Semester February

Session 2020/2021

AFT2023 Innovation Management in Entrepreneurship

Innovation Case Study

TESLA: ELECTRIC VEHICLE

LECTURER NAME: PUAN RAJA ROSNAH BINTI RAJA DAUD

No. Student Name Matrix No.

1. AFIQ BIN ROZNAN F19B0004

2. DARHEMAN BIN DARIAL F19A0028

3. DEVVEN RAO A/L GUNASEGARAN F19A0030

4. BAVANI VISHA A/P DORAISAMY F19A0021

5. ISNAIRRAH NAJIAH BINTI IBRAHIM F19B0247

6. NISALINI NAIR A/P DEVENDRAN NAIR F19A0109

7. RAJA ZAFRAN AIMAN BIN RAJA SALLEH F19A0176

8. SYAWAL BIN MD ZAIN F19A0193

9. JACQUINNA MONALYSA BINTI EDWARD MILLOS F19A0049

10. MUHAMAD FAIZ BIN ARIFFIN F19B0075

 TABLE OF CONTENT

NO. CONTENT PAGES

1. Introduction Pg. 1
2. Section 1: About the Firm
-Introduction about the firm.
-The firm’s business model. Pg. 2-4
-The mission/vision statements.
-The product/service/process innovation.
3. Section 2: The Idea
-The idea for innovation came from
-The form of innovation the firm has Pg. 5-7
-How the opportunity for innovation identified
-The type of innovation involved in Tesla inc.
4. Section 3: The Technology
-The technology used in the innovation
-The innovation theories Pg. 8-10
-The technology advances on this innovation
-The benefits to use the technology
5. Section 4: The People
-The innovators in Tesla inc
-The source the innovation came Pg. 11-14
-Who else have involved (directly and indirectly) in the innovation?
-How was the stakeholder buy-in acquired?
6. Section 5: The Process
-The process of developing the idea into the innovation
-The main activities in the process of the innovation Pg. 15-18
-The tools/techniques were used in the process
-What alternative models of the innovation process
7. conclusion Pg. 19
8. References Pg. 20-22
Introduction

This case study follows Tesla inc, an electrical car company that located in Palo Alto,
California is an American electric vehicle and clean energy company. Tesla was founded on
July 1, 2003, by Martin Eberhard and Marc Tarpenning in San Carlos, California. At this time
known as Tesla Motors, the company's name is a tribute to inventor and electrical engineer
Nikola Tesla. The case study analyses the company the success by examining their firm by
divided by five section the first one is the firm, which is the business model, mission and vision
statement, and the product innovation. Second section is the idea mainly finding out where
the idea came from. Furthermore, identify the form of innovation Tesla inc has, the opportunity
of the innovation and the type of innovation. The case study also includes analysis of
technology implementation and theories Tesla inc used we called this section the technology.
Which is the technology used in the innovation, the theories, the technological advances, and
the benefits of the implementation for their business and consumer. The study continued by
researching the people responsible for the company’s success, this includes the innovators
responsible, who involved directly or indirectly in the innovation and how the stakeholders buy-
in acquired. Lastly the study moves into section five, the important part of the study called the
process, this part where mainly we explain the process Tesla in used to develop their idea,
the main activities they used, the tools and techniques, and the possible alternative models
they used for their innovation process.

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SECTION 1: About the Firm

Introduction About the Firm - Tesla, Inc.

Tesla, Inc. is an electric vehicle and renewable energy company based in Palo Alto,
California. Martin Eberhard and Marc Tarpenning created Tesla on July 1, 2003, in San Carlos,
California. Tesla Motors was the company's name at the time, and it was a tribute to inventor
and electrical engineer Nikola Tesla. Tesla's mission, according to Elon Musk, is to help drive
the transition to sustainable transportation and electricity, which can be accessed by electric
vehicles and solar power. Tesla's first vehicle, the Roadster, was introduced in 2009, and was
followed by the Model S sedan in 2012, the Model X SUV in 2015, the Model 3 sedan in 2017,
and the Model Y crossover in 2020.With more than 800,000 units sold through December
2020, the Model 3 is the world's best-selling plug-in electric vehicle. In 2020, Tesla sold
499,550 vehicles worldwide, a 35.8% improvement over the previous year. By 2020, the
company would have produced over one million electric vehicles.

