Disrupting the Status Quo: Tesla’s journey to the top of the electric vehicle industry
Dalithemba Mdlongwa, Feature
The history of electric cars dates back to the early 19th century, but it wasn’t until the turn of the 21st century that the idea began to gain traction. However, idea of electric cars was largely suppressed by the powerful oil industry, which had a vested interests in maintaining the status quo. Additionally, prior to Tesla, most electric cars on the market had limited range and performance, and were not seen as a viable alternative to gasoline-powered cars. The technology was not as advanced as Tesla’s, which had a range of more than 300 kilometres and could accelerate from 0 to 96 kmph in under four seconds, which made it more attractive to consumers. Furthermore, the charging infrastructure for electric cars was not as developed as it is now, which made it difficult for consumers to rely on electric cars as their primary mode of transportation. These factors, combined with a lack of support from the government and the auto industry, led to the failure of many early electric cars.
Enter Tesla Motors, The two original founders of Tesla Motors before Elon Musk invested in the company were Martin Eberhard and Marc Tarpenning. Martin Eberhard and Marc Tarpenning, both engineers and entrepreneurs, founded Tesla Motors in 2003 with the goal of proving that electric cars could be better than gasoline-powered cars. They developed the first prototype, the Tesla Roadster, and began production in 2008. Eberhard served as the CEO of the company until 2008 and Tarpenning served as the company’s Vice President of Electrical Engineering. They were instrumental in the early development of the company and laid the foundation for its success. Elon Musk, the CEO of SpaceX and PayPal, became involved with Tesla in 2004, investing $6,5 million of his own money in the company. He eventually became CEO in 2008, just as the company was facing financial difficulties due to the global economic crisis.
Despite the economic downturn, Tesla was able to secure a $465 million loan from the US Department of Energy. This loan, along with an injection of cash from Elon Musk and early investors, helped the company stay afloat and continue its operations.
Repaying the loan: In 2009, Tesla repaid the loan in full, nine years ahead of schedule, making it the first American car company to do so. This helped to position the company as a major player in the auto industry. This, combined with the company’s $11 billion deal with Google, the partnership agreement announced in 2010 between Tesla and Google. The partnership was to allow Google to use Tesla’s technology in its own self-driving cars project. It was reported that Google had invested $11 billion in the partnership. However, the details of the partnership were not disclosed, the partnership has not been announced to have been extended or renewed, and the details of the partnership have not been made public, so it is unclear if the partnership is still active. It is possible that the partnership ended or the deal fell through. That there is no official confirmation of this, helped position Tesla as a major player in the auto industry.
One of the key factors in Tesla’s success has been its charging network. The company has built a network of Supercharger stations across the United States, Europe, and Asia, making it easy for Tesla owners to travel long distances.
Another important aspect of Tesla’s technology is its battery technology. The company has developed a proprietary battery system that is both powerful and efficient, allowing its cars to travel long distances on a single charge.
Tesla’s cars have performed well in safety tests conducted by various organizations, such as the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS). In addition to the safety ratings and features, Tesla has been a pioneer in developing and implementing advanced safety features such as Autopilot, a semi-autonomous driving technology which allows the car to drive itself on the highway and assist the driver with steering, braking, and acceleration. It also includes features like Summon, which allows the driver to remotely move the car in and out of tight parking spaces, and Navigate on Autopilot, which automatically guides the car on and off the highway, navigating interchanges and making lane changes.
Tesla’s Energy division, which includes the Powerwall and Powerpack, offers energy storage solutions for residential and commercial use. The Powerwall is a rechargeable lithium-ion battery that can be used in conjunction with solar panels to store excess energy generated during the day for use during power outages or times of high demand. The Powerpack is a larger-scale energy storage system that can be used to store energy from solar panels, wind turbines, and other sources.
