Tesla's Evolution: Mass Market Electric Vehicles?

by: Stuart L. Hart

Publication Date: May 28, 2024
Length: 22 pages
Product ID#: 2-135-828

Core Disciplines: Entrepreneurship & Innovation, Strategy & Management, Sustainability

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Teaching Note

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Tesla finds itself at a critical juncture as it grapples with intensifying competition in the U.S. electric vehicle (EV) market and potentially waning consumer demand. The company, known for disrupting and leading the auto industry, confronts a dilemma: Continue catering to an affluent consumer base with premium vehicles, pivot toward a mass-market approach, thus aligning with its mission to accelerate the world’s transition to sustainable energy, or do both.

The dilemma is seen through the eyes of Sheritta Watts, a fictional vice president of strategy for Tesla. How should she advise the CEO regarding the central dilemma? She sees the new, premium (and long-delayed) Cybertruck emerge from the assembly line and wonders whether a new, low-priced EV should be the next model prioritized by Tesla. Would this secure Tesla’s position in the evolving U.S. EV landscape? Should the company give greater priority to a broader, more inclusive target audience? These decisions could shape not only Tesla’s future but also influence the trajectory of the entire U.S. EV industry.

The real-world implications in this case make it a valuable tool for understanding the complexities for companies transitioning to sustainable systems.

Teaching Objectives

After reading and discussing the material, students should:

  • Understand and argue strategy regarding the roles public policy and inclusivity play in the development of new technologies and markets.
  • Examine the equity considerations of electrification and the energy transition from multiple stakeholder—and potential stakeholder—points of view.
  • Identify how Tesla can market electric vehicles to customers from different socioeconomic backgrounds.