Tesla is a widely-known multinational corporation specializing in clean energy and electric cars. It is associated with Elon Musk – a renowned inventor and businessman, who advocates for a clean technological future of human kind. The company employs over 100,000 people and is valued at 62.1 billion dollars (Trends, 2020). Given the spotlight it receives, Tesla presents an excellent case study on globalization and international trade, supply chain strategies, and transportation within that supply chain.
Initially, Tesla’s production values and trade were focused on satisfying the US market, which is considered its largest source of revenues – over 60% of all Tesla sales happen there (Trends, 2020). Nevertheless, the company has since put an effort into globalization and opening up production to expand into other markets. Tesla has constructed one of its Gigafactories in China in just 168 days. Since then, Tesla’s sales in China proper have been growing at a rate of 175% per year, thus giving them a foothold in a potentially 2-billion-strong market (Trends, 2020). Likewise, the company was expanding into Europe both in terms of production and sales, with a battery factory being constructed in Germany to supply the pan-European market. Based on these observations, it could be concluded that Tesla pursues a globalization and expansionist strategy, seeking to reach out beyond its North American domestic market.
Initially, Musk viewed Tesla as a company that should be able to produce everything it needs within its own confines, in a kind of full circle system. This strategy required much in terms of investment and construction, and numerous setbacks have put the release of many Tesla products back, and have reduced the numbers of models produced. Since 2017, however, the company has altered its supply chain strategy by diversifying its suppliers and involving 3rd-party contracts to provide them with necessary materials, instruments, and components (Trends, 2020). Nevertheless, Tesla looks to becoming more independent through merges with numerous engineering, electronics, and material production companies, such as Hibar Systems, Deepdive, and Maxwell Technologies (Trends, 2020). Overall, the company realized that it is much easier to acquire key suppliers through merges and to hire the rest than to build everything from scratch, which greatly improved their supply chain stability.
Despite claiming to be a green-energy company and having a working model of the Tesla Truck ready for production and utilization, the company is hesitant to dedicate its own supply chains to the concept. Indeed, their supply transportation has been forfeited to various subcontractors that primarily use gasoline-fueled trucks, in order to address the demand, which has grown since the transition of the company to the Silicon Valley, away from its traditional supply routes (Trends, 2020). Their fleet of Tesla trucks remains small and does not play a significant role in its logistics. To conclude, Tesla pursues a globalization and supply chain strategy similar to that of many other automotive companies. They tried their own path at the start, but quickly realized to follow the trail, in order to ensure stable growth and development.
Reference
Trends, M. (2020). Understanding Tesla’s intensive growth strategy in 2020.
