Tesla, Inc. (formerly Tesla Motors, Inc.), is an American automotive and energy company based in Palo Alto, California.[8] The company specializes in electric car manufacturing and, through its SolarCity subsidiary, solar panel manufacturing.[9] It operates multiple production and assembly plants, such as Gigafactory 1[10] near Reno, Nevada, and its main vehicle manufacturing facility at Tesla Factory[11] in Fremont, California. As of 2019, Tesla sells Model S,[12] Model X,[13] and Model 3 cars.[14] It is accepting reservations for the Model Y,[15] Roadster (2020),[16], Cybertruck,[17] and Semi[18] vehicles. Tesla also sells Powerwall,[19] Powerpack,[20] and Megapack[21] batteries, solar panels,[22] solar roof tiles,[23] and some related products.[24]
Tesla was founded in July 2003, by the engineers Martin Eberhard and Marc Tarpenning, under the name of Tesla Motors. Elon Musk was responsible for 98% of the initial funding, and served as Chairman of the Board. He appointed Martin Eberhard to be the first CEO.[25][26] The company's name is a tribute to engineer Nikola Tesla. In its 2004 [27] Series A funding, Tesla Motors was joined by Elon Musk, J. B. Straubel and Ian Wright, all of whom are retroactively allowed to call themselves co-founders of the company. Musk, who formerly served as chairman and is the current chief executive officer, said that he envisioned Tesla Motors as a technology company and independent automaker, aimed at eventually offering electric cars at prices affordable to the average consumer. Tesla Motors shortened its name to Tesla in February 2017.
After 10 years in the market, Tesla ranked as the world's best selling plug-in passenger car manufacturer in 2018, both as a brand and by automotive group, with 245,240 units delivered and a market share of 12% of the plug-in segment sales.[28][29][30] Tesla vehicle sales in the U.S. increased by 280% from 48,000 in 2017 to 182,400 in 2018,[31] and globally were up by 138% from 2017.[32] Tesla has never had a profitable year.[33] However, it has had several profitable quarters starting from the first quarter of 2013 when it posted an $11 million profit.
Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning with 98% of the initial funds being provided by Chairman of the board Elon Musk, who appointed Eberhard to be the first CEO.[25][26] The founders were influenced to start the company after GM recalled all its EV1 electric cars in 2003 and then destroyed them,[34] and seeing the higher efficiency of battery-electric cars as an opportunity to break the usual correlation between high performance and low mileage.[35] Elon Musk led the Series A round of investment in February 2004, joining Tesla's board of directors as its chairman. Tesla's primary goal was to commercialize electric vehicles, starting with a premium sports car aimed at early adopters and then moving into more mainstream vehicles, including sedans and affordable compacts.[36]
Musk took an active role within the company and oversaw Roadster product design at a detailed level.[37] In addition to his daily operational roles, Musk was the controlling investor in Tesla from the first financing round, funding $6.5M of the Series A round of US$7.5 million with personal funds.[38] Musk later led Tesla Motors' Series B, $9M of US$13 million, and co-led the third, $12M of US$40 million round in May 2006. Tesla's third round included investment from prominent entrepreneurs including Google co-founders Sergey Brin & Larry Page, former eBay President Jeff Skoll, Hyatt heir Nick Pritzker and added the VC firms Draper Fisher Jurvetson, Capricorn Management and The Bay Area Equity Fund managed by JPMorgan Chase.[39] The fourth round in May 2007 added another US$45 million and brought the total investments to over US$105 million through private financing.[40]
Tesla has been reporting net losses most quarters for many years. In 3Q2019, Tesla surprised analysts, who had been anticipating a quarterly loss of approximately 40 cents per share, with adjusted earnings of US$1.61 per share, on total quarterly revenue of US$6.3 billion.[41]
Strategy
Tesla's business strategy is to emulate typical technological-product life cycles and initially target affluent buyers, and then move into larger markets at lower price points.[36][42] The battery and electric drivetrain technology for each model would be developed and partially paid for through the sales of earlier models.[36][43] The Roadster was low-volume and priced at US$109,000. Model S and Model X target the broader luxury market. Model 3 and the Model Y are aimed at a higher-volume segment.[44][45] This business strategy is common in the technology industry.[46] According to a Musk blog post, "New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars."[47]