The firm’s Business Model

Business model is a company’s scheme of making a good profit and it helps a company
to analyse the type of products or services to sell, determine the target market and predictable
expenses. Tesla is well known for manufacturing and selling world’s excellent plug-in cars.
Besides electric vehicles, Tesla too manufacture solar panels for residential and commercial
purpose which is also an important segment of the company’s business model. Tesla’s
business models are considered from designing and manufacturing electric cars and solar
panels. The unique strategies used by Tesla to gain a larger market space and commercial
value are value propositions, good customer relationship, key partners, key activities, key
resources, channels, cost structure and revenue streams.

Research and development (R&D) play an important role in Tesla’s business model.
The aim of the research and development programme in Tesla is to achieve its target which
is to create more innovative engines for the electric car the company produced. Through this
R&D programme, the company managed to achieve significant achievement in the design of
its engine for Tesla electric cars.

Business model of this company improve the main income which are from automotive
segment and energy segment. The essential mediums which are required by the business
model of Tesla to design and create its electric cars are electrical vehicle knowledge, battery
system, cooling system and automation and engineering.

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The mission and vision statement

“To accelerate the world’s transition to sustainable energy” is the statement of Tesla’s
mission. The focus on sustainability indicates the compliance of the company with global
demands of business methods that align with calls for green energy. The mission of Tesla is
to be accelerating global transition. The entire business model by Tesla is based on its
determination to lead the world from the traditional energy uses to the more sustainable and
clean energy sources especially in the motor vehicle industry, Tesla concentrates all its
resources on coming up with the most applicable technology to make this a reality in the car
manufacturing sector.

“To create the most compelling car company of the 21st century by driving the world’s
transition to electric vehicles” is the vision of Tesla. The vision comprise these features is
transition to electric vehicles. Tesla has a global agenda of influencing the world to embrace
electric cars. In fact, the company expansion trends show how committed it is in achieving
thus vision of globalizing electric vehicles. Tesla has opened various production plants in
various global regions. The company also continues to influence other players to recognize
the place of renewable and green energy in the modern era as well.

The product/services/process innovation

Tesla in history is the most successful electric car company, this is because of their
unique innovation towards the line-up of their product which is the Model S, Model 3, Model
X, and Model Y. There are three key innovation Tesla does that make them the most
successful electric car company to date.

The first of key innovation is the engineering sides, they implement to their product are
by building powerful electric motors, that capable to have long-range on a single charge, also
providing charging stations across the country for the consumer as well improving the
automatic system far better than their competitors. for example, most of the cars use
expensive lidar systems for automatic driving systems, thus make the car more expensive, yet
Tesla uses their system to mitigate the price problem. According to 4Panalysis(2016) “Tesla
Model S is the first one to plug-in electric vehicle fleet and reached the 1 billion electric miles
milestone. It is an evolution in automobile engineering.” This makes their most attractive
innovations.

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 Tesla also makes an innovation on the conventional all-wheel-drive system, which
make the car traction control easier. As mention by 4Panalysis(2016)” Electric all-wheel drive
innovation makes Model S motor lighter, smaller and more efficient than its rear-wheel-drive
counterpart, providing both improved range and faster acceleration.”.

The second innovation is called the Position Innovation, Tesla developed a new market
for Luxury long-range electric vehicles and become the market leader in this region. People
who are interested in advanced green sustainability ideas are their main buyers. Green cars
and sports cars, for example, are typically sold individually and appeal to various categories
of buyers. Tesla merged the words "green" and "sports" to produce the first kind of "sports
green" car to please those who want them, taking a unique approach to the industry.

