Tesla Motors: Relentless Innovation as a Strategy
Serial innovation driven to disruption
In his Master Plan: Part Deux of 2016, serial entrepreneur and disruptor Elon Musk reminded readers that out of all American car companies, only two have avoided bankruptcy. The first is Ford, and you’ve probably worked out which is the second. Since then, Tesla hasn’t just kept up with competitors. As of this month, they are now regarded as the most valuable automaker in the U.S., overtaking both Ford and General Motors. This can be partly attributed to the imminent launch of the Model 3, an incredibly popular electric five-seater. But the new car is only one aspect of an impressive success story which shows just how important it is to embrace, and even cause, disruption. So, how exactly did Tesla do it, and how will it continue to disrupt other industries in the future?
What makes Tesla so successful?
In a way, Tesla’s success is simple. They make electric vehicles (EVs) that people want and can afford to buy. . . but we know there’s far more to the company than that. Tesla Motors was founded in 2003 and released its first electric sports car in 2008. Since the late 2000s, the firm has forged partnerships with other automakers as an original equipment manufacturer. As well as working collaboratively, the company continued to work on their own vehicles. The 2015 Model S became the world’s best-selling EV in both 2015 and 2016. Tesla’s next EV was the 2015 Model 3. Around 400,000 people placed a deposit, raising the company’s revenue from $15 million in 2008 to four billion. In July 2016, Musk announced the availability of semi-autonomy, stating that the advantages for safety were too great to hold back from the consumer market. Later that year, all models began to be built with full autonomy. Despite characteristic confidence, the company suffered a hit when a malfunction led to the death of a test driver. Evidently, that didn’t do too much damage to their image. Tesla has undoubtedly contributed to the transformation of the automotive industry – but the automaker has fingers in more than one pie. In 2016, Tesla stepped into the energy sector and acquired SolarCity as part of a commitment to developing renewable battery technology. In all its projects and partnerships, the firm has consistently encouraged technological development that doesn’t negatively impact the environment, contributing to a positive company image.
Tesla’s disruptive impact
From the get-go, Tesla has embarked on a policy of relentless innovation. In the automotive industry, it has mobilised competitors, fuelled innovation, and popularised EVs. Partnerships with leading competitors like Toyota and Mercedes-Benz have also helped to expand the market for electric cars. The company’s developments in solar energy (namely Tesla Powerwall batteries and solar panelled roofs) have accelerated the adoption of renewables, and stuck another nail in the coffin of fossil fuel providers. Tesla’s recognition of the importance of advancing battery technology was further confirmed by their acquisition of SolarCity last year. Since then, Tesla has disrupted the way we think about energy storage. By installing 272 power packs on the island of Kauai, Hawaii, solar power can now be reliably stored for overnight use. It’s not just what Tesla has done and who they’ve partnered up with that makes them disruptive – it’s the speed at which the company works. Last month, for example, Musk promised to solve the energy problems of South Australia in just 100 days. The rise of Tesla is part of Musk’s overarching plan to create a sustainable future. Bearing in mind the automaker’s success, legacy companies should take these ambitions very seriously.
Tesla Motor’s success is a clear demonstration of the importance of innovation in business, as well as a CEO who isn’t afraid to take risks and make big promises. The company has ultimately progressed from a niche car manufacturer to the driving force behind advances in renewables, energy storage and sustainable technology. Tesla’s transformation came from creating popular products, forging profitable partnerships and constantly pursuing self-disruption. *Their new position as the most profitable U.S. automaker is a clear indication that disruption isn’t something that is simply happening to businesses – it’s now a strategy that they should pursue*.
How could Tesla’s success inspire change within your business? Will they maintain their position as the most valuable automaker in the U.S.? What, if any, is the most important reason for the company’s success? Share your thoughts and opinions.