Tesla Motors: Burning Up the Road to Market Domination or Doom

Ten years after its founding, California-based Tesla Motors is close to becoming one of the world’s premier luxury car manufacturers. Its innovative design — using carbon fibre and aluminum rather than steel to construct body and parts — and technology — lithium ion battery packs rather than gasoline for power and a simple powertrain to provide maximum acceleration — make its models treasured options for eco-friendly and tech-savvy consumers as well as wealthy professionals. Relying almost entirely on word-of-mouth promotion through social media, the company sells its cars through factory stores in upscale malls rather than through dealerships and has built service centres to provide free battery charging. However, just as it is expanding into Europe and Asia and is contemplating buying its own factory to secure its battery supply, three of its cars have burst into flames following collisions, although no one has been injured. In addition, analysts claim that the company has been covering up its lack of cash flow by using non-generally accepted accounting principles for reporting its revenue. The CEO knows that the company has tremendous potential but is struggling with public relations problems arising from the crashes and questions about its financial stability and return on investment to investors.

Ideal as a co-teaching case with finance and operations faculty, the case can be used to teach branding, innovation, entrepreneurial marketing, public relations, investor relations, sales, distribution and international marketing at the advanced undergraduate or MBA level. Its objectives are the following:<br><br><ul><li>To discover how to deal with crises involving a new product without relying on advertising by focusing on other components of marketing tactics such as distribution, pricing, manufacturing, etc.</li><li>To develop a clear strategic vision for a brand threatened by criticism and negative media reports.</li><li>To develop a complete marketing plan, including a timeline, contingency plan, financial analysis and future initiatives.</li></ul>

• Electric cars
• premium
• sales
• public relations
• United States