Tesla Mission Statement and Vision Statement Analysis

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Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla used a transitional business model as its ecosystem grew.

What How Why
Vision “To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” Tesla’s vision is ambitious and forward-looking. It aims to position the company as a leader in the automotive industry by not only producing cars but by becoming the most appealing and influential car manufacturer of the 21st century. The vision focuses on driving the global transition to electric vehicles, indicating Tesla’s commitment to sustainability and innovation.
Mission “To accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla’s mission statement emphasizes urgency and the pursuit of sustainable transport solutions. It underscores the company’s commitment to making electric vehicles accessible to the masses. By accelerating the advent of sustainable transport, Tesla aims to address environmental concerns and promote widespread adoption of electric cars. It also emphasizes the importance of making electric cars attractive to a broad consumer base.

Breaking down the Tesla mission and vision

In an official presentation in 2011, Tesla highlighted its vision as:

Create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles

While as highlighted by Elon Musk on Tesla’s blog its mission was:

To accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.

To understand what it means, we need to look at Tesla’s history and how it developed.

Tesla was founded in 2003 by a group of engineers. The central idea was to prove that electric cars could be as good, if not better, than gasoline alternatives.

As Elon Musk took over as a CEO, he started to roll out a strategy where Tesla could have an entry price competitive with other cars in the market.

That is why the first car Tesla launched was a sports car, as its pricing was in line with the market.

If Tesla were to launch a premium car, it would not have made it because the costs of producing the first prototypes turned out so much higher, and Tesla would have seen all its orders canceled.

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Instead, by narrowing down the market, at the point of figuring out a microniche, Tesla could sell a high-priced sports car in a market segment that was much less elastic to price changes, as those were innovators interested in the technology.

Tesla could envision its next step in this evolution only after launching a successful sports car.

Indeed, once it had figured out the prototyping of the car, it could start to manufacture a premium car model at proper pricing for the market, which could be a bit wider.

This targeted a market segment that could be labeled, according to the tech adoption curve, as early adopters.

Those were people interested in the technology but much more in its value proposition, which was about an alternative to gas-powered cars with zero emissions.

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Where are we today? Tesla, with its Model 3, is ready to tackle mass manufacturing.

Tesla Production Numbers By YearTesla Production Numbers By Year

Of course, as Tesla has scaled and launched the new Model 3, its value proposition and scope also changed.

Tesla is now working on achieving economies of scale, and the people buying a Tesla now are doing it for different reasons.

It’s about status, looking good with peers, saving on gas, and of course, for some, it’s still about the environment.

Indeed, it’s critical to notice that when a company scales, the value proposition for consumers also changes dramatically.

From a more tech-based and practical pay-off, the value proposition morphs into demand generation when it adds into the mix social status and how the consumer feels about her/himself while driving a Tesla!|

To remember the early days, as highlighted by Elon Musk back in 2013:

Our first product was going to be expensive no matter what it looked like, so we decided to build a sports car, as that seemed like it had the best chance of being competitive with its gasoline alternatives.

Therefore, as a go-to-market and entry strategy, Tesla used a higher-priced segment of the market, in seemingly sharp contrast with its mission.

Yet this was a transitional business model that enabled Tesla to be viable in the short term and yet achieve its mission in the long run.

That’s because, in order to become fully viable as a business model, Tesla needed to create an entire ecosystem, also made of energy solutions that could enable electric cars to become competitive in terms of convenience (meant the ability to charge anywhere) in respect to gasoline vehicles.

Therefore, as Tesla rolls out its business model, by enabling this ecosystem to grow year over year, the company can enter larger and larger segments of the markets by offering lower-priced options that might make it possible for Tesla’s vehicles to achieve mass adoption.

Where is Tesla today?

It took years for Tesla to roll out its business strategy, at the point of going through various near-death experiences.

And yet, by 2022, this is where Tesla stands.

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Tesla’s profit margin per car in 2023 was $8,279, compared to $9580 in 2022, over $6000 in 2021, and over $1700 in 2020.

As Tesla was working toward mass manufacturing in 2020, the company’s profitability per car increased massively between 2020 and 2023, though in an attempt to gain market shares, it decreased in 2023 compared to 2022.

In fact, after many years of rolling outs its strategy, finally, the car segment of Tesla has become highly profitable as result of scale.

