Tesla Inc. 2020

Abstract

From a niche-market consisting of customers with a higher buying power, Tesla established its commitment to its vision over the past decade: to increase the adoption rate of electric vehicles in the mass market. With this goal at the core of the company, Tesla aimed to fulfill this feat through the production of the Tesla Model 3 with a target selling price of $35,000. After a series of drawbacks on whether Tesla can deliver on this promise to the mass market, Elon Musk decided on a new strategy: to close the Tesla Stores and move the worldwide sales channel online-only. With this unprecedented move in the automobile industry, what other problems should be considered? What would be the long-term and short-term implications of the store shutdowns? Will the entire shift to e-commerce for Tesla be enough to increase the Model 3’s adoption rate? This case aims to explain the surrounding context behind Musk’s decision in order to provide a detailed ground for analyzing the implications of this strategy on the entire business, possible alternatives to the strategy, and the factors to be considered when changing a crucial part of a company’s value chain.

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