Tesla: A Journey To Success
Founded in 2003 by Martin Eberhard, Marc Tarpenning and an innovative group of engineers, Tesla Motors strived to prove to the world “that people didn’t need to compromise to drive electric”. Fast-forward 5 years and a $6.3 million investment to 2008, Elon Musk was now the CEO of Tesla with an ambitious “Secret Master Plan” to establish Tesla in the automotive industry.
Taking a conventional approach of designing an affordable car to be mass-produced was impossible for a pioneering Electric Vehicle (EV) company with low economies of scale, leading Tesla to unveil its first EV in 2006: the Roadster - a high-price, low-volume sports car with unprecedented range and power. By targeting wealthy customers with relatively inelastic demand, Tesla generated revenue in its early years to facilitate a progressive reduction in its cost of production through capital deepening. Following the completion of the first stage of their plan, Tesla began production of their critically successful electric luxury sedan, Model S, in 2012 which was three-quarters of the Roadster’s price and another step towards the mainstream consumer market. Attaining greater economies of scale, and an unprecedented level of vertical integration (80%), Tesla announced the Model 3 - their first mass-produced EV targetted at the mainstream consumer market - marking the completion of Musk’s “Secret Master Plan” and Tesla’s successful establishment in the competitive automotive industry.
However, the reasons for Tesla’s sustained prosperity and its recent ranking as the 6th most valuable company by market capitalisation boil down to several notable factors:
Since the release of its first EV, Tesla has prioritised their data collection and utilisation from its customers. All of Tesla’s EVs collect huge amounts of raw data based on almost all human interactions such as hand placement on the steering wheel or applying brakes when intervening with Autopilot, but more significantly, Tesla cars utilise its sensors and Artificial Intelligence to generate a highly data-dense ‘map’ showing everything from traffic conditions, hazards, and new roads - all of which are crowdsourced, analysed and transmitted to the entire Tesla EV fleet.
Furthered by George Paolini, “Tesla owners are not just driving a car… They are simultaneously training the Tesla Artificial Intelligence engines as they go”, and since 2018, Tesla has successfully collected nearly 5 billion kilometres of real-world driving data - a market which ‘McKinsey and Co’ researchers estimate will be worth AUD $1 trillion by 2030.
Another exciting way this gathered data is put to use is through their utilisation of “6 years of [production] sensor data to train an artificial intelligence” to improve Tesla’s efficiency and productivity in their production process.
Tesla, an automotive and recently a data company, has always valued innovative data utilisation techniques to maximise the value of their products and minimise their cost of production.
To enter the automotive industry with guaranteed high production costs, Tesla’s first EV had to outperform the top-class cars in the industry. Tesla’s technological innovation resulted in their first EV, the Roadster, trumping “gasoline sports cars like Porsche or Ferrari in a head-to-head showdown” whilst simultaneously having “twice the energy efficiency of a Prius” - the pinnacle of speed and efficiency respectively during the 2008 era. From then on, almost all of Tesla’s EVs dominated the high ratings in each category of safety, performance, and efficiency, resetting global standards on the quality of modern vehicles.
One key factor of Tesla’s superiority in acceleration is attributed to their innovative induction motors where the lack of friction and gear changes allows the power output to be maximised compared to traditional internal combustion engines. Tesla’s technologies are so successful that other automotive firms such as Toyota and Mercedes-Benz are known to use Tesla’s motors and batteries in some of their cars.
However, Tesla’s technological innovation spans further than vehicles to technology like solar panels which Tesla has remodelled to employ more efficient solar cells which can produce a substantially high 71.67 watts/tile.
But more recently, toward the middle of 2021, Tesla announced the Tesla Bot which is a humanoid artificial intelligence with the intended ability to “eliminate dangerous, repetitive, and boring tasks” without being explicitly told what to do. This means the Tesla Bot would be able to save customers’ time and effort on tasks like cooking, cleaning and shopping.
Although Tesla’s EVs are responsible for the birth of Tesla, it is Tesla’s continued technological innovation in a wide variety of technologies that underpins its success.
It is common knowledge that Tesla’s EVs are a more sustainable option than fossil-fueled vehicles, but when examining their 2021 Impact Report, it is evident that Tesla takes its sustainability seriously even in the manufacturing process. Tesla’s gigafactories are built with “highly efficient, insulated, low emissivity windows to reduce building heating and energy loss” and are additionally roofed with solar panels to reduce reliance on natural gas. In addition, Tesla has invested in capital that will revamp its production process of batteries by reducing total energy consumption by an estimated 70% in the manufacturing phase alone.
However, recent reports show Tesla is not as ‘green’ as it may seem. A Forbes article examines that Tesla is in the “bottom 15% in sustainability transparency” - due to limited environmental information being shown in their sustainability reports. Furthermore, an obvious rebuttal to the sustainability of EVs is that they transfer the pollution to the production process - however, Reuter, an internationally recognised news agency, debunked this critique by calculating that an EVs carbon footprint (including energy sourcing, the production process, driving and disposal) will be lower than a fossil-fueled car after being driven for only 20,000km.
Ultimately, it is much less Tesla’s current environmental sustainability that attracts individuals to purchase/invest in Tesla than it is Tesla’s drive and innovation towards improving its environmental sustainability - a testament to Tesla’s mission statement “To accelerate the world’s transition to sustainable energy”.
Overall, it is Tesla’s mission for future environmental sustainability and their innovative, aesthetic technologies that attract customers and investors, and it is their ability to effectively collect and utilise data that strengthens Tesla’s future prosperity.