Robotic manufacturing of the Model S at the Tesla Factory in Fremont, California
Tesla's production strategy includes a high degree of vertical integration[48] (80% in 2016[49]), which includes component production and proprietary charging infrastructure. The company operates large factories to capture economies of scale. Tesla builds electric powertrain components for vehicles from other automakers, including the Smart ED2 ForTwo electric drive (the lowest-priced car from Daimler AG), the Toyota RAV4 EV, and Freightliner's Custom Chassis Electric Van. Vertical integration is rare in the automotive industry, where companies typically outsource 80% of components to suppliers,[50] and focus on engine manufacturing and final assembly
Tesla's sales strategy is to sell its vehicles online and in company-owned showrooms rather than through a conventional dealer network. Moving towards an e-commerce strategy, customers are able to customize and order their vehicles online.[54][55]
Tesla's technology strategy focuses on pure-electric propulsion technology, and transferring other approaches from the technology industry to transportation, such as online software updates.[56] Tesla allows its technology patents to be used by anyone in good faith.[57] Licensing agreements include provisions whereby the recipient agrees not to file patent suits against Tesla, or to copy its designs directly.[58] Tesla retained control of its other intellectual property, such as trademarks and trade secrets to prevent direct copying of its technology.[59]
Tesla Human Resources VP Arnnon Geshuri committed to bringing manufacturing jobs "back to California".[60][61] In 2015, Geshuri led a hiring surge about which he said: "In the last 14 months we've had 1.5 million applications from around the world. People want to work here."[62] Geshuri emphasizes hiring veterans, saying "Veterans are a great source of talent for Tesla, and we're going after it."[61][63][64]
Sales
Tesla delivered 367,500 cars in 2019, 50% more than in 2018 and more than triple the number sold in 2017. At the end of 2019, Tesla's global sales since 2012 totaled over 891,000 units.[65][66][32] Year over year Tesla U.S. vehicle sales from 2017 to 2018 increased by 280% from 48,000 to 182,400.[31] As of October 2018, Tesla's sales represented about 20% of the all-electric cars on the world's roads, according to Navigant Research.[67] In July 2017, Tesla said their vehicles had traveled 5 billion miles (8 billion km).[68]
In 2016 BYD Auto was the world's top selling plug-in car manufacturer with 101,183 units sold, followed by Tesla with 76,243.[69][70] However, Tesla revenues ranked first with US$6.35 billion, while BYD notched US$3.88 billion.[71] Also in 2016, Tesla sold US$1 billion worth of cars in China, the world's largest market for electric vehicles, and in October of the following year it reached an agreement with the Chinese government to build a factory in Shanghai.
After ranking third by brand in 2017, behind BYD and BAIC,[73][74] Tesla ranked as the world's best selling plug-in passenger car manufacturer in 2018, both as a brand and by automotive group, with 245,240 units delivered, capturing a market share of 12% of all plug-in cars sold globally in 2018,[28][29][30] followed by BYD Auto with 227,152 plug-in passenger cars delivered.[30][75]
In August of 2015, Tesla launched a revamp of its stores to include interactive displays focused on safety, autopilot, charging network and motors.[76] As of October 2016, Tesla operated about 260 galleries or retail locations in the United States.[77] In June 2016, Tesla opened its first store-within-a-store: a small outpost within the Nordstrom department store at The Grove shopping mall in Los Angeles.[78] In 2017, Tesla opened retail locations in Dubai and South Korea.[79]
Foreseeing Germany as its second market after the U.S. (and the largest in Europe), in 2016 Tesla stated the Dutch (Dienst Wegverkeer) RDW-issued Whole Vehicle Type Approval (WVTA) should be accepted as a legal compliance document, with no need to seek specific national type of approvals in EU member states.[80] In 2017 Tesla had a US$52 million marketing budget and used a referral program and word of mouth to attract buyers
Tesla operates stores and galleries[121][122]—usually located in shopping malls—in many U.S. states. However, customers buy vehicles only from the Tesla website.[123][124][125][126] The stores serve as showrooms that allow people to learn about the company and its vehicles. Some galleries are located in states with restrictive dealer protection laws that prohibit discussing price, financing, and test drives, as well as other restrictions.
