Generic and Intensive Growth Strategies of Tesla

Tesla is the global leader in electric mobility and the largest automobile brand based on market capitalization. The company has enjoyed enormous growth over the past several years. In 2023, its total revenue grew by 19% rising to $96.77 billion.

Tesla has an attractive product portfolio that despite being limited compared to most automobile businesses has grown a lot in popularity. Product models sold by Tesla include Model S, Model 3, Model X, Model Y and Cybertruck. Apart from these, Tesla also makes and sells energy generation and storage products.

Tesla’s superior and faster growth is a result of its focus on innovation. Tesla cars are attractive in terms of design, build quality, performance and safety.

In this post, we are going to discuss the generic and intensive strategies adopted by Tesla to achieve faster growth and success.

Generic Strategies of Tesla

The two main generic strategies given by Michael E Porter are differentiation and cost leadership. Apart from it, there is a third strategy called focus, which is further divided into subcategories including cost focus and differentiation focus.

The strategy of differentiation entails differentiating a brand or its products from the rival brands in the market. Differentiation helps achieve a distinct identity and status in the market by offering a distinct advantage and can help a business achieve leadership in its particular industry sector.

Cost leadership on the other hand focuses on leading on the basis of lower costs. This is a strategy that is commonly employed in the retail sector. However, it is not so practical to use it in the automobile strategy since the choice of pricing differs on the basis of the target segment of a brand.

Cost focus strategy focuses on cost leadership within a target segment. For example, a company offering lower cost electric cars is utilizing cost focus to achieve a leadership position in the electric car sector. Similarly, differentiation focus tries to differentiate and lead in its target segment.

The main generic strategy utilized by Tesla is that of differentiation. It offers mainly premium products. The company has differentiated its brand from the other automobile brands by focusing on electric mobility and sustainability. It makes only electric cars for the premium automobile market.

Apart from electric vehicles, the company also makes and sells energy generation and storage products. Its business model is highly differentiated from the other automobile brands. The main factor that differentiates it from the other businesses in the automobile sector is its focus on innovation.

Tesla is known to be a highly innovative brand that makes and sells innovative cars that are excellent in terms of design and performance as well as equipped with innovative technologies and software like Autopilot. There is a lot about Tesla that makes it a highly differentiated brand compared to its rivals in the automobile sector. The company is also investing in AI and rather than being just an automobile brand, it is a leading name in the world of technology.

Differentiation has helped it achieve a leadership position in the market since the company has grown into the world’s largest automobile brand based on market capitalization.

Intensive Growth Strategies of Tesla

In this section, we will discuss how Tesla has utilized the intensive growth strategies to help its business achieve faster growth and acquire a leadership position in the automobile sector. There are four intensive growth strategies that include market penetration, product development, market development, and diversification.

Market penetration: Market penetration strategy involves selling more of the existing products in the existing markets. Tesla employed this strategy in the initial phase of business growth while it was a new company in the market and operating mainly in the North American market. During this period, it was trying to sell more in the US market. It successfully completed this phase by devel;oping a strong supercharge infrastructure in the North American region which led to growth in sales in the area.

Market Development: Market development strategy involves selling existing products to new markets. Tesla has also relied on market development to achieve superior business growth. The company found initial growth in the US and after establishing itself in the North American region, it moved on to new markets in Asia and Europe. It has now established itself in China, the second largest automobile market and several leading European markets. However, the company is still using the market development strategy and expanding into new markets. It is also expanding its manufacturing infrastructure in new geographical regions to cater to the local demand. Gigafactory Berlin-Brandenburg is Tesla’s first manufacturing location in the European region and its most advanced, sustainable and efficient facility yet. Hundreds of thousands of Model Y vehicles and millions of battery cells are manufactured at Gigafactory Berlin-Brandenburg.

Product development: Product development involves developing new products to sell in existing markets. Tesla is actively pursuing a strategy of geographic expansion. However, it is also simultaneously developing new products to improve the attractiveness of its product portfolio. After the successful marketing and sales of its S, 3, X and Y models, the company developed the Cybertruck which is also enjoying high demand and popularity across key markets. The company is continuously innovating to make its product portfolio more appealing and apart from vehicles it is also developing energy generation and storage products to cater to the needs of customers of varying sizes and from different segments.

Diversification: The diversification strategy involves diversifying into new areas of business to achieve superior growth. Tesla is strongly focused on technological innovation and using it as a base to diversify into new areas including AI and Robotics. These are some new areas that Tesla has decided to enter after achieving strong success in automobiles and energy products. Tesla has developed the Tesla bot as well as the FSD chip, dojo chip, and Dojo system. It is expected that in the coming years, Tesla will become a leading name in the world of AI.

Conclusion:

Tesla remains the undisputed leader in electric mobility. However, it is also facing increased competition from the other players including China’s BYD. The company has still achieved robust growth over the past several years driven by increased demand and popularity of various Tesla models across various regions throughout the globe.

The company has differentiated itself from its rivals primarily on the basis of innovation. It is a highly innovative brand that is also investing in AI and Robotics to achieve more growth. Its strong focus on innovation has helped it achieve the leadership position in the automobile sector. The company has achieved solid market growth in the US, China and some regions in Europe. To achieve an even stronger position in its leading markets, the company is investing in strengthening its supercharger and manufacturing network.