Few companies have attracted as much praise, derision, scepticism and enthusiasm as Telsa Motors and its founder Elon Musk. Having interviewed Elon Musk and the Tesla leadership as part of my research, one of the questions I’m asked most frequently is: how can you make sense of Tesla’s wild strategies? The latest example is the move to create a “Gigafactory” for car batteries just outside Berlin.
Part of the challenge in understanding Tesla’s strategy are the commentators. These range from short-selling to star worship. Many ask the wrong questions, such as why Tesla isn’t making any money – a question appropriate for a mature business, but not a growth one. While all businesses must be sustainable in the long run, Tesla is like most rapid growth companies that eat up more cash flow than they produce while in the early growth phase.
But the biggest part of the challenge may simply be understanding Tesla’s strategy. Why would a new company, already taking on the Herculean task of introducing an entirely new type of car to the market, also take on the incredible risk of building some of the world’s largest battery factories? Or for that matter, a dealership and repair network? Or a charging network? Or, even crazier, a solar power business?