Over the last few years, the automotive giant Tesla has been driving the auto industry like no other companies. In 2018, the company delivered over 2,45,000 cars and around 3,60,000-3,70,000 in 2019. The vehicle manufacturer built the Gigafactory 3, in China, in 11 months and is already delivering vehicles today. Recently, Tesla’s market capitalization reached to triple-digit mark, US$107 billion, for the first time, overtaking German automaker Volkswagen AG, which has a market capitalization of about US$100 billion. Now, Tesla only trails Toyota globally, which has a market cap of US$233 billion.
The company is the highest-valued US automaker of all time, and its market capitalization has excelled both Ford and GM combined. Tesla’s innovation pace in the market for high-end electric vehicles is making it outshine other auto manufacturers. In 2018, the company sold nearly 1,46,000 Model 3s, its electric four-door sedan, making Tesla the top-ranked entry-level luxury sedan in the US.
Unique Business Model
Instead of making a relatively affordable car that it could mass produce and market, Tesla took a unique approach to getting its first vehicle in the market. The company’s business model considerably spins around selling, servicing, and charging its electric vehicles. As many automakers use franchised dealerships to sell their vehicles, Tesla leverage the opposite model, direct sales.
Tesla has developed a global network of company-owned showrooms and galleries. These showrooms are mostly in leading urban centers across the world. Apart from the showrooms, Service Plus centers, and service facilities, the company has 318 locations worldwide as of the end of the third quarter of 2017. The automotive giant has combined many sales centers with service centers, where customers can charge or service their vehicles. It also deploys Tesla Rangers, mobile technicians, in certain areas who service vehicles from customers’ house.
Tesla’s specialization in electric vehicle manufacturing, battery energy storage from home to grid-scale and, through its acquisition of SolarCity, solar panel and solar roof tile manufacturing are making it to drive to the next level. The company has built its own network of Supercharger stations, allowing drivers to fully charge their Tesla vehicles in about 30 minutes for free.
Tesla operates a wide range of production and assembly plants. Its main vehicle manufacturing facility at Tesla Factory in Fremont, CA; Giga Nevada, Nevada; Giga New York in Buffalo, New York; and Giga Shanghai in Shanghai, China.
Tesla’s relentless work to advance its batteries rely on the cost-cutting calculus and simply scale. Scaling up production delivers results in greater manufacturing efficiencies, improvements, and cost reductions. The company is scaling up its production big-time through the under-construction Gigafactory.
Making of Cars
Tesla entered the automotive market with the sporty Roadster. However, it stopped making the Roadster when it had launched the Sedan, called the Model S, in 2012. The company started deliveries of its first SUV, the Model X, in September 2015. And just two years later, in December 2017, it kicked off the first Model S deliveries.
Like Apple develops the iPhone and Microsoft uses Intel chips and Dell PCs uniquely, Tesla builds its cars by developing software on unique hardware. This enables the company to enhance its cars’ software functionality with ease. Just leaving fewer parts, the total cost of Tesla ownership is considerably lower than an internal combustion vehicle. There is no need to expense on oil changes, tune ups, replacing mufflers, and more.
Tesla brings new products to the market all the time. Its upcoming Tesla Model Y, an electric compact crossover utility vehicle (CUV), which was unveiled in March 2019, began production at its Fremont plant earlier this year. According to reports, the company will start delivering Model Y by March 2020.