Tesla Motors: Disrupting the Auto Industry Case Business & Marketing

Tesla Motors: Disrupting the Auto Industry Case
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Executive Summary
Tesla Motors’ management faces some problems with product design and charging stations. These two problems present a myriad of challenges in the short and long term operations of the company, especially in cost and time management. The first problem is rooted in the company’s use of new architecture and technologies in developing and designing their products, while the second problem stems from the lack of established infrastructure to support electric vehicles. To address these problems, this report recommends prolonging the time frame for development and production and charging a service fee when a customer uses the service stations. The solutions will ensure that enough time is allocated to production operations and that the costs of maintaining and construction charging stations are reduced.
Tesla Motors: Disrupting the Auto Industry Case
Statement of the Problem
One of the major problems facing Tesla relates to the design and development of its cars since the company does not rely on traditional architecture. This could be the root cause of the delays in production as evidenced by the delayed production target of the Model 3 (Matousek, 2018), and the company’s executives have to decide on whether to set longer production periods to avoid such delays. However, this can be termed as a short-term problem because, with time, the production team will become more familiar with the architecture. Another problem relates to the free charging services provided by Tesla. This especially provides a long-term problem regarding sustainability. The company expects its sales to increase in the future and consequently, they will need to build more charging station to meet the customers' demand. Forbes (2015) revealed that much money made by Tesla goes to the creation of a network of charging stations in support of their customers. The company has to make decisions on whether to start charging a fee or not to cover some of the costs required to maintain and build more stations.
Causes of the Problem
The use of new architecture in designing the Tesla models is the root cause of the development and design problem listed above. As noted in the case study, Tesla created a “new architecture,” and as such, it is likely that this has created challenges in developing and designing the models, causing unforeseen delays. Second, the use of free charging services has been caused by the lack of an existing infrastructure to support electric vehicles. As revealed in the case study, customers were concerned that they would be inconvenienced if they run out of charge ...