Tesla Ansoff Matrix

By John Dudovskiy
April 26, 2021

Tesla Ansoff Matrix is a marketing planning model that can be used by the alternative fuel vehicles manufacturer to make strategic decisions. According to Ansoff Matrix, there are four different strategy options available for businesses:  market penetration, product development, market development and diversification.

Tesla Ansoff Matrix

Tesla Ansoff Growth Matrix

Within the scope of Ansoff Matrix, Tesla uses all four growth strategies in an integrated manner:

1. Market penetration. This strategy involves selling existing products to existing markets. Tesla uses market penetration strategy extensively. The company is focused on selling its Model S, Model X and Model 3 electric vehicles, Powerwall 2 and Powerpack 2 energy storage products, as well as, solar panels, inverters, racking, electrical hardware and monitoring devices in the US and 35 other countries[1].

2. Product development. This strategy implies the development of new products to sell to existing markets. Tesla engages in new product development infrequently. This is mainly due to overly high cost of new product development in electric vehicles and power storage sectors. In Battery Day event in September 2020, CEO Elon Musk announced that the electric car maker had plans to enter into mining business.

The company acquired the rights to a 10,000-acre plot in Nevada. In this site it plans to extract the metal using simple table salt, and would build a lithium refinery to supply a new factory in Texas. While the initial plan for Tesla is to use lithium for its own needs as raw material, the electric automaker can start selling this expensive material to others as well.

3. Market development. Market development strategy involves finding new markets for existing products. Tesla is evaluating a number of new markets to enter, India being in the shortlist. CEO Elon Musk “indicated it was the company’s Indian-born chief financial officer, Deepak Ahuja, who was really calling the shots on Tesla entering India”[2] Entering Indian market would be a strategically appropriate decision for the electric automaker, taking into account rapidly growing economy of this country.

4. Diversification. When following diversification strategy, businesses develop new products for new markets. Tesla has used diversification strategy during past years. The company was started only as electric vehicles manufacturer in 2003 and later changed its name from Tesla Motors Inc. after purchasing solar company SolarCity in 2016 to enter energy storage sector.

Tesla Inc. Report contains the above analysis of Tesla Ansoff Matrix. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Tesla. Moreover, the report contains analyses of Tesla leadership, business strategy, organizational structure and organizational culture. The report also comprises discussions of Tesla marketing strategy, ecosystem and addresses issues of corporate social responsibility.

Tesla Inc. Report 2021

[1] Find US (2021) Tesla, Available at: https://www.tesla.com/findus/list

[2] Barhat, V. (2018) “From a single Elon Musk tweet, the keys to Tesla’s India strategy” CNBC, Available at: https://www.cnbc.com/2018/06/18/in-a-single-elon-musk-tweet-the-key-to-teslas-india-strategy.html

Category: Strategy