Tesla’s Digital Transformation Journey
1.1.Introduction:
Historical Background:
The company Tesla was founded in 2003 by Martin Eberhard and Marc Tarpenning. They both were Silicon Valley engineers who wanted to show the world that electric vehicles have the potential to replace gasoline vehicles and that electric vehicles are better than gasoline vehicles. The idea of Tesla was presented in front of Elon Musk in 2001 as he was famous for his success regarding startups. The other co-founders of Tesla include JB Straubel and Ian Wright. Elon Musk led the first round of funding for Tesla and became a part of the board of directors (Wu, 2019).
The company invested four years, from 2004 to 2008, to build its first car, the “Roadster,” as shown in Figure 1. In Fremont, California, the business opened a 5.3 million square foot factory that was once occupied by General Motors and Toyota. In 2008, Elon Musk became the company’s CEO and took complete control of product design in his hands (Wu, 2019).
Organization’s Products:
Tesla was established to design electric vehicles that are equally efficient as gasoline automobiles and less reliant on fossil fuels. Tesla launched its first product in 2008, known as the Roadster. After that, the company introduced different products like Sedan (Model S), Model X, and Model 3. Tesla has also followed the market trend and need and introduced the SUV known as Model Y. Tesla’s cyber trucks also caught the customers’ attention and played an important role in making the Tesla famous among truck enthusiasts.
Tesla has acquired various companies, including SolarCity Corp, Maxwell Technologies Inc, Grohmann Engineering GmbH, Perbix Machine Co, and Hibar Systems Ltd. The vision behind acquiring all these companies is to help Tesla in various fields, including energy and battery production, automated and fast manufacturing, increased production, etc. (Johnston, 2020).
Organization’s Size and Statistics:
Tesla has become the number one EV manufacturer globally and is growing continuously. The company has six manufacturing facilities, out of which four are operational, and the remaining two are under construction. Tesla crossed its closest competitor SAIC-GM-Wuling, and became the most famous EV company. The sales of Tesla are far greater than any of its competitors, as shown in Figure 2 (Dean, 2022).
Tesla’s revenue is continuously growing every year, with a significant increase in percentage as compared to every previous year. The company generated a revenue of 31.54 billion dollars in 2020. The increase in Tesla’s revenue can be seen in Figure 3 (Dean, 2022).
Tesla’s car demand and production are continuously increasing, and they have increased their production 5.06 times between 2017 and 2020, as shown in Figure 4. This impressive growth shows a promising future for Tesla (Dean, 2022).
1.2.Technological Challenges:
Tesla has become one of the biggest car companies, crossing all its components. But the company faces a number of challenges with increasing demand.
Manufacturing Limitations:
The demand for Tesla is increasing worldwide, and they need to suddenly increase the manufacturing capacity, which is not an easy job. They have to add more stations in an assembly line and speed up their production capacity along with the demands; otherwise, their competitors can use the delay to steal away the consumers of Tesla with similar or better technology. The company needs to increase its production factories across the globe to deliver its products to the market at the right time (Gardner, 2016).
Lack of skilled employees:
The company has to increase its production units to meet the increasing demands and hire new skilled employees to extract the right output from the assembly plant. Moreover, if the production plants are needed to be installed in different countries worldwide, it will be more difficult to find the right candidates for the job. The company also needs a skilful administration who can plan according to the market trend and approve the designs accordingly. Tesla needs to hire good brains and a labour face, which is a big challenge for the company.
Limited Service centres and retail network:
The company’s major consumer is located in the USA; hence, most of its retail network and service centres are in big states of America. Moreover, many states are against Tesla’s aim to sell to the customer directly, so they have not opened their franchises there. As a result, many consumers are reluctant to buy Tesla as they have to put a lot of effort into buying it and have to cover a long distance to the service centre when maintenance is required. Tesla needs to overcome this challenge and develop a method to make Tesla’s product and services more accessible to the people. Moreover, they have to think of some methods to approach international customers.
1.3.Opportunities by Digital Transformation Objectives:
The company’s challenges allow it to think out of the box and develop new techniques and methods to overcome them. These challenges are opportunities to improve and to change for good. Digital transformation is a good solution for all the challenges discussed above, and the objectives of digital transformation support the company in mitigating the challenges. The few objectives that allow Tesla motors to overcome the challenges mentioned above are given below:
Business process improvement:
It is one of the key objectives behind any company’s digital transformation. Tesla motors are currently using the internet to connect with all of its cars, and this level of digitalization allows them to monitor and update their cars with time (Goodwell, 2021). But they have to integrate digital transformation in their production plants as it will allow them to evaluate themselves and help them speed up the processes and increase their offerings. Hence, this objective will help Tesla to increase the production units according to consumer demands (Malik, 2022).
The company can use a digital transformation that will help them modify its selling methodology to reach customers more efficiently. The digital tools are already helping Tesla to monitor the car conditions. They can further extend it to provide timely maintenance to the customers.
Improve employee performance and collaboration:
The company is facing a lack of skilled employees who have good performance and can adapt to the business model quickly. Digital transformation allows the company to increase collaboration, which helps the employees to learn fastly, and the productivity of the employees will increase. Moreover, digital transformation aids in reducing administrative pressure and let employees focus on more important tasks, such as business strategies according to the condition (Malik, 2022).
2.Digital Business Agility:
2.1.Hyperawareness:
Tesla is a company that relies on the data gathered through the environment and car sensors. The company is providing major assistance and online tools to the customers with the assistance of the data. The state of being hyperaware gives Tesla an advantage over its competitors and allows the company to provide better personalization and excellent customer experience to the users of their product. Hyperawareness is contributing a huge role in the company’s growth. It allows the company to take decisions with calculated risks and promises a specific return on investment against every decision based on the data. The digital tools that are being used by Tesla are given below:
Tesla’s Design Studio:
The company has given an online tool on its website that allows the customer to design their dream car, paint it and choose the interior of their own choice. This activity helps the company to understand the design demands of the customer. It allows them to assess the customers’ favourite colors, interior specifications and design features, and they can use this data to design their upcoming models accordingly (Garg, 2018).
