1. Is the Tesla Model S a radical innovation or an incremental innovation? Competence enhancing or destroying, and from whose perspective? Is it a component or an architectural innovation?
The Tesla Model S can be described both as an architectural and component innovation. The architectural innovation used by the Tesla Model S is linked to incremental innovation that is enhanced by technological advancements, continuously building upon the current architecture but continuously reshaping the vehicle to meet consumer requirements by defining new norms and functions (Välikangas, 2018). In the electric motor industry, change in architecture also results in a change in how the various components of the vehicle connect with each other. What differentiates the Tesla Model S from other electric cars is how the company manufactures electric cars while at the same time introducing new software and hardware architecture (Ahmad & Khan, 2019). All Tesla vehicles have more software than the average electric car and they are built around a single software architecture. The Tesla Model S revolutionized the electric motor industry because Tesla capitalized on the existing challenges in the industry, such as the components that limit the performance of an electric car.
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For example, the power capacity in electric cars is known to limit the performance of electric vehicles. Tesla produces their own electric batteries which results in better performance of their electric vehicles (Välikangas, 2018). By being able to control this challenge, Tesla is able to generate profits and define the future of the electric industry. The price of the Tesla Model ranges from $80,000 to over $120,000, however its range is 265 miles more than double that of the Nissan Leaf which is capped at 75 miles (Ahmad & Khan, 2019).
2. What factors do you think influence the rate at which consumers have adopted (or will adopt) the Tesla Model S?
Relative Advantage: This is the extent to which a new innovation or product is considered to be superior to the alternative. Consumers looking to adopt the Tesla Model S may measure its relative advantage in economic terms - is the technology used in the Model S expensive but more powerful? A competitive advantage by any business is achieved by offering consumers an alternative with greater value by either providing improved benefits and services that quantify higher prices or by lowering the prices of the existing commodities.
Trialability: This is the extent to which consumers can try new products or services with ease. Trialability applies to technological and innovative products that must be experienced so that consumers may see their value before purchasing (Ahmad & Khan, 2019). Tesla has made test drives available for its Model S, Model Y, Model 3, the Roadster, and the Cybertruck by scheduling a test drive online before committing to purchase one.
Compatibility: This refers to level compatibility that an innovation has to its consumers as they incorporate it in their lives (Välikangas, 2018) . Prospective adopters need to know whether the Model S will be compatible with their life and lifestyles. If the Model S requires an extensive lifestyle change, it will be hard for consumers to adopt the vehicle in their lives.
Observability: This refers to the extent to which the benefits of using an innovation are observable to probable adopters (Ahmad & Khan, 2019). Not every consumer adopts an innovation immediately (Välikangas, 2018). Most consumers decide to use an innovation after observing its use by early adopters. Potential adopters of the Model S must clearly see the vehicle’s benefits before adopting and purchasing it.
3. Where do you think electric vehicle battery technology is on the technology s curve?
The largest barrier to the largescale adoption of electric vehicles is "range anxiety." Range anxiety occurs when consumers are concerned about their low battery charge levels and their usual charging points are not available (Välikangas, 2018). This initiates the fear of getting stuck somewhere, which adds inconvenience, time, and stress to a journey. Most consumers do not consider buying an electric vehicle because of their driving range and the lack charging infrastructure. Electric battery technology has been given the highest priority in the technology’s curve (Ahmad & Khan, 2019). Today, battery manufacturers are working on advancements in cell technology that are aimed at reducing range anxiety and allow electric vehicles to gain traction substantially.
In addition, electric vehicle technology needs to be cheaper, safer, fast charging, and possess high-energy density for greater range. Today, the growing demand for electric vehicles is growing at unprecedented rates and this growth needs to be augmented with faster charging and improved safety (Ahmad & Khan, 2019). The current state of conventional Li-ion batteries are unable to meet such emerging needs and hence require multi-fold improvements to energy density, faster charging and safety without increasing the cost of battery packs (Välikangas, 2018).
4. Do you think Tesla Motors will be profitable? Why or why not?
Yes, I do think Tesla motors will be profitable. In 2020, Tesla became the world’s most valuable automaker with an estimated worth of $209 billion which is worth more than the combined value of Ford and General Motors (O'Kane, 2020) . Despite closed down its electric vehicle manufacturing plant in Fremont, California because of the coronavirus pandemic, Tesla earned $721 million in the second quarter of 2020 (O'Kane, 2020) . Tesla’s success is largely defined by its growing sales in Europe and China, and the addition of the Model Y to its fleet of electric vehicles that has become its top seller in the United States.
What will make Tesla Motors profitable is the company’s CEO, Elon Musk who creates and uses innovative capital to support his ideas. When Elon Must talks about an idea, he ensures that he materializes it and then later gives it a physical form (Välikangas, 2018). Over the years, Tesla Motors has developed a multi-pronged strategy that has and continues to revolutionize the electric vehicle industry. The company’s core strategy includes redesigning core architecture of electric vehicles and resolving system-level limitations that discourage the adoption of technology (Välikangas, 2018). Tesla has ensured that they possess technologies that other electric vehicle manufacturers do not possess, thus giving their vehicles unique characteristics that they constantly expand, optimize, and improve them.
References
Ahmad, S., & Khan, M. A. (2019). Tesla: Disruptor or Sustaining Innovator. Journal of Case Research , 10 (1), 12–24.
O'Kane, S. (2020). Tesla turns a profit for the fourth quarter in a row — a first for the company . The Verge. Retrieved 8 March 2021, from https://www.theverge.com/2020/7/22/21333954/tesla-q2-earnings-profit-model-y-revenue-elon-musk-covid-19.
Välikangas, L. (2018). Forum on Tesla and the Global Automotive Industry. Management and Organization Review , 14(3), 467-470. https://doi.org/10.1017/mor.2018.30