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Automotive sales are the most critical segment for Tesla, with over $82.4 billion in revenue from automotive parts; most of the gross profits come from automotive sales, with over $16 billion in gross profits, or a 19.4 % gross margin. However, the “energy platform” (generation & storage) is contributing more and more to it. With revenue of $6 billion, a gross profit of over a billion dollars, and gross margins of 18.9%, this might become a critical component of the business model, thus changing its whole strategy.

Thus, today Tesla is a completely different company, with a changed cost and margin structure.

tesla-gross-margintesla-gross-margin
Tesla’s gross margin changed from 19% in 2017 to over 25% in 2022 before going back to 18,2% in 2023. Those gross margins came primarily from the automotive segment due to increased competition and reduced prices in 2023 as an attempt to quickly and further grow its market shares across the EVs industry and beyond.

And profitability.

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Tesla was profitable in 2023, with a net profit of $14.99B, compared to $12.55 billion in 2022. Tesla has been profitable since 2020. Indeed, Tesla generated $862 million in net profits in 2020. It will further generate $5.6 billion in net profits in 2021.

Of course, things might slightly change as the EV market gets more competitive, and Tesla might have to leverage short-term price wars to win market shares.

However, the company, overall, has become way more efficient over the years.

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According to a FourWeekMBA analysis, in 2023, Tesla’s revenue per employee stood at $688,908 compared to $637,144 in 2022 and $542,079 in 2021.

The history of Tesla is one of the most interesting corporate histories of the last century.

Starting as an attempt to show the viability of EVs, by starting from a sub-segment of the sports car performance market, Tesla produced its first viable EV in 2008.

From there, the company scaled up its operations in a story with plenty of twists and turns and many near-death experiences.

Elon Musk explained how, in 2018, Tesla was a few days away from bankruptcy and how the company managed to survive and thrive.

Yet, while Tesla’s story might make sense in hindsight, it was a very unpredictable turn of events that transformed Telsa into one of the most interesting companies of the last century!

The history of Tesla, from the early days, until scaling up its operations!

Starting from a microniche to kick off the business

At the introduction of the Tesla Roadster, Elon Musk, in 2006, as the prototype was introduced, highlighted:

The opportunity is now and the need is now to have a car company of this nature and you know one thing I’d say to anyone who’s

considering buying this car is you know you’re not just buying a sports car

you’re actually helping pay for the development of the mass-market vehicles. 

The tesla collectives are not paid high salaries we don’t issue dividends all

money all free cash flow goes completely into driving the technology to lower and lower costs and make it more more available and also we’re going to be working with solar panel companies to offer solar options along with the vehicles so that if you buy the solar option and you buy the vehicle you’ll actually be energy positive. 

You’ll generate more miles in electricity than you use in your daily commute and so I really I think we should all aspire to be the energy positive in that way.

After a very complex history, made of many near-death experiences, Tesla’s pieces came together in a company that goes way beyond cars!

And while the path seems easy and linear in hindsight, in reality, it was very messy and hard to predict.

I like to say over and over that it takes a decade or more to roll out a business strategy fully.

And when you look at it in hindsight, it looks like a linear journey, when instead, it was a very messy endeavor.

what's Tesla market?what's Tesla market?

Indeed, when Musk set the master plan for Tesla, it was a very simple plan, which took fifteen years to execute!

Indeed, by 2006, Musk would lay out the foundation for Tesla’s plan for the next decade. It was a four points master plan structured as below:

  1. Build sports car
  2. Use that money to build an affordable car
  3. Use that money to build an even more affordable car
  4. While doing above, also provide zero emission electric power generation options

Breaking down the Tesla business model

To understand Tesla’s business model, it’s critical to look at a few key ingredients:

  • In-house manufacturing: when Tesla started to execute its business model back in the early 2000s, it thought it could mainly outsource parts of the car, and create an electric vehicle out of those. Yet, they soon realized this assumption was completely off. Not only did they not manage to secure proper parts for the vehicles, but none wanted to risk having electric vehicles that could have caught fire. Instead, if Tesla wanted to make its business plan viable it had to build its own manufacturing centers. It took years for the company to do that, and it’s starting to pay off today. Now Tesla has various manufacturing facilities, called gigafactories.
  • Energy storage and generation: another key element to make the Tesla business model scalable is the ability of drivers to find electric stations around the country, and to quickly charge the cars. That is why, over the years, Tesla has been ramping up its electric generation and storage arm.
  • Direct distribution: another key element of the Tesla business model which the company started to build early on, is direct distribution or the ability to sell Tesla vehicles either through its online stores, or via its Tesla stores.
  • And financing models: as explained in real-time insurance, a combination of lower insurance premiums and better leasing rates can ramp up Tesla’s demand side, making it possible for many millions of Americans to own a Tesla.

