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Since its very inception, the brand name Tesla has become synonymous with big-picture ideas and revolutionary solutions. Even before the company’s emergence, the market for fully electric vehicles had been proliferating, thus, creating niches to be filled. Indisputably, what made Tesla stand out among its contenders was the successful employment of the disruptive business model. This type of model can be interpreted as the invention of a technology that is not only innovative but is also more beneficial as opposed to those created to serve the same need before.
Therefore, the said new invention has the potential to put other companies whose profits are tied to the “old” technology at the risk of bankruptcy. Still, history has seen many companies with a similar business model fail miserably after the initial success. This paper will discuss the company’s sustainability and challenges.
Tesla’s Business Model Sustainability
To examine the sustainability of Tesla’s business model, one needs to get to the very core of what the company is actually doing on the market and in the business world. If one assumes that Tesla is nothing more than another car company with somewhat different ideas and solutions, the possible conclusion might be that the company is barely able to stand the competition. It is true that the company’s sales are growing with each coming year.
Yet, the American car market is not only tremendously competitive but also almost monopolized by such industry giants as Ford and Chevrolet. When comparing their revenues to those of Tesla, it is easy to see that the latter is nowhere near starting the electric car revolution. However, it seems more reasonable to compare Tesla to Apple: one should not call them a car and computer companies respectively. On the contrary, in the developmental process, these brands have been moving relentlessly into broader fields. As for Tesla, it boasts endless opportunities to invent more vehicles for its unique batteries.
For all the company’s progress, one should not dismiss the challenges that Tesla is likely to face in the future. In 2018, Musk’s plans to manage finances and avoid fundraising seemed somewhat uncertain. Moreover, the company has yet to demonstrate its ability to produce electric cars at scale to meet the growing demand. The recall of 123,000 Model S sedans due to a technical issue at the beginning of the year has not helped the case. What might have been most detrimental to the company’s reputation is the death of the driver who was behind the wheel of the semi-autonomous Model X. These incidents only show that Tesla’s ambitions might not be matching its technical excellence.
Tesla has not only made a household name for itself but has also been increasing its revenues as the years pass by. Yet, the question arises as to whether Tesla’s business model is sustainable in the long haul and what challenges might manifest themselves in perspective. Tesla’s way of doing business may be viable if one presents the company, not as a car manufacturer but an inventor and popularizer of innovative technology. Nevertheless, some possible issues might compromise and undermine Tesla’s sustainability. The year 2018 is likely to go down in the company’s history as the one full of misfortunes. One may conclude that the company’s most bold ideas might need more time for testing before implementation.