Big Data Analytics:
The company needs to take constant feedback from the customer if they want to be fully aware of the condition and understand the consumer needs. Big data analytics help the company to do so as big data analytics analyses the messages and comments of the customers in an online form and allows the company to understand the common demands and issues faced by the customers (Singh, 2021).
NLP to gain Insights:
Natural language processing is a field that helps companies analyze consumers’ comments and remarks through any online form and social media. Tesla has not focused on social media analyses with the help of natural language processing to get the information that can help the company gain consumers’ attention (Regkas, 2020).
2.2.Informed Decision making:
Informed decision-making is necessary for the present condition and is one of the major objectives behind any company’s digital transformation. Technology is changing very fastly worldwide, and the competitors of Tesla are trying to introduce and integrate new technologies to get an edge over the company. In such a condition, you must understand the customers’ demands and make decisions accordingly. Tesla is also using informed decision-making to automate their cars.
Autonomous Driving:
Tesla is currently using the data gathered through the car’s sensors and the environment to assist consumers in driving. The company uses data and machine learning algorithms to detect other vehicles, driver alertness, pedestrians, traffic lights, etc. Informed decision-making in such cases allows the company to provide remote assistance to the customers and allows the company to alert them about the car’s condition (Singh, 2021).
Social Media Analysis:
Social media analysis allows the company to understand the customers’ demands. Moreover, it allows the company to analyze the areas in which they are lagging compared to its competitors. Since Tesla is uncomfortable outsourcing and getting the services from outside. Thus, they need AI tools that help in social media analysis and develop the tools that can help them separate the required data, arrange it and extract meaningful information and give suggestions according to the data (Regkas, 2020).
2.3.Fast Decision-Making:
Digital transformation has sped up the procedure in every industry, and customers are also expected to get the technology and their required products at the right time. Fast decision-making can only be done by robotic process automation and digital tools. The robotic processes used by Tesla allow them to speed up their production and take fast decisions according to the consumers’ demand.
RPA and Alien Dreadnought:
The company’s biggest problem is production speed, and robotic process automation allows the company to make fast decisions. The Alien Dreadnought is an RPA assembly line, as shown in Figure 5, that will help Tesla to develop all the cars with the help of the robots. The Alien Dreadnought is not a complete success yet, but the company can develop it properly to overcome the production challenge (Debord, 2016).
3. The Role of Digital Collaboration Tools:
Digital collaboration tools are important during a company’s digital transformation. The trend of working is changing, and we need digital tools to help employees increase their collaboration. The company must arrange tools to assist the employees in working remotely. Such tools allow multiple employees to work on the same project from different places and create an innovative environment that increases the company’s productivity.
Tesla is already facing challenges related to production speed, and they need to enhance the collaboration among the employees to work with greater force and less hindrance. The digital collaboration tools can allow the company to integrate all the manufacturing plants of the company. It can help them keep track of the orders and the production capacity at different plants, which can allow the company to develop a better strategy that allows the production units to collaborate according to the demand and supply.
The generic digital collaboration tools necessary for any company include data-sharing tools, video conferencing and discussion panels. It contributes to enhanced communication and resolves accessibility problems, which plays an important role in building collaborative and innovative cultures (Needle, 2022).
3.1.Collaborative Tools:
Google Workspace:
Google workspace is the best example of a collaborative digital tool as it is a complete package. Google workspace allows you to share files so anyone with access can edit, read and download the document without any hassle. Google workspace handles security concerns and allows you to contact each other through emails and google meet. Tesla can also use this workspace as an inspiration to develop its digital tools (Needle, 2022).
Microsoft Workspace:
Microsoft also provides a similar type of workspace as discussed above and a similar kind of tool to share workspace and contact each other. Microsoft allows you to keep track of your progress, increasing employee productivity. These tools are necessary for the growth of Tesla as they will allow the employees to learn from each other and adapt to new technologies with the help of each other (Needle, 2022).
4. Digital Leadership:
Digital Transformation is a complex process; digital business agility can be brought only when the digital transformation is done under the right leadership. Digital leadership is essential as a digital leader has entrepreneurship skills and can use new techniques, take risks, enjoy challenges and overcome with a greater vision. Digital leadership should be in the hands of someone who can gradually transform the situation so that all the employees can blend in according to the changing conditions (Katanic, 2021). The digital leader needs a supportive environment allowing employees to learn the changing methodologies. Digital leadership should have the following traits:
4.1.Leverage Technology:
Tesla is a company which is highly reliant on technology, and the one driving the company through digital transformation must have the sense to make the right choice of technology. A digital leader should be able to choose the right technology and know how to use it for maximum productivity (Hinds, 2020).
4.2.Encourages Collaboration:
Tesla needs new employees, and production plants as Tesla’s product demands are growing fast. The challenge of training the employees cannot be managed without introducing a collaborative culture in the company. Hence, Tesla needs a leader who can enhance teamwork and endorse collaboration in the organization (Hinds, 2020).
4.3.Drives Innovation:
The innovation allows the company to remain one step ahead of its competitors. Digitalization should be led by someone who knows how to introduce an innovative culture and makes sure that everyone in the team thinks outside of the box and bring new solutions to the table (Hinds, 2020).
4.4.Manage Risks:
Digital transformation can cause a great risk, and some risks become a hurdle in digital transformation. A digital leader must overcome this situation, know how to manage uncertainties, and bring the company out of it (Hinds, 2020).
References:
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