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Tesla is vertically integrated. Therefore, the company runs and operates the Tesla’s plants where cars are manufactured and the Gigafactory which produces the battery packs and stationary storage systems for its electric vehicles, which are sold via direct channels like the Tesla online store and the Tesla physical stores.

Manufacturing, together with energy storage and generation, and direct distribution are some of the key ingredients of Tesla’s business model.

Key Highlights

  • Tesla’s Vision and Mission:
    • Vision: To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.
    • Mission: To accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.
  • Tesla’s Founding and Early Focus:
    • Founded in 2003 by a group of engineers with the goal of proving the viability of electric cars.
    • Initial focus on building high-priced sports cars, starting with the Tesla Roadster.
    • Aimed to demonstrate that electric vehicles (EVs) could compete with gasoline alternatives.
  • Transitioning Business Model:
    • Tesla’s early emphasis on sports cars was a transitional strategy to establish brand credibility and generate revenue.
    • Recognized the need to build its manufacturing facilities (Gigafactories) to ensure EV production.
    • Developed an entire ecosystem, including energy solutions, to support EV convenience and competitiveness.
    • Gradually expanded its market by offering lower-priced options as it achieved economies of scale.
  • Evolving Value Proposition:
    • Tesla’s value proposition evolved over the years.
    • Initially, it was technology-focused, targeting innovators interested in new tech.
    • Expanded to include social status, cost savings, and environmental considerations as the company scaled.
    • Demonstrated how the value proposition changes as a company grows.
  • Tesla’s Current Status:
    • In 2022, Tesla achieved a profit margin of $9,580 per car, driven by increased scale and efficiency.
    • Automotive sales accounted for over $71.4 billion in revenue, with a 28.5% gross margin.
    • Gross margin improved from 19% in 2017 to over 25% in 2022.
    • The company achieved profitability, with over $12.5 billion in profits in 2022.
  • Tesla’s Evolutionary Journey:
    • Tesla went through various phases, from proving EV viability with the Roadster to achieving mass production with the Model 3.
    • Faced numerous challenges and near-death experiences.
    • The company’s transformation was marked by unpredictability and adaptation.
  • Tesla’s Master Plan:
    • Elon Musk’s master plan involved a multi-phased approach:
      1. Build a high-priced sports car (Roadster).
      2. Use the profits to create an affordable car (Model S).
      3. Repeat step 2 to produce even more affordable vehicles (Model 3, Model Y).
      4. Develop zero-emission electric power generation options (Solar, Energy products).
  • Key Ingredients of Tesla’s Business Model:
    • In-house manufacturing: Tesla realized the need to establish its own manufacturing facilities (Gigafactories) to control production.
    • Energy solutions: Tesla invested in electric generation and storage solutions, including solar products and Powerwalls.
    • Direct distribution: Tesla adopted a direct-to-consumer sales model, combining online and physical stores.
    • Financing models: Lower insurance premiums and leasing options were part of Tesla’s strategy to make EVs accessible.
  • Vertical Integration:
    • Tesla is vertically integrated, overseeing its manufacturing plants, including Gigafactories, and directly selling products to consumers.
    • Vertical integration allows Tesla to have greater control over production and customer experience.

Read Also: Tesla Business Model

Related to Tesla

Is Tesla Profitable?

is-tesla-profitableis-tesla-profitable
Tesla was profitable in 2022, and it generated $12.55 billion in net profits. Tesla has been profitable since 2020. Indeed, Tesla generated $862 million in net profits in 2020. And it further generated $5.6 billion in net profits in 2021.

Related to Tesla

Tesla Business Model

tesla-business-modeltesla-business-model
Tesla is vertically integrated. Therefore, the company runs and operates the Tesla’s plants where cars are manufactured and the Gigafactory which produces the battery packs and stationary storage systems for its electric vehicles, which are sold via direct channels like the Tesla online store and the Tesla physical stores.

How Does Tesla Make Money?

how-does-tesla-make-moneyhow-does-tesla-make-money
In 2022, Tesla generated $81.46 billion in revenues. Tesla’s business model primarily relies on automotive sales, $71.46 billion (almost 88% of the total revenues); services/others followed with over $6 billion; energy generation and storage generated over $3 billion in revenues.

Tesla Cost Structure

tesla-cost-structuretesla-cost-structure
Automotive sales are the most critical segment for Tesla, with over $71.4 billion in revenue from automotive parts; most of the gross profits come from automotive sales, with over $20 billion in gross profits, or a 28.5% gross margin.

