This Paper analyzes the business model of Tesla and their Omni-Channel Strategy. Tesla Inc. is an American electric vehicle and energy company founded by a group of engineers on July 1, 2003 with the vision to accelerate the global transition to sustainable energy. It's largest business is the sale of electric vehicles, which makes up to 86% of the company's total revenue. While the CEO, Elon Musk, drives the innovative character of the company, this innovative mind set and the passion for new technologies is also responsible for Tesla´s omnichannel strategy which offers customers a unique experience they get from no other car manufacturer.
Tesla´s omnichannel approach can be described as an integrated approach to give customers the best possible experience across multiple channels when they interact with the brand. Although a central aspect of the omnichannel strategy is the interplay between the online and offline buying experience, Tesla´s omnichannel approach is not limited to that. While Tesla
has both car showrooms and an online store where you can buy their cars, Tesla uses many more channels to interact with the customer. Examples are social media, the car itself, where you can buy updates like the autopilot, or the smartphone app which can be used to unlock the car.
Because other car manufacturers catch up with Tesla, our recommendations include, but are not limited to stick with Elon Musk as the CEO and be open to new ideas and experiments he suggests, move on to new business opportunities connected to renewable energies or further improve the customer experience by making more use of available data.
Contents
Executive Summary
Company History and Business Model
SWOT Analysis
Recommendations for Tesla
References
Executive Summary
Tesla Inc. is an American electric vehicle and energy company founded by a group of engineers on July 1, 2003 with the vision to accelerate the global transition to sustainable energy. It's largest business is the sale of electric vehicles, which makes up to 86% of the company's total revenue. While the CEO, Elon Musk, drives the innovative character of the company, this innovative mind set and the passion for new technologies is also responsible for Tesla's omnichannel strategy which offers customers a unique experience they get from no other car manufacturer.
Tesla's omnichannel approach can be described as an integrated approach to give customers the best possible experience across multiple channels when they interact with the brand. Although a central aspect of the omnichannel strategy is the interplay between the online and offline buying experience, Tesla's omnichannel approach is not limited to that. While Tesla has both car showrooms and an online store where you can buy their cars, Tesla uses many more channels to interact with the customer. Examples are social media, the car itself, where you can buy updates like the autopilot, or the smartphone app which can be used to unlock the car.
Because other car manufacturers catch up with Tesla, our recommendations include, but are not limited to, stick with Elon Musk as the CEO and be open to new ideas and experiments he suggests, move on to new business opportunities connected to renewable energies or further improve the customer experience by making more use of available data.
Company History and Business Model
Brief history of Tesla Inc:
Tesla Inc. is an American electric vehicle and energy company founded by a group of engineers on July 1, 2003 with the vision to accelerate the global transition to sustainable energy. Shortly after the foundation, Elon Musk invested $6.3 million in Tesla and became the chairman. The company specializes in manufacturing electric vehicles, solar energy panels and integrated renewable energy solutions for homes and businesses. Tesla is the world's best-selling manufacturer of plug-in and battery electric passenger vehicles. The company is also the world's first vertically integrated sustainable energy company, providing end-to-end clean energy products, including power generation, storage and consumption (Schreiber, 2021).
In February 2008, Tesla's first official production model, the Tesla Roadster, rolled off the production line. According to Tesla, this should first target the high-end market and Tesla wanted to step down and enter the mass market with a civilian-priced vehicle later. Thus the Tesla Roadster is the highest priced convertible sports car of the company, the Model S/X is aimed at the luxury market, and the Model 3 and Model Y are produced for the mass market. In 2013, Tesla delivered a total of 22,442 electric vehicles, and in 2020 Tesla delivered nearly half a million (499,535) electric vehicles (Tesla Inc., 2021a).