Tesla's strategy of direct customer sales and owning stores and service centers is different from the standard dealership model in the global vehicle marketplace. Tesla is the first automaker that sells cars directly to consumers[127]; all others use independently owned dealerships,[128][129] although many provide online configuration and financing.[130][131][132] 48 states have laws that limit or ban manufacturers from selling vehicles directly to consumers,[133][134][135] and although Tesla has no independent dealerships, dealership associations in multiple states have filed lawsuits over Tesla's sales practices.
Countries other than U.S. do not protect dealers. The Federal Trade Commission recommends allowing direct manufacturer sales,[136][137] which analysts believe would save consumers 8% in average vehicle price.[138][139]
In February 2019, Tesla announced that it would shut down the bulk of its stores and begin to sell cars exclusively through the internet.[140] The next month, the company reversed its decision, saying in a government filing that it would only close about half the number of showrooms it had originally intended to.[141]
Used vehicles
Under a buyback program called the Resale Value Guarantee available in 37 U.S. states, a Tesla Model S sold new before July 1, 2016 included the right to return it after three years with reimbursement of 43% to 50% of its initial price. This reimbursement matched the trade-in values of competitive German luxury cars of that age. In addition to maintaining the resale value, Tesla hoped to secure a supply of used cars to refurbish and re-sell with warranty. According to Automotive News, the profit margin on used car sales in the U.S. is about triple that on new cars, and Tesla's direct sales would allow them to capture resale profits.[142] Tesla ended the program in 2016, although they retained the Residual Value Guarantee on leased vehicles.[143][144][needs update]
In May 2015, Tesla started selling refurbished Model S cars in the U.S.[145] and within a month sold 1,600 cars.[146] As of July 2017, over 80 used Model S and Model X cars were for sale, with either a four-year, 50,000-mile warranty[147] or a two-year, 100,000-mile warranty for vehicles above 50,000 miles.[148][149] As of September 2015, similar programs existed in Canada,[150] Austria,[151] Belgium,[152] Denmark,[153] France,[154] Germany,[155] Britain,[156] Netherlands,[157] Norway,[158] Sweden[159] and Switzerland
Tesla was founded in July 2003, by the engineers Martin Eberhard and Marc Tarpenning, under the name of Tesla Motors. Elon Musk was responsible for 98% of the initial funding, and served as Chairman of the Board. He appointed Martin Eberhard to be the first CEO.[25][26] The company's name is a tribute to engineer Nikola Tesla. In its 2004 [27] Series A funding, Tesla Motors was joined by Elon Musk, J. B. Straubel and Ian Wright, all of whom are retroactively allowed to call themselves co-founders of the company. Musk, who formerly served as chairman and is the current chief executive officer, said that he envisioned Tesla Motors as a technology company and independent automaker, aimed at eventually offering electric cars at prices affordable to the average consumer. Tesla Motors shortened its name to Tesla in February 2017.
After 10 years in the market, Tesla ranked as the world's best selling plug-in passenger car manufacturer in 2018, both as a brand and by automotive group, with 245,240 units delivered and a market share of 12% of the plug-in segment sales.[28][29][30] Tesla vehicle sales in the U.S. increased by 280% from 48,000 in 2017 to 182,400 in 2018,[31] and globally were up by 138% from 2017.[32] Tesla has never had a profitable year.[33] However, it has had several profitable quarters starting from the first quarter of 2013 when it posted an $11 million profit.
