The Rise of Tesla, Aditya Paturi, 7th grade, MI

The car market, a market that has been dominated by companies such as Ford and GM, had admitted a new company. Tesla Motor Inc. In the past sixteen years since Tesla was founded, it has come a long way, selling unique luxury vehicles. While Tesla is not at the top of the automotive industry right now it is set to be among the top. While Tesla is considered a new innovation, it has a long history.

The Birth of Tesla

Two men, Martin Eberhard and Marc Tarpenning, after making almost 200 million by selling their e-book reading services in the heart of the dot-com bubble, saw GM's EV1's fail. The duo decided to reduce the world's reliance on Middle Eastern oil. To do this, they needed to design cars that don't use oil. After looking into multiple ideas they decided that electric cars were the best ideas. In 2004, Elon Musk became the lead investor of Tesla, joined the board of directors as their chairman, and took an operational role. In the same year, Jb Straubel became the CTO of tesla and Ian Wright became the first employee.

Business Strategy

Tesla's strategy was to first build a high-performance sports car. One reason was that sports cars have high-profit margins, also, high-end buyers are less price-sensitive. But the main reason was to prove that people did not have to give up comfort to use electric cars. So with that in mind, they started to design the Roadster, their first car. Designing a regular car is hard, much less an electric car that is the first of its kind. So to lessen the burden, Tesla made a contract with a British sports car company to use one of their designs as a base. Still, starting an automobile business is hard and Tesla soon fell into hardships.

Some Heading

One of the problems was that Tesla had to out-source hundreds of parts to make one car. They had delays in the supply chain and the costs were spiraling out of control due to the customization of many parts. Also due to the company having an elegance phenomenon, they kept changing the design of the car from the design they bought skyrocketing expenses. While all of this is going on new CEOs were coming and going. After a while, Elon Musk becomes the CEO as he was one of the biggest financial contenders.

The Launch of the Roadster

While this was going on the Roadster had already been launched at a star-studded party in Santa Monica with 350 Hollywood actors and actresses along with the press. Tesla also got displayed on the front pages of The New York Times, Fortune, Wired, and CNET. While originally planned to be launched in 2007 the various problems that were previously disclosed, the release date was pushed to February 2008.

Going Public

On June 29, 2010, Tesla had its IPO, becoming the first American car production company since Ford to go public. Tesla raises 226 million dollars in its debut and is in position to take a huge leap as it had multiple breakthroughs. Tesla had narrowly escaped bankruptcy, won its lawsuit against Martin Eberhard, and got a factory in Fremont, CA. Tesla, the original plan was to start out selling high margin sports cars which they accomplished. Now they had to go to the next step; build an affordable car for the masses. In 2010, with a market cap of 2.3 billion dollars, Tesla started to work towards its goal to build an affordable car from scratch. The next year, Tesla reaches a market cap of 3.1 billion and decides to discontinue the Roadster.

Moving On

Tesla decides to start working on the Model X and Model S instead. The Model S was planned to be released in June of 2012, but there was a problem. Lithium-Ion batteries were just too expensive to mass-produce. The solution that was implemented was using a GIGAFactory. 2014 was used to release semi-autonomous driving to the model S, set up 221 supercharges and open source all the company's patents. The Model X was finally released in 2015. Tesla also announced its end goal of Integrating energy generation and storage at homes. By 2016, with a Market Cap of 40.9 billion, Tesla launched its Model 3. Tesla also announced that it is taking over Solar City, one of Elon Musk' Companies. With this Tesla has truly become a full-fledged Company.

Thank You