Tesla's transition from Niche to Mainstream:

Tesla is one of the most exciting companies in the 21st century. If we look from the hindsight,
Tesla might simply appear to be a company operating in the already mature auto industry.
However, it is far from so. 
Tesla has challenged the incumbents in the auto industry like none other and is the first company
in the auto industry to focus its strategy on developing electric vehicles entirely. 
With its well laid out strategy and a comprehensive ten-year roadmap, Tesla has managed to
make significant strides in the market. Compared with the traditional players, it remains only one
among the two U.S. companies in the auto industry to have not gone bankrupt in the past
century, the other being the Ford Motor Company. 
Back when Tesla laid down its vision and mission in 2003, this was something unthinkable. It
was imagined that Tesla would be a niche player in the automotive industry, focusing only on
electric vehicles. Fast forward 15 years into the future, Tesla has created an entirely new industry
on its own with a primary focus on electric vehicles.
When we consider any industry, there are primarily three stages; introduction, growth, and
maturity. The introduction stage is marked by developmental activities, technological
stabilizations, and multiple product iterations. When Tesla introduced its first car, the Roadster in
2008, it faced severe bottlenecks and constraints. All component parts were expensive, and the
product was not able to be produced at scale. Several iterations and reiterations had to be done
before the Roadster hit the road. It had to be priced at a premium. These are precisely the
characteristics of the introduction stage.
Fast forward, Tesla started producing electric vehicles at scale and introduced economic models
like the Model S, Model X, and Model 3. Around 100,000 units of the Model S and Model X
were sold in 2017. It was at this stage that the industry was in its growth phase. The industry
soon attracted the incumbents' attention, with major players like BMW and Volkswagen
announcing their plans to produce electric vehicles.
It was roughly around this time in 2016 that Tesla changed its mission from "To accelerate the
world's transition to sustainable transport" and replaced it with "To accelerate the world's
transport to sustainable energy." This new mission statement is a much broader one and
explains Tesla's foray into solar roofs, energy storage, electric energy, and, most recently, Tesla
Homes, in addition to electric vehicles. 

Tesla's New Mission Statement paving the way for venturing into newer Product Lines
With its mission and vision statement, Tesla is perceived as a humane company that does not
pursuit profits mindlessly. Instead, it seeks to make humanity thrive and save planet Earth in the
process. Such an image augurs well for the company and helps recruit highly talented personnel
who are motivated to work for a company making a real difference out there. It helps them to
attract customers who are sensitive to the different environmental issues out there. As time goes
on, these customers are expected to be on the rise. Such a social stance helps the company gain a
huge fan base and helps them save a lot on marketing expenses. Additionally, the charismatic
CEO, Elon Musk, also helps to rope in fans. In fact, as per a Nomura research report, Tesla's
brand following is second only to that of Apple.
Over the years, Tesla hasn't just remained an automotive company anymore. It has transformed
into an all-round sustainable energy firm. A merger will Solar City in 2016 helped Tesla to
introduce several product lines. Some of them include solar panels and roofs (used to convert
sunlight to energy), power walls (to store solar energy), and Tesla homes (eco-friendly homes
with 24/7 power backup, where most of the energy is obtained from the sun).
Besides home-products, Tesla is one of the most innovative companies in the domain of power
storage installations. In countries like Puerto Rico and Australia, the company had a critical role
in such installations during electricity blackouts. These initiatives are necessary to promote large
scale renewable energy use. Tesla builds such enormous batteries to store energy generated by
wind farms, solar panels or other renewable energy sources. In Australia, Tesla has built the
world's largest Lithium-ion battery at a wind farm, saving consumers millions of dollars. 
Tesla's battery product line has enormous potential and has the capability to surpass the
automobile division in the future. In an industry still in its infancy, Tesla has ramped up critical
know-how as the world transitions to renewable energy. Batter storage costs keep on decreasing,
and at a certain point in time, this will allow for massive revenue growth as the technology
becomes more and more accessible. Renewable energy storage and generation are critical aspects
of achieving long-term sustainability. 

