1. Describe Tesla’s Model 3 business model. Is the model controversial?

What are the

threats and weaknesses?

Answer:

In general, Tesla operates as a Direct- to- consumer business model meaning selling the product
directly to the consumers without involving any agents or middlemen and no dealerships
[CITATION Dan22 \l 1033 ]. Since, Tesla doesn’t involve any dealerships and sell their products
directly to their customers, it has helped them to get a competitive advantage over others. They
are focused on three basic aspects of selling, servicing, and charging. Musk’s mission to bring
mass electric vehicles in the market is also one of the reasons of Tesla’s business model success [
CITATION Kri22 \l 1033 ].

Yes, the model was called controversial by the customers. To fulfill the customer’s pre-orders for
the new Model 3, Tesla decided to redesign and simplify the parts of the product which was not
communicated to the Model 3 buyers and when they received their delivery, they were surprised
of the change. While some people called it controversial, there were other customers who were
satisfied with the materials and slight change in the model design. Also, Tesla didn’t confirm
what material will be used in the Model 3’s interior which also sounded controversial
[CITATION Fre18 \l 1033 ].

The threats and weaknesses are mentioned below:

 Competitors

Tesla Model 3 was in competition with other different luxury brands like Audi, BMW, Lexus,
Mercedes, Honda, and Toyota. These were well-established brands and had huge customer base.

 Battery Material Constraints

Tesla obtained their components from multiple sources and many other from a single source.
However, in the battery case, Tesla was dependent only on Panasonic for battery imports. Battery
makers were struggling to secure the key ingredients used in large power packs- Cobalt and
Lithium.

 Risk Exposure

As per the case, Tesla major concern was also the product design for which there might be
complications in the design and production. Manufacturing the model within the time and limited
or no experience in mass production delivery is an issue [ CITATION Mat16 \l 1033 ]

 Environmental Threat

Disposal of the battery is an environmental headache as they contain heavy metals and other
toxic materials. While cobalt and nickel are recycled, lithium was converted into cement and was
used for construction.

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