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HBX Business Blog

Disruptive Strategy Reflection: Tesla Motors

Posted by HBX on March 3, 2016 at 8:40 AM

Participants in Disruptive Strategy with Clayton Christensen wrote final papers to apply the principles they learned in the course to a real organization. The post below is an excerpt written by Nitin Solanki.


Tesla Motors designs and produces cars that are a sustaining innovation. Tesla focuses on making better products with higher prices, targeting the upper end of the market, and profiting from high margins where customers are willing to pay a premium. Tesla's vehicles "job to be done" is to provide transportation between two points in a luxurious and efficient manner using advanced technologies and elegant design. Tesla has integrated the Supercharger charging station with the cars providing a convenient way to charge its vehicles with destination charging stations all over the country.

Tesla has done an excellent job of marketing by building its brand for consumers who are environmentally friendly. It started at the high end of the market by building great products and is now moving down the chain. The reason Tesla has been successful thus far with its sustaining innovation is because it has its Resources, Processes, and Profit Formula (RPP) focused only on electric cars.

As the CEO of Tesla, I would be alert of low-end disruptions that would compete with the electric cars. Tesla's current market offering is targeting the high-end consumer with the Model S and Model X. They do plan on offering the Model 3 in a couple of years with a lower price point, but it will leave the door wide open for low-end disruptions.

Incumbents such as General Motors, Nissan, BMW, and Mercedes already have electric cars on the market which are at the lower price point than Tesla. Currently, the models that are offered by BMW and Mercedes would compete against the Model 3. The car companies that will end up competing against Tesla at the current price points will most likely be BMW and Mercedes. The competition for the higher end electric vehicles will get intense in the next couple of years, and there will be more choices for the high-end electric car consumers.

Interested in learning about jobs to be done, RPP, and other theories from Professor Christensen? Disruptive Strategy will equip you with the tools, frameworks, and intuition to make a difference.

Learn more about HBX Disruptive Strategy with Clay Christensen

Topics: Disruptive Strategy