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Tesla Digital Business Analysis

Tesla General Information


Tesla is an American Electric-Automobile manufacturer with the heart quarter based in Palo Alto, California, United States. Tesla was founded in 2003 by Eberhard and Tarpenning, two-car engineers with a passion for electric cars who wanted to prove that people didn't need to compromise to drive electric cars. In 2008 Elon Musk acquired Tesla and is currently the CEO of the automaker. Today, Tesla produces electric vehicles and is one of the most extensive clean and renewable energy producers.




Tesla Website E-Business Model


Tesla's website allows customers to design their cars having real-time quote, providing customers with the ability to choose from several options. Offers access to a variety of Tesla products, such as charging stations, Apparel, and Lifestyle Products, all characterized by unique design and brand identity. Tesla's E-Business Model has functioned by selling their cars and products directly to consumers from their website rather than retailing their cars through third-party sellers, cutting out intermediaries, and having direct contact with their consumers. Unlike other car manufacturers worldwide, Tesla focuses on selling vehicles and accessories directly from its website. Tesla's Website E-Business Model can be defined exclusively as a Business-to-Consumer (B2C) model, according to Chaffey, 2019 Business or consumer of e-commerce transactions models.



Tesla's website comes with strengths and weaknesses. Some of the strengths of the Tesla website are that it is a straightforward website, easy to navigate, and with all the information you need for each of their products. Some of the weaknesses are that you must register on their internet sites to have a quote for one of their vehicles, and it is not possible to make a personalized estimate without registering. This system alienates many people who are only looking for general information on car prices and do not want to share personal information with the website.




Tesla Competitive Strategy and Digital Business Strategy


From the beginning, Tesla revolutionized the automotive industry and its business model by creating a unique position and creating a new category of rules never seen before in the industry. Tesla has changed the way people look at electric vehicles. As a "connected car", it has developed an income flow for an ecosystem of other related activities. Essentially, Tesla's digital transformation has exploited the new technologies developed to advance, revise, and rejuvenate operational processes and activities and identified and developed new value propositions. Furthermore, Tesla's digital transformation e the ecosystem has occurred in several areas, from reviewing production automation processes and effectively interacting with potential and existing customers to creating a customer experience by using social media and website development.


In every industry, there is a business that does better than the others. Tesla is currently the most promising and most performing automotive company with a $ 1.07 billion market cap, $ 1.108 per share, and the sixth company in the world by market cap.


But how do some companies have a competitive advantage over other businesses? One of the ways to understand the competitive advantage of a business is by using Micheal Porter's competitive forces model (Porter, 2001).

This model allows us to understand a general view of the business competitors and their environment. The business's strategic position and its strategy with its traditional competitors and analyses the other four forces in the industry: new market entrants, substitute products, customers, and their suppliers (Laudon and Laudon, 2020).


Traditional Competitors

The competition in the sector is considerably intense. Tesla has a unique position in this market niche where very few companies and car models compete to produce electric cars. Tesla Motors is the market leader and pioneer in the electric vehicle industry. The company created its niche for electric technology luxury cars. Its marketing strategy has managed to gain market dominance in an exciting sector. Tesla is currently the leader in the industry. However, future development of electric car technology from their traditional competitors like General Motors, Ford, etc., may put the leadership at risk.

New Market Entrants

It is challenging for new entrants to approach the electric vehicle industry. Entering this market is capital intensive and requires a great value of experience to get started. There are few car manufacturers competing in this industry, with most of them spread across the various niches of the industry. Most companies in the sector have existing synergies with Tesla Motors.

Substitutes Products and Services

The substitutes threat in this sector is very high. The great barrier to entry into this market has been determined by many substitutes available in the form of hybrids, plug-in hybrids, and all the existing traditional competitors. Some of the most significant replacement threats are low-displacement turbo diesel vehicles with considerably low emissions and economical fuel consumption.


Suppliers

Suppliers have remarkably high bargaining power in this area. However, Tesla realizes low bargaining power from its suppliers due to its sourcing policies. The company buys its lithium-ion batteries from various suppliers, reducing the bargaining power of the battery suppliers. The company manufactures its engines in-house, as well as its chassis .

Customers

Buyers have modest bargaining power, depending on the type of buyer. Tesla has two main types of buyers; individual customers who have low bargaining power due to high demand for Tesla Motors products and corporate buyers, such as Toyota, and Daimler, who make up a sizeable share of the company's business, giving them modest power contractual.

Conclusion

Laudon and Laudon (2020) point out how important it is for a company to have a strategy that keeps the company competitive. In fact, he mentions four strategies that a company should implement, such as low-cost leadership, and using a system that manages information to lower the costs of operations as much as possible. Product differentiation, offering a diversity of products, Focusing on the market niche, and finally, a close relationship with consumers and their suppliers.

From the information we have from Porter's five forces, it can be seen that Tesla optimizes the focus in the market niche, product differentiation, and low-cost leadership all the way. Despite having a policy that helps them manage suppliers, it would be better to increase the battery suppliers in case of any eventuality.




Tesla Digital Marketing Strategy


Digital Marketing, by definition, means "Achieving marketing objectives through applying digital technologies and media" (Chaffey and Ellies-Chadwick 2016 cited in Chaffey, 2019), and marketing itself means "Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably" (Chaffey, 2019). So how does Tesla identify, anticipate and satisfy its customer needs to generate the most profitably using digital marketing strategy?

