Tesla policies. By the turn of the

Tesla is a rising champion in the automotive industry and this paper focuses on analyzing what makes Tesla grow so significant in the short amount of time and its strategy to compete in the very competitive market.Automotive industry is a red ocean filled with strong competitors. Tesla which is a newcomer in the industry and just founded in 2003 entered a niche electric car market which has big potential in the future automotive Industry.In the current electric car industry some of the strong players such as BMW, Toyota, Volkswagen have the upper hand due to the long experience in the automotive industry, compared to them Tesla is still very new.Huge car manufacturer like Volkswagen have also started producing electric car which is E-Golf, an electric version of VW Golf. Volkswagen announced that it is going to double their production capacity in the VW factory in Dresden. Production will gradually increase from 35 to 70 vehicles a day starting in March 2018, the automaker also announced. The plant in Dresden will add a second shift to accommodate this change. (Lambert and Lambert, 2018)According to Voigt, Buliga and Michl (2017), until the year of 1990s, most big players in automotive industry saw no big need to develop electric vehicle technology, largely due to low oil prices and facile environmental policies. By the turn of the millennium, some car manufacturers, for instance GM, made initial attempts to introduce environmentally friendly vehicles, such as the Chevrolet S-10 Electric. Such projects mostly failed, due to a lack of market driving factors.The most significant among them was the lack of good performance batteries and recharging stations. However, some of those projects succeeded. Some electric cars such as the Nissan Altra, and hybrid cars such as the Toyota Prius and the Honda Insight found a good position as the early adopters. The higher sales numbers of hybrid cars compared to purely electric cars were largely due to the higher performance of the hybrid’s internal combustion engine, these were able to reduce the biggest disadvantage of electric vehicles which is its short travel range on one charge.4During a short period of time compared to its competitors, Tesla has done much more than any other car manufacturer has. One of the proofs can be seen from a data obtain by McCarthy from Statista (2017) about Tesla dominated the United States electric vehicle sales share based on unit in the period of January until June 2017.Figure 1. US Electric Vehicle Sales Share; Source: McCarthy, 2017In November 2017, Tesla launched its new generation two roadster. Tesla wanted to create an electric roadster which can beat gasoline sports car. He claimed the base model will do accelerate from 0 to 60 in 1.9 seconds and the top speed will be above 250 miles per hour. The Roadster has a 200kWh battery pack and a 620-mile range every charge, or over 1,000 kilometers. (J. Hawkins and Warren, 2017).2. Tesla’s Secret for its Tremendous Growth in a Short TimeThe Tesla’s Co-Founder, Martin Eberhard noticed that people did not buy hybrid cars such as the Toyota Prius just to save money on gas, but it is because they care about positive environmental impact by using the car, they are shifting to more the eco-friendly lifestyle. Tesla’s founders came to believe that they could begin by addressing this potential in the niche market segment and only subsequently address the mass market through more affordable electric cars. If5any Tesla could have a chance on the market, it first had to reach early adopters, in order to make electric vehicles desirable to the mainstream. Tesla’s business model was therefore primarily triggered by an emergent demand for high-performance electric vehicles. At the same time, the founders envisioned the company’s evolution towards mass-producing cost-effective models. (Voigt, Buliga and Michl, 2017)2.1Tesla’s Growth Driver Analyzed with VRIO FrameworkWhat can be said, however, is that during short period of time compared to its competitor, Tesla has done much more than any other car manufacturer has.Tesla is a promising new company in electric vehicle industry. We can prove it by looking at its uniqueness and its competitive advantages by using the VRIO framework. VRIO is used to assess the situation inside the company and its resources,and which part of it has possible potential for improvement. The tool which is called VRIO framework was originally developed by Barney, J. B. (1991). VRIO framework is one of many frameworks or tools which can be suitable to identify what makes successful growth of the company.Resource TypeValuableRareCostly to ImitateOrganizedCompetitive Advantages?Products (Electric Car & Battery)YesYesYesYesSustainable Competitive AdvantagesProduction PlantsYESYesYesPartiallyPotential Competitive AdvantagesSales Team and ProcedureYESNoNoPartiallyPotential Competitive AdvantagesManagement of TESLAYESYESYesYesSustainable Competitive AdvantagesTable 1: VRIO Framework on Tesla’s Resource; Source: Author’s own illustrationValue: Tesla’s resources are all valuable. Tesla’s production plants can produce high tech electric car and efficient battery. This battery which is produced with the help of Panasonic’s technology are able to change the way of current common industry which still heavily rely with fossil fuels, its clean energy products can become perfect with improved technology and solve energy6demand problems for the entire world. Their sales procedure is sell and produce by order. Due to high demand, they need to increase the production plant capacity.Rarity: Tesla’s high end technology such as battery which is patented and ongoing R and also production plant to develop innovative and improved alternative energy products such as cars and batteries can be considered rare.Imitability: It is costly and difficult to imitate Tesla’s unique technology,manufacturing strength, R&D capabilities and it is not easy to find the CEO which has leadership skill like Elon Musk. Tesla has spent huge amount of resources and effort to reach this current stage which is going to be difficult to copy by other competitor in the automobile industry.Organization: Tesla’s utilization of its battery efficiency and the intangible resources like the corporate culture lead by the CEO are good enough however the production plan and sales team are not