The final key innovation is the paradigm innovation, which makes Tesla unique from
other competitors as mentioned by 4Panalysis(2016)” Tesla car is the first car that does not
need petrol and gas, the special demand of electric asks the society built electric power
station.” Tesla is driven by a new concept they tried to realize every single day which is
improving quality of life without environmental damages, this call makes others to make the
same things, slowly country by country adopting Tesla Electric car to be the main car of each
of their citizens by incentivizing and giving a discount to whoever bought one, truly an amazing
way to start a change in the world.

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SECTION 2: The Idea

The Idea for Innovation Came From

Tesla acknowledges that making electric-battery cars has a great deal of potential and
that it will make a difference in the industry. Tesla Motors debuted its first car, the fully electric
Roadster, in 2008. It has a range of 245 miles (394 kilometres) on a single charge, which is
unparalleled for a production electric vehicle (“Tesla, Inc. | History, Cars, Elon Musk, & Facts
| Britannica,” 2021). From there, Tesla came up with the brilliant concept of converting
gasoline-powered vehicles to battery-powered vehicles. Furthermore, Tesla sees this electric
car's capabilities as being able to solve the issue of a shortage of fuel by using renewable
energy sources. According to McFadden (2020), They set out to create a line of cars that
would be "better, faster, and more fun to drive" than gasoline-powered vehicles, according to
the company. Tesla aims to minimise emissions and fuel use, so it is progressing toward more
efficient energy usage and the integration of renewable energy sources. As mention by
McFadden (2020), "Construct a sports car." Make an affordable car with that money. Make a
car that is even more affordable with the money you saved. Provide zero-emission electric
power generation options in addition to the aforementioned.” - Tesla CEO Elon Musk. The
concept of innovation arose to bring about a large-scale revolution in the automotive industry,
and it has had a positive effect. by considering the possibilities offered by these electric-battery
vehicles, and ways to address the issue of fuel shortages while enhancing sustainable
development.

The Form of Innovation the Firm’s has

The form is TESLA company innovation is considered as process innovation since the
products operate in totally different way of providing the better way of travelling in vehicle
compared to average gasoline powered vehicle. This innovation took a new approach of
making vehicles that challenged the existing established system that powered through internal
combustion. Compared to normal vehicle, electric vehicles only use electric for fuel and is
cheaper in cost compared to gasoline and required lower maintenance and repair cost.

With this innovation, tesla also created a new opportunity for them to offer services to
the consumer such as maintenance or repairs of the vehicles and the fuel facility for the
vehicles as normal gas station is only for internal combustion vehicles that use gasoline as
power source. Only a very selective group of exclusive shops can offer services to the vehicles
as the products itself is still adapted by the market and need training, equipment, and approval
by the TESLA itself.

pg. 5
The Opportunity for Innovation Identify

Opportunity for Tesla innovation are identified by the external factor. External factor can
help Tesla to improve business performance, management structure, strategic growth, and
the other aspects. So, when external factor had been identified it can help the innovation and
growth of the company. Opportunity is created in the environment in which the company
operates. For example, opportunities can arise from market, industry, government, and
consumer.

After being identified, among opportunity of TESLA electric car is first, environment
friendly cars, as consumers are becoming more environmentally aware, the need for more
electric vehicles is growing along with the need to minimize fuel driven cars. Next is battery
production technology, Tesla is now planning on manufacturing its battery cell in house after
identified its opportunity. This can be a game changer as it will help the company to lower the
production cost and create many jobs for those qualified people outside there. Also,
autonomous driving technology, Tesla autopilot technology has gained it fame for its safety
and convenience which making it trustworthy by consumers and the share market as Tesla
autopilot is constantly expand. Lastly market confidence, the stock market has shown
confidence in Tesla after seeing two consecutive profitable quarters. The price of Tesla stock
has rose doubled since the start of this year since August 2019 until February 2020.

