Tesla Business Model

tesla logo

Tesla, Inc. is an American automotive, lifestyle, and energy company. It was founded in July 2003. In Jan 2020, Tesla’s market capitalization reached $107 billion, and it became the world’s second most valued company after Toyota.

History and Timeline of Tesla

It was founded by engineers Martin Eberhard and Marc Tarpenning as Tesla Motors. The name was kept in the honour of electrical engineer, Nikola Tesla. Elon Musk also served as the employee of the company. He was later made the co-founder of Tesla Musk.  He envisioned Tesla as the independent automaker and designer of electric vehicles. the chart represents the timeline of Tesla.

timeline of tesla

Business Model of Tesla

The business model of a company refers to unique strategies it uses to gain a larger market space and commercial value. The business model of Tesla can be represented below.

business model tesla

Let us discuss the business model of tesla in detail.

Value Proposition

Tesla manufactures electric vehicles (EV) models that have high performance and high energy efficiency. Some models are:

value tesla

Along with electric vehicles, Tesla also sells  solar energy systems, like solar panels to commercial customers

Customer Segmentation

Customer segmentation refers to different customers a company caters to. Tesla manufactures hardware for customers of all segments. The different products according to customer segmentation can be represented below.

customer segments

Key Partners of Tesla

In 2010, Tesla, Inc. signed joined hands with Toyota. In 2014, Tesla partnered with Japan to improve battery designs. Other partners of Tesla are battery manufactures and component suppliers, like AGC Automotive, Brembo, Fisher Dynamics, etc.  Dana Cooling Technology helps Tesla in building cooling system design. Panasonic supplies lithium-ion batteries to Tesla.

Key Activities of Tesla

Tesla invests a lot in research and development. Tesla also invests in unique designs of hardware systems, eg long-lasting battery life. One of the key activities of tesla is software development. Let us understand the activities of Tesla through this chart.

It constantly develops new software after seeing customer feedback and experience. Tesla also builds charging stations, eg MOAT.

Customer Relationship

Tesla interacts with its customers through company-owned stores and self-service website. Tesla ensures it gives its customers unique shopping customers. As Tesla understands the value and quality, so it provides loyal customers. As Tesla focuses on innovation and research, so it has built a reputation for itself.

Key Resources of Tesla

Key resources of Tesla include its big data analysis. Other than that, Elon Musk is one of the key resources of the company.

The charging and induction system of Tesla is also a key component.

Key Channels of Tesla

Tesla has its own distribution channel. There are over 200 Tesla stores all over the world. In 2019, Tesla’s deliveries reached between 367,000 and 368,000 units. Because of its distribution channel, Tesla became the leading producer of electric vehicles this year.

Cost Structure of Tesla

Tesla spends the most on manufacturing and labour. Other than that, tesla also spends on research and development. More concise representation of cost structure of tesla can be seen from the chart below.

cost structure tesla

Marketing strategy of Tesla

Tesla also gives importance to sales and marketing efforts. It markets its products through company-owned stores and other galleries.

marketing strategy of Tesla

Competitive Strategy of Tesla

Tesla has a huge competitive margin in the field of electric vehicles. It is because it builds software on unique hardware. This results in less depreciation and more efficiency. Other than that, Tesla also invests in simplifying the customer experience.

competitive strategy of tesla


Tesla will turn 17 in July 2020. In this period it has successfully managed to create a market for electric vehicles.  Tesla is also ranked as the world’s best-selling plug-in and battery electric passenger car manufacturer in 2019.

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