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Business Model Design: Lessons Learned from Tesla Motors

Author

Listed:
  • Yurong Chen

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • Yannick Perez

    (UP11 - Université Paris-Sud - Paris 11)

Abstract
Electric vehicle (EV) industry is still in the introduction stage in product life cycle, and dominant design remains unclear. EV companies, both incumbent from the car industry and new comers, have long taken numerous endeavors to promote EV in the niche market by providing innovative products and business models. While most carmakers still take 'business as usual' approach for developing their EV production and offers, Tesla Motors, an EV entrepreneurial firm, stands out by providing disruptive innovation solutions. We review the business model approach in the literature, then classify the innovation dimensions in the EV ecosystem. We study Tesla Motors in terms of: (i) innovation related to the vehicle, (ii) innovation related to the battery (iii) innovation concerning the recharging system, and (iv) innovation toward the EV ecosystem. Lessons for incumbent carmakers for their EV business model design: Tesla Motors 1) holds a product strategy entering from high-end market and moving to mass market, with a high level of innovation adaptation and learning by doing; 2) pays considerable attention to reduce range anxiety by high performance supercharger station network and high capacity battery; 3) shows a very high level of integration of information technology into many aspects of the EV business model, such as advanced in-car services and digital distribute channel; 4) shows a new value configuration which involving in high level of vertical integration towards battery and recharging network. All these lessons of this chapter would be worth the attention of the carmakers if the disruptive choices of Tesla succeed in challenging the dominant design.

Suggested Citation

  • Yurong Chen & Yannick Perez, 2018. "Business Model Design: Lessons Learned from Tesla Motors," Post-Print hal-01655959, HAL.
    • Handle: RePEc:hal:journl:hal-01655959
    Note: View the original document on HAL open archive server: https://hal.science/hal-01655959
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    References listed on IDEAS

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    Cited by:

    1. Carole Donada & Yannick Perez, 2016. "Editorial: Electromobility at the crossroads," Post-Print hal-01424641, HAL.
    2. Michael Naor & Alex Coman & Anat Wiznizer, 2021. "Vertically Integrated Supply Chain of Batteries, Electric Vehicles, and Charging Infrastructure: A Review of Three Milestone Projects from Theory of Constraints Perspective," Sustainability, MDPI, vol. 13(7), pages 1-21, March.
    3. Carole Donada & Yannick Perez, 2016. "Editorial: Electromobility at the crossroads," Post-Print halshs-01980654, HAL.
    4. Huang, Hongfu & Liu, Feng & Zhang, Peng, 2021. "To outsource or not to outsource? Warranty service provision strategies considering competition, costs and reliability," International Journal of Production Economics, Elsevier, vol. 242(C).
    5. Guevara, C. Angelo & Figueroa, Esteban & Munizaga, Marcela A., 2021. "Paving the road for electric vehicles: Lessons from a randomized experiment in an introduction stage market," Transportation Research Part A: Policy and Practice, Elsevier, vol. 153(C), pages 326-340.
    6. Cathay Kuo-Tai Kang & Chieh-Yu Lin & Yi-Hui Ho, 2022. "Key Factors to Increasing Free Cash Flow for Manufacturers Utilizing Lean Production: An AHP-DEMATEL Approach," Information Management and Business Review, AMH International, vol. 14(2), pages 28-45.

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    Keywords

    Tesla Motors; Business Model; Innovation Management; Electric Vehicle;
    All these keywords.

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