Teslas are everywhere. A ten minute drive anywhere near any American metropolis will almost guarantee a sight of the minimalistic, single-tone, electric vehicle. For some it instills a feeling of disapproval, while others marvel at the elegance of the vehicles. Tesla was the pioneer to electric vehicles, but how exactly did they do it? How did they start off as a company of the aspiring Martin Eberhard and Marc Tarpenning with nothing but a mission and end up stealing the market for a decade and a half? 

The Beginning 

So how does a company go about creating competition with other companies that have existed for decades? Well, for Tesla, it started off with a goal and the correct circumstances. Electric vehicles were just beginning to make headway, but most large manufacturers like GM and Toyota decided that they would rather create hybrid vehicles. In fact, GM went as far as removing as many of their electric vehicles from the road and crushing them. While this wasn’t a terrible decision, the public showed their approval for solely electric vehicles, and thus Tesla was born.

Originally being made up of only three people, Tesla Motors inc. entered the world not only as a vehicle manufacturer, but also one that focused on technology development. They approached the problem of electric vehicles from an entirely new angle. Rather than taking the shell of a vehicle that already existed, they worked from the ground up, creating almost everything themselves. 

Moreover, as proof that they had the ability to pull off their mission successfully, Tesla launched the Roadster in 2011. Priced at roughly $100,000, this vehicle was not meant for the average customer (Reed 2020). However, it showed the world that electric vehicles were possible, and Tesla was the first to do it right.

Figure 1

The original Tesla Roadster

Source: Car and Driver

What exactly did Tesla do? 

There are quite a few things that Tesla did as a company in order to make sure that they had control over the market for as long as possible. Breaking off from the hybrid market wasn’t a simple task, as unique concepts such as these take time and money that’s difficult for small companies to spare. They did this by focusing on three main aspects: The technology, customer appeal, and advertisement.

The Technology

The Tesla roadster was heavily influenced by one vehicle, the tZero. This was also an electric vehicle wi

th impressive performance, but cost $220,000 and had an interior that could only be described as “spartan.” Tesla solved this by creating a sleek design that represented a supercar, in compromise for some weight. Yet, this car wasn’t only looks; it also delivered as much performance as it promised.

Creating 288 horsepower, the roadster was a beast to behold. While the power might seem unimpressive, it’s important to know the difference between standard combustion engines and electric motors. Standard combustion engines take liquid fuel, convert it into linear energy, then rotational energy, then control it using a transmission, and finally use it to move the wheels. Traditional electric vehicles had motors and transmissions in order to account for higher speeds, but that was too much for Tesla. While originally having a two-speed transmission, they replaced it with a single-speed gearbox and gave free upgrades to whoever had the old version (Strieber 2008). This allowed the power to go straight from the battery to the wheels.

This is the reason why electric vehicles are so appealing. They can offer the performance of sports cars while having the efficiency of a daily driver solely because there’s nowhere else for the energy in the vehicle to go. However, the price of this vehicle still excluded a huge majority of the market. A majority of customers need a vehicle that’s reliable, cheap to buy and operate, and can comfortably fit a family. The Tesla roadster couldn’t do any of these and still had the downside of being difficult to charge.

Figure 2

Tesla’s Nevada Gigafactory

Source: Business Insider

Customer Appeal

The final product tends to only be half of a company’s true success. The other half is to understand what customers want and being able to deliver that. Tesla’s methodology of doing so was very effective, and it all started with the creation of the Model S. 

