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  • Essay / Key Features and Benefits of Tesla's Widespread Charging Infrastructure

    Tesla is a very special case in the automotive industry. The infrastructure the company creates for its electric vehicles can represent a real source of competitive advantage. Indeed, this adds value to the company's offering to the market, as it not only produces some of the longest range electric cars, but it also builds its own network infrastructure to charge Tesla cars. Furthermore, by applying the VRIN framework, it seems clear that charging infrastructure represents a valuable and scarce resource in the market. Indeed, fast charging networks are not widespread throughout the world and only Tesla and CHAdeMO are well advanced, with the important difference that Super Charger networks are specifically made for Tesla vehicles. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”? Get an original essayIn addition, the presence of a widely known charging network reduces customer anxiety and adds value to the product, also due to the annual charging credit given to each buyer of a Tesla. Additionally, given the electric vehicle market and the importance of building adequate infrastructure explained in previous chapters, it is clear that Tesla's network will have an impact on the competition. Indeed, a network is valuable when it is extensive and has a high number of users. Certainly, Tesla's charging infrastructure is widespread all over the world and it already has many users. However, one recommendation that can be offered to Tesla is to seek partners for its charging infrastructure. In fact, its CEO has already declared himself open to this idea and has taken important steps forward, like making his patents open source, but he needs other manufacturers to adopt their standard, allowing Tesla Cars to be charged in Super Charger stations. In this way, other manufacturers will be able to rely on Tesla's network and use their technology. Thus, their network will have a stronger impact on the competition and will be even more valuable, because there will potentially be more users. This certainly creates economies of scale on the demand side, allowing both product and network value to be increased. Additionally, the more other companies adopt Tesla's standard, the harder it will be for others to build their own network. Therefore, Tesla is now the only manufacturing company with an extensive fast charging network and this represents a competitive advantage, but to maintain it in the future, the company must find more and more companies willing to share it costs. Indeed, given its balance sheet and the speed with which it burns its cash, it will probably not be able to finance its network expansion plan on its own and it could lose its main competitive advantage in the coming years. It is therefore true that Tesla CEO Elon Musk has stated that he is ready to open his network to other producers, but we must move from words to action. Additionally, it's clear that charging infrastructure like Tesla's is expensive to imitate. In fact, only CHAdeMO has a similar diffusion, while the others are in their early stages and will probably only reach Tesla after a few years of intense work. This is enough to say that the hypothesis has been confirmed and that the competitive advantage derived from Tesla's charger network is potentially able to guarantee a lasting advantage for the company over its competitors in the most important markets. In fact, it is not.