The Types of Innovation Involved

Tesla inc, case is based on an electric vehicle under a well-known company which is
Tesla, inc. Tesla produces electric cars where they used a lot of innovations to produce a
perfect product. The type of innovation involved is, sustaining innovative. This is because, this
company always upgrade their product which is electric cars in various ways to attract their
customers nearly every year. Hence, they also, produce new upgraded version of cars with
extra features. They never stop of upgrading or create new type of cars. There will be always
huge improvement in performance of their new version electric cars. Hence it is also proved
that Tesla is one of the major automakers on the deployment of artificial intelligence (AI).
Tesla’s innovation strategy has resulted in an extreme level of in-car hardware and software
integration as well. The innovations made on this car are, they have the stamina to dispel
wide-held concerns regarding mileage. For example, The Tesla S and Tesla X mileage figures
stood at 370 and 325 miles respectively in 2019. Hence, in 2020 upgrades to the US version
of the Model S then pushed it above the 400-mile mark. Telsa also makes autopilot system

pg. 6
possible. Meaning it contains, a forward-facing radar with Cameras provide visibility up to 250
meters away. They also provide a high-precision digitally-controlled electric assist braking
system and 2 long-range ultrasonic sensors around the car all the time. Furthermore, they
also added some innovative system where to change lanes, the driver manually indicates the
turn signal, then the sensors prevent the Tesla from merging into other cars. The Tesla only
aids drivers, it is not able to drive itself fully autonomously. However, a newer feature in the
Tesla can enter or exit parking spots without a driver in the vehicle. Then, this car uses
worldwide supercharger network of fast DC chargers. It also involved Tesla’s battery
technology, power electronics, Tesla motors, firmware or software, and controls.

pg. 7
SECTION 3: The Technology

The Technology used in the Innovation

There are few technologies used in the innovation in Tesla. Cruise control is the first
technology used in Tesla. The Tesla's radar and forward-facing cameras monitor the location
of cars in front of it and change its speed accordingly. This feature keeps you and the car in
front of you at a safe distance. Besides that, Autosteer are also one of the technologies used
in Tesla. The Tesla's autosteer feature allows it to remain in its lane, change directions, and
self-park. The cameras around the car track the location of road markings, and sensors
monitor other cars on the road to maintain a safe distance. To change directions, the driver
must manually indicate the turn signal, after which the Tesla's sensors prevent it from merging
with other vehicles. To avoid hitting something in its path, the car uses both sensors and
cameras to self-park in parallel and perpendicular positions.

When the road markings are not visible or the car is going less than 20 mph, the
autopilot feature does not work well. In residential areas with streetlights and stop signs, this
feature is not recommended for use. The driver must remain alert and keep their hands on the
steering wheel. If the wheel does not detect the driver's hands, it will warn the driver visually
and audibly to take control. If the driver still does not place their hands on the wheel, the car
will begin to safely slow down before the driver takes control or the car comes to a complete
stop.

The Tesla is only capable of assisting drivers, it is not capable of fully autonomous
driving. However, a newer feature in the Tesla allows it to enter and exit parking spaces
without requiring the presence of a driver. This function comes in handy when there is a tight
space between your parked car and the car, wall or bush next to it, making it difficult to get in
and out. A summon function allows the owner to walk out their front door and summon their
vehicle, which means the Tesla will open the garage door, pull out, and come to “greet” you.
For the time being, the summon function is only available on private property. If the Tesla is
parked without the driver inside, it can only travel forward and backward, and it cannot
transform at this time.

pg. 8
The Innovation Theories Fit

Innovation theories that fit in Tesla Inc. Is the dominant design, dominant design is an
innovation theory that explain some companies often reap the benefits by combination product
features from others competitor and make it new for the consumer, that’s how exactly Tesla
Inc win the competition of electric car, electric car are already in the market, but because of
its feature basically scattered among companies, consumer were are not able to pick which
one to buy, thus the demand for electric car was not able to compete gas based car. Yet Tesla
Inc, find a way to combine auto pilot in their car, also develop a superchargers networks for
their customer while at the same time, keeping the price of the car low as gas-based car. This
completely catch the mainstream of audience to Tesla inc.

