CRITICAL THINKING

Module Number

Contemporary strategy

Module: Critical Thinking

Critical Thinking: Tesla motors; Case study

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Date:

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Introduction

TESLA is an American based automobile company that designs and develops electric

motors. It was firstly introduced in the year 2008. TESLA produced the electric car for the first

time. The motors of TESLA are ultra-technological that makes less noise and run on electricity

(Vynakov et al., 2016). The mission of the TESLA Company was to drive the world's transition

to electric mobility.

Differences and similarities between conventional and electric-powered automobile

industries

Points of difference Combustion engines Electric engines

Definition Traditionally automobile Such engines run on energy

industries produce such stored in batteries. The stored

vehicles that run on the energy powers electromagnets

combustion of gasoline. The that move the axels of

filled gasoline gets exploded vehicles.

in the engine. The combustion

of gasoline pushes the piston

that is joint with the rods and

that rotates an engine

crankshaft and consequently,

it rotates the axels of vehicles.

Type and number of parts Vehicles that run on The electric engine usually

combustion engines are comprises 20 parts. Electric

relatively more complex. They motors do not generate waste

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comprise more parts and need materials because they do not

more space. Combustion contain disposable fuel.

engines usually more than

comprise 2000 parts. In this

type of engine gasoline is

disposable fuel.
Energy storage Combustion engine run on More energy is needed by

quite an inefficient process electric engines but very little

and a lot of energy is wasted energy is wasted by electric

along the way. So a gasoline- engines.

powered vehicle needs more

energy.
Maintenance cost Combustion motor owners Electric vehicles are always a

have to bear the expense of win-win option it only saves

brake maintenance and also fuel cost but also saves

bear the expense of fuel maintenance cost for people. It

change, fluid fills up, break saves money on break

oils etc. maintenance due to the

regenerative braking system

and these breaks are long-

lasting than others. These cars

do not need the expense of oil

change and fluid fills up

expenses nor any expense of

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spark plug maintenance and

more.
Driving techniques Combustion powered engine motors and electric motors differ

in driving techniques too.

Opening-up patens, complex and rich strategy

"Tesla opened its patents in the spirit of open-source movement for promotion,

development, and accelerating the production of electric vehicle technology.”

Patents are the intellectual property of a firm that is the source of competitive advantage

for a company. At the initial stage, Tesla protected its intellectual property. But in the year 2014,

the CEO of Tesla surprised people by saying "patents of Tesla belong to you" he announced the

opening of all its patents to those people who want to use them in good faith (Rimmer, 2014).

Some people claimed it as a good spirit of Elon Musk while few of them considered it as a

publicity stunt. CEO of Tesla said that opening up patents aim to accelerate the development of

sustainable transport (Hil, 2016). Tesla will not initiate any lawsuit against anyone who wants to

invent electric cars for using its patents.

Tesla is a technology-intensive company and patents or technology provides such

companies with a competitive advantage over competitive rivals but Tesla allowed free access to

its patents. Too many predictions were made against the opening of patents to everyone but the

motive of Elon behind this action was unclear. There could be a motive to accelerate the

production of electric motors and the development of EVs infrastructure and consequently saving

the planet from the diverse impacts of fossil-fueled vehicle. Opening up the patents or

technology is not free of cost because it exposes a firm to a few risks like loss of centrality in the

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market and increases the competition for the firm. But opening up patents or technologies to

others brings few benefits also. Technological risk can be shared with others it is often known as

"risk-pooling." The open-patent process is complex and rich there would be a big picture in the

mind of Tesla's CEO for opening its patents for free and he would be known to the reaction of

competitors. It can fuel the development of required technology and it can make a company

paddle-back from the open-technology strategy. Competitors take benefit from the open

technology and convinced to invest a huge amount. Tesla also fueled the investment and

activities of competitors towards the development of EVs infrastructure (Arquitectura et al,

2015).

Tesla's strategy; the contribution of continuous innovation in the strategy of Tesla

Relentless innovation is a strategy of Tesla. The success of Tesla is just simply the

company produces electric cars that are needed by people and quite affordable. The company

produced its first car in the year 2008 and kept producing the world's best electric vehicles. The

company is operating on the policy of relentless innovation. In the automobile industry, Tesla

has promoted innovation and creativity and has successfully popularized electric vehicles. Tesla

has disrupted the way the world thinks about energy. Tesla has enabled people to store and use

energy. The company is achieving milestones speedily just because of the contribution of

innovation to its business strategies. For instance, Tesla solved the energy problems of South

Australia only in a hundred days. The success and development of Tesla demonstrate that its

CEO accepts the importance of innovation. CEO of Tesla is a risk taker he is famous for making

and fulfilling big promises. Tesla is securing success and growth in manufacturing electric cars,

and advancement in the manufacturing and utilization of renewable resources, energy storage,

and sustainable technology.

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The competitive advantage of Tesla

Tesla is taking competitive advantage from innovation and customer-centric strategies in

different ways. The battery supply chain of Tesla is working effectively and efficiently. There is

a continuous fall in the price of battery due to economies of scale, continuous innovation,

decrement in the quantity of waste, and placing manufacturing process under a single roof. The

battery supply chain of Tesla is the factor of competitive advantage for the firm. The

Supercharger network of Tesla is also a source of competitive advantage for the company. The

company has established charging stations for electric vehicles with high power and speed. The

company is taking a competitive advantage from its software updating system. It keeps updating

the software of its vehicles. Another factor of the competitive advantage of the company is a

strong brand image and strong position in the market. The company produces electric motors that

are needed by people and that are also affordable by people. It promotes the production of

sustainable transport and aims to reduce the impacts and waste of traditional transport. Long

term operational activities of Tesla are providing a competitive advantage to Tesla.

Recommendations

Tesla is suggested to expand its service centers in emerging markets. The company is

suggested to manage its production capability according to demand. Tesla should leverage brand

equity to augment brand awareness. Tesla has provided the service of supercharging stations it

should manage the locations of stations too. Power stations should be accessible by maximum

people so their location should be ensured nearby food points, bathrooms, and main roads and

should ensure to make power accessible.

Conclusions

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Tesla is an innovation-based company run by one of the famous and successful

entrepreneurs in the world. He has maintained his image in the market by developing multiple

businesses and contributing to the betterment of society, the economy, and the planet. By

producing electric cars CEO of Tesla is contributing to the welfare of society, and the planet.

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References

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C. L. E. Y. N. to K. in 20, Mu, A., Inan, T., Sierra Garriga, C., Library, P. Y., Hom, H.,

Kong, H., Castilla, N., Uzaimi, A., … Waldenström, L. (2015). Contemporary Strategy

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Hil, B. M. (2016). Powering Intellectual Property Sharing: How To Make Tesla’S Patent Pledge

Effective. Journal of Intellectual Property Law, 24(1), 191–219.

https://login.pallas2.tcl.sc.edu/login?url=http://search.ebscohost.com/login.aspx?

direct=true&db=a9h&AN=127389380&site=eds-live

Rimmer, M. (2014). Tesla Motors’ Open Source Revolution: Intellectual Property and the

Carbon Crisis — Medium. Medium, August, 1–53. https://medium.com/@DrRimmer/tesla-

motors-open-source-revolution-intellectual-property-and-the-carbon-crisis-95259ff867e6

Vynakov, O. F., Savolova, E. V., & Skrynnyk, A. I. (2016). Modern Electric Cars of Tesla

Motors Company. Automation of Technological and Business Processes, 8(2), 9–18.

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