How Tesla Became the Biggest Name in the Automobile Industry?

How Tesla Became the Biggest Name in the Automobile Industry?

The Automobile Industry is one of the giants in the global economy. It has been around forever and has gone through its fair share of changes and innovations over the years, however, one of the most influential and sustainable innovations is that of Electric Vehicles.

And although this concept floated since its invention by Robert Anderson in 1832, it was put into the mainstream spotlight by Tesla in 2008 with its first Electric Car, the Tesla Roadster. No major company thought of taking up this concept before it was in many ways made cool by Tesla despite it being incredibly sustainable and way ahead of its time.

Many experts in the industry have speculated about the EV Concept and as a result, Automobile Industry as a whole would not have been such a hot topic if Tesla was not the driving force behind it.

Although Tesla has not seen a profitable year yet, it has had many profitable quarters and sticks to its vision of making Electric Vehicles affordable for almost everyone.

On 1 July 2020, exactly 17 years after its incorporation, Tesla became the world’s most valuable automaker with a market capitalization of $206 Billion, surpassing Toyota. But how did Tesla start? Who was behind it? What makes this futuristic company different from the rest? Where will it be after 10 years? Let us find the answer to these questions.

History of Tesla
Musk’s Four Round Investments
Marketplace and Stocks of Tesla
Different Strategies Implemented by Tesla
Vehicle Models
The Journey of Tesla to Emerge as the World’s Most Successful EV Brand
How Tesla Is Dominating the Ev Industry?
Problems With Tesla Models and the Future Ahead

History of Tesla

The founders of Tesla- Martin Eberhard and Marc Tarpenning
The founders of Tesla- Martin Eberhard and Marc Tarpenning

Originally known as Tesla Motors, Tesla was co-founded and incorporated on 1 July 2003 by Martin Eberhard and Marc Tarpenning. The influence behind Tesla was GM’s failed attempt at EVs in 2003 despite the vast potential and high efficiency of battery electric cars.

The third employee was Tom Wright and in February 2004, Elon Musk whose name today is almost synonymous with Tesla contributed $6.5 Million and became the chairman of the BOD. Martin Eberhard was appointed as the CEO and JB Straubel joined in May 2004. After a lawsuit settlement in September 2009, all three original employees can call themselves co-founders.

Tesla’s initial goal was to start the production of premium sports cars for early adopters and after securing a respectable customer base, move into the mainstream vehicles like sedans, Trucks, and luxury cars. The first car produced by Tesla was the Roadster in 2008.

Musk’s Four Round Investments

Elon Musk- the current CEO and the largest investor in Tesla
Elon Musk- the current CEO and the largest investor in Tesla

First Round

The Series A Investment in February 2004 included Company Technology partners along with different ventures and private investors.

Second Round

The second round investment was worth $13 Million and it included the addition of Valor Equity Partners to the funding team.

Third Round

The third round investment was co-led by Musk and various technology partners. It consisted of $40 million in May 2006 along with Tech Partners. This round also included investments from Google, and eBay among others.

Fourth Round

The fourth round of investment included another $45 Million in internal investment and the total investment went up to $105 million through private financing.

Marketplace and Stocks of Tesla

Tesla launched its initial public offering (IPO) on NASDAQ, the second American car company after Ford Motor Company to do so.

Tesla became the world’s second most valuable automaker with a market capitalization of $104 Billion and on 1st July 2020 the most valuable by reaching the milestone of $202 Billion.

Despite the above milestones, Tesla has not seen an overall profit in any financial year. At the end of 2019, it posted a loss of $862 Million on revenue of $24.6 Billion.

However, this fact is often overlooked as Tesla leans towards a societal concept rather than a profit-making one.

Different Strategies Implemented by Tesla

Business Strategy

Tesla follows a typical business strategy like the technological sector, i.e, targeting early adopters with a high price and gradually lowering the price as they move on to the bigger markets. For example, Tesla’s First model, Roadster was of a lower volume and higher price compared to Model X and Model Y.

Production Strategy

Like Musk’s other projects, Tesla’s production strategy includes high degrees of Vertical Integration which is rare in the automobile industry, as companies outsource most of the components from their suppliers.

Sales and Marketing Strategy

Instead of a conventional dealer network, Tesla opts to sell its vehicles online through company-owned showrooms. It offers the customers an option to customize their desired vehicle. Tesla does not rely on a heavy advertising policy Elon Musk with his massive Twitter following is an unofficial marketing manager.