The Beneficial to use such Technology

Technology is the application of scientific knowledge in the form of processes,

methods, means, and even techniques to the use of any output of products or goods that are
successful in terms of services or products by various mechanisms. Any equipment or thing
that has been invented using technical expertise is a technology that helps and serves the
needs of the consumer. Today's world, innovation is mostly about the use or implementation
of technology to materials or goods that have been innovated, because that is a significant
advantage or key to success for businesses and entrepreneurs in meeting customer demands
and desires. Individuals, companies, investors, and the government are all contributors to
turning current goods and services into something innovative, because they are the catalyst
of this innovation. The use of technology has a numerous benefit, including increased
productivity, cost reductions, improved product value and recognition, increased profitability,
and time - saving.

Tesla's electric vehicles (VE) have been innovated by implementing or using

technology. This is because the application of technology to new goods provides a variety of
features and benefits that assist the business while also attracting various stakeholders to
invest in the business. The Cruise Control, for example, is one of the innovative technologies
that has been applied to Tesla's electric vehicles. As a part of this technology, electric vehicles
gain an advantage in terms of travel confinement, vehicle-to-vehicle coordination, and as
previously mentioned. Thus, the technology aids in enhancing the safety of electric vehicle
users by ensuring inter-car confinement, area synchronisation, and maximum car control
functionality. Standard vehicles, for instance, necessitate the maximum concentration of
individual energy to ensure the protection of car use; but, despite this electric vehicle's

pg. 9
technology innovation, its use has been regulated and managed by technology to ensure the
degree of user safety.

Aside from that, the use of technology has a benefit in that it can help reduce the
number of accidents and the amount of manpower required. Tesla electric vehicles, as
previously stated, have an Autosteer system that can power the steering wheel. The benefits
of the technology can then be used to ensure that the electric vehicle remains safe and does
not consume a lot of energy.

Ultimately, technology has a positive influence on what is produced. Which is why it

beneficial to used technology in innovation that were allows to refine something so that can
bring it to consumers in the best possible way and entice a variety of investment firms.

pg. 10
SECTION 4: The people

The Innovator

Elon Musk, Straubel, and Beth Davies are the key innovator in Tesla Inc. They
contribute Tesla rapid growth, with this Tesla inc have able to reach new heights beyond
competitor expectation and customer as mentioned by Aurumm(2020)” Their electric cars
have consistently defied consumer expectations for reliability, performance, and style.
Perhaps most importantly, they also have the stamina to dispel wide-held concerns regarding
mileage. (The Tesla S and Tesla X mileage figures stood at 370 and 325 miles respectively in
2019. 2020 upgrades to the US version of the Model S then pushed it above the 400-mile
mark.)”

Elon Musk is the co-founder and CEO of Tesla, SpaceX, Neuralink, and The Boring
Business, among other companies. In Tesla Elon Musk leads all product creation, innovation,
and global sourcing for Tesla's hybrid cars, battery devices, and renewable energy products
as co-founder and CEO. This is supported by Aurumm(2020)” According to Harvard Business
Review, Musk’s brilliance is heavily used towards building and using innovation capital to
garner support for his ideas.”

Tesla's executive team, in addition to Musk, is full of innovative people who have
helped the company become the world's most valuable automaker. JB Straubel, a co-founder
of Tesla, served as Chief Technology Officer (CTO) until 2019. Also present were Beth Davies,
the former Director of Learning and Development at Tesla, as well as senior positions at Apple
and Microsoft, as mentioned by Aurumm(2020).

JB Straubel is a co-founder of Tesla and now serves as a Senior Advisor. JB Straubel

is a well-known keynote speaker on innovation and sustainability who played a key role in the
creation of Tesla. Among all, JB was responsible for the creation of the automaker's key
technology. Straubel was also in charge of the technical direction of the global supercharger
network of fast DC chargers. He was also in charge of Tesla's battery technology, power
electronics, Tesla motors, firmware/software, and controls, and he has not strayed far from
those responsibilities.

