{"id":10618,"date":"2016-11-04T01:37:09","date_gmt":"2016-11-04T05:37:09","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/tesla-accelerating-the-transition-to-sustainable-transportation-for-the-masses\/"},"modified":"2016-11-04T01:37:09","modified_gmt":"2016-11-04T05:37:09","slug":"tesla-accelerating-the-transition-to-sustainable-transportation-for-the-masses","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/tesla-accelerating-the-transition-to-sustainable-transportation-for-the-masses\/","title":{"rendered":"TESLA: Accelerating the Transition to Sustainable Transportation for the Masses"},"content":{"rendered":"

Ten years ago, on August 2, 2006, Elon Musk posted his first-ever blog post on Tesla\u2019s website, titled \u201cThe Secret Tesla Motors Master Plan (just between you and me)<\/em>[1].\u201d The plan was a trilogy, based on the premise that in a rapidly changing world of climate change, it is incredibly important to accelerate the transition to sustainable transportation. His master plan was simple:<\/p>\n

    \n
  1. Start small. As a small company with limited resources, create a low-volume, expensive electric car. Show the world you can make a great, high-performance electric car that surpasses all other gas-powered vehicles on the road.<\/li>\n
  2. Use that money to create a mid-volume, less high-price car.<\/li>\n
  3. Use that money to drive down to the mass market with a high-volume, low-price car.<\/li>\n<\/ol>\n

    Unlike most other companies that are reacting or adapting to climate change\u2019s physical manifestations and \/ or regulation, Tesla\u2019s business model is both benefitting from and proactively addressing climate change by creating a step-function change in the way the world moves, from gasoline-powered vehicles to electric vehicles for the masses. According to a study by NASA\u2019s Goddard Institute for Space Studies, road transportation will be the greatest contributor to global warming for the next 50 years. This is due to the unique portfolio of greenhouse gas emissions emitted by motor vehicles that have a faster effect on warming the planet relative to timescales of other gases [2].<\/p>\n

    Tesla in Final Stages of Completion of Master Plan<\/strong><\/p>\n

    With strikingly unbelievable accuracy, Tesla has almost achieved Elon\u2019s master plan. Here\u2019s how the trilogy has played out:<\/p>\n

      \n
    1. In 2008, Tesla launched the Roadster, producing 500 units per year and selling each at a price of $100k. Though a low-volume car, the Roadster set a new standard for electric cars and had huge ripple effects in the auto industry \u2013 the Roadster is credited for the reason GM began its own electric vehicle program, the Chevy Bolt, and Nissan began its LEAF program [3].<\/li>\n
    2. In 2012, Tesla launched the Model S. At $70k a piece, the sedan fits 7 people and was rated by Consumer Reports as performing better than any other car ever has [4]. Tesla later extended the line to Model X, an SUV-format.<\/li>\n
    3. Revenue from the Model S and X were used to fund the next generation mass market, affordable car \u2013 in April 2016, Tesla announced its Model 3, a $35k car that is expected to be on the market by the end of 2017 [5].<\/li>\n<\/ol>\n

      Beyond the release of the Model 3 generation, Tesla is taking other steps to accelerate the advent of a sustainable energy world with the integration of solar energy generation into Tesla (believe it or not, this was also part of the original master plan that has been on Tesla\u2019s website for 10 years). In June 2016, Tesla made an offer to acquire SolarCity, with the aim to bundling Tesla batteries with rooftop solar panels that would replace traditional roofs [6]. Under the merger, Tesla would manufacture and install solar panels that look better than traditional rooftops and are cheaper than traditional roof installations plus electric utility bills. The idea is that you can generate solar power from your roof, store it in a Tesla Powerwall battery, and use that electricity to power your home and car, vertically integrating Tesla\u2019s supply chain by owning the energy generation source and representing a trifecta of three revolutionary clean-energy home products. Keep in mind, when electricity itself comes from renewable sources, all-electric vehicles produce zero emissions to drive.<\/p>\n

      \"pic\"<\/a><\/p>\n

      Watch Video Here<\/a><\/p>\n

      What Else Can Tesla Do? <\/strong><\/p>\n

      Looking forward, Tesla needs to expand its retail distribution channel strategy to become truly mass market. Currently, Tesla has 215 retail locations globally located in high-foot traffic, high-visibility locations, through which it sells direct-to-consumer [7]. Through these locations, Tesla targets those consumers who have not yet made up their mind about car purchasing behavior and educates them about the all-electric driving experience. In my opinion, because the Model 3 will be the first time Tesla is truly competing with mass automobile distributors, Tesla needs to greatly expand its number of retail stores worldwide to clear consumer misconceptions and spur desire for the Model 3.<\/p>\n