Tesla Marketing Strategy

tesla-marketing-strategytesla-marketing-strategy
Tesla doesn’t have an official advertising budget to spend on budget, as it has almost been null over the years. Indeed, Tesla leveraged a combination of Elon musk’s ability to generate significant media coverage and build a product that sold via word of mouth and directly to consumers.

Tesla Revenue Per Employee

tesla-revenue-per-employeetesla-revenue-per-employee
According to a FourWeekMBA analysis, in 2022, Tesla’s revenues per employee were $637,144, growing from $542,079 in 2021.

Is Tesla Profitable?

is-tesla-profitableis-tesla-profitable
Tesla was profitable in 2022, and it generated $12.55 billion in net profits. Tesla has been profitable since 2020. Indeed, Tesla generated $862 million in net profits in 2020. And it further generated $5.6 billion in net profits in 2021.

Tesla Profit Margin

tesla-profit-margintesla-profit-margin
Telsa’s profit margins moved from negative 3.15% in 2019 to over 15% in 2022. As Tesla scaled up manufacturing and improved its economies of scale (with new facilities) and scope, the company became extremely profitable by 2022.

Tesla Profit Margin Per Car

tesla-profit-margin-per-cartesla-profit-margin-per-car
Tesla’s profit margin per car in 2022 was $9580, compared to over $6000 in 2021 and over $1700 in 2020.

As Tesla was working toward mass manufacturing in 2020, the company’s profitability per car has increased slightly.

Tesla R&D Strategy

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Tesla R&D’s costs have doubled in absolute number, from almost $1.5 billion in 2020 to over $3 billion in 2022. Yet they have decreased as a percentage of revenue, from 5% in 2020 to 4% in 2022. These R&D expenses primarily comprise costs associated with personnel for teams in engineering and research, manufacturing engineering and manufacturing test organizations, prototyping expense, contract, and professional services.

Tesla Market Cap vs. Revenue

tesla-market-cap-revenue-multipletesla-market-cap-revenue-multiple
In the peak of 2020 and 2021, Tesla reached a market cap revenue multiple of 21x and 18x, respectively-. This means that Tesla was valued at 21X over its revenues in 2020 and 18X over its revenue in 2021. By the end of 2022, this multiple decreased to 4.7X.

Tesla Production

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Tesla Production vs. Delivery

tesla-production-numberstesla-production-numbers

Who Is Elon Musk

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Elon Musk, seen as one of the most visionary tech entrepreneurs from the Silicon Valley scene, started his “career” as an entrepreneur at an early age. After selling his first startup, Zip2, in 1999, he made $22 million, which he used to found X.com, which would later become PayPal, and sell for over a billion to eBay (Musk made $180 million from the deal). He founded other companies like Tesla (he didn’t start it but became a major investor in the early years) and SpaceX. Tesla started as an electric sports car niche player, eventually turned into a mass manufacturing electric car maker.

Who Owns Tesla

who-owns-teslawho-owns-tesla
Elon Musk, an early investor and CEO of Tesla, is the major shareholder with 21.7% of the stocks. Other major shareholders comprise investment firms like Baillie Gifford & Co. (7.7%), FMR LLC (5.3%), Capital Ventures International (5.2%), T. Rowe Price Associates (5.2%), and Capital World Investors (5%). Another major individual shareholder is Larry Ellison (co-founder and CEO of Oracle), with a 1.7% stake.

History of Tesla

history-of-teslahistory-of-tesla
Founded in 2003 by Eberhard and Tarpenning, eventually, the initial co-founders left the company, and by 2004, Musk first became the main investor. After that, by 2008, he took over as CEO of the company. Tesla would go through many near-death experiences until 2018. And yet, by 2021, Tesla will become a trillion-dollar company.

Tesla Business Model

tesla-business-modeltesla-business-model
Tesla is vertically integrated. Therefore, the company runs and operates the Tesla’s plants where cars are manufactured and the Gigafactory, which produces the battery packs and stationary storage systems for its electric vehicles, which are sold via direct channels like the Tesla online store and the Tesla physical stores.

Tesla Competitors

tesla-competitorstesla-competitors
As an electric automaker and builder of sports cars and now trucks, Tesla’s competitors comprise companies like Ford, Mercedes-Benz, Porsche, Lamborghini, Audi, Rivian Lucid Motors, Toyota, and more. At the same time, Tesla is an electric energy production and storage company (SolarCity); it competes with Sunrun, SunPower, and Vivint Solar. And as an autonomous driving company, it competes with companies like Zoox, Waymo, and Baidu with self-driving software.

