Tesla
Vertical integration as the answer to capital intensity.
Latest filing on file · 2025-12-31
Overview
Business model and origins
Electric vehicles would only become mainstream if they first became desirable. A high-end electric sports car (the Roadster) would prove that EVs could exceed internal-combustion performance, funding the technology development for cheaper mass-market vehicles.
Origin
Tesla was founded by Martin Eberhard and Marc Tarpenning in 2003, a month after GM killed the EV1. Elon Musk led the Series A in 2004 and became chairman, eventually taking over as CEO in 2008 during a near-bankruptcy crisis. The original strategy — Roadster → Model S → Model 3 — was explicit from the beginning. The Roadster ($100K+) proved the technology; the Model S ($70K-$90K) proved the market; the Model 3 ($35K-$50K) addressed volume. What made Tesla strategically distinct was the vertical integration required by necessity: no one made the battery packs, the motors, or the software stack Tesla needed at the quality and cost required, so Tesla built them itself.