Vehicle strategy

Tesla's product release strategy is to emulate typical technological-product life cycles and initially target affluent buyers, and then move into larger markets at lower price points. The battery and electric drivetrain technology for each model would be developed and partially paid for through the sales of earlier models. The Roadster was low-volume and priced at $109,000. Model S and Model X target the broader luxury market. Model 3 and the Model Y are aimed at a higher-volume segment. This strategy is common in the technology industry. According to a Musk blog post, "New technology in any field takes a few versions to optimize before reaching the mass market, and in this case it is competing with 150 years and trillions of dollars spent on gasoline cars."

With the Model S, Tesla's technology strategy was to start with a "clean-sheet" design, and build an integrated computer hardware and software architecture at the center of its vehicles. Musk stated in 2015: "Tesla is a software company as much as it is a hardware company." Doing so enables Tesla to provide online ("over-the-air") software updates to its cars, which allows Tesla to improve the functionality and performance of its already-sold cars for free.

Tesla's overall customer interaction strategy is to "ensure owners have the best possible experience". In 2020, Consumer Reports ranked Tesla as having the highest "overall customer satisfaction" of any car manufacturer.

Tesla's sales strategy is to not advertise, but to educate customers through its showrooms, and sell its vehicles online rather than through a conventional dealer network. Musk believes existing dealerships have a conflict of interest and will not promote electric cars from Tesla or any manufacturer, because they make more money servicing than selling cars, and electric cars have lower servicing costs. Tesla is the first automaker that sells cars directly to consumers; all others use independently owned dealerships (although many manufacturers provide online configuration and financing). Tesla has showrooms in malls and other high-traffic areas.

Tesla service strategy is to service its vehicles through: proactive monitoring, remote diagnosis and repair, mobile technicians, and Tesla-owned service centers. Tesla's goal is not to make a profit on service.

Tesla's manufacturing strategy is to continuously improve the hardware of its cars, rather than waiting for a new model year (as nearly every other car manufacturer does).

Tesla's production strategy includes a high degree of vertical integration (80% in 2016), which includes producing vehicle components as well as building proprietary stations where customers can charge Tesla vehicles. Vertical integration is rare in the automotive industry, where companies typically outsource 80% of components to suppliers, and focus on engine manufacturing and final assembly. The company operates large factories to capture economies of scale.

Tesla's competitive strategy is to allow its competitors to license its technology. Musk said in July 2020, "Tesla is open to licensing software and supplying powertrains & batteries. We’re just trying to accelerate sustainable energy, not crush competitors!" Musk said in August 2020: "Tesla's long-term competitive advantage will be manufacturing."

Tesla patent strategy is to allow its technology patents to be used by anyone in good faith, in order to promote the electric car industry in general, which Tesla believes will be good for itself. (Licensing agreements include provisions whereby the recipient agrees not to file patent suits against Tesla, or to copy its designs directly.) Tesla retains control of its other intellectual property, such as trademarks and trade secrets to prevent direct copying of its technology.

Tesla's hiring strategy, according to former Tesla Human Resources VP Arnnon Geshuri, is to bring manufacturing jobs "back to California". Geshuri also emphasized hiring veterans, saying "Veterans are a great source of talent for Tesla, and we're going after it."