5.3. Tesla's Electric Vehicles

Tesla's electric vehicles are a result of applying design thinking to the automotive industry. By re-imagining the traditional car design and focusing on sustainability and performance, Tesla has become a leader in the electric vehicle market, applying methods for identifying opportunities, mitigating risks, and scaling operations.

Empathizing: Tesla starts by empathizing with consumers and understanding their needs, desires, and concerns regarding transportation and sustainability. Tesla also considers broader societal trends, regulatory requirements, and environmental concerns related to transportation and energy consumption. Note that, in 1998, the United States government, under the Clinton Administration and with the automotive industry, and the Northeastern states, had reached an agreement to put cleaner cars on the road leading up to the Clean Air Act. The first of these new cars, called National Low Emission Vehicles (NLEV), were released in New England in the 1999 model year and made available nationwide in 2001. Another idea to limit emissions from the personal vehicle sector in the USA proposed that 10% of newly registered vehicles must be emission-free until 2003. Nevertheless, pressure from the car and oil companies forced the law to be repealed. Martin Eberhard and Marc Tarpenning understood the need for change in vehicle emissions and thus founded Tesla, where Elon Musk became a partner in resolving vehicle emissions.

Re-defining to understand: The problem with gas-powered vehicles is that the minimization of emissions is limited. Re-framing the problem of emissions, the company realized that only a vehicle driven by power produced by sustainable energy could be the solution. So, Tesla defined the main challenge as the need for sustainable transportation solutions that reduce dependence on fossil fuels and mitigate environmental impact, and identified performance, affordability, charging infrastructure, and environmental sustainability as key criteria for success.

Ideating: Tesla aimed to produce a car that represented a real or even better alternative to the gasoline-powered car. But they did not want to be dependent on the government and laws, so imagining ideas that were exciting and out-of-the-ordinary, they came up with a dual proposition that included not only a nation-wide charging network but also electric vehicles with a much-improved range. From a corporate perspective, Tesla hired candidates even when they were new to the industry if they showed special aptitude for solving problems. This hiring strategy aimed to contribute to the generation of new ideas from design and engineering teams working together to reach the best possible compromise. Outsiders of the industry would also tend to avoid overthinking about the presumed principles of car manufacturing. Ideas generated during ideation sessions include electric propulsion systems, battery technologies, lightweight materials, aerodynamic designs, and renewable energy integration. Additionally, the car must be cheap even if the price of the battery was initially much higher than that of an Otto motor, but to get this price mass production was needed. Lastly, Tesla came up with the idea of Over-the-air Updates for cars, a very convenient way for their customers to receive information and installations of new features and even have problems resolved in their cars after the vehicles were sold.

Prototyping: Rapid prototyping techniques, computer simulations, and virtual modeling have allowed Tesla to quickly iterate and refine vehicle designs, optimizing performance, efficiency, and user experience. As a part of their prototyping, Tesla launched their first car, the Tesla Roadster in 2008 to especially demonstrate that a fully electric vehicle can be driven not only in the city but also on the highway. The price of over $100,000 (US) and the range limited to 200 miles were prohibitive factors for most consumers, even those with enough available income to spend on behalf of the environment. Launching the prototype, however, showed that the car could in fact be produced and some premiums were included in sales for the prototype. For example, the first vehicles were sold with unlimited charging at Tesla SuperChargers to give their drivers the possibility to drive for free.

Evaluating: A lot of testing was done by the customers. Tesla listened a lot to their customers and fulfilled a lot of their wishes. Tesla also created a voting system with which customers could rate the developers’ ideas. If an idea was particularly well received by customers, the developer received a bonus. In this way, Tesla was able to encourage its employees to perform at their best.

Implementing: For background on the earlier history of the electric car, the 2006 documentary Who Killed the Electric Car?, directed by Chris Paine, offers a context-rich analysis for better understanding of the stakeholders, from consumers to government and gas companies to the automobile industry.

Further reading:

Discussion questions related to Tesla’s electric vehicles

  1. How did Tesla understand what consumers wanted in terms of transportation and sustainability, and how did this influence their ideas to designing electric vehicles?
  2. What specific challenges did Tesla identify in thinking about C02 emissions and sustainable transportation, and how did they address these challenges in their electric vehicle designs.
  3. What were some of the unconventional ideas generated during Tesla's ideation sessions, and how did they contribute to the development of electric vehicles?
  4. How did Tesla listen to customer feedback and incorporate it into their product development process in a voting system for developers' ideas?
  5. Is an electric vehicle a good investment in the long term?
  6. Can the batteries be recycled and where can they be recycled?
  7. How did Tesla redefine the problem of emissions in the automotive industry and what were the key criteria they identified for success?
  8. How did Tesla encourage innovation hiring and idea generation within its design and engineering teams?
  9. How did Tesla's approach to rapid prototyping and iterative design contribute to the evolution of their electric vehicle offerings, particularly in terms of enhancing performance, range, and user experience?
  10. How did Tesla prioritize sustainability and address concerns regarding CO2 emissions in the automotive industry through their electric vehicle designs, and what strategies did they employ to overcome challenges associated with sustainable transportation?