Battery Storage costs keep on decreasing with time

 Tesla's vision of the future involves building homes equipped with solar panels and solar roofs. It
also includes batteries that store the solar energy generated during the day and enable residents to
use it at night. Additionally, owners will also be able to charge their electric vehicles using solar
energy. This is a truly holistic view of what the world is likely to become in the future. A graphic
of Tesla’s integrated vision for the future has been displayed below.

Tesla' Integrated vision of the future

Tesla: Porter's 5 Forces Analysis

Porter's Five Forces Analysis is used to determine the attractiveness of any industry. Here, we
will analyze Tesla's automotive division using Porter's 5 Forces Framework. This will include
the bargaining power of suppliers, bargaining power of buyers, threat of substitute products,
threat of new entrants, and analysis of existing competition.

1) Bargaining Power of Suppliers: Tesla is a vertically integrated producer. Most of the

production processes are carried out in-house. Tesla relies on its suppliers only for the
procurement of components. They do not have specialized technical suppliers delivering them
specialized readymade products. This independence gives Tesla relatively improved bargaining
power with the suppliers. Bargaining power increases when production scales up, and larger
orders can be placed. This is also favorable in the case of Tesla, with the company having scaled
and ramped up its production process in recent years.
2) Bargaining Power of Buyers: With Tesla selling the models of its electric vehicles to
hundreds and thousands of consumers, it is needless to say that the buyers here do not have
enough bargaining power. However, there are several players in the market and depending on the
kind of vehicle it offers, Tesla can afford to charge a premium price (like the Roadster, Model S
or Model X ) or offer a competitive price (like the Model 3). 
Tesla has plans to enter into the B2B market soon. Things are a bit different there. With order
sizes being larger, some amount of negotiation can take place. However, clients belonging to the
B2B segment also do not sufficient bargaining power. They only get the incentive of a few
percentage points of discount, as compared to retail clients.
3) Threat of Substitute Products: An obvious alternative to electric vehicles is cars running on
fossil fuels. The growth of the electric automobiles market is largely dependent on the speed of
transition from fossil fuel vehicles.
Using an electric vehicle has its fair share of pros and cons. The advantages include
environmental benefits and cheaper maintenance costs when compared to fossil fuel cars. The
disadvantages include a lack of infrastructure, like charging stations and mechanics. Besides,
electric vehicles tend to be sold at a premium, at least in the present circumstances. However,
this is likely to change when electric car producers can achieve significant economies of scale. 

A significant development in the automotive industry is the increasing popularity of ride and car-
sharing services like Uber, Ola, and Lyft. Many users prefer using them rather than owning a car.
This liberates them from the expenses of buying or maintaining a vehicle. The increasing
popularity of these services will likely make a slight dent in the portion of the automotive sales
market.

4) Threat of New Entrants and Existing Competition: At this point in time, almost all major
automobile manufacturing companies (like BMW, Volkswagen, and Toyota) have announced
their plans to enter into the market of manufacturing and offering electric vehicles. The entrants
of new players in the electric vehicle market seems imminent. This is a significant threat.
However, it is also true, Tesla is already much ahead of them in terms of the learning curve in
the electric vehicle industry. Tesla has significant first-mover advantages in this scenario. It is
not an easy job to convert a regular car into an electric vehicle.
As already mentioned, the level of competition in the electric vehicles industry is not very huge
right now. Some of the players that have released their electric vehicles in the market besides
Tesla include Kia, General Motors, Mitsubishi, Toyota, Renault, and Volkswagen. But the fact
remains that tens of thousands of people are willing to wait for a Tesla Model 3 for a year and
are willing to deposit amounts above $1000 to book one. This tells us that competition is not
very fierce at this moment. Nevertheless, we can conclude that competition in the industry is
expected to rapidly increase in the near future. Tesla's first-mover advantage is likely to protect
the company in the mid-term. However, at some point, they need to find a way to compete with
the more established players in the automobile industry.

To summarize, the electric vehicles industry looks to be at the beginning of its growth phase.
Tesla is a first-mover here with not much significant competition. Over the years, they have built
up considerable know-how and possess sufficient bargaining power with both suppliers and
clients. The threat of substitute products is not that significant currently. The only issue worth
considering is the threat of new entrants, which is expected to intensify competition in the near
future. Porter's five forces indicate Tesla is a first-mover and a leader in an industry that is
expected to experience significant growth.