Tesla has been expanding its manufacturing capacity for these products and developing new software and services to help customers manage their energy usage and optimize their solar and battery systems. In 2020, Tesla announced the integration of Powerwall with its vehicles, allowing them to power the house during a power outage and also announced new Virtual Power Plant, a service that allows customers to use their Powerwalls as part of a larger energy storage system that can be used to support the power grid during times of high demand
Tesla’s market cap reached its peak of $1 trillion in 2020, and the company has formed strategic partnerships with other companies such as Panasonic and Daimler AG. The partnership between Tesla and Panasonic began in 2010, when the companies announced a deal for Panasonic to supply Tesla with lithium-ion battery cells for its electric cars. Panasonic also invested in the construction of Tesla’s Gigafactory in Nevada, which is used to produce battery cells and packs for Tesla’s electric cars and energy storage products. The partnership was expanded in 2016 to include the production of solar cells and modules at the Gigafactory.
The partnership between Tesla and Daimler AG, which is a German multinational automotive corporation, began in 2009, when Daimler AG invested in Tesla and purchased a stake in the company. The partnership includes the development and production of electric drivetrains for Daimler AG’s vehicles, as well as the supply of battery systems and components. In 2014, Daimler AG also purchased a number of Tesla’s electric powertrains for use in its own electric and hybrid vehicles. Both partnerships were instrumental in the development and success of Tesla’s electric vehicles and energy storage products, as they provided access to Panasonic’s battery technology and Daimler AG’s expertise in the automotive industry.
2020 Tesla Market Cap Peaks at just over 1 Trillion USD making it more valuable than all Car makers combined!
There were several factors that contributed to the rise in Tesla’s market capitalisation from the time it went public in 2010 to its peak in 2020. Some of the main factors include:
Strong demand for electric cars: As more consumers became aware of the environmental benefits of electric cars and the technology improved, demand for Tesla’s electric cars increased, which helped drive the company’s growth.Innovative technology: Tesla’s cars are known for their advanced technology, including long-range battery capabilities, fast charging, and advanced safety features. These technologies have helped position Tesla as a leader in the electric car market.
Expansion into new markets: As Tesla’s sales grew, the company expanded into new markets around the world, including Europe, China, and Asia. This helped to diversify the company’s revenue streams and reduce its dependence on any one market. Energy storage and solar products: Tesla’s energy storage and solar products, such as the Powerwall and Solar Roof, have been well received by consumers, which helped to diversify the company’s revenue streams and increase its market capitalization.
Leadership and vision of Elon Musk: The leadership and vision of Tesla’s CEO, Elon Musk, has been a key factor in the company’s success. Musk has been vocal about his vision for Tesla to accelerate the world’s transition to sustainable energy, and his ability to execute on that vision has helped to build investor confidence in the company.
Strategic partnerships: Tesla has formed strategic partnerships with other companies, such as Panasonic and Daimler AG, which have helped to strengthen the company’s technology and manufacturing capabilities, as well as increase its market capitalization.
All these factors combined helped Tesla to become one of the most valuable companies in the world, reaching a peak of 1 trillion USD market capitalisation in 2020.
Tesla was able to overcome the first mover advantage phenomenon and become a leader in the electric vehicle industry by focusing on advanced technology, innovation, strong branding and marketing, strategic partnerships, and visionary leadership. The company’s cars are known for their long-range battery capabilities, fast charging, and advanced safety features, which helped to position it as a leader in the market. The company also differentiated itself by innovating in areas such as electric powertrain technology, battery technology, and charging infrastructure.
Through strong branding and marketing, they have been able to attract customers and investors and raise awareness about electric cars. By forming strategic partnerships with other companies such as Panasonic and Daimler AG, the company strengthened its technology and manufacturing capabilities and increased its market capitalisation. The leadership and vision of CEO Elon Musk, who is vocal about his vision for Tesla to accelerate the world’s transition to sustainable energy, helped to build investor confidence in the company.
This experience shows that being a first mover in an industry does not guarantee success, but by focusing on technology, innovation, branding and strategic partnerships and strong leadership, a company can overcome the first mover advantage phenomenon.