Real-Time Insurance

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A real-time insurance business model enables Tesla to build its insurance arm by dynamically adjusting the premiums based on real-time driving behavior. Reduced insurance premiums hooked with the leasing arm enable Tesla to scale its demand side of the business.

Read Also: Tesla Business Model, Elon Musk Companies, Who Owns Tesla, Transitional Business Models, Tesla Competitors.

Read Also: Who Is Elon Musk? The Elon Musk’s Story, How Does Elon Musk Make Money, Elon Musk Companies, Bill Gates Companies, Jeff Bezos Companies, Warren Buffett Companies.

How did Tesla use a transitional business model to thrive?

Read Also: Who Is Elon Musk? The Elon Musk’s Story, How Does Elon Musk Make Money, Elon Musk Companies, Bill Gates Companies, Jeff Bezos Companies, Warren Buffett Companies.

Mission Statement Case Studies

Adidas Mission Statement

adidas-mission-statementadidas-mission-statement
Adidas’ mission is “To be the best sports brand in the world.” Adidas AG is a German multinational initially founded in 1924 by Adolf Dassler who developed spiked running shoes out of his mother’s house. Today, the company is the largest sportswear producer in Europe and the second largest globally behind rival Nike.

Uber Mission Statement

uber-mission-statementuber-mission-statement
Uber’s mission statement is to ignite opportunity by setting the world in motion.

Tesla Mission Statement

tesla-vision-statement-mission-statementtesla-vision-statement-mission-statement
Tesla’s vision is to “create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles,” while its mission is “to accelerate the advent of sustainable transport by bringing compelling mass-market electric cars to market as soon as possible.” Tesla used a transitional business model as its ecosystem grows.

Amazon Mission Statement

amazon-vision-statement-mission-statement (1)amazon-vision-statement-mission-statement (1)
Amazon’s mission statement is to “serve consumers through online and physical stores and focus on selection, price, and convenience.” Amazon’s vision statement is “to be Earth’s most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices.” 

Apple Mission Statement

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Apple’s mission is “to bring the best user experience to its customers through its innovative hardware, software, and services.” And in a manifesto dated 2019 Tim Cook set the vision specified as “We believe that we are on the face of the earth to make great products and that’s not changing.”

Netflix Mission Statement

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Netflix’s core mission, strategy, and vision are that of “improving its members’ experience by expanding the streaming content with a focus on a programming mix of content that delights members and attracts new members.”

Coca-Cola Mission Statement

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Coca-Cola’s Purpose is to “refresh the world. make a difference.” Its vision and mission are to “craft the brands and choice of drinks that people love, to refresh them in body & spirit. And done in ways that create a more sustainable business and better-shared future that makes a difference in people’s lives, communities, and our planet.”

Starbucks Mission Statement

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Starbucks highlights its mission as “to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.” And its vision is to “treat people like family, and they will be loyal and give their all.”

Microsoft Mission Statement

microsoft-mission-statementmicrosoft-mission-statement
Microsoft’s mission is to empower every person and every organization on the planet to achieve more. With over $110 billion in revenues in 2018, Office Products and Windows are still the main products. Yet the company also operates in Gaming (Xbox), Search Advertising (Bing), Hardware, LinkedIn, Cloud, and more.

Walmart Mission Statement

walmart-vision-statement-mission-statementwalmart-vision-statement-mission-statement
Walmart’smission can be summarized as “helping people around the world save money and live better – anytime and anywhere – in retail stores and through eCommerce.” While its vision is to “make every day easier for busy families.” Walmart defines “busy families” as the bull’s eye of its business strategy.

Nike Mission Statement

nike-vision-statement-mission-statementnike-vision-statement-mission-statement
Nike vision is “to bring inspiration and innovation to every athlete in the world.” While its mission statement is to “do everything possible to expand human potential. We do that by creating groundbreaking sport innovations, by making our products more sustainably, by building a creative and diverse global team and by making a positive impact in communities where we live and work.”

Google Mission Statement

google-vision-statement-mission-statementgoogle-vision-statement-mission-statement
Google mission statement is to “organize the world’s information and make it universally accessible and useful.” Its vision statement is to “provide an important service to the world-instantly delivering relevant information on virtually any topic.” In 2019, Sundar Pichai emphasized a renewed mission to allow people “to get things done!”

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