I.Introduction
Tesla is an American company that designs, manufactures and distributes electric car products
and components for electric vehicles. Tesla is traded on the NASDAQ stock exchange under the
symbol TSLA.
Tesla is an inseparable brand with the name Elon Musk but in fact, Tesla was founded by Martin
Eberhard and Marc Tarpenning on July 1, 2003, in San Carlos, California, USA.
Elon Musk, with a desire to bring about changes for the better, only joined the company as an
investor and chairman of the board of directors in 2005. From the beginning, Elon Musk outlined
a strategy that would focus on sports cars for the upper class, then moving towards popular
electric cars, targeting the global market.
For Elon Musk, the company's mission is not only to bring satisfied products to customers, but
also to change customer thinking, towards green, clean, and environmentally- friendly products
in the context of an alarming environmental degradation today.
Founded in 2003, it was not until 2008 that Tesla escaped the public's skeptical eyes when it
introduced its first pure electric sports car - the Roadster. Roadster brought a breath of fresh air
to the car market at that time when it was the first car to use batteries lithium ion and from 2008
to March 2021, Roadster sold more than 2000 cars in 31 countries. In 2020, Tesla opened its first
production factory and officially launched to the public with 13.3 million shares sold. 2013 was
also a memorable milestone in Tesla's journey when the Model S was launched after a period of
stagnation due to the prolonged financial crisis. With features such as the ability to run more than
400 km per charge and accelerate from 0 to 96.5 km/h in 5.5 seconds, Tesla won the Motor of
the Year award voted by Motor Trend.
Up to now, Tesla has achieved significant achievements and is one of the most notable car
companies in the world. Tesla has enormous advantages such as being a luxury car brand and the
ability to supply products directly to customers without having to go through a third party.
However, there are also some weaknesses such as limitations on building production centers and
the inability to target a diverse customer base.
II. Positives
1.The first and most obvious positive about Tesla now is the high-quality staff, an
innovative environment with leading technologies. According to business insider's interviews
with former Tesla employees, Tesla is a fast-paced, innovative environment with enthusiastic
people and a "creating the best" work culture. In 2019, Tesla was voted "one of the most ideal
places to work". Thanks to its team of quality employees, Tesla also possesses unique and
leading technologies today. Tesla's electronic components are up to five years superior to Toyota
and Volkswagen while Tesla's self-driving technology surprises the technology world. Mercedes
acquired Tesla's powertrain and the rights to use the engine were also acquired by Toyota
(
Figure 1: Customer Satisfaction for Electic Vehical (2017, ILSR)
​
In a survey conducted by Institute for Local Self-Reliance (ILSR), Model S from Tesla
dominated customer satisfaction in both hybrid/EV and large luxury with an index of 98, much
higher compared to Audi, Lexus, or Mercedes. (Figure 1)
​
Figure 2: Car Owner Satisfaction (2020, Customer Report)
In another survey by Customer Report for most and least liked cars in 2020, Tesla’s customers
were also the most satisfied, with an absolute score on driving experience criteria and score of
4/5 for comfort and in-car electronics criteria. (Figure 2)
With undisputed car quality and brand value, Tesla is the brand dominating the US electric
vehicle market since 2018 and produced a cumulative of one million cars till 2020(Figure 4).
After investing a large amount of money in research and development, 2020 was also the first
year Tesla recorded a net profit after 10 years of operation. In the 2021 financial statements,
annual net profit reached 5.5 billion USD on revenue of 54 billion USD, an increase of 700%
and 71% respectively compared to the previous year, making 2021 a breakthrough year for
Tesla. It can be said that with the foundation of these initial successes and the reputation that
Tesla has gained, Tesla will achieve even more incredible achievements.
Figure 3: Tesla’s Dominance on US EV Market (2021, Statista)
Figure 4: Tesla’ Cumulative Production (2020, Statista)
2.The second thing that brought success for Tesla that must be mentioned is the effective
marketing strategy of unique CEO Elon Musk and the brand value with an inspirational
story behind it. Grasping customers and stockholders' preference, Tesla does not follow
common promotional strategies on social networks like other brands such as BMV, Audi or
Toyota but put more emphasis on direct interaction with their stakeholders. Instead of just sitting
in the office directing staff and monitoring business results, Elon Musk is always the one directly
sharing about processes in Tesla via official Twitter account. Although Musk’s sharing did cause
arguments, this marketing strategy was still very successful since Tesla always attracts attention
from the media every time Musk appears on social networks and creates confidence in customers
that Tesla is something very special and will bring many breakthroughs in the future. It can be
seen from the chart that Tesla ranked 3rd in terms of most discussed rates on social networks in
2017, only behind two long-standing brands at that time- BMW and Audi (Figure 5). It is also
this presence on social media that partly contributes to the impressive sales later.
