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Tesla Motors Company’s Value Chain Design Research Paper

Tesla Motors Company

Founded in 2003 by a group of engineers in Silicon Valley, Tesla Motors is focused on delivering electric cars that perform better than gasoline-powered cars (Tesla Motors, 2015). Tesla is touted as an extraordinary automaker with a focus on technology and design, as well as energy innovation.

Tesla Motor Products

Tesla delivered the world‘s first premium electric sedan car in 2012. The company’s cars are designed with “instant torque, incredible power, and zero emissions” (Tesla Motors, 2015). These design features are incorporated without compromise. For Tesla, every new generation of its electric cars should be more affordable to assist the firm in achieving its mission of moving the world toward sustainable transport (Tesla Motors, 2015).

Currently, more than 50,000 Tesla Model S vehicles are driven in over 30 countries globally. Given this success in a short period, the company is preparing to introduce Model X with even more advanced features.

Major design features of Tesla Models include all-wheel-drive systems, dual motor, autopilot for side collision avoidance, automatic lane changing, and automatic parallel lane changing. The Models also boast of advanced safety features, touch screens and options for Supercharger with longer life batteries and drive warranty.

The models guarantee absolute Zero Emissions and Zero Compromise.

Configuration of Resources


Tesla Motors has developed a custom-built supply chain to compete with dominant auto companies. Along the supply chain, the company works with other automobile companies such as Toyota and Daimler. This strategy has helped Tesla to control costs of shared components by obtaining them directly from these dealers (Tao, n.d).

The company believes in working with suppliers that are faster and highly agile to ensure that it can manufacture its car faster relative to most automotive manufacturers.

Overall, Tesla has significant control of the supply chain and suppliers by careful consideration of potential suppliers that can deliver components within the shortest time possible. Besides, the suppliers must deliver custom-designed components that meet the unique features of their car models.


It is observed that Tesla has embarked on vertical integration of its factories, or possibly adopt the model used by Apple and Foxconn and supply chain strategy (Wesoff, 2014).

At the same time, the Tesla Gigafactory is designed to meet the unique requirements of the company. For instance, it is built to reduce the cost of the cell rapidly relative to the present state. In addition, by the year 2020, the Gigafactory will manufacture more lithium-ion batteries every year than all batteries manufactured globally in the year 2013 (Wesoff, 2014).

Tesla operates in low plant investment facility at Fremont (Tesla Motors, 2011). In the future, it plans to construct a large-scale factory that would result in economies of scale and cost reduction through innovative manufacturing, low logistic wastes, and processes optimization through co-location and low personnel.


The company does not operate large warehouses like other automobile dealers.

It is currently working on expansion programs across the world with direct sales offices.

At the same time, Tesla recognizes that there is no reason to construct, large unnecessary warehouses or hold excess inventory. Thus, it can manage to minimize wastage.


It has been noted that Tesla does not use distributors or dealerships to sell its cars (Lemkin, 2013). In fact, it is observed that Tesla keeps resisting distribution systems for direct sales (Fung, 2014). One major reason is to keep the company brand intact (Fung, 2014). In most instances, automobile manufacturers are known to cede much control to distributors, particularly with regard to price setting and customer experience. This implies that Tesla senior executives are focused on transforming the entire auto industry through direct sales and innovative products only sold by people who understand them.

Instead, uses multi-channel approach to sale its cars, which include online stores and sales offices. Customers can book for test drives and purchase cars online while the boutique stores are designed to enhance sales and customer engagement.

Technical support centers

Tesla asserts that roadside assistance and tech support are available whenever required. Customers can place direct calls to the company anytime of the day to ask for assistance from support team. Moreover, customers with hearing challenges can contact the company through special contact channels.

Tesla states that the roadside technical support program is designed to deliver quick response, diagnosis and solution to issues facing the Models with low interference with the customers’ programs. In most cases, Tesla can resolve many technical issues over the phone or use simple software reset (Tesla Motors, 2015). If the customer requires the car to be taken to a service center, Tesla has a wide network of towing service providers who are trained to handle the vehicle properly during loading and transportation without any damages.

Engineering design

Tesla leverages the unique benefits of electric powertrain to deliver Zero Emissions and Zero Compromise cars. Besides, the advanced electric powertrain is recognized for improved performance. This innovative strategy sets it apart from gasoline internal combustion engine vehicles, which have multiple movable parts. Tesla only has one moving component, the rotor (Tesla Motors, 2015). Consequently, the car can achieve instantaneous, silent and smooth acceleration within few seconds. Thus, Tesla cars are considered transformative in the automobile engineering. Moreover, engineering approaches have also provided advanced all-wheel drive, autopilot and safety features.

Currently, much emphasis is put on longer-lasting batteries and advanced vehicle designs to enhance customer experience and warranty provided.

Sales office

Generally, Tesla sale offices are designed to engage, excite and inform customers (Tesla Motors, 2011). The storefront is transparent, engaging and inviting. In addition, the stores are located in affluent high-traffic places.

The interior of sales offices is integrated with technologies that inform customers alongside Tesla product specialists who handle customers’ queries. Moreover, vehicle display is open so that customers can sit and test the comfort.

Parking space is convenient and facilitates test drives and charging.

Communication links

Customers have access to the company through online links and direct phone calls any time of the day while customers with hearing challenges can use other contact alternatives provided. Besides, the manual, through My Tesla, contains most information customers would like to know.

The company also benefits internally because of its flat organizational structure, which ensures faster communication and decision-making (Chaika, n.d, p. 8). Thus, delays and red tape are minimized. Moreover, the leadership qualities of the CEO, Elon Musk support unique Tesla culture and drive the vision to manufacture cars for the 21st century.

Tesla has offices across North America, Europe and Asia/Pacific to facilitate communication and customer support. Besides, there are super-fast free charging centers across cities.

Overall, Tesla Motors is currently running a value chain that supports its product development, management control of sales and growth strategies. It is expected that the company will continue to improve its value chain approaches.


Chaika, D. (n.d). Tesla Motor’s strategic Analysis. Web.

Fung, B. (2014). Why Tesla keeps fighting for direct sales when it could just work with dealers. The Washington Post. Web.

Lemkin, J. M. (2013). Why Doesn’t Tesla Use Dealerships To Sell Their Vehicles? Forbes. Web.

Tao, R. (n.d). Tesla created a custom-built supply chain that competes with the best, and so can you. Web.

Tesla Motors. (2011). Tesla Motors Company Overview. Web.

Tesla Motors. (2015). . Web.

Wesoff, E. (2014). Tesla’s Gigafactory Supply Chain Vertical Integration. Supply Chain 247. Web.

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IvyPanda. (2020, June 10). Tesla Motors Company's Value Chain Design. Retrieved from https://ivypanda.com/essays/tesla-motors-companys-value-chain-design/

Work Cited

"Tesla Motors Company's Value Chain Design." IvyPanda, 10 June 2020, ivypanda.com/essays/tesla-motors-companys-value-chain-design/.

1. IvyPanda. "Tesla Motors Company's Value Chain Design." June 10, 2020. https://ivypanda.com/essays/tesla-motors-companys-value-chain-design/.


IvyPanda. "Tesla Motors Company's Value Chain Design." June 10, 2020. https://ivypanda.com/essays/tesla-motors-companys-value-chain-design/.


IvyPanda. 2020. "Tesla Motors Company's Value Chain Design." June 10, 2020. https://ivypanda.com/essays/tesla-motors-companys-value-chain-design/.


IvyPanda. (2020) 'Tesla Motors Company's Value Chain Design'. 10 June.

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