,
equity, and inclusion (DEI) into the organization's fundamental values.
HR Strategy
Tesla's human resource management (HRM) strategy, anchored in cultivating a
"Thinking Like Owners" ethos, represents a paradigm shift in organizational culture. As
elucidated by Teece (2018), this strategic framework underscores the imperative for employees
to embrace a holistic understanding of their roles, akin to proprietors overseeing their ventures.
Such an approach instills a profound sense of ownership and aligns individual aspirations with
the overarching corporate mission, fostering a symbiotic relationship conducive to sustainable
growth.
Central to this ethos is Elon Musk's advocacy for personal accountability. By
championing a culture where employees take ownership of their projects' outcomes, Musk
catalyzes a dynamic wherein responsibility becomes a cornerstone of professional conduct. This
ethos, in turn, permeates the organizational culture, creating a culture of accountability that
surpasses hierarchical boundaries and empowers individuals to proactively address challenges
and seize opportunities (Khan, 2021).
Furthermore, Tesla's HRM practices are underpinned by a profound integration of
employees into the company's ethos, as highlighted by Hardy (1990). This integration transcends
mere assimilation into corporate protocols; instead, it fosters a deep-seated identification with the
company's values, vision, and objectives. By nurturing an environment where employees
TESLA STRATEGIC HR 10
embody the essence of Tesla, the organization cultivates a collective consciousness wherein
individual actions resonate with the broader organizational ethos, thereby mitigating negative
behaviors and fostering a synergistic alignment toward shared objectives.
Tesla's HRM approach extends beyond mere job satisfaction to encompass the
enrichment of the overall job experience. This resonates with Hardy's (1990) assertion that
fostering a cohesive work atmosphere is instrumental in nurturing employee engagement and
well-being. By fostering an organizational culture predicated on empowerment, accountability,
and integration, Tesla mitigates negative behaviors and cultivates an environment where
employees are not merely stakeholders but active participants in the company's journey toward
innovation and excellence.
Training and Development
According to Tesla’s annual report (2024), they search through a diverse pool of
candidates to find those who will best contribute to the organization. Tesla offers entry-level
training and development programs for its new employees. Tesla has also partnered with high
schools and community colleges to establish training, apprenticeship, and internship programs.
Tesla has also made it a point to include talent and work experience in hiring decisions, not just
educational background. The company has offered jobs to local communities without specific
work experience but with the necessary skills to learn vehicle service, manufacturing, and energy
product installation. Tesla also offers its employees opportunities for mobility within the
organization through professional development. In support of retention efforts, Tesla’s leadership
encourages employees to take advantage of development opportunities and advance within the
organization (Tesla Inc., 2024).
TESLA STRATEGIC HR 11
Recommendations
Wu and Calic (2022) present a compelling argument regarding the challenges companies
face under Musk's leadership, particularly regarding human resources management. As former
Tesla employees have reported, the intense work culture, exemplified by long hours and high
expectations, can strain personal relationships and lead to burnout. The suggestion to distribute
leadership responsibilities more evenly among colleagues, managers, and human resource
professionals is valid. Delegating authority and empowering individuals within the organization
can alleviate some of Musk's burdens and foster a more sustainable and supportive work
environment.
Returning to foundational principles can help reorient the company's focus towards long-
term sustainability and employee well-being rather than solely chasing ambitious goals at any
cost. By nurturing a culture of collaboration, respect, and work-life balance, companies like
Tesla can potentially enhance employee satisfaction, retention, and performance (Poell, 2022).
Recommendations for Tesla’s improvement will include reintroducing remote work,
performance management, attitudes surveys, evaluation of organizational commitment, and a
focus on employee retention.
Remote Work
It is recommended that Tesla reincorporate remote or hybrid schedules where applicable
to increase job satisfaction. Researchers have found that remote work can increase productivity
by as much as 77% for some. Some people accomplish 30% more work in less time, while others
accomplish 24% in the same amount of time as in the office (Bloom et al., 2023). According to
Frederick Herzberg, job satisfaction decreases when company policies and working conditions
do not meet employee expectations (Hardy, 1990). People feel a need to perform fulfilling and
TESLA STRATEGIC HR 12
meaningful work that makes an impact (Keller & Alsdorf, 2012). Job satisfaction is people's
evaluations and feelings toward their work (Valentine et al., 2020).
Performance Management Narrative
Salemans and Budding (2022) found that using scorecards with narrative feedback over a
numerical score increases employee value. A numerical score may provide a ranking or visual
score but does not fully explain the employees' performance. A narrative accompanying the
numerical score can provide additional insights that can help improve employee performance.
Continuous, honest, and open dialogue fosters trust development that can permeate into other
areas of the organization (Valentine et al., 2020).
