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

Abstract

Electric vehicle (EV) industry is still in the introduction stage in product life cycle, and its dominant design is still dormant. EV manufacturing companies have long taken numerous endeavors to promote EV in the niche markets by providing innovative business models. While most OEMs 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 choices and solutions. The authors review the business model approach in literature, then classify the innovation dimensions in EV industry. We study on Tesla Motors accordingly: (i) innovation related to the vehicle, (ii) innovation related to the battery (iii) innovation concerning the infrastructure system and (iv) innovation toward value configuration. We extract four main lessons for classical OEMs: 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 a considerable attention to reduce range anxiety by high performance supercharger station network and high capacity battery; 3) shows a high integration of information technology into many aspects of EV business model, such as advanced in-car services, and digital distribute channel; 4) shows a new value configuration which involve a massive use of vertical integration from EVs manufacturing towards battery software, recharging network and battery manufacturing. All these lessons would worth the attention of the OEMs if the Tesla disruptive choices succeed in challenging the dominant design.

Suggested Citation

  • Yurong Chen & Yannick Perez, 2015. "Business Model Design: Lessons Learned from Tesla Motors," Post-Print hal-01424723, HAL.
    • Handle: RePEc:hal:journl:hal-01424723
    Note: View the original document on HAL open archive server: https://hal.science/hal-01424723
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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. 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.
    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. 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.

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