Contrary to the Tesla Roadster, the Model S was designed for the more casual customer that wanted a luxury feel for a non-luxury price. Compared to the roadster, the base model had more power, more range, better suspension, and a larger body. Essentially, everything that a typical customer would want. However, a premium experience could be obtained with certain packages that increased the power of the vehicle and a drag coefficient of 0.24, lower than any other production vehicle on the market at that time. The drag coefficient of a vehicle is essentially the resistance against a vehicle due to air. This allowed the vehicle to have a 0-60 mile per hour time of 5.9 seconds while other cars with a similar make and price range had 0-60 times of nearly 7 seconds (Reed 2020). Since the vehicle had no engine, it was incredibly quiet with the only noise coming from the tires. However, this was still a risky purchase for customers who already had experience with gas powered vehicles. On top of this, these vehicles didn’t operate off normal gas pumps, which made the risk of running out of battery a major reason why the cars were avoided. 

Yet, the novelty of a Tesla was still strong. The vehicle was still impressive for its cost, and the controversy over the introduction of electric vehicles only gave Tesla greater publicity. Tesla continued to release vehicles such as the model 3, model Y, and the Cyber Truck, but that’s not truly what sent Tesla to the moon. 

Figure 3

Tesla’s stock history

Source: Yahoo Finance

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One good look at figure 3 shows the almost sudden spike in the midst of Covid-19. While correlation isn’t causation, this is a scenario where it really is causation. One of the side effects of the Covid pandemic is the increased awareness of environmental damage. This was because the overall reduced pollution made the environment in urban areas much healthier, sparking interest in keeping the change permanent. Tesla responded accordingly, releasing the model Y in this time period, a vehicle that was advertised perfectly for the average family in almost every way. However, the price cut meant that Tesla would be sacrificing a lot of what made a premium vehicle and compensating with the technology and the novelty of an electric car. This worked, though, with the model Y selling a record breaking 1.23 million units in 2023, more than any other vehicle (Reed 2020).

Further, Tesla employed quite a few other marketing tactics with their new Cybertruck. Their major comparison was with the base Ford-F150, which is roughly half the price of the Cybertruck. Not only that, it’s a rear wheel drive vehicle, which means only half the wheels are actually moving the vehicle. On top of that, the Cybertruck is about a thousand pounds heavier than the F-150. So, of course, when put in a towing competition against each other, the Cybertruck won, simply because of simple physics. However in reality, the F-150 can tow just as much as the Cybertruck can but $30,000 cheaper (Allain 2019). 

These advertising tactics that Tesla employs are what allow them to sell vehicles in a way that other companies found difficult to replicate. This combined with their simplistic designs making them feel like the future of vehicles allows them to sweep customers off their feet and into their cabins.

Conclusion

Even as we currently witness Tesla struggling to keep growing at the pace that it was able to, it’s still valuable to admire everything that this company has done right. Creating no more than five different vehicles and entering a market that’s been locked in place for decades is no simple task, and now that Tesla has done so successfully, there’s only room for improvement. It’s companies like Tesla that have the most potential for growth, providing competition for the market and, well, an electrifying ride.

References and Sources

Allain, Rhett. (2019, November 26). Tesla Cybertruck vs. Ford F-150: It’s all about the friction. Wired. https://www.wired.com/story/tesla-cybertruck-vs-a-ford-f-150-its-all-about-friction/ 

“Drive Flashback: The Electric Car That Inspired Two Blokes (Not Elon) to Start Tesla.” Drive, 10 Dec. 2023, www.drive.com.au/caradvice/drive-flashback-the-electric-car-that-inspired-two-blokes-not-elon-to-start-tesla/. 

Reed, Eric. “History of Tesla: Timeline and Facts – Thestreet.” The Street, 5 Oct. 2020, www.thestreet.com/technology/history-of-tesla-15088992. 

Strieber, Andrew. “Tesla Declares Transmission Problems Solved, Finished Roadster Now in Production.” MotorTrend, MotorTrend, 10 Sept. 2008, www.motortrend.com/news/tesla-declares-transmission-problems-solved-finished-roadster-now-in-production-2261/. 

“Tesla, Inc. (TSLA) Stock Price, News, Quote & History.” Yahoo! Finance, Yahoo!, 17 Mar. 2024, finance.yahoo.com/quote/TSLA.