Overcoming Barriers to Entry in an Established Industry: Tesla Motors. (August 2015)

• Record Type: Journal Article
• Authors: Stringham, Edward Peter; Miller, Jennifer Kelly; Clark, J.R.
• Is Part Of: California management review. Volume 57:Number 4(2015)
• Page Start: 85
• Page End: 103
• Publication Date: 2015-08
• Subjects: Innovation -- Barriers to Entry -- Electric Cars -- Entrepreneurship -- Silicon Valley -- Case Study -- Environmental Protection -- Environmental Policy; Industrial management -- Periodicals; Industrial management; Management; Bedrijfseconomie; Periodicals; 658.005
• DOI: 10.1525/cmr.2015.57.4.85
• Languages: English
• ISSNs: 0008-1256

Abstract

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.