Tesla Inc.

Date: October 2, 2017
Context: Elon Musk, CEO of Tesla, was observing production data for the Model 3.

Musk promised 1,500 Model 3 vehicles in Q3 2017, increasing to 5,000 per week in Q4 for a total of 65,000 cars.
Actual production: Only 260 Model 3 vehicles built in Q3 2017.
Investor concerns: How to satisfy 500,000 pre-orders for Model 3, amid production challenges predicted during the Model 3 launch event, termed “manufacturing hell.”

In 2017, Tesla valued at $60 billion, a 1,300% appreciation from its IPO in 2010.
Comparison:
- GM produced ~10 million vehicles in 2016.
- Tesla sold 76,000 cars in comparison, less than 1% of GM's output.

Unveiling of “Master Plan, Part Deux” in 2016 outlining a strategic roadmap:
1. Create stunning solar roofs integrated with battery storage.
2. Expand the electric vehicle product line to cover all major segments.
3. Develop self-driving technology that is ten times safer than human driving.
4. Enable personal vehicles to generate income when not in use.

Acquisition aimed at creating a fully integrated sustainable energy company combining energy generation with storage.
Solar roofs:
- Designed to look like ordinary shingles but are cheaper and more durable in the long run.
Powerwall:
- Storage solution allowing homeowners to store solar energy for later use.
Goals of energy independence for consumers and potential income through selling excess energy.

Plans to introduce different electric vehicle models (e.g., trucks, buses).
Self-driving technology aspirations for fully autonomous vehicles capable of generating income through shared rides (Uber-like service).

Origin: Musk left South Africa at age 17 to avoid military service.
Education:
- Queen’s University in Canada.
- Transferred to the University of Pennsylvania, graduated with degrees in economics and physics in 1995.
- Briefly attended Stanford for a PhD, then dropped out to start Zip2 with brother Kimbal Musk.
Financial Success:
- Sold Zip2 for $341 million (1999).
- Co-founded PayPal, sold to eBay in 2002 for $1.5 billion, receiving $175.5 million for his shares.
Entrepreneurial Identity:
- Musk identifies as an engineer and entrepreneur focused on solving broad challenges.
Ventures:
- SpaceX began in 2002, intended for low-cost commercial space launches.
- SpaceX's achievements include resupply missions to the International Space Station and plans for Mars colonization.

Founded in 2003 in San Carlos, California, named after Nikola Tesla.
Early products:
- First product: Roadster using AC current concepts introduced by Nikola Tesla.
Financial issues: Musk discovered unsustainable costs with the original Roadster, which led him to redesign and refocus on manufacturing strategies.

Five-step strategy:
1. Build a sports car.
2. Use profits to build an affordable car.
3. Use profits from that to build even more affordable cars.
4. Provide zero-emission power generation options.
5. Keep these plans under wraps initially (not disclose to the public).
Execution:
- Step 1: Roadster introduction in 2008, costing $110,000.
- By 2012, production of 2,500 Roadsters discontinued to focus on the Model S, a more affordable family sedan.
- Model S garnered significant acclaim, including accolades from Motor Trend and Consumer Reports.

2015: Introduction of Model X, an SUV with innovative door designs. Sales increased but faced challenges due to high prices and technical issues.
2017: Launch of Model 3, priced starting at $35,000, received 375,000 pre-orders.
Ambitions to reach 500,000 total vehicles sold by the end of 2018, while planning for production ramp-up to one million cars per year by 2020.

As of 2017, Tesla’s market cap at ~$60 billion; significant rising trends over early years since IPO.

Tesla continues to face financial losses:
- $900 million in 2015, $675 million in 2017.
- Investors show concern about sustained profitability and cost management.
Share growth in light of major equity purchases from corporations like Tencent, producing further interest in Tesla's long-term vision.

Early equity investments from traditional automotive companies:
- Daimler (~10% stake in Tesla).
- Toyota’s investment provided key manufacturing facilities (NUMMI).
- Partnership with Panasonic for battery technology and solar energy initiatives.
Importance of strategic partnerships for technology and market reach.

2016 saw approximately 18 million vehicle sales, a decrease from early 2000 highs.
Consumer preference shifting toward larger vehicles (SUVs, trucks) due to lower gasoline prices.

GM restructuring post-bankruptcy; focusing on electric vehicle offerings like Chevy Bolt.
Ford’s strategy involves transitioning to electric vehicles while maintaining competitiveness against Tesla.
Importance of global market trends, especially influenced by Chinese demand for electric vehicles.

Achieving production targets for Model 3 currently hindered by supply chain issues.
Need to maintain product quality and manage public expectations amidst production challenges.

Managing demand during expected phase-out of federal tax incentives for electric vehicles.
Addressing competition from established automotive brands pivoting toward electric and hybrid vehicles.

Achieving a balance between ramping up production while ensuring quality and capitalizing on demand for electric vehicles in emerging markets.

Elon Musk's approach mirrors a strategic master plan; taking transformative risks while navigating technological innovation and market dynamics.
Continuous evolution of Tesla’s vision compatible with global trends in sustainability and energy efficiency remains crucial for future success.