Tesla's China Drive

The case describes how Tesla entered the Chinese market with a new kind of vehicle and how it survived and innovated in the market. As the “alternative” to the regular automobile industry, Tesla has distinguished itself by redefining the car and rewriting the rules of the game with Internet-savvy thinking. Ten years after its founding, Tesla began to make inroads into China — an environment completely different from its familiar markets in Europe and the US. Veronica Wu, Tesla’s China president, faced challenging strategic choices in the company’s efforts to expand in China. As shown in the case, Tesla has adopted the same direct-sales model in China as in the US. It has also continued applying its US brand-promotion techniques in the Chinese market, for instance, by tapping social media, celebrity appeal, and seed users. Tesla’s charging networks in China will rely on solar energy for 24-hour charging, making them independent of the State Grid. Tesla offered competitive prices for Chinese customers as it would in any other country. These practices and commitments all demonstrate that Tesla is pursuing a strategy of aggregation by applying globally uniform standards and is focused on worldwide economies of scale in the beginning of its China drive. However, compared with Europe and the US, China is a growing market with considerably different cultures and values. Are these strategic choices made by Tesla fully justified? Is it possible to realize these innovations in China?