Tesla’s strong financial and operating performance in 2022 put the company on a trajectory to be competitively successful and increasingly profitable despite the 2023 introduction of 123 new models of battery-powered electric vehicles by rival automobile manufacturers across the world. These new 2023 models followed on the heels of 60 new battery-powered models introduced by traditional automobile manufacturers and aspiring new electric vehicle start-up companies in 2022. 
There were a number of competitively significant highlights surrounding Tesla’s 2022 performance:
	Tesla delivered a record 1,313,851 new vehicles to customers in 2022, a 40.3 percent increase over the record 936,222 vehicles delivered in 2021. Buyer demand for Tesla’s models was so strong that the company spent zero dollars on advertising to achieve its record sales volumes. 
	The company’s automotive revenues rose to $71.5 billion in 2022, up from $47.2 billion in 2021, and Tesla’s 2022 net income was a record $12.6 billion, up from $5.5 billion in 2021. 
	Tesla generated $7.6 billion of free cash flow in 2021—after spending $7.2 billion to build new factories and on other capital expenditures. 
	Going into 2023, the company had annualized production capacity of close to 2.0 million vehicles at its two plants in California and Texas, one near Shanghai, and one on the outskirts of Berlin. In January 2023, Tesla announced the construction of a new plant in Nevada that would be dedicated to producing the new Tesla Semi truck. Management was also planning the construction of a second plant in Asia, to be located either near the plant in Shanghai or in Indonesia.
	Due to continuing improvements in operating efficiencies and the ability to spread fixed costs over a much higher production and sales volumes, Tesla’s operating profit margin went from -0.03 percent in 2019 to 6.3 percent in 2020 to 12.1 percent in 2021 to 16.8 percent in 2022. 
	Tesla’s software engineering team continued to make significant headway in achieving full self-driving capability for Tesla vehicles. The company’s latest full self-driving (FSD) Beta software had been released to 400,000 customers in the United States and Canada who had bought the FSD software option, and close to 6 million Tesla vehicles worldwide had autopilot capability. CEO Elon Musk expected that Tesla would achieve full self-driving capability for Tesla vehicles equipped with FSD software sometime in 2025. 
Tesla management’s strategic intent was for Tesla to become the world’s biggest and most highly regarded producer of electric-powered motor vehicles, dramatically increasing the share of electric vehicles on roads across the world and causing global use of gasoline-powered motor vehicles to fall into permanent long-term decline. Tesla’s strategy, therefore, was aimed squarely at utilizing the company’s battery and electric drivetrain technology to disrupt the world automotive industry in ways that were sweeping and transformative. If Tesla’s strategy proved to be as successful as CEO Elon Musk believed it would be, industry observers expected that Tesla’s competitive position and market standing vis-à-vis the world’s best-known automotive manufacturers would grow significantly stronger in the years to come.
ASSIGNMENT QUESTIONS
1.	What are the key elements of Tesla’s strategy? 
2.	Which one of the five generic competitive strategies discussed in Chapter 5 most closely approximates the competitive approach that Tesla is employing?
3.	What are the potential entry modes that Tesla adopted when entering foreign markets and explain the advantages and disadvantages?
4.	Does Tesla have competitive advantage and sustainable competitive advantage, use VRIN tests to analyze.