Beth Davies grew the company from 600 to 33,000 employees in just six years. She
was instrumental in evangelizing the business ethos and safeguarding it against the dilution
that can occur with exponential growth. Davies carefully planned and built the factory-wide
preparation and support. She was also in charge of onboarding all recruits around the world.

pg. 11
Which Source the Innovation Came

Tesla, Inc is an American electric vehicle and clean energy company in Palo Alto,
California. As we know, the source of this innovation come from electric and solar energy.
Electric cars, battery energy storage from home to grid scale, Solar roof tile and solar panels
as other related products and services were Tesla’s current products. Tesla was categorized
as the world’s best-selling plug-in and battery electric passenger car manufacturer with a
market share of 23% of battery electric (purely electric) and 16% of the plug-in segment
(includes hybrids) segment 2020 sales. Besides, with 3 GWh of battery storage supplied in
2020, Tesla also one of the largest global suppliers of battery energy storage systems. The
vehicle’s electric motor was powered by lithium-ion cells often used in laptop and computer
batteries that could be recharged from a standard electric outlet. Tesla Motors was founded
in July 2003 by Martin Eberhard and Marc Tarpenning and the company’s name is a tribute to
inventor and electrical engineer Nikola Tesla. Elon Mask has served as CEO since 2008, who
contributed most of the funding in the early days. Musk said that the purpose of Tesla is to
help expedite the move to sustainable transport and energy, obtained through electric vehicles
and solar power.

Tesla starting the production of their first car model known as Roadster in 2009. In
company tests, it archived 245 miles (394km) on a single charge and a range unprecedented
for a production electric car. Followed by the Model S Sedan in 2012, which came with three
different battery options that gave estimated ranges of 235 or300 miles (379 - 483 km) the
battery option with the highest performance gave an acceleration of 0 to 60 miles (96 km) per
hour in slightly over 4 seconds. The Model X SUV was produced in 2015 that had a maximum
battery range of 295 miles (475 km). Nest is the higher volume Model 3 Sedan was produced
in 2017 and the latest ones Model Y crossover in 2020. The Model 3 is the world’s all-the-time
best-selling plug-in electric car. This Model was delivered more than 800,000 through
December 2020. The company surpassed the 1 million mark of electrical cars produced in
2020. The company branched out into solar energy products. A line of batteries to store the
electric

pg. 12
Who else have involve directly and indirectly in the Innovation

People who have involve directly and indirectly in the innovation is individual,
corporation, user, and the state. For TESLA, the individual refers to Elon Musk. Elon Musk is
the individual who serve the financial support by giving his own capital for the company
TESLA. He contributed more than $30 million to the new venture for electric car and served
as chairman of TESLA since 2004 until 2008 (Erik Gregersen. Barbara A. Schreiber Feb 19,
2018). He then become CEO of TESLA starting 2008 until now 2021 after Martin Eberhard
(CEO) and Marc Tarpenning (CFO) resigned.

Next corporations, there are many corporates who purchased million shares of TESLA
(Erin Clark Dec 11, 2020). For example, Susquehanna Securities. with total share owned
$347.4 billion and Baillie Gifford & Co. with total share owned $245.3 billion which basically
will lead to open innovation that expand the markets for external use of innovation
consecutively.

After that user, user is part of the sources of technologies for the innovation. In TESLA,
the user is first, (AI) Artificial Intelligence integrated chips. Tesla automobile systems have two
AI chips those chips make separate assessments of the traffic and danger situation around
the car and enable better control over the navigation in self driving. Second autopilot features
enable cars to steer, accelerate, and brake automatically in the lane. Third batteries and
propulsion system, Tesla cars use lithium-ion batteries give TESLA long range performance
as these cylindrical batteries made of expensive metals that provide more energy density than
the batteries in other battery of electric vehicles. Fourth 360-degree visualization, TESLA cars
use a neural network to process 8 cameras placed in the system that provide a 360-degree
visualization of surrounding vehicles at up to 250 metres. These cameras provide a deeper
understanding of objects around the automobile by giving access to views from different
angles thus enabling a safer drive (Mack Hogan Nov 17, 2017).

