Tesla and the open vs. closed strategic dilemma
Tesla CEO Elon Musk announced the kind of thing at his company’s annual general shareholders’ meeting on Friday that makes the job of academics like me who study the electric carmaker’s strategy all the more interesting: the company is considering freeing its patents to help speed up electric car development.
Tesla, which has gone further than any other company in developing electric cars, and has been dubbed the new Apple by some, and there are even rumors that the two companies had been in talks, is showing a notable capacity for strategy execution that not only makes it the only company in the industry aged less than a century, but that has become profitable in record time. This has been helped considerably by an intelligent communication strategy that avoids traditional advertising, and instead takes a disruptive approach that makes it the object of constant comment. Issues such as developing a disintermediated distribution strategy without dealers, which has led to sales in some states being banned due to industry lobbies, have created major controversies from which the company has benefitted as common sense triumphs.
The strong increase in the company’s valuation has allowed it to develop an ambitious plan to create a huge plant dedicated to battery production, a key technology in the industry. At the same time, Tesla could be planning to free up several of its patents to try to boost growth in the electric car market, which it feels none of the big carmakers have yet to take seriously. This aggressive strategy aims to achieve faster market growth, which would bring prices down progressively, while simultaneously implementing its “secret” master plan: using the products from each model to be able to launch a cheaper and more accessible car.
The company has become one of the most popular topics for case studies at business schools. If you’re interested in knowing more about the company, below are a few of the links that I provided my students with in a session dedicated to Tesla, and which, following my usual practice were what I call “non-case case studies”:
- “Tesla Motors: how it all began“, Tesla Rumors
- “Even without accounting gimmicks, electric-car maker Tesla is now profitable“, MIT Tech Review
- “Tesla Model S outsells Volt, Leaf, but Musk has other priorities“,LA Times
- “Tesla sales beating Mercedes, BMW and Audi“, CNN Money
- “The secret Tesla Motors master plan (just between you and me)“, Tesla blog
- “Fully charged“, The Economist
- “What goes into a Tesla Model S battery — and what it may cost“, Green Car Reports
- “Does Tesla Motors have a competitive advantage?“, The Motley Fool
- “Tesla Motors plans to debut cheaper car in early 2015“, LA Times
