Nowadays Tesla is a successful company known throughout the whole world. Tesla is known

mostly for its electric cars; however, it also manufactures products related to sustainable energy.

The total assets of the company are $34,309M with a total annual revenue of $28,176M as of the

end of 2019. The company was created in 2003 by a group of innovative engineers. Let’s

consider how a company in 17 years has achieved such good results, and what was the state of

the market before Tesla entered it.

Even though people were talking about cars that work on alternative sources of energy for

decades, the conclusion always was that these cars will be more expensive, less attractive, and

will have worse characteristics. At the end of the twentieth century, the Green Movement

became very strong and popular, and more and more people were interested in environmental

technologies. At the same time, more and more people understood that prices for gasoline will

increase over time. Also at this time, scientists were looking for alternative sources of energy.

Engineers were thinking about electrical cars, but there were no technologies to produce cars that

can compete with cars that work on gasoline in technical characteristics and cost of production.

Even automotive giants couldn’t or didn’t want to take any steps toward cars that work on

alternative energy.

Around the Millennium companies began to more seriously experiment with electrical cars.

General Motors in 1996-1998 created an experimental model, the electrical vehicle EV1, to test

the market. But they decided that it was an unprofitable niche of the automobile market and they

discontinued the program. Despite the failure of General Motors, the founders of Tesla thought

that there was a new segment in the automotive market. The problem was that there were no

technologies to create a competitive vehicle; that was what inspired them to invent a viable car.

The Tesla startup and the first product offering were an extremely successful implementation of

the STP concept. First, they identified a major new segment. Tesla's first products were too

expensive for average consumers, therefore the target customer segment chosen was wealthy

individuals and households. It was clear that the first electric cars would be expensive, but at the

same time people who care about the environment are usually from the middle and upper class,

so they are people who have money and are ready to pay for an expensive car. These people also

know that in long run these cars save a lot of money because there is no need to buy gasoline.

Second, they specifically targeted consumers representing the new segment. They targeted welloff, high-status people older than 30 who care about the environment. Finally, they positioned

the new Tesla car as displaying the owners’ status and their active concern for the environment.

Tesla began as a comparably small automotive company and began with limited market. They

couldn’t provide their service all over the world immediately upon starting the company, so they

chose the US as the market. Later it was expanded to Canada and Mexico. Nowadays Tesla is

expanding into European and Asian markets.

After this initial success, Tesla repeatedly implemented the STP principle by identifying and

expanding into new related segments. For example, they recognized well-off, environmentally

concerned families, and produced a SUV for this segment.

From its very beginning to now Tesla has repeatedly applied the STP concept first to create the

company and then to expand into new lucrative markets.

Photo by Tesla Fans Schweiz