Business strategy
Robotic manufacturing of the Model S at the Tesla Factory in Fremont, California
At the time of Tesla's founding in 2003, electric vehicles were very expensive.[124] In 2006, Elon Musk stated that Tesla's strategy was to first produce high-price, low-volume vehicles, such as sports cars, for which customers are less sensitive to price. This would allow them to progressively bring down the cost of batteries, which in turn would allow them to offer cheaper and higher volume cars.[16][125] Tesla's first vehicle, the Roadster, was low-volume (fewer than 2,500 were produced) and priced at over $100,000. The next models, the Model S and Model X, are more affordable but still luxury vehicles. The most recent models, the Model 3 and the Model Y, are priced still lower, and aimed at a higher volume market,[126][127] selling over 100,000 vehicles each quarter. Tesla continuously updates the hardware of its cars rather than waiting for a new model year, as opposed to nearly every other car manufacturer.[128]
Unlike other automakers, Tesla does not rely on franchised dealerships to sell vehicles. Instead, the company directly sells vehicles through its website and a network of company-owned stores.[129][130] The company is the first automaker in the United States to sell cars directly to consumers.[131][132] Some jurisdictions, particularly in the United States, prohibit auto manufacturers from directly selling vehicles to consumers. In these areas, Tesla has locations that it calls galleries that the company says "educate and inform customers about our products, but such locations do not actually transact in the sale of vehicles."[133][134] In total, Tesla operates nearly 400 stores and galleries in more than 35 countries.[135] These locations are typically located in retail shopping districts, inside shopping malls, or other high-traffic areas,[130] instead of near other auto dealerships.[136][137][138]
The Tesla Patent Wall at its headquarters was removed after the company announced its patents are part of the open source movement.[139]
Analysts describe Tesla as vertically integrated given how it develops many components in-house, such as batteries, motors, and software.[140] The practice of vertical integration is rare in the automotive industry, where companies typically outsource 80% of components to suppliers and focus on engine manufacturing and final assembly.[141][142][143]
Tesla generally allows its competitors to license its technology, stating that it wants to help its competitors accelerate the world's use of sustainable energy.[144] Licensing agreements include provisions whereby the recipient agrees not to file patent suits against Tesla, or to copy its designs directly.[145] Tesla retains control of its other intellectual property, such as trademarks and trade secrets to prevent direct copying of its technology.[146]
Robotics
Ahead of the start of production of the Model 3, Tesla invested heavily in robotics and automation to assemble vehicles. To that end, between 2015 and 2017, the company purchased several companies involved in automation and robotics including Compass Automation,[211] Grohmann Automation,[212] Perbix Machine Company, and Riviera Tool and Die.[213] Elon Musk later admitted that the robotics actually slowed the production of the vehicles.[47]
Tesla uses massive casting machines (Giga Press) to make large single pieces of vehicle underbodies and to streamline production.[214] This saves time, labor, cost and factory space, replacing multiple robots that weld car parts together with a single machine.[215]
In September 2022, Tesla revealed prototypes of a humanoid robot named Optimus, which Musk has stated uses the same core software as FSD. During the presentations at Tesla's AI Day 2022, Musk suggested that, among other use cases, the finalized version of Optimus could be used in Tesla's car factories to help with repetitive tasks and relieve labor shortages.[216]
In July 2023, Tesla acquired Wiferion, a Germany-based developer of wireless charging systems for industrial vehicles and autonomous robots, which has since been operating as Tesla Engineering Germany GmbH.[217] Tesla sold the business to Munich-based Puls Group three months later, but retained its staff.[218][219]
Glass
In November 2016, the company announced the Tesla Glass technology group. The group produced the roof glass for the Tesla Model 3. It also produces the glass used in the Tesla Solar Roof's solar shingles.[220]