For the last few years, Tesla has been making inroads in a highly competitive automotive industry. Although the company is not traditionally known to be part of the group of large auto manufacturers with high volume sales on year-to-year basis, Tesla is still considered a dominant player in the industry. What the company lacks in the yearly financial statements is compensated by its investments in new technologies and innovations in auto design and manufacturing. Tesla is now at the forefront when it comes to testing and delivering disruptive automotive technologies that can change the way people and observers see automobiles. But for many individuals who are not familiar with the industry, Tesla’s role still remain shady and questionable. If you’re still groping in the dark as to why Tesla is now considered an innovator and tech leader in the industry, read on and find out why (and how Tesla is doing it).
1. Tesla used a direct-selling platform to sell cars to customers
Car manufacturing and selling are profitable business enterprises and run by different sellers and suppliers at different levels. For example, there’s a dealership that works between the consumer and the car manufacturer. If you want to buy a 2014 Toyota Sienna, you’ll need to visit and work with a local Toyota dealership to order your minivan. Tesla takes a different approach in selling its cars- through direct selling platform. There are at least two reasons why Tesla is going this route. One, the company feels that there’s a conflict of interest when a dealer sells both the electric and gasoline-powered vehicles. Two, selling electric cars require a specialized strategy. With these in mind, Tesla adopts a direct selling approach to connect with customers.
2. Commitment to ‘Just in Time’ manufacturing and inventory management
As a way to minimise risks and not waste resources, Tesla adopted the ‘Just in Time’ approach to manufacturing and inventory management. This approach runs in counter to the prevailing practice of other established automakers that manufacture a large volume of vehicles to meet projected demand. The company maintains a limited inventory, and as a result creating a waiting list of customers who will wait for months to get their hands on their electric cars. Tesla says that creating a waiting list has no negative effects on its sales. What is clear about this move is that it helps the company re-direct its resources to other aspects of business operations.
3. Cars appreciate instead of depreciating
This may seem like an incredible claim, but the explanation given by Elon Musk makes one think favourably about this argument. In a statement, Musk explained that the Model S has the largest automotive screen, and that new capabilities and features can be added into the screen and car the way one upgrade the features on the smart phone. The end result is a car that will remain useful for the next few years. This will run in counter to the usual trend in the market where a new car immediately loses its value after a few months.
4. Commitment to quality, promotes retroactive policy adjustments
Other car manufacturers will only extend warranty to up to a limited time or number of miles and often new policies on warranty covers models sold starting from release of memo. This is not the case with Tesla when its majority owner, Elon Musk released a memo extending the warranty coverage to 8 years. And what makes the statement ground-breaking is the fact that the warranty extension has a retroactive effect, thus covering all Model S models produced in the previous years. This move only validates the strong belief of Tesla on its technology and what it can do to change the motoring world.
5. Tesla continuously provides software updates and customer support
As away to show commitment to its customers, products and the electric vehicle industry as a whole, the company continuously informs and educates its customers. The company maintains a Blog and has software updates that automatically inform the driver of Model S about the availability of the latest update. These are over-the-air updates that will be shown on the center display and will provide the driver with an option whether to install the update immediately or at a later time.
6. Offers a three-year buy back guarantee
Tesla is so sure about the quality and resale value of their cars like the Model S that the company is willing to buy back the car after three years of ownership. This move only underlines the dedication and commitment of the company about the quality and reliability of their products. The company will pay for 50 percent of the model’s base price (60 kWh Tesla Model S) and another 43 percent of options fitted in the car. This means that the car owner can get at least $47,000 for the car. This is seen as the best assurance that the car one is buying is reliable.
7. Tesla maintains a ‘personal supply chain’ to design and produce cars
Compared to other automakers, Tesla is not backed by a large organization that can accommodate a large demand for new cars. And due to the kinds of cars produced and marketed in the market, the company requires a different set of suppliers. Tesla understands these limitations thus it forms collaborations with other automakers for supplies, and other specialized suppliers for unique requirements like batteries. The result is a supply chain that is directly picked and managed by Tesla, in line with its unique products and vision.
8. Elon Musk publicly released his patents
While other companies are guarding and protecting their patents against intrusion and use, Musk and Tesla have decided to release the patents to the general public. According to a statement, Musk will not contest the use of his patents by third parties provided that these patents are used in good faith. Musk and his team are counting on the benefits that Tesla will get in case other companies will also use the patents in their business. If all things work according to their plans, the use of their patents and technologies will actually help Tesla grow in the future.
9. Energy efficiency, reliability that works (and covered) for miles and miles!
Tesla cars are purely electric, and are slowly helping the country get away from oil dependence. But more than the promotion of gasoline-free vehicles, the company surprised the industry by offering the ‘Infinite Mile Warranty’ for the Tesla Model S. A warranty is an industry requirement, but an infinite miles warranty is unheard of. According to Elon Musk, extending infinite miles guarantee to Model S is only a manifestation of their belief on the technology and their products.
10. Tesla is currently constructing a large battery factory called Gigafactory
Tesla is redefining the automotive industry on all fronts including the construction of a gigantic battery factory. According to published reports, the factory will occupy roughly 10 million square miles that is equal the combined size of 174 football fields. The state of Nevada has won the bidding to accommodate the gargantuan complex ad it is expected that that more than 3,000 workers are expected to work on the project which is expected to give a boost of employment to the state. And in 2017 when the factory starts to operate, the complex will need the services of more than 6,000 workers to generate at least half a million batteries to sustain the demand until 2020. And according to the company, this is not yet enough, thus there are still plans to construct the same factories in the near future.