The market for electric vehicles is growing. There are many reasons, including new regulations on safety, vehicle emissions, technological advances, and changes in customer expectations. However, the acceptance and excitement of electric vehicles in the mainstream market is largely due to Tesla Motors Inc. and its unique business model.
Tesla founder and CEO Elon Musk had a mission when he founded the company: “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Such a mission is the backbone of Tesla’s successful business model.
Tesla’s business model is based on a three-pronged approach of sales, digital transformation, and clean energy value proposition.
Direct Sales creates a simple customer buying process.
Unlike other automakers that sell through franchised dealerships, Tesla sells directly to consumers. It has built up an international network of company-owned showrooms and galleries, mainly in the city centers.
Tesla believes that by having a distribution channel, it can gain an advantage in the speed of product development. More importantly, it creates a better customer buying experience. Unlike car dealerships, Tesla showrooms have no potential conflicts of interest. Customers will only deal with sales and service personnel employed by Tesla.
As of the start of 2021, Tesla had 523 locations worldwide, including showrooms, Service Plus centers (a combination of retail and service centers), and Service facilities. Tesla also utilizes Internet sales — consumers can customize and purchase Tesla online. The global market share of Tesla vehicles increases dramatically from 2017 to 2020.
Tesla leverages its digital prowess to turn a new chapter in the automotive industry
“The Tesla vehicle is a computer on wheels.”
Tesla is inherently digital.
When Elon Musk founded Tesla, he had a different way of thinking when he came into contact with the automotive industry — technology first. As an entrepreneur and technical expert, he started Tesla’s design with technology as a starting point. For example, the system software receives software updates. This is in stark contrast to other manufacturers, where technology and infotainment become obsolete the longer you own a car. With Tesla, it will get better and better!
Since its digital DNA, Tesla has been focusing on providing the best automotive technology. The result is a frictionless and easy-to-use experience with the following characteristics examples:
Autopilot — Drive on autopilot.
Smart call — use the mobile app to move your car out of the parking space.
Dashboard smart screen — it has a series of smart applications.
The clean environmental value proposition appeals to a large number of modern customers.
The last key part of the business model, and the most important, is electricity-storage technology. Tesla continues to lead the industry in energy storage. The result is that Tesla cars offer the longest range and fastest performance of any electric car on the market. The vision is to create a cleaner world by reducing carbon dioxide emissions and overall pollution.
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