Category winner: Tesla Motors

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This case won the Strategy and General Management category at The Case Centre Awards and Competitions 2016
 
The case

Who – the protagonists

Elon Musk, CEO of Tesla Motors, a designer and producer of electric cars.

Model S

What

In the 10 years since it was founded, Tesla had launched a high-end limited edition Tesla Roadster and a Model S production car, and was now taking reservations on its upcoming Model X electric crossover SUV.

Despite a public controversy about its range, the Model S received the coveted Car of the Year award and earned the highest consumer report ratings ever given to a car, an astonishing feat for such a new company. While some of its most visible competitors went bankrupt or halted production, Tesla became profitable.

Why

Circa 1902Electric cars were popular in the late 1800s. In fact, the first speeding ticket was issued to an electric car (driving 12 mph) and the Hartford Electric Light Company even operated an exchangeable battery service. But electric cars were quickly overtaken by the internal combustion engine.

The interest in electric cars increased again sharply in the late 20th century when oil prices shot up and when improvements in battery technology increased their range.

When

Tesla Motors was founded in 2003 and named after Nikola Tesla, one of the inventors of the electric AC induction motor. The founding team included Elon Musk and Tesla’s CTO, JB Straubel. Musk provided most of the capital and became chairman of the board and head of product design. None of Tesla’s founders had a background in the car industry and neither did its original engineering team.

TeslaWhere

Tesla’s headquarters are in Palo Alto, California, US. It sells vehicles across the world via online sites and showrooms in a number of countries including China, Australia, Europe, Singapore, Canada and Germany.

Key quote

‘Profoundly humbling to just about any rumbling Ferrari or Porsche that makes the mistake of pulling up next to a silent, 105mpg Tesla Roadster at a stoplight.’ – Kim Reynolds, Motor Trends Technical Editor.

What next?

Elon Musk wanted Tesla to be a mass manufacturer of electric cars and becoming profitable meant that his goal was within reach. Or was it?

The author

author

Eric Van den Steen

Eric explains what this award means to him and why this case is among his favourites.

Great satisfaction

The award means a lot to me for what it represents. When writing a case, you put in a lot of work because you believe that the case will be a good vehicle for giving students insight in some important topics. So seeing that people seem to find the case useful gives great satisfaction.

teslaFavourite case

Of all the cases I’ve written, this one is definitely among my favourites. First, the case highlights a number of issues – such as the effect of increased simplicity on industry change or the power of Tesla's high-end entry strategy – that weren't so obvious at the time.

Second, the case illustrates two issues that I'm personally very interested in: the power of strategy and, closely related, the characteristics of a strategic decision. The fact that it creates an opportunity for some interesting quantitative analysis is a nice bonus.

Solid and reliable

I chose to write this case, at first, from published sources because the company was very busy at the time and sensitive to coverage – it was in the midst of its Model S launch. But I always planned to complement this with field work, although this will ultimately depend on time and opportunity.

For Tesla, so much had been written and so many interviews given, that there was more than enough material for a solid and reliable case – almost as if it were based on field work. Obviously, field work will always give more insight into the real issues and challenges

Top tip

Focus on issues and settings that you are personally passionate about.

About the authors

Eric Van den Steen is Professor of Business Administration at Harvard Business School.
e evandensteen@hbs.edu

 
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Tesla Motors
Ref 9-714-413
Teaching note
Ref 5-714-483

Related items:
Portuguese language version
Ref 9-714-P06

 

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