Tesla uses a unique digital marketing strategy to generate the most awareness on social platforms, drawing customers to their products (inbound marketing) with original and exciting content such as videos, social media posts etc., (content marketing) (Chaffey, 2019).

Thanks to its charismatic CEO, Elon Musk, with over 68 million followers on Twitter, Tesla can generate immense marketing at a meager budget.

Elon Musk's activity on Twitter is more than unique for a CEO; he cross-promotes from Tesla to SpaceX and vice-versa on his Twitter profile, shares business technology ideas, responds to customer suggestions, and often rolls out a fix, generating the interest of millions of people in his business.

Also, viral content is shared directly from Tesla on YouTube, like this "Dog Mode" video, a unique car feature that ensures the dog is safe and at the correct temperature while the driver is away from the car—generating over 18 million views.

All content generates awareness about the business, inspires, educates, entertains, and convinces. Increase satisfaction, drive brand loyalty, and reduce costs to consumers and organizations (Chaffey, 2019).



Tesla Customer Traffic


Overview

Tesla's website has over 17 million visitors per month and is the 3rd website in its category and 2336th in the global rank. The average duration of a visit by a user is 3 minutes and visits six pages. 64% of the visitors use a desktop pc and the other 36% a mobile web (Similarweb, 2021).


Geography

50% of Tesla traffic is coming from the United States, 5.35% from Canada, 4.47% from Germany, 3.96% from the United Kingdom, and 3.07% from France.


Channels Overview

With over 17 million views per month, 50% of the traffic is organic, 37% direct traffic, 4.4% from socials, and only 1.29% from emails.


Outgoing Traffic

After a visit to the Tesla website, 6.83% of the user visit a Tesla not owned website for insurance, 6.71% a Tesla Chinese website, and 4.89% and 4.80% visit a forum about the effect of Tesla vehicles on ambients and the benefits of a Tesla Car.


Social Traffic

Of the 4.4% of Social traffic, 37% is from Linkedin Traffic, 32% from YouTube, 10% from Twitter, 9% from Facebook, and 7% from Reddit.

Conclusion & Suggestions

Tesla has a considerable number of visitors monthly; most of them visit six pages and spend about 3 minutes on the website. 50% of the traffic is coming from the United States, and only 5% on average from other countries, as the suggestion increasing the traffic from other countries would help less centralization and risks of external factors like regulation.

After a visit to the Tesla website, most of the visitors view extra information about the benefits of the car and are interested in Tesla car insurance.

It would be recommendable to create a forum with a paid subscription where the visitors can join, and find the information needed. Make a deal with some insurance company and offer it to their website visitors.


Tesla E-CRM and Social Network channels


E-Customer Relationship Management (e-CMR) is software used by an organization to manage relations with customers and potential customers (Chaffey, 2019). According to CIO magazine (Wailgun, 2017 cited in Chaffey, 2019), the e-CRM tool help to understand customer needs and how to satisfy those needs without compromising. e-CRM systems store information about customers and potential customers in one database from various sources, emails, socials, websites, sales, and marketing. Help organizations build customer relationships to increase sales, improve customer service and increase profitability (Chaffey, 2019).


How does Tesla use the e-CRM to improve its Customer Relationship Management?

Tesla is transitioning from the traditional Salesforce e-CRM to a homemade version to have vertical integration capable of handling numerous internal and external functions. The method by which Tesla uses its e-CRM software is to manage its relationship with its customers and via news emails, which are sent to subscribers of their website, customers, and non-customers. However, there are no direct links to the company's social networks on its website, making it difficult to find them and thus losing potential customers and people who would like to be updated on the automaker's progress.


Tesla Website Security

Tesla's website seems a secure website; a TLS1.2 protocol is enabled, it asks permission to share cookies, and visitors can opt in or out.

The automaker has a heart for the security of its website. In fact, on many white hat hackers' websites, there are bounty rewards for people that can find vulnerabilities on the Tesla website and report them to the automaker.



References:

  • Chaffey, D. (2019). Digital business and e-commerce management : strategy, implementation and practice. Harlow, England: Pearson.

  • Google Finance (2021). Tesla Inc (TSLA) Stock Price & News - Google Finance. [online] www.google.com. Available at: https://www.google.com/finance/quote/TSLA:NASDAQ?sa=X&ved=2ahUKEwiPsIOYoIT1AhVQY8AKHTrRDTYQ3ecFegQIDhAc [Accessed 5 Dec. 2021].

  • Greiner, A., Sherman, I., Baker, T., Schmitz, A. and Ts, J. (2019). The history of Tesla and Elon Musk: A radical vision for the future of autos. [online] Cnn.com. Available at: https://edition.cnn.com/interactive/2019/03/business/tesla-history-timeline/index.html (Accessed 19 Nov. 2021).

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  • Matousek, M. (2019). Tesla is starting to ditch Salesforce and replace it with its own software for company salespeople. [online] Business Insider. Available at: https://www.businessinsider.com/tesla-replacing-salesforce-with-its-own-sales-software-2019-11?r=US&IR=T [Accessed 5 Dec. 2021].

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  • Tesla (2021). About Tesla. [online] Tesla. Available at: https://www.tesla.com/about. (Accessed 19 Nov. 2021).

  • Yurong C., Yannick P., (2017) Business Model Design: Lessons Learned from Tesla Motors. Towards a Sustainable Economy: Paradoxes and Trends in Energy and Transportation, Springer, 2018, 978-3- 319-79060-2. ffhal-01655959f

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