Finally, the state, purpose of state is to correcting market failure and funding “blue
skies” research when uncertainty over potential return or when social return is greater than
the private return. In 2009 the U.S. government has put $465 million into the auto and new
energy industries to promote R&D and innovation which give benefit to TESLA (Jordan Malter.
Kate Sprague Oct 22, 2018). Apart of that, every Tesla car that purchased in the U.S. qualifies
for a federal tax credit to the buyer of to $7500. From subsidies at the national and state level,
to federal tax credits for consumers buying electric cars and solar panels, to fuel efficiency
standards had help bring millions profit for Tesla.

pg. 13
The Stakeholders buy-in Acquired

Stakeholders buy-in consists of investors, customers, employees, member of the

board in company, owner and interested community members who shape how the
organization work. It is a process which including all the members mentioned in decision-
making with hoping to reach a broader consensus for organizational future as a goal (Bradley,
2021). Tesla acquired stakeholder-buy-in by regularly maintain communication with their
stakeholder and doing it efficiently. For example, Tesla company publishes their annual report
in their website to give the stakeholder the close-up inspection of the company for the
stakeholder such as key financial data, company’s strength and values and network and
infrastructure of the company (Ekwueme, et al, 2013). Tesla also manage their own blogs and
official social media such as Twitter to be closer and stay in touch to their stakeholder and at
the same time spreading their own influence on incoming new potential stakeholder by sharing
Tesla development and achievement.

pg. 14
SECTION 5: The Process

The process of developing the Idea into the Innovation

First, Tesla is an American electric vehicle and clean energy company. A large and
successful company like this will contains a lot of process and steps indeed. The idea of
creating an electric vehicle with a lot of advanced technology was by Nikola Tesla who was
an electrical engineer. Then it was founded by an American entrepreneurs Martin Eberhard
and Marc Tarpenning. Originally, Tesla Motors was formed to develop an electric sports car.
The founders were influenced to start the company after “General Motors” which is an vehicle
company recalled all its EV1 electric cars and then destroyed them. As an opportunity, they
came up with an idea where they broke the usual correlation between high performance and
low fuel economy in automobiles. Then, they try to develop their idea to get a worthy outcome
of product.

Hence, on the case of design Tesla keep on changing their design of the electric cars
to attract the customers. The 1st car which was produced was Tesla Roadster in 2008. In
company tests, it achieved 245 miles (394 km) on a single charge, a range unprecedented for
a production electric car. Its body structure was unique. The body weight of the car was light
and made off by carbon fibre. The design was unique yet full of quality. This factor attracts the
customers very easily and the result was successful. Then, for the next model they changed
their designs in many ways where the car body was mostly manufactured from aluminium.
They also use own made spare parts for their car to ensure the quality of each components of
the electric car.

Furthermore, their innovation throughout until now made their market evaluation to be
on standard and high. Tesla is worth about $700 billion on year 2020. This was all because of
their level of creativity and innovations they made until now. Tesla use oligopoly market
structure.

The reason why Tesla company is said to belong to the oligopoly market structure is
that it competes with other automobile companies in today's current markets. The oligopoly
type of market structure has the following characteristics such as they are only few, large firms
that are operating in the market. In this case, Tesla company competes with other large motor
companies in the market such as Nissan, Toyota, and Chevrolet. This companies compete
with Tesla just because of one factor which is ‘cost’. Due to Tesla is an electric vehicle it cost
much compare to other company cars where they are using fuel.

pg. 15
 Tesla’s goal in 2018 was to manufacture and produce more than 500,000 electric
vehicles. They somehow managed to get it with their new innovations. The latest model that
produced by Tesla was Model Y compact SUV where it contains a lot of new innovations such
as it provides a larger battery pack where can travel up to 316 miles of driving range in the all-
wheel drive Long Range model. The 2020 Tesla Model Y will be the upstart automaker's first
entry in the compact-luxury SUV segment, pitting it against gas-powered rivals such as BMW
X3 and Porsche Macan.

In short, Tesla worked very hard on developing their idea in a creative and innovative
way and they also succeeded on their hard work.

The Main Activities in the Process of the Innovation

An innovation is an idea, practice or object that is perceived as new by an individual or

other unit of adoption (Rogers, 2003). Process of innovation makes an organization to be able
to change an existing processes or products and produce new resources. Basically, the
process of innovation consists of exploration, exploitation, and diffusion.

