Once perceived as a company of the future, Tesla is today one of the successful companies in the automotive industry, specialising in electric cars, Lithium-ion energy storage batteries and residential solar panels. For decades, the American automotive industry has been an oligopoly market, dominated by giants such as General Motors (GM) and Ford. The rise of Tesla in this lucrative yet highly competitive automotive industry is a good lesson and inspiration for innovators and technology enthusiasts. This article highlights the role technology and innovation played in helping Tesla become the most valuable carmaker in the United States of America. Additionally, the article outlines best practices that innovators and techies can use to leverage on the available technologies and phenomenon such as big data to help transform their organisations or start-ups.
Established 13 years ago by Martin Eberhard and Marc Tarpenning, Tesla released its first sportscar called ‘Roadster’ in 2008. The Roadster was the second pure electric car after the Renault-Nissan Alliance. Though, Tesla is synonymous with the South African born entrepreneur Elon Musk, he was not one of the initial founders, he joined Tesla in 2004 as an investor. Within 3 years of existence, the company managed to raise US$ 187 million through rounds of investments from prominent entrepreneurs such as Elon Musk, Sergey Brin, Larry Page and many others. Like any start-up company, Tesla survived many turbulent times, including bankruptcy. However, the rise of Elon Musk to the chairmanship of Tesla has helped turned the company’ misfortunes into a brighter future, inspiring new confidence in investors and persuading thousands of people to believe in alternative means to fuel for sustainable transportation. With Elon Musk at helm, Tesla went through rapid transformation from a mere Silicon Valley start-up to a trend setter in the electric automotive industry, according to then chairman of General Motors (GM) Robert Lutz, Tesla inspired him to push GM to create the Chevrolet Volt, an electric car with provision for gas.
The story of Tesla is an interesting one, after going public in 2010 in the same year GM went public. Tesla’ stock was worth US$ 17 per share, seven years later Tesla’s shares are worth more than that of GM or Ford Motors, making Tesla the most valuable automotive company in the US. This is still so, even though Tesla is only expected to declare its first profit by 2020. What makes Tesla so unique and valuable is not the number of cars they produce but their agile and typical technological product lifecycle, which enabled them to optimise their resources. Moreover, I think what makes Tesla model unique is how the company has succeeded in diversifying its operations around its core business by creating subsidiaries such as Tesla glass technology, which manufactures glass solar roof tiles. Instead of asking other companies to produce the glass roof for its Tesla Model 3, the glass roof will be produced and manufactured by Tesla glass technology group. Tesla is also known for its high-quality Lithium-ion batteries, which has been a flagship of Tesla cars since the Roadster. Today, Tesla’ is not only producing and manufacturing Lithium-ion batteries for its own cars but is working on collaboration with other automotive manufacturer, for example Mercedes Benz with whom Tesla is building a battery pack for Mercedes Benz A-Class. Another important aspect of Tesla cars, which gives the company a competitive advantage over other car manufacturers, is its Autopilot project, which set the company apart from the rest. No doubt, self-driving cars will become the norm in the near future, as a leader in Autopilot Tesla will inevitably produce majority of the autonomous cars.
Innovators today are facing a wide range of challenges, from lack of starting capital to complex issues such as winning against the well established companies. However, the story of Tesla should be an encouraging one for all of us in innovation and technology sphere. Moreover, it should teach us that if we use technology correctly no one can stop us, not even Zuma. With growing calls for a greener planet, electric cars are becoming the only alternative to ending emissions of toxic gases. In countries such as Norway, government incentivise citizens for pure electric cars. Certainly more governments will follow this example in the following years. This doesn’t only threaten petroleum industry but also the metal industry especially platinum, which is used in exhausts to strip toxic emissions. Additionally, batteries of electric cars do not need platinum, hence just like producers of petroleum are preparing themselves for the new world where oil will not be used in cars, so should the largest producers of platinum, Russia and South Africa.
Tesla with Elon Must at the helm will continue to be innovative, disrupting many industries in the process. Therefore, we need to pay attention or risk being left behind and irrelevant.
Lameck Mbangula Amugongo is country Ambassador of 1 Billion Africa in Namibia. He holds B.IT: Software Engineering, B.Hons: Software Development (Cum Laude), MSc. Computer Science & currently a PhD Candidate