Overcoming Barriers to Entry in an Established Industry: Tesla Motors
California Management Review 57/4 : 85-103
20 Pages Posted: 24 Dec 2015
Date Written: 2015
The automobile industry’s high costs of entry, economies of scale, and network effects from distribution, fueling, and service lead many to conclude that new entrants have no chance. Tesla Motors has overcome many barriers to pioneer electric cars. Starting with partnerships and a minimum viable product, Tesla is working to innovate and scale up. Tesla now produces a top-selling luxury car and has a market capitalization twice that of Fiat Chrysler and half that of General Motors or Ford. Tesla has shown that a startup can enter and disrupt the status quo in one of the most established industries.
Note: Published as Edward Peter Stringham, Jennifer Kelly Miller, and J.R. Clark (2015) Overcoming Barriers to Entry in an Established Industry: Tesla Motors. California Management Review 57/4 : 85-103. © 2015 by the Regents of the University of California. Copying and permissions notice: Authorization to copy this content beyond fair use (as specified in Sections 107 and 108 of the U. S. Copyright Law) for internal or personal use, or the internal or personal use of specific clients, is granted by the Regents of the University of California for libraries and other users, provided that they are registered with and pay the specified fee via Rightslink® or directly with the Copyright Clearance Center.
Keywords: Innovation, Barriers to Entry, Electric Cars, Entrepreneurship, Silicon Valley, Case Study, Environmental Protection, Environmental Policy
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