Tesla Motors was incorporated in July 2003 by Martin Eberhard and Marc Tarpenning with 98% of the initial funds being provided by Chairman of the board Elon Musk, who appointed Eberhard to be the first CEO.[25][26] The founders were influenced to start the company after GM recalled all its EV1 electric cars in 2003 and then destroyed them,[34] and seeing the higher efficiency of battery-electric cars as an opportunity to break the usual correlation between high performance and low mileage.[35] Elon Musk led the Series A round of investment in February 2004, joining Tesla's board of directors as its chairman. Tesla's primary goal was to commercialize electric vehicles, starting with a premium sports car aimed at early adopters and then moving into more mainstream vehicles, including sedans and affordable compacts.[36]
Musk took an active role within the company and oversaw Roadster product design at a detailed level.[37] In addition to his daily operational roles, Musk was the controlling investor in Tesla from the first financing round, funding $6.5M of the Series A round of US$7.5 million with personal funds.[38] Musk later led Tesla Motors' Series B, $9M of US$13 million, and co-led the third, $12M of US$40 million round in May 2006. Tesla's third round included investment from prominent entrepreneurs including Google co-founders Sergey Brin & Larry Page, former eBay President Jeff Skoll, Hyatt heir Nick Pritzker and added the VC firms Draper Fisher Jurvetson, Capricorn Management and The Bay Area Equity Fund managed by JPMorgan Chase.[39] The fourth round in May 2007 added another US$45 million and brought the total investments to over US$105 million through private financing.[40]
Tesla has been reporting net losses most quarters for many years. In 3Q2019, Tesla surprised analysts, who had been anticipating a quarterly loss of approximately 40 cents per share, with adjusted earnings of US$1.61 per share, on total quarterly revenue of US$6.3 billion.[41]
Strategy
Tesla's business strategy is to emulate typical technological-product life cycles and initially target affluent buyers, and then move into larger markets at lower price points.[36][42] The battery and electric drivetrain technology for each model would be developed and partially paid for through the sales of earlier models.[36][43] The Roadster was low-volume and priced at US$109,000. Model S and Model X target the broader luxury market. Model 3 and the Model Y are aimed at a higher-volume segment.[44][45] This business strategy is common in the technology industry.[46] According to a Musk blog post, "New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars."[47]
Robotic manufacturing of the Model S at the Tesla Factory in Fremont, California
Tesla's production strategy includes a high degree of vertical integration[48] (80% in 2016[49]), which includes component production and proprietary charging infrastructure. The company operates large factories to capture economies of scale. Tesla builds electric powertrain components for vehicles from other automakers, including the Smart ED2 ForTwo electric drive (the lowest-priced car from Daimler AG), the Toyota RAV4 EV, and Freightliner's Custom Chassis Electric Van. Vertical integration is rare in the automotive industry, where companies typically outsource 80% of components to suppliers,[50] and focus on engine manufacturing and final assembly
Tesla's sales strategy is to sell its vehicles online and in company-owned showrooms rather than through a conventional dealer network. Moving towards an e-commerce strategy, customers are able to customize and order their vehicles online.[54][55]
Tesla's technology strategy focuses on pure-electric propulsion technology, and transferring other approaches from the technology industry to transportation, such as online software updates.[56] Tesla allows its technology patents to be used by anyone in good faith.[57] Licensing agreements include provisions whereby the recipient agrees not to file patent suits against Tesla, or to copy its designs directly.[58] Tesla retained control of its other intellectual property, such as trademarks and trade secrets to prevent direct copying of its technology.[59]
Tesla Human Resources VP Arnnon Geshuri committed to bringing manufacturing jobs "back to California".[60][61] In 2015, Geshuri led a hiring surge about which he said: "In the last 14 months we've had 1.5 million applications from around the world. People want to work here."[62] Geshuri emphasizes hiring veterans, saying "Veterans are a great source of talent for Tesla, and we're going after it."[61][63][64]
Sales
Tesla delivered 367,500 cars in 2019, 50% more than in 2018 and more than triple the number sold in 2017. At the end of 2019, Tesla's global sales since 2012 totaled over 891,000 units.[65][66][32] Year over year Tesla U.S. vehicle sales from 2017 to 2018 increased by 280% from 48,000 to 182,400.[31] As of October 2018, Tesla's sales represented about 20% of the all-electric cars on the world's roads, according to Navigant Research.[67] In July 2017, Tesla said their vehicles had traveled 5 billion miles (8 billion km).[68]
In 2016 BYD Auto was the world's top selling plug-in car manufacturer with 101,183 units sold, followed by Tesla with 76,243.[69][70] However, Tesla revenues ranked first with US$6.35 billion, while BYD notched US$3.88 billion.[71] Also in 2016, Tesla sold US$1 billion worth of cars in China, the world's largest market for electric vehicles, and in October of the following year it reached an agreement with the Chinese government to build a factory in Shanghai.