Technological Strategies

Tesla relies on heavy electrical technologies to get its production done. As a vertically integrated company, they design batteries, motors, glass, and innovative models like Autopilots.


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Vehicle Models

The first model of Tesla- Roadster
The first model of Tesla- Roadster

As of 2020, Tesla sells three car models, Model S, Model X, and Model Y.

The Unveiled models include Roadster 2020 and the highly awaited Cybertruck. These products have different versions to them based on affordability. Musk said that there will be more innovative models down the road which would be more affordable than the current ones.

Unfortunately, there will be no Tesla Motorbike.

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The Journey of Tesla to Emerge as the World’s Most Successful EV Brand

There are several car manufacturing companies found across different parts of the World. However, when we talk about Tesla, it does stand out from the rest of the companies due to the initiation of something different.

Tesla is quite popular for its EV model cars which have created a path for Tesla to emerge as the World's most successful brand.

To achieve this tag, Tesla made every step resourceful. Tesla brand was started with a sample model featuring cars with a high cost and few models. This invention was to just ensure that myth revolving around the EV cars can find their dissolving points. For the start, Tesla manufactured just 500 units in a year and was responsible for many revolutionary programs.

The next model introduced by Tesla was about changing the manufacturing units to a greater scale and on contrary, it decreased the price of the model. This model was a great way to give head-on competition to the other luxury brand models.

Tesla also connects directly with its customers rather than depending upon the franchisee network. Tesla sells its products directly to customers and has a web-type global network to get it settled as a global brand.

Tesla mainly focuses on the customer buying experience to get more recognition from people. Several showrooms and galleries are placed at multiple locations by Tesla to have a much-organized system.

Tesla Showroom
Tesla Showroom

Apart from this, Tesla has a good marketing strategy and a well-developed plan to sell its brand. Tesla also has a good financing backup and a few well-known investors. All these things make it possible for Tesla to emerge as the World's most successful EV brand.

How Tesla Is Dominating the Ev Industry?

We can assume that Tesla is dominating the EV industry based on the fact that the EV sales of Tesla are approximate 2.3 times higher than that of other brands as per Morgan Stanley analyst Adam Jonas. The rate of growth observed by Tesla in the EV industry is almost double that of any rival brand.

If we look at the Tesla market in the US, it is safe to say that the EV market in the US is highly dominated by Tesla for years now. For that instance, the EV cars of Tesla accounted for 79% of the overall rate of new cars registered in the US during 2020 and 69.95% of the newly registered car for the year 2021.

If to believe the available facts and data, it can be estimated that Tesla will still keep on dominating the EV industry for a few more years but with the condition of increasing competition.

US Electric Vehicle Sales
US Electric Vehicle Sales

Problems With Tesla Models and the Future Ahead

A 2025 Tesla Model S
A 2025 Tesla Model S 

Despite having an innovative approach and putting customer satisfaction ahead of profits, Tesla has come up short on various aspects.

The durability, handling, and repairs cost are some of the quality-related problems that come with a Tesla model. The repairs and maintenance costs are very high and as a result, so are the Insurance costs. Apart from this, Tesla repeatedly comes up short in meeting deadlines regarding production, but this can be attributed to their decision on Vertical Integration.

Whatever the case may be, the company fixes some of its flaws with every new model and with its futuristic.


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Conclusion

Tesla is the first brand to introduce electric vehicles on the roads. The models designed by Tesla also stand out from others due to their characteristics. Tesla created a safe way for the EV models to run on roads and also made them available at cost-effective prices.

With its uniqueness, Tesla is now dominating the EV industry and has successfully evolved as an EV brand across the world. The above article contains information like the history of Tesla, Investors and stock shares of Tesla, strategies planned by Tesla, the future of Tesla, and a few other basic information.

FAQs

Who are Tesla's competitors?

Tesla's competitors are Rivian Automotive Inc. (RIVN), Lucid Group Inc. (LCID), XPeng Inc. (XPEV), Li Auto Inc. (LI), etc.

Why is Tesla so famous?

Tesla is majorly famous because of its cutting-edge technology involving battery technology and electric powertrain.

Is Tesla the biggest car company?

The company is the biggest in the world and can be defined in many aspects. If we talk about the profit, then yes, Tesla is counted among the eight largest car companies across the world.

What is the rank of Tesla in the world?

Tesla falls at the rank of 65 on the "Fortune 500" list for the year 2021.

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