fully organized yet, as we all know they have problems with supply and demand of the electric cars. In the future when they are as big as Volkswagen or Toyota, they can be a real giant in this industry and they can mass produce their electric car. Tesla’s strong leadership, organizational culture and practices indeed make the company capable to obtain sustain competitive advantage by exploiting opportunities in the alternative energy segment. To sum up, their products and management culture are sustainable competitive advantages but their production plants and sales team need to be improved.2.2 Tesla’s Business ModelValue Proposition : Tesla offers something more than the competitor can offer which is Luxury electric car with high performance (high speed, long battery life, fast charging, infrastructures such as charging stations distributed in various locations.Key Partner and Activity : Panasonic and Tesla has partnered since the beginning of 2017, the partnership aims to produce new batteries which are slightly larger size in size than the ones it has been using in order to increase efficiency and lowering the cost. (Fehrenbacher, 2017)Resources : Tesla Gigafactory, Tesla with the help of Panasonic planned production rate of 500,000 cars per year by 2018, High Tech Research and development in Silicon Valley.Customer Relationship: Personal Assistance, strong engagement7Customer Segments: Niche market for the electric luxury carChannels and Revenue Streams: Tesla has Online store in the tesla website for the customer in order to purchase the car, accessories or even apparels. Tesla gained the revenue streams for these.2.3 Tesla’s Strategy Observed by Porter’s Generic StrategyPorter’s Generic Strategy describes how a company pursues competitive advantage across its chosen market scope. There are cost leadership (narrow/focus or broad), and differentiation (narrow/focus or broad).Figure. 2 Porter Generic Strategy; Source: Author’s own Illustration (using Porter’s Generic Strategy Canvas created in 1980.)From what is look like, Tesla’s generic competitive strategy is using differentiation strategy (Initially it uses narrow or focus differentiation and now it is starting to move to broad differentiation strategy). Tesla has a big competitive advantage by developing electric cars and also luxury electric cars which differentiate the company from other firms in the automotive industry.Tesla’s electric cars are also has a huge competitive advantage because they are using electric as the energy source which is more environmental friendly technology compared to combustion engine technology in ordinary carsBy using this Porter’s generic strategy to observe Tesla’s mission, we can see that Tesla is able to attract potential customers especially the guys who are8interested in environmentally friendly products. Initially, Tesla used to choose differentiation focus as its generic strategy before, the company focused on the uniqueness of its products which are electric cars and the battery. It also specialized as the early adopters in the mid to luxury car market. As this paper is written, Tesla has grown tremendously and it has potential to reduce production costs. Tesla’s Porter generic competitive strategy will possibly shift to completely broad differentiation. The declining production costs after doing more sales until it passes the breakeven point and get profits. In addition to that point, Tesla’s increasing brand popularity which attracts more investors and buyers will open a new door for the company to produce electric cars in higher quantity and broadly target customers in the automobile market.According to Block and Harrison (2014), the increasing growth of electric cars during the beginning phase will have a lot of challenges upon the cost of vehicle, vehicle mileage between charging, vehicle maintenance, battery life, availability of charging stations, charging duration, infrastructure, standards, and permitting, and also public knowledge and education. These are what Tesla has been developing in a short time and keep on improving.3. ConclusionAs it is written above, Tesla is a rising champion in the automotive industry, specialized in electric car manufacturing. Tesla use broad differentiation as it is strategy and utilize its resourcesAs we can see from the Value which is offered by Tesla, it offers premium quality electric car with high performance (high speed, long battery life, fast charging, infrastructures such as charging stations distributed in various locations. Tesla has strong key resources partners and will obtain more in the future. Some of the challenges which Tesla needs to overcome right now are such as the production capacity to fulfill the demand of the battery and the cars from the market.REFERENCESNieuwenhuis, P. and Wells, P. (2015). The global automotive industry. 1st ed. West Sussex: Wiley, pp.12-13.9Block, D., & Harrison, J., (2014). Electric vehicle transportation center: Report on electric vehicle sales and future projections. Retrieved September 26, 2015, from http://evtc.fsec.ucf.edu/ reports/EVTC-RR-01-14.pdf.Voigt, K., Buliga, O. and Michl, K. (2017). Business model pioneers. 1st ed. Switzerland: Springer International Publishing, pp.11-15.J. Hawkins, A. and Warren, T. (2017). Tesla’s new second-generation Roadster will be the quickest production car ever made. online The Verge. Available at: https://www.theverge.com/2017/11/17/16669024/tesla-roadster-2017-fastest-car-world Accessed 1 Jan. 2018.Lambert, F. and Lambert, F. (2018). VW is doubling its e-Golf electric car production following strong domestic demand. online Electrek. Available at: https://electrek.co/2017/12/27/vw-doubling-e-golf-electric-car-production-strong-demand/ Accessed 30 Dec. 2017.Barney, J. (1991). Firm Resources and Sustained Competitive Advantage. Journal of Management, 17(1), pp.105-111.McCarthy, N. (2017). Infographic: Tesla Dominates The U.S. Electric Vehicle Market. online Statista Infographics. Available at: https://www.statista.com/chart/10684/tesla-dominates-the-us-electric-vehicle-market/ Accessed 19 Dec. 2017.Fehrenbacher, K. (2017). Tesla and Panasonic Kick Off Battery Production at the Gigafactory. online Greentechmedia.com. Available at: https://www.greentechmedia.com/articles/read/tesla-and-panasonic-kick-off-battery-production-at-the-gigafactory#gs.DD9Lm9A Accessed 10 Dec. 2017.