As an omnichannel company, Tesla offers an unprecedented shopping experience. Unlike traditional car companies, consumers learn about Tesla vehicles through social media, the web, physical stores or other online and offline channels. Anyone can book a test drive through Tesla's website, and the customer service then locates the nearest Tesla showroom and sets up a time to test drive with the customer. When customers reach a purchase decision, they no longer need to go to a bank and have the check ready for the car dealer, instead, they can just pay online wirelessly and have the freedom to choose the model and configuration they want. For a certain time Tesla also offered payments in Bitcoin. When customers own a Tesla car, they can interact with other smart devices through Tesla's in-car system, and pay for software and hardware upgrades such as Autopilot in the car. Tesla owners no longer need to make a trip to a certified service center to update their in-car maps, instead, they can just park their car anywhere with wifi coverage to make it happen. The omnichannel consumer experience covers every aspect of the Tesla company and will bring unimaginable convenience to customers compared to the traditional car sales model. In the future, the omnichannel sales model will become increasingly popular in the automotive industry.
Business model of Tesla Inc:
Tesla's largest business is the sale of electric vehicles. In 2020 they made $27,236 million in revenue with this business segment, which is 86% of the company's total revenue. Tesla has increased Model S production and reduced costs for parts since 2013, which led to a rise of the total gross margin from 8% to today 30.5%. This is one main factor which contributes to Tesla's profitability. In the following years, cost reduction has continued to be one key of Tesla's profitability. One important aspect of the cost reduction is also the omnichannel approach of Tesla, as there are less costs connected to cars which are sold online. In addition to car sales, a large part of Tesla's profit comes from the "greenhouse gas credits", which are sold to other car manufacturers. Greenhouse gas credits are set up by the government to reduce greenhouse gas emissions. In the automotive industry, policies on greenhouse gas emissions are even stricter, with California requiring car companies to sell zero-emission vehicles (ZEVs) and facing high taxes if they don't sell enough ZEVs. Since Tesla produces all zero-emissions electric vehicles, their credits can be sold to other car companies and it becomes a part of the company's revenue. Since 2010, Tesla has generated over $2 billion in revenue through the sale of greenhouse gas emission credits (Tesla Inc., 2021b).
SWOT Analysis
This chapter will analyze the Strengths, Weaknesses, Opportunities and Threats of Tesla. While the focus of these four aspects is on the omnichannel strategy of Tesla, some “more general” aspects will be listed and described, as these fundamentally contribute to the omnichannel strategy as well. An example is the “Limited production capacity”. While this is a general problem of Tesla, it also refers to the omnichannel strategy, as this changes the demand for Tesla cars (Lambert, 2020). In the following table, the results of the SWOT analysis are listed and afterwards explained. Characteristics written in Italic are solely related to the omnichannel strategy.
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Strengths:
Tesla's omnichannel approach can be described as an integrated approach to give customers the best possible experience across multiple channels when they interact with the brand. Although a central aspect of the omnichannel strategy is the interplay between the online and offline buying experience, Tesla's omnichannel approach is not limited to that. While Tesla has both car showrooms and an online store where you can buy their cars, Tesla uses many more channels to interact with the customer. Examples are social media, the car itself, where you can buy updates like the autopilot, or the smartphone app which can be used to unlock the car. This unique experience Tesla offers is a result of Tesla's innovative character. Another strength of Tesla is the strong growth in the number of cars they sell. This goes hand in hand with the omnichannel approach of Tesla, which clearly describes a shift towards online sales of cars. The reason these points match together is because online sales are more easily scalable. Of course Tesla in the end needs to produce the amount of cars which are bought, but in terms of logistics and other factors it is more easy to sell the car online and hand it over to the customer at a large storage hall. Another strength specific to the combination of online and offline shopping is how easy and similar to other online purchases Tesla makes it for the customer. On the Tesla website, customers can select all features they want to have included in their new car. Then they start the buying process online by making a deposit with the credit card. The amount of the deposit is often not more than some hundred dollars, which makes the online experience similar to buying other products online. The result is that it works. In 2018, the first full year where the Tesla Model 3 was sold, 78% of the Model 3 cars were sold online (Holland, 2019).
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- Philipp Rothe (Autor:in), 2023, Analyzing Tesla. Their Business Model and Omni-Channel Strategy, München, GRIN Verlag, https://www.grin.com/document/1357318
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Laden Sie Ihre eigenen Arbeiten hoch! Geld verdienen und iPhone X gewinnen.