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SMIT Progress Report Group 10

Strategic Management of Innovation &

Technology Businesses

Project Progress Report

Term V, IIM Ranchi

Group 10
G Sujitha M021-15
Jayshree Saikia M026-15
Saswata Banerjee M048-15
Shruti Vinyas M051-15
Anuj Khatri M078-15
Lenin Kispotta M100-15

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SMIT Progress Report Group 10

1. Introduction

Elon Musk is an investor, inventor and business person. His passion towards computing, applied

Physics and renewable energy goes back to his childhood days. In his quest to build a more sustainable

ecosystem around alternate fuel he has founded and/or leads organizations like Tesla, SpaceX, SolarCity,

and OpenAI.

Tesla Motors was founded in 2003 by Martin Eberhard and Marc Tarpenning, with the goal to

commercialize electric vehicles. They came up with the initial prototype for the Roadster and funded the

operations till 2004. In 2004 Elon Musk led the Series A round of funding, and from then onwards have

spearheaded the business.

For our project we would be looking at the capabilities developed/ partnered, strategies formulated at

different stages to achieve their final goal of entering the mass market with electric cars and provide a

sustainable alternate energy.

2. Master Plan, Part Deux

In 2006 Elon Musk envisioned a master plan for Tesla Motors. He wanted to build an electric sports car

which will cater to a small segment and be expensive, channel the money to build more affordable electric

cars which will cater to the mass market. And while doing so provide zero emission electric power

generation options.

In 2016 Musk went ahead and envisioned another master plan to provide sustainable alternate fuel

options. In this master plan he mentions to develop solar roof and integrate them as battery storage.

Expand the electric car product line for all major segments, develop self-driving capabilities which will

make the cars 10 times safer than those running on gasoline, and finally to enable the car as a revenue

generator for her owner.

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SMIT Progress Report Group 10

In our project we are looking at how Tesla crossed the chasm by developing a whole glitch free product

that is the best in the market, giving its customers a compelling reason to buy their cars. We are also

looking at how Tesla started its journey from the top of the Technology S-curve as opposed to general

practice. We would study the impact on market adoption and how competitors have responded to their

move. In its quest to provide affordable electric cars, Tesla went along to build a whole ecosystem around.

They started by developing a network of charging points - from wall chargers, went on to develop

supercharger stations to charge a battery fully within 75 minutes, and presently running a pilot study on

battery swap which takes around 3 minutes. We would study and compare the technology curves of

gasoline run cars versus electric run curves. Tesla addressed the issues of mileage per charge (270 Km

with a charge of 30 minutes), battery charging and battery disposal, that troubled electric car

manufacturers by delivering the best product with full utilities and converted them into order winners.

All this while Tesla went ahead with disruptive innovations from developing a car which runs on Lithium-

ion battery (to which the then Robert Lutz Vice Chairman of General Motors remarked that the

technology was at least 10 years ahead of its time), to developing batteries which had multiple core

instead of having a single one. Tesla headed by Musk has been focused on their strategy to provide

affordable electric cars, and they work around to achieve the same. Their deliberate strategies have helped

them to get funding to sustain their operations and to stay focused.

In their journey Tesla have developed some capabilities like development of batteries, autopilot

technology, solar glass, and car design, while they have partnered with players like Lotus, Panasonic,

Daimler AG, Toyota, and Bosch to bridge the gap in those capabilities that they lacked. In order to be a

sustainable business Tesla have learned from their partnerships to develop their capabilities like building

their own ERP from the scratch. We are studying the formulation of their corporate strategies and how

those have evolved/ changed with market scenario and time.

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SMIT Progress Report Group 10

3. Piecing Together the Tesla Puzzle

In 2006 Elon Musk helped his cousins found SolarCity to combat global warming by tapping alternate

energy and batteries. In 2014 Tesla announced that it would build Gigafactory 1 to provide 50 GWh/yr of

battery packs. In 2014 Tesla opened up its patents for their use in good faith. In 2015 Musk founded a not-

for-profit organization OpenAI to develop Artificial Intelligence in a way that is safe and beneficial for

humanity. In 2016 Tesla acquired SolarCity to gain from the synergies.

All these pieces are in fact joined and aimed at the main goal to achieve sustainable alternate power. By

opening up its patents Tesla hopes to influence the electric car market by setting the standard for electric

cars and batteries. The formation of SolarCity and its subsequent merger with Tesla was to develop its

capabilities and to cater to its own needs and cater to the market, and with their new capabilities they have

started a pilot to switch car batteries in under 3 minutes. OpenAI can be seen to be the next move towards

having a robust autopilot system in their cars that makes driving safer.

4. Competition

Tesla have elaborate plans to develop an entire ecosystem through sustainable alternate energy. They have

ventured into developing small-scale batteries to meet the needs of households (Powerwall) and are

developing large-scale batteries for industrial usage. They have come up with solar panels and solar tiles

for homes to provide emission free alternate energy. Tesla is in the process of rolling out their Model 3

which is priced at $35,000. Tesla also plans to have transportation fleet running on batteries.

We would like to study about the key component manufactures and how they have evolved along with

Tesla in this journey. Tesla has taken the innovation game to newer heights and we will look at how their

competitors (gasoline/hybrid/battery car manufacturers) have responded. We will also look into the

changes in policies of economies like offering tax rebate of $7,500 to battery car owners in US.

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SMIT Progress Report Group 10

5. References
a. http://executive.mit.edu/blog/innovating-innovation-tesla#.WHHw-YVOLIV
b. http://www.forbes.com/sites/innovatorsdna/2015/08/19/teslas-secret-formula/#d36a2ef59f86
c. https://www.greentechmedia.com/articles/read/What-Would-Teslas-Solar-Strategy-Look-Like
d. http://www.forbes.com/sites/innovatorsdna/2015/08/20/teslas-high-end-disruption-

gamble/#5486d0ec4e2f
e. https://www.tesla.com/blog/secret-tesla-motors-master-plan-just-between-you-and-me
f. https://hbr.org/2015/09/piecing-together-the-tesla-strategy-puzzle

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