Tesla Organizational Culture: a brief overview

By John Dudovskiy
April 23, 2021

Tesla organizational culture integrates the following five key elements:

1. Ambitious innovation. Tesla has been founded right after auto giant General Motors recalled and destroyed its EV1 electric cars.[1] Starting a business in a segment where large and experienced players such as GE have failed is a clear indication of abundant ambitions of founders including Elon Must. Founders have adapted product and process innovation as a strategic tool to realize their ambitions in practice. Ambitious innovation has been deeply ingrained in Tesla organizational culture.

2. Adherence to ‘First Principles’ method. Elon Musk insists that employees use First Principles method, also known as reasoning from first principles in dealing with problems. It has been noted that “first principles thinking requires you to dig deeper and deeper until you are left with only the foundational truths of a situation”[2]. Arguably, process and product innovations at Tesla can be credited to the successful application of first principles to a significant extent.


Tesla Organizational Culture

3. Doing things differently. Tesla corporate culture encourages employees at all levels to experiment with different ways of doing business. The electric automaker is well known for challenging the status quo of conducting business. Especially, the company’s marketing and HR practices are fundamentally different from other global auto manufacturers.

4. Lack of bureaucracy. Day-to-day operations and communications in the company are not bounded by strict levels of management and bureaucracy. An email from CEO Elon Musk sent to employees a few years ago stressed that “anyone at Tesla can and should email/talk to anyone else according to what they think is the fastest way to solve a problem for the benefit of the whole company. You can talk to your manager’s manager without his permission, you can talk directly to a VP in another dept, you can talk to me, you can talk to anyone without anyone else’s permission.”[3]

5. Appealing to intangible employee motivational tools. Tesla promotes its mission statement “to accelerate the world’s transition to sustainable energy” through various means of communication to internal and external stakeholders. Working up to 70 hours per week is not unusual for Tesla employees.[4] Employees sacrifice their work-life balance because the company effectively appeals to intangible employee motivation tools, giving them the perception that they are doing good for the planet, contributing to change the auto industry and accelerating the world’s transition to a sustainable energy.

Tesla Inc. Report contains the above analysis of Tesla organizational culture. 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, Ansoff Matrix and McKinsey 7S Model on Tesla. Moreover, the report contains analyses of Tesla leadership, organizational structure and business strategy. The report also comprises discussions of Tesla marketing strategy, ecosystem and addresses issues of corporate social responsibility.

Tesla Inc. Report 2021

[1] Bihani, S. (2017) “Elon Musk Reveals He Started Tesla After Watching General Motors Destroy Its Own Electric Car” India Times, Available at: https://www.indiatimes.com/news/world/elon-musk-reveals-he-started-tesla-after-watching-general-motors-destroy-its-own-electric-car-323520.html

[2] Clear, J. (2015) “First Principles: Elon Musk on the Power of Thinking for Yourself” James Clear, Available at: https://jamesclear.com/first-principles           

[3] Bariso, J. (2017) “This Email From Elon Musk to Tesla Employees Describes What Great Communication Looks Like” Inc. Available at: https://www.inc.com/justin-bariso/this-email-from-elon-musk-to-tesla-employees-descr.html

[4] Matousek, M. (2020) “Ex-Tesla employees reveal the worst parts of working at the company” Business Insider, Available at: https://www.businessinsider.com/ex-tesla-employees-reveal-the-worst-parts-of-working-there-2019-9

Category: Culture