After ranking third by brand in 2017, behind BYD and BAIC,[73][74] Tesla ranked as the world's best selling plug-in passenger car manufacturer in 2018, both as a brand and by automotive group, with 245,240 units delivered, capturing a market share of 12% of all plug-in cars sold globally in 2018,[28][29][30] followed by BYD Auto with 227,152 plug-in passenger cars delivered.[30][75]
In August of 2015, Tesla launched a revamp of its stores to include interactive displays focused on safety, autopilot, charging network and motors.[76] As of October 2016, Tesla operated about 260 galleries or retail locations in the United States.[77] In June 2016, Tesla opened its first store-within-a-store: a small outpost within the Nordstrom department store at The Grove shopping mall in Los Angeles.[78] In 2017, Tesla opened retail locations in Dubai and South Korea.[79]
Foreseeing Germany as its second market after the U.S. (and the largest in Europe), in 2016 Tesla stated the Dutch (Dienst Wegverkeer) RDW-issued Whole Vehicle Type Approval (WVTA) should be accepted as a legal compliance document, with no need to seek specific national type of approvals in EU member states.[80] In 2017 Tesla had a US$52 million marketing budget and used a referral program and word of mouth to attract buyers
Tesla operates stores and galleries[121][122]—usually located in shopping malls—in many U.S. states. However, customers buy vehicles only from the Tesla website.[123][124][125][126] The stores serve as showrooms that allow people to learn about the company and its vehicles. Some galleries are located in states with restrictive dealer protection laws that prohibit discussing price, financing, and test drives, as well as other restrictions.
Tesla's strategy of direct customer sales and owning stores and service centers is different from the standard dealership model in the global vehicle marketplace. Tesla is the first automaker that sells cars directly to consumers[127]; all others use independently owned dealerships,[128][129] although many provide online configuration and financing.[130][131][132] 48 states have laws that limit or ban manufacturers from selling vehicles directly to consumers,[133][134][135] and although Tesla has no independent dealerships, dealership associations in multiple states have filed lawsuits over Tesla's sales practices.
Countries other than U.S. do not protect dealers. The Federal Trade Commission recommends allowing direct manufacturer sales,[136][137] which analysts believe would save consumers 8% in average vehicle price.[138][139]
In February 2019, Tesla announced that it would shut down the bulk of its stores and begin to sell cars exclusively through the internet.[140] The next month, the company reversed its decision, saying in a government filing that it would only close about half the number of showrooms it had originally intended to.[141]
Used vehicles
Under a buyback program called the Resale Value Guarantee available in 37 U.S. states, a Tesla Model S sold new before July 1, 2016 included the right to return it after three years with reimbursement of 43% to 50% of its initial price. This reimbursement matched the trade-in values of competitive German luxury cars of that age. In addition to maintaining the resale value, Tesla hoped to secure a supply of used cars to refurbish and re-sell with warranty. According to Automotive News, the profit margin on used car sales in the U.S. is about triple that on new cars, and Tesla's direct sales would allow them to capture resale profits.[142] Tesla ended the program in 2016, although they retained the Residual Value Guarantee on leased vehicles.[143][144][needs update]
In May 2015, Tesla started selling refurbished Model S cars in the U.S.[145] and within a month sold 1,600 cars.[146] As of July 2017, over 80 used Model S and Model X cars were for sale, with either a four-year, 50,000-mile warranty[147] or a two-year, 100,000-mile warranty for vehicles above 50,000 miles.[148][149] As of September 2015, similar programs existed in Canada,[150] Austria,[151] Belgium,[152] Denmark,[153] France,[154] Germany,[155] Britain,[156] Netherlands,[157] Norway,[158] Sweden[159] and Switzerland