Attitude Survey
Because of employee conflict within the organization, Musk discontinued the Tesla360
summary. The Tesla360 summary was a platform where employees could share ideas and engage
with each other as stakeholders. The platform provided valuable feedback that helped influence
decisions (Wilmot, 2023). Tesla should reinstate the Tesla360 program as it was a crucial
component for employees and managers to communicate with each other.
Organizational Commitment
Organizational commitment refers to the bond or connection between employee and
employer (Valentine et al., 2020). Organizational commitment is a voluntary action that
improves employees' perception of the organization's justice and organizational citizenship
(Jehanzeb & Mohanty, 2020). Policies to boost productivity without enriching employees' lives
will decay the employees' commitment to the organization (Hardy, 1990). Tesla must engage
with its employees and rebuild the trust and commitment that has eroded since drastic changes
were made following the COVID-19 lockdowns.
TESLA STRATEGIC HR 13
Employee Retention
The successful implementation of the recommendations discussed above should, in
theory, improve employee retention. Tesla has experienced voluntary, dysfunctional, and
controllable turnover, which is considered turnover that is promoted by the organization
(Valentine et al., 2020). This means that employees and high performers leave for reasons the
organization influences. Managers should work towards identifying the root cause of the
turnover while also applying policies that will improve retention. It is highly recommended that
Tesla prioritize recommendations that will help improve retention as it affects the organization's
overall health.
TESLA STRATEGIC HR 14
References
Bloom, N., Barrero, J.M., Davis, S., Meyer, B., & Mihaylov, E. (2023). Research: Where
managers and employees disagree about remote work. Harvard Business School
Publishing.
Hardy, L. (1990). The fabric of this world: Inquiries into calling, career choice, and the design
of human work. Wm. B. Eerdmans Publishing Co.
Hoover’s Company Records (2023). Tesla Inc. Fort Mill. D&B Hoovers Inc.
Hu, Y., Yin, H., Zhao, L., & Luo, X. (2024). How has tesla's entry affected china's electric
vehicle market?Applied Economics Letters,31(6), 503–
507.Phttps://doi.org/10.1080/13504851.2022.2139798
Jehanzeb, K., & Mohanty, J. (2020). The mediating role of organizational commitment between
organizational justice and organizational citizenship behavior: Power distance as
moderator.Personnel Review,49(2), 445-468.Phttps://doi.org/10.1108/PR-09-2018-0327
Keller, T., & Alsdorf, K. L. (2012). Every good endeavor: Connecting your work to god's work.
Khan, M. R. (2021). A critical analysis of Elon Musk’s leadership in Tesla Motors.Journal of
Global Entrepreneurship Research,11(1), 213–222.Phttps://doi.org/10.1007/s40497-021-
00284-z
Liu, S. (2021). Competition and valuation: A case study of tesla motors.IOP Conference Series.
Earth and Environmental Science,692(2), 22103.Phttps://doi.org/10.1088/1755-
1315/692/2/022103
Mello, J. A. (2010). Strategizing strategic human resource management.Journal of Human
Resources Education,4(3)
TESLA STRATEGIC HR 15
New International Version Bible. (2024). Https://Biblegateway.com. (Original work published
1978)
Poell, R. F. (2022). Will human resource development become too important to be left to human
resource development professionals? Employees and managers as strategic human
resource development stakeholders.Human Resource Development Review,21(3), 267–
274. https://doi.org/10.1177/15344843221083192
Salemans, L., & Budding, T. (2022). Operationalizing public value in higher education: Using
narratives as an alternative for performance indicators.Journal of Management and
Governance,26(2), 337–363.Phttps://doi.org/10.1007/s10997-021-09596-4
Teece, D. J. (2018). Tesla and the reshaping of the auto industry.Management and Organization
Review,14(3), 501–512.Phttps://doi.org/10.1017/mor.2018.33
Tesla Inc. (2024). Tesla Investor Relations. Retrieved May 9, 2024, from https://ir.tesla.com/sec-
filings
Thomas, V. J., & Maine, E. (2019). Market entry strategies for electric vehicle start-ups in the
automotive industry – lessons from Tesla Motors.Journal of Cleaner Production,235,
653-663.Phttps://doi.org/10.1016/j.jclepro.2019.06.284
Valentine, S. R., Meglich, P. A., Mathis, R. L., & Jackson, J. H. (2019). Human resource
management (16th ed.). Cengage Learning.
Wang, J., Duan, Y., & Liu, G. (2022). A study of specific open innovation issues from
perspectives of open source and Resources—The series cases of tesla.Sustainability
(Basel, Switzerland),14(1), 142.Phttps://doi.org/10.3390/su14010142
Wilmot. S. (2023). Why tesla is still gunning for growth. Wall Street Journal. Retrieved May 6,
2024, from https://www.wsj.com/articles/why-tesla-is-still-gunning-for-growth-11674695296
