Case 1 Tesla Motors

7/24/2019 Case 1 Tesla Motors

1/5

CASE ANALYSIS 2GROUP no.

Members:Caringal, Phill osh!a

Geo"allo, Ar#ohnL$n, Amie


2/5

CASE %: CAN ELON MUS& &EEP 'ESLA MO'ORS RUNNING(Management: Leading and Collaborating in a Competitive World, 9thEdition, by Bateman and Snell

A small player in the struggling global auto market, Caliornia!based start!up"esla Motors is trying to revolutioni#e its industry$ %eaded by &hie e'e&utive Elon

Musk, "esla has an ambitious vision: to mass produ&e ele&tri& &ars that end Ameri&ans(dependen&e on ossil uels and &ut greenhouse gas emissions$ "he South Ari&an!bornMusk, )ho holds degrees in both physi&s and inan&e, predi&ts that by *++, thema-ority o &ars made in the .nited States )ill be ele&tri&$

A bold predi&tion/Maybe$ But Elon Musk is a skilled manager$ By his thirties hehad led t)o su&&essul internet &ompanies: 0ip* 1later sold to Compa23 and 4$&om1)hi&h morphed into )hat is no) kno)n as 5ay5al3$ 6n *++7, Musk be&ame &hairmano "esla Motors, a start!up ounded the year beore by CE8 Martin Eberhard$ Sel!proessed &ar geeks, Musk and Eberhard sa) a bright uture or ele&tri& &ars$ But thet)o oten disagreed about ho) to move the &ompany or)ard$ Costs and &onli&ts

es&alated until *++, )hen the board o dire&tors ousted Eberhard$

With "esla at a turning point, Musk helped the &ompany regrouped, introdu&ingthe irst model, the all!ele&tri& oadster, in *++;$ "he t)o!seat sports &ar goes rom +to mph$ 5o)ered solelyby a lithium!ion battery, the oadster operates )ithout engine noise and &an travelnearly *>+ miles on a single &harge$ 6t also doesn(t emit any gases to theenvironment$

?espite its substantial @=+9,+++ pri&e tag, the "esla oadster sold out almostimmediately$ "oday, "esla ships =+ o the &ars ea&h )eek and has a year!long )aiting

list$

Like many start!ups, "esla Motors has hit a e) potholes along the )ay$

undamental dieren&es bet)een Musk and Eberhard led to &ompli&ations that nearly

halted the &ompany(s progress$ "e&hni&al problems during development pushed ba&k

the laun&h o the &ompany(s irst &ar, the oadster, by more than a year$ 6n turn, the

produ&tion delays &aused &ash lo) problems$ et, to date "esla has raised nearly

@=>+ million rom investors @>> million o that &ome rom Elon Musk$

"he &ompany burned through three CE8s beore Musk took reins in *++;$ By

that time, the )orld e&onomy had taken a serious do)nturn, and the .nited States

ound itsel in a deepening &redit &risis$ Musk ordered a layo o nearly *> per&ent o

the )orkor&e, &losed one oi&e in a ?etroit suburb, and opened a smaller one

nearby$ "esla is also looking to its oadster, no) in ull produ&tion, to enhan&e the

revenue stream by trimming manua&turing &osts$

While Musk is &onident "esla )ill )eather the storm and &hara&teri#es the

moves as needed belt!tightening, the re&ession &ouldn(t have &ome at a )orse time


3/5

or the irm$ With Elon Musk(s &ost!&utting initiatives, "esla Motors )as able to

)ithstand its inan&ial &run&h$ Musk dre) on relationships he ormed in the &omputer

industry !!! )ith investors ranging rom eBay(s &oounder to Doogle(s ounders to

Sili&on alley venture &apitalists !!! to help und "esla$ Mean)hile, the &ompany

o&used on illing its ba&klog o orders or its oadster sports &ar to generate needed

&ash$ Musk says, F"he reason )e started o )ith a sports &ar is be&ause initially any

ne) te&hnology(s e'pensive$G Sports &ars, even )ith their hety pri&e tags, do not

suer sales slumps the )ay an average mom!and!pop &ar )ould !!! buyers still )ant

the latest te&hnology$ But their smaller market limits the gro)th that "esla &an

e'pe&t$ "o reali#e his vision o bringing ele&tri& &ars to the masses, Musk needs to

produ&e a more mainstream, less e'pensive model$

)UES'IONS:

=$ Consider Elon Musk(s ba&kground in the &omputer industry and the dii&ulty o

starting a revolutionary &ar &ompany$ ?o you think Caliornia is a good pla&e

rom )hi&h to base "esla Motors/ Why or )hy not/

Consider Elon Musk(s ba&kground in the &omputer industry and the

dii&ulty o starting a revolutionary &ar &ompany$ ?o you think Caliornia is a

good pla&e rom )hi&h to base "esla Motors/ Why or )hy not/ es$ Caliornia is

the most populous .$S$ state, )ith ; million people, and the third largest

state by area -ust behind Alaska and "e'as$ "he e&onomy o Caliornia is the

largest in the .nited States$ As o *+=7, CaliorniaHs gross state produ&t 1DS53 isabout @*$ trillion$ Caliornia has an enormously produ&tive e&onomy, )hi&h or

a nation )ould be one o the ten largest in the )orld$ So there is a really big

opportunity )aiting there$ "he revolutionary &ars )ould stimulate the e&onomy

o Caliornia even more$ "hrough retail sales, -ob opportunities, sto&ks, and

supporting businesses$ 6t )ould be a )in!)in situation$ Iot to mention the

overall produ&tivity, ei&ien&y, and saety o these revolutionary &ars )ould

also beneit the lo&als o Caliornia sin&e )e all kno) ho) trai& )orks there$

6t )on(t take de&ades beore dramati& &hanges is seen$ Just to give some

additional perspe&tive, here are some 2uotes rom Lee Stogner, a business

&onsultant in the ields o engineering: Fou(ll be seeing more &hanging in &ar

te&hnology in the ne't ive years than you have in the past hundred,G Stogner

says$ F"he market e'pe&ts it$ Dovernment )ill demand it$ And the market )ill

bear it$K*$ Musk has dra)n on his ba&kground in both physi&s and ina&e to get "esla o

the ground$ But he has also used his managerial skills to keep the &ompany

moving ahead$ Whi&h skills has he used/


4/5


5/5

manua&turing &osts and &on&entrated in building the oadster sports &ar$ With

this, he uses his ability to adapt in the industry &risis that he )as set on a goal

that the &ompany should )ithstand on its o)n and surviving and deeating the

problem$ With his &apabilities and intelligen&e the "esla Motors Company )as

able to surpass and )ithstand on its inan&ial &run&h$ "hey gathered big

investors that &an support the &ompany all throughout$ ortunately, the

oadster sports &ar be&ame a hit but the idea o the ele&tri& &ar should not end

on that, but Musk and his "esla Motors Company )ill produ&e and invent a more

mainstream and less e'pensive model that &an &ertainly help our so&iety gro)

and progress$

Documents

Case 1 Tesla Motors