Tesla: The story of a strong purpose as a competitive advantage
Posted: Sun Dec 22, 2024 7:31 am
It seems that as marketing professionals we only look at large companies to give examples of things that we find interesting or noteworthy. But it is precisely these companies that do things excellently.
In the case of Tesla, it is not a long-term company like the more traditional ones we all have in mind, but it is one of those that has attracted the most attention in recent years. In terms of visibility and brand, it has made almost the same journey as other large companies, but in a fraction of the time.
Well, Tesla is a company that, due to its level
telegram usa number of innovation and disruption (and a somewhat controversial CEO), has attracted the attention of the market since its founding in 2003 .
Given the high interest generated, one might think that it is a company with high profits and profitability. But nothing could be further from the truth.
Until 2018 (15 years since its founding), Tesla had been losing money. So much so that some analysts said it was better for them to close down, because the more cars they made, the more money they would lose.
What decisions would anyone have made to save the situation? To put it colloquially, anything to sell more and save the company. That would be what many would have tried.
But Tesla decided to continue betting on continuing to innovate and be true to its purpose.
Tesla's Purpose
Accelerating the World's Transition to Sustainable Energy
Accelerating the world's transition to sustainable energy
One of the conditions for correctly defining a brand purpose is that it is seemingly unattainable . Normally we start by defining purposes that are closer to the company's vision in a few years. But when we go up several steps and separate ourselves from the product or services we currently market, suddenly the magic appears.
Tesla defined it correctly and stuck to it. His reward was twofold, even though the road has not been easy.
The company was created with the goal of reducing the world's dependence on fossil fuels and helping to combat climate change through clean and sustainable energy solutions. No less!
How did Tesla decide to put its purpose into practice? It does so through high-end electric vehicles, energy storage systems for homes and businesses, as well as the production and distribution of solar panels.
Staying true to its purpose led Tesla to sustained growth
After 15 years of losses, they had 5 years of annual increases of 47% and in the second quarter of 2023 Tesla has grown by 87% compared to the same quarter in 2022.
Tesla sales from 2008 to 2022
Tesla Inc. Sales from 2008 to 2022
In the El Confidencial article , Juan Gómez Bada describes the keys to their growth very well. In a previous article he identified the 5 competitive advantages that, when maintained over time, have led them to these results:
Technology (batteries).
Scale: mass production capacity.
Network of electric chargers.
Brand.
Distribution model (direct sales).
In addition to obtaining good results, it has allowed them to increase the distance with their competitors year after year.
Increased manufacturing volume strengthens Tesla
One of the keys is found in its software. Every time it is updated, drivers enjoy a more advanced system, which increases their advantage over their competition and also increases the barriers to entry into the sector.
This is a constant source of value generation for shareholders. In addition, they begin to enjoy economies of scale (lower costs as the number of cars using it increases).
Today, Tesla continues to sacrifice margins to gain volume (the opposite of what anyone would have done during those 15 years of losses).
We have similar examples of the growth philosophy at Inditex, Apple or Amazon. These companies bet on the long term and won .
How can I apply Tesla’s approach to my business?
As I said at the beginning of the article, we are talking about large companies. They are large precisely because they do these things (among many others, of course).
And these being examples, there is obviously no simple formula to apply. But the lessons I draw from Tesla are:
In the case of Tesla, it is not a long-term company like the more traditional ones we all have in mind, but it is one of those that has attracted the most attention in recent years. In terms of visibility and brand, it has made almost the same journey as other large companies, but in a fraction of the time.
Well, Tesla is a company that, due to its level
telegram usa number of innovation and disruption (and a somewhat controversial CEO), has attracted the attention of the market since its founding in 2003 .
Given the high interest generated, one might think that it is a company with high profits and profitability. But nothing could be further from the truth.
Until 2018 (15 years since its founding), Tesla had been losing money. So much so that some analysts said it was better for them to close down, because the more cars they made, the more money they would lose.
What decisions would anyone have made to save the situation? To put it colloquially, anything to sell more and save the company. That would be what many would have tried.
But Tesla decided to continue betting on continuing to innovate and be true to its purpose.
Tesla's Purpose
Accelerating the World's Transition to Sustainable Energy
Accelerating the world's transition to sustainable energy
One of the conditions for correctly defining a brand purpose is that it is seemingly unattainable . Normally we start by defining purposes that are closer to the company's vision in a few years. But when we go up several steps and separate ourselves from the product or services we currently market, suddenly the magic appears.
Tesla defined it correctly and stuck to it. His reward was twofold, even though the road has not been easy.
The company was created with the goal of reducing the world's dependence on fossil fuels and helping to combat climate change through clean and sustainable energy solutions. No less!
How did Tesla decide to put its purpose into practice? It does so through high-end electric vehicles, energy storage systems for homes and businesses, as well as the production and distribution of solar panels.
Staying true to its purpose led Tesla to sustained growth
After 15 years of losses, they had 5 years of annual increases of 47% and in the second quarter of 2023 Tesla has grown by 87% compared to the same quarter in 2022.
Tesla sales from 2008 to 2022
Tesla Inc. Sales from 2008 to 2022
In the El Confidencial article , Juan Gómez Bada describes the keys to their growth very well. In a previous article he identified the 5 competitive advantages that, when maintained over time, have led them to these results:
Technology (batteries).
Scale: mass production capacity.
Network of electric chargers.
Brand.
Distribution model (direct sales).
In addition to obtaining good results, it has allowed them to increase the distance with their competitors year after year.
Increased manufacturing volume strengthens Tesla
One of the keys is found in its software. Every time it is updated, drivers enjoy a more advanced system, which increases their advantage over their competition and also increases the barriers to entry into the sector.
This is a constant source of value generation for shareholders. In addition, they begin to enjoy economies of scale (lower costs as the number of cars using it increases).
Today, Tesla continues to sacrifice margins to gain volume (the opposite of what anyone would have done during those 15 years of losses).
We have similar examples of the growth philosophy at Inditex, Apple or Amazon. These companies bet on the long term and won .
How can I apply Tesla’s approach to my business?
As I said at the beginning of the article, we are talking about large companies. They are large precisely because they do these things (among many others, of course).
And these being examples, there is obviously no simple formula to apply. But the lessons I draw from Tesla are: