Tesla Motors Strategy Development and Industry Analysis
This paper develops a strategic analysis for Tesla Motors within the rapidly growing hybrid and all-electric vehicle market. It begins by defining organizational strategy and applying that definition to Tesla's corporate context, then traces the luxury-brand marketing approach the company has pursued since its 2008 founding. The paper identifies Tesla's primary competitors — Ford, General Motors, Honda, and Toyota — and evaluates each competitor's strategy and effectiveness. An industry-wide analysis of the electric vehicle market follows, assessing its current development stage and long-term growth outlook. The paper concludes by proposing six concrete performance goals for Tesla: three for the next year and three for the next five years, covering product viability, battery technology, manufacturing location, and international market expansion.
- Introduction: The Electric Vehicle Landscape: Overview of EV market growth and Tesla's role
- Defining Strategy in the Context of Tesla Motors: Definition of strategy applied to Tesla's goals
- Tesla's Core Marketing Strategy: Luxury brand approach and target market focus
- Industry Competitors and Their Strategies: Ford, GM, Honda, and Toyota competitor analysis
- Electric Vehicle Industry Analysis: EV market development stage and growth outlook
- Performance Goals for Tesla Motors: One-year and five-year strategic performance goals
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What makes this paper effective
- The paper applies a clear, cited definition of organizational strategy before using it as a lens throughout the analysis, grounding abstract concepts in a concrete framework.
- The competitor comparison table organizes complex information efficiently, allowing side-by-side evaluation of strategy descriptions and effectiveness across four major automakers.
- Performance goals are divided meaningfully into one-year and five-year horizons, demonstrating an understanding of short-term operational priorities versus long-term strategic planning.
Key academic technique demonstrated
The paper demonstrates structured strategic analysis: it moves from definition, to internal context, to external competitive environment, to forward-looking recommendations. This mirrors frameworks used in business strategy courses and capstone projects, showing how theoretical definitions translate into applied industry evaluation.
Structure breakdown
The paper opens with an industry overview and purpose statement, followed by a definitional section on strategy. It then profiles Tesla's luxury marketing approach, presents a competitor matrix, provides an industry-level market analysis, and closes with six specific performance goals. Each section builds on the previous one, culminating in actionable CEO-level recommendations.
Introduction: The Electric Vehicle Landscape
The hybrid and all-electric vehicle market is growing rapidly, and some industry analysts suggest that the future of personal transportation is in the hands of these manufacturers. One company at the vanguard of this industry is Tesla Motors, named for the famed inventor Nikola Tesla. The purpose of this paper is to provide an industry analysis and develop a strategy for the CEO of Tesla Motors to help shape the company's future.
Defining Strategy in the Context of Tesla Motors
Although a number of different definitions have been advanced over the years, a useful definition in an organizational context states that "strategy determines the direction and scope of an organization over the long term, and it should determine how resources should be configured to meet the needs of markets and stakeholders" (Three levels of strategy, 2018, para. 4). Applied to Tesla Motors (hereinafter alternatively "Tesla" or "the company"), this definition refers to the manner in which the company intends to achieve its corporate objectives over the short and long term, and how it will allocate the organizational resources needed for these purposes. This definition is also congruent with the strategic approach that the company has pursued over the past decade, as discussed further below.
Tesla's Core Marketing Strategy
Since the company's founding in 2008, Tesla has employed a luxury marketing strategy focused on affluent consumers who are interested in cutting-edge technologies with the potential to replace fossil fuels. In this regard, Uggla (2016) reports that "in general, a luxury brand has a deeper and richer extended brand identity as compared to more mundane brands. It also has a more subtle brand personality and stronger brand credibility and brand integrity" (p. 35). Although the company has more recently focused exclusively on developing all-electric vehicles rather than hybrids, its strategy remains anchored in a luxury marketing approach that appeals to its target market. This approach has also been used in varying degrees by the company's main competitors, as discussed below.
Industry Competitors and Their Strategies
While a number of major vehicle manufacturers are either planning to introduce their own hybrid or all-electric vehicles or have already done so, Tesla Motors' current major competitors include those described below, along with their corresponding corporate strategies and the effectiveness of those strategies.
Ford Motor Company: Ford's strategy involves transitioning from existing internal combustion engines to hybrid or all-electric vehicles by 2022, including 40 all-electric vehicle models as well as some mid-range priced options (Carey & White, 2018). This strategy requires the reallocation of scarce organizational resources away from Ford's existing models, which will likely erode consumer confidence and the marketability of current vehicles until the new product launches are complete.
General Motors: GM is focused on low-cost, flexible vehicle designs with proven efficiency, relying on high-volume production in China to appeal to mid- and upper-end consumers (Lienert & White, 2018). These strategies will help reduce the price of all-electric vehicles, but the Chinese point of origin may become a politically sensitive issue in the foreseeable future, potentially disrupting both manufacturing and marketing planning.
Honda Motor Company: Honda is developing an affordable all-electric vehicle by drawing on its Urban EV Concept, with an anticipated launch in early 2019 (Honda Urban EV Concept, 2018). These strategies, while focused on affordability, may limit Honda's short-term ability to innovate in an industry where innovation is the key to long-term success.
Toyota Motor Corporation: Widely regarded as Tesla's primary competitor, Toyota plans to offer all-electric versions of its current models by 2025, with the goal of selling at least 5.5 million all-electric vehicles by 2030 (LeSage, 2017). These strategies represent a viable approach to transitioning from existing internal combustion models to all-electric versions while retaining the core features that have made Toyota's vehicles enormously popular over the years.
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