Exploration is the most creative phase where an innovation begins where exploring for
fresh understanding and skills, new technologies, and making of products with unfamiliar
market. In this phase, different thinking such as thinking from a new perspective and
unconventionally is very crucial to fulfil customer’s need. Exploration which associates with
research and development team, produce profit which is unclear because it does not assuredly
produce quick profit. Tesla Motors is well known as an innovation driven company which is
looking to change and transform current motor industry. Tesla is more specified in producing
battery based electric vehicles to revolutionize existing vehicles which are based on diesel
and petrol. By developing their product through innovation, Tesla managed to maintain their
extensive investments in their research and development department.

Exploitation is development of known products that can be known as rectification of

current understanding, technologies and products and known to be less creative compare with
exploration. Exploitation has more direct and certain profits and to get their profit, and decision
making about offered products or services are crucial in this phase. With advanced
technologies, Tesla Motors grows its business by developing its current electric vehicles by
offering solar panels. World’s fully electric sports car was produced by Tesla which was a
developed and innovated Tesla Roadster. The distinction general plan of action develops the
market when the company get into new market by making the customers attracted by the
unique electric vehicles created.

pg. 16
 Diffusion is a phase where innovation is applied indirectly and is more concerned about
acceptance rate of innovation in current market by customers. The acceptance of customers
for its battery based electric vehicles is proved when Tesla became the leading automotive
brand which sold around 367,500 battery based electric vehicles in 2019. Tesla vehicles
cannot be purchased from and conventional dealer network and prefer selling the cars online
which makes Tesla as the only automaker which sell its vehicles directly to the customers.

Tools/Techniques were used in the Process

Tesla Inc, popular used open innovation in the process of their value creation to create
continuous innovation for their customer. Tesla inc continuously dishing out patent by this
approach, Open innovation is a way company uses networks to integrate their innovation with
other company by forming partners, potentially helps company to lower their cost as their only
uses others innovation speeding up the development phase. For an example Tesla
Superchargers innovation come with huge cost by this approach Tesla focus on sharing their
innovation to smaller firm in hopes to lower their cost as stated by (NextStart, 2018)” Tesla
opening its patents, this revolutionary company encourages competitors to make the same
choice and thus save in time of development. The greater the number of companies using
Tesla's technology, the sooner their cost will go down.” Tesla also famous for their basic rules
their implement for their future innovation, which is the first principle thinking, this mode of
thinking is responsible for Tesla stellar innovation they bring to the market, according to
(Catherine, 2018)” Elon musk wants Tesla employees to use first principle thinking as its help
the company to think from the fundamental truth of their problem they want to solve, devoid of
analogy thinking, as this lead to more practical cost effective solution” The reason why Open
innovation is far more favourable it’s because the realization of powers of networks, by
networking information flow more freely ideas can be implemented, shared and tested in quick
succession.

pg. 17
The Alternative Models of the Innovation Process might be used

Tesla inc, uses integrated model into their innovation process, integrated model refers
to organization keep lateral communication between research and development, prototyping,
design, manufacturing, and marketing. These models keep real time communication between
sectors in hope for fast development on any idea the organization want to realize, this includes
testing and production. According to Stratagem (2012)” The integrated model emphasises on
the concurrent learning with customers and suppliers. There is more emphasis on the role of
feedback and the non-sequential, messy character of the innovation process. Innovation is
also by definition, cross functional, and R&D is just one of the functions involved in the
innovation process.” For an example Tesla management cares more about users’ feedback
where they create a direct way of communication with their customer through creating their
own website, to accept feedback and buying car directly online. With this they can quickly try
new ideas to implement to keep their customer buying Tesla product.

pg. 18
Conclusion

Tesla inc, approach in innovation for sustaining innovation is a great example for future
aspiring tech companies, through this case study we can identify the cause of Tesla inc
success, the theory we can conclude here is the people, and technology are the catalyst for
new idea, and through the right process the idea can be realized and shared to the masses to
solve problem we all shared together.

pg. 19
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