Tesla, Inc., formerly known as Tesla Motors from 2003 until 2017, is an American company that manufactures electric vehicles, solar panels, batteries for vehicles and homes, and home power storage systems. Tesla’s mission statement is to accelerate the world’s transition to sustainable energy. Tesla was founded in 2003 by American engineers Martin Eberhard and Marc Tarpenning. The company was given its name in honour of the inventor Nikola Tesla, who was of Serbian and American descent (Schreiber and Gregersen 2022). Since its inception, the company has secured funding from a variety of sources, most notably PayPal co-founder Elon Musk. In 2004, Musk became the largest shareholder of the company, investing more than $30 million and serving as Tesla’s chairman (Schreiber and Gregersen 2022). Although they remained as shareholders and advisers, in late 2007 Eberhard and Tarpenning left the company. In 2008, Elon Musk took over as CEO.

Although the last decade has been turbulent due the global pandemic, financial crisis and parts shortages that have impeded production in both the US and China, Tesla has managed to put electric vehicles on the map and become the most valuable car company in the world. In 2022, Tesla celebrated its 12th year as a public company and was valued at $1 trillion. This case study discusses the pricing strategies adopted by Tesla as it transitioned from the luxury to mainstream electric vehicle market. 

Today, Tesla has positioned itself as a global leader in the design, development and manufacturing of electric cars, in particular the sports automobile. However, over the years, the company has faced significant challenges. In 2008, Tesla encountered immense pressure due to the global financial crisis. As a result, Musk fired about 25 per cent of the staff and pushed back the launch date of the Tesla Roadster, its first completely electric car. The Roadster boasted the longest range of any electric vehicle on the market, with power and performance to rival many gasoline-powered sports cars, while producing zero tailpipe emissions (Schreiber and Gregersen 2022). 

In 2010, Tesla went public, raising around $226 million. In 2012, the company ceased production of the Roadster and switched to the Model S, again to critical acclaim. The Model S represented Tesla’s first foray into the mass consumer market. In the same year, the company developed charging stations across Europe and the US, called Superchargers, to promote high-speed charging for its cars at no extra cost to Tesla car owners (Schreiber and Gregersen 2022)........

Questions

1. How does Tesla achieve success using premium pricing strategies? 

2. How has the impact of the global pandemic damaged Tesla’s pricing strategy? 

3. The forthcoming Roadster 2 is a high-spec high-price item. Discuss why Tesla might once again be targeting a very elite market with this model? 

4. To what extent do you think Elon Musk’s behaviour will affect Tesla’s brand equity and pricing strategies?  

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