Figure 5: Car brands’ presence on social media (2017, Socialmediatoday.com)
From a starting point as a skeptical company in 2003 because electric cars were not popular at
that time, the price of Tesla was quite high and the battery capacity was small, Tesla has become
a leading company. Not only does Tesla bring quality products, it also changes customer
thinking. Tesla identifies its main customers as people who are quick with technology and care
about environmental issues. Tesla also broke the story of other luxury cars by showing their
customers that owning a luxury car is no longer so exciting.
3.Another positive about the growth of Tesla is the general future of the electric vehicle
market. From Figure 6, it can be clearly seen that market share of EV gradually increased and
reached 13% in 2022, while the total sales were 55% higher than 2021.
Given the current situation of fossil energy depletion and the future customers who are young
and aware of environmental issues, it is no doubt that electric cars will dominate traditional cars
and this is the opportunity for Tesla to expand its market.
Figure 6: Global EV Sales 2013-2022 (2022, onlineev.com)
II.Negatives
Despite the aforementioned positives, Tesla still faces some negatives that need addressing
urgently.
1.The most notable negative point of Tesla now is the ratio of net income to revenue.
Figure 7: Tesla’s Net Income and Revenues (2021, Statista)
Despite achieving high revenue, if talking about profitability ratio on an economic aspect Tesla's figures are quite alarming. Tesla continuously reported losses until 2019, 2020 was the
first year it achieved profits and 2021 was a year recording record revenue but net income was
only 5.5 billion USD, quite low compared to the industry average and the expectation from the
board of directors.
2.The second negative of Tesla is the pin shortage, complex production process and
problems surrounding the incomplete autopilot technology. Tesla is dependent on lithium-ion
batteries, which mainly come from Chinese suppliers. The effects of the pandemic and the
political situation have partly affected Tesla's operating results over the past 3 years and in the
future, if Tesla is still too dependent on only one supplier, the obstacles and threats to production
are unavoidable.
Regarding the complexity of the production process, since Tesla's technologies are too
complicated and once broken, it will be very difficult or very expensive to replace parts such as
batteries and this also somewhat negatively affected the customer psychology when choosing
Tesla’s product.
With respect to autopilot technology, In early 2023, Tesla had to voluntarily recall 362,758
vehicles equipped with the full-self driving beta system, also known as FSD beta, with a warning
that it could cause unwanted incidents. FSD, which customers only have to pay an additional
15,000 USD to get, is a feature that Elon has expected and promised many years ago. Thus, with
consecutive vehicle recalls, Tesla must further promote research to perfect these features.
3. The difference between Tesla’s and other brands’ products also acts as an obstacle to
Tesla's sales and overall business performance. Price of Tesla is much higher than other
competitors. Tesla Model 3 is much higher than Lexus RX and is nearly two times more
expensive than cars in the same segment from Audi, Mercedes, or Acura.
Figure 8: America’s Best-Selling Luxury Car in 2018 (2018, Statista)
IV.Solutions
Tesla is facing several problems and the 2 solutions proposed below can partly solve the problem.
1.With the problem of net income over revenue ratio and narrow market, Tesla can expand
its target market to Asia, especially East Asia, Southeast Asia, and India - where the middle
class is becoming rich very quickly and with that comes the need to own a car. According to
Statistics, in 2020 the middle class in Asia accounted for more than half of the global middle
class and this figure is projected to reach 65% by 2030.
Figure 9: The Rise of Asian Middle Class (2020, Statista)
In addition, besides China and India, which are the two billion-people markets in Asia and South
Korea and Japan- the two developed countries in East Asia, Southeast Asia is also a promising
region for the electric vehicle market in general and for Tesla in general. It can be inferred from
figure … that the number of car owners in developing countries in Southeast Asia is growing at a
significant rate, reaching 15 million in Thailand and 13.5 million for both Malaysia and
Indonesia in 2017.
Figure 10: Number of Registered Cars in Selected ASEAN Countries (2017,Inforgram)
2. Another possible solution for Tesla is to expand product segments such as pickup trucks
and more affordable cars compared to the current high-end segment. Tesla currently has 3
segments: cars, energy and services. and 86% of revenue is coming from the premium car
segment.
With a more flexible approach, Tesla will gain more customers and improve the company's sales
and net profit.