      Second, Tesla should pursue an aggressive strategic partnership strategy to increase its Supercharger stations worldwide to support the Model 3. Superchargers charge the car for free within minutes, relative to destination charging that require hours. Tesla does the set-up and covers the cost of providing electricity [8]. While Tesla wants to control the product, it should instead sell charging stations to governmental authorities and other strategic partners (real-estate and infrastructure developers) to shift the cost of electrifying road transport and increase the pace of installing stations. These would be enabling steps for the Model 3 to become mass market in the near-term.<\/p>\n

      Word Count: 798<\/p>\n

       <\/p>\n

      Sources:<\/strong><\/p>\n

      [1] Elon Musk, \u201cThe Secret Tesla Motors Master Plan (just between you and me),\u201d Tesla Motors<\/em> (blog), August 2, 2006, https:\/\/www.tesla.com\/blog\/secret-tesla-motors-master-plan-just-between-you-and-me, accessed November 2016.<\/p>\n

      [2] Adam Voiland, \u201cRoad Transportation Emerges as Key Driver of Warming,\u201d NASA News & Feature Releases, February 18, 2010, http:\/\/www.giss.nasa.gov\/research\/news\/20100218a\/, accessed November 2016.<\/p>\n

      [3] Phil Plait, \u201cTesla, Elon Musk, and Climate Change,\u201d Slate<\/em> (blog), April 2, 2016, http:\/\/www.slate.com\/blogs\/bad_astronomy\/2016\/04\/02\/elon_musk_reveals_new_electric_car_calling_climate_change_his_motivation.html, accessed November 2016.<\/p>\n

      [4] Mark Rechtin, \u201cTesla Model S P85D Earns Top Road Test Score,\u201d Consumer Reports, October 20, 2015, http:\/\/www.consumerreports.org\/cro\/cars\/tesla-model-s-p85d-earns-top-road-test-score, accessed November 2016.<\/p>\n

      [5] Phil Plait, \u201cTesla, Elon Musk, and Climate Change,\u201d Slate<\/em> (blog), April 2, 2016, http:\/\/www.slate.com\/blogs\/bad_astronomy\/2016\/04\/02\/elon_musk_reveals_new_electric_car_calling_climate_change_his_motivation.html, accessed November 2016.<\/p>\n

      [6] Mike Ramsey and Cassandra Sweet, \u201cTesla and SolarCity Agree to $2.6 Billion Deal,\u201d Wall Street Journal, August 1, 2016, http:\/\/www.wsj.com\/articles\/tesla-and-solarcity-agree-to-2-6-billion-merger-deal-1470050724, accessed November 2016.<\/p>\n

      [7] Phil Plait, \u201cTesla, Elon Musk, and Climate Change,\u201d Slate<\/em> (blog), April 2, 2016, http:\/\/www.slate.com\/blogs\/bad_astronomy\/2016\/04\/02\/elon_musk_reveals_new_electric_car_calling_climate_change_his_motivation.html, accessed November 2016.<\/p>\n

      [8] Darrell Etherington, \u201cInside Tesla\u2019s Supercharger Partner Program: The Costs And Commitments Of Electrifying Road Transport,\u201d Tech Crunch<\/em> (blog), July 26, 2013, https:\/\/techcrunch.com\/2013\/07\/26\/inside-teslas-supercharger-partner-program-the-costs-and-commitments-of-electrifying-road-transport\/, accessed November 2016.<\/p>\n

       <\/p>\n

      Exhibit Sources:<\/strong><\/p>\n

      Cover Image: Tesla, https:\/\/www.tesla.com\/, accessed November 2016.<\/p>\n

      Image 1: Tesla, https:\/\/www.tesla.com\/, accessed November 2016.<\/p>\n

      Video 1: Tesla, \u201cTesla’s Sexy Solar, Massive Batteries, and Fast Cars.,\u201d Bloomberg, published October 31, 2016, https:\/\/www.bloomberg.com\/news\/articles\/2016-10-31\/no-one-saw-tesla-s-solar-roof-coming, accessed November 2016.<\/p>\n","protected":false},"excerpt":{"rendered":"

      Can Tesla fight the impact of climate change by achieving its mission of a mass market, affordable car with the Model 3?<\/p>\n","protected":false},"author":1937,"featured_media":10704,"comment_status":"open","ping_status":"closed","template":"","categories":[1218,129,1246,1247,1617,1248,1238,128],"class_list":["post-10618","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-climate-change","category-electric-car","category-model-3","category-model-s","category-model-x","category-roadster","category-solarcity","category-tesla"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nTESLA: Accelerating the Transition to Sustainable Transportation for the Masses - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/tesla-accelerating-the-transition-to-sustainable-transportation-for-the-masses\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"TESLA: Accelerating the Transition to Sustainable Transportation for the Masses - 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