This case explores the growth of Tesla Inc., and in particular, the role of government subsidies in the growth of the company’s electric cars sales. Tesla, which in addition to its electric cars is also involved in energy storage, lithium ion batteries and solar panel making, was founded in 2003. The Tesla Roadster rocketed Tesla into consumer consciousness in 2008. As the world’s first electric sports car, Tesla’s Roadster changed the way people perceived electric cars. Today, Tesla, which has assets of $25 billion and sales of more than $7 billion, employs more than 30,000 people. Today, more than 150,000 Tesla Model S vehicles have been sold. The Model S, a luxury sedan, is the world’s best-selling electric car after the Nissan Leaf. Tesla has gone on to introduce several other models including one with a base price of just $35,000. Electric cars sales have been particularly strong in Europe, where sales of electric cars have grown by 30 percent overall and, and as much as 80 percent in countries like Sweden where there is a move toward protecting the environment. Throughout most of its existence, Tesla has been the recipient of government subsidies and some analysts suggest that without these subsidies, Tesla’s vehicles are not be competitive. Indeed, following the phase out of subsidies in Denmark, a country that had been an important market for Tesla, sales dropped notably as consumers bought cheaper combustion engine vehicles rather than higher priced, non-subsidized Tesla vehicles despite the country’s general tendency toward environmentally friendly living. If other governments phase out their subsidies as well, Tesla could find itself in a difficult spot. Some governments are more likely to subsidize electric cars (and many other products) than other governments. Denmark took a stand to not subsidize (for now) electric cars. Should such subsidies be up to each country or region in a country (e.g., California in the United States), or should there be a world standard enforced perhaps via the World Trade Organization, United Nations, or a similar organization?

This case explores the growth of Tesla Inc., and in particular, the role of government subsidies in the growth of the company’s electric cars sales. Tesla, which in addition to its electric cars is also involved in energy storage, lithium ion batteries and solar panel making, was founded in 2003. The Tesla Roadster rocketed Tesla into consumer consciousness in 2008. As the world’s first electric sports car, Tesla’s Roadster changed the way people perceived electric cars. Today, Tesla, which has assets of $25 billion and sales of more than $7 billion, employs more than 30,000 people.

Today, more than 150,000 Tesla Model S vehicles have been sold. The Model S, a luxury sedan, is the world’s best-selling electric car after the Nissan Leaf. Tesla has gone on to introduce several other models including one with a base price of just $35,000. Electric cars sales have been particularly strong in Europe, where sales of electric cars have grown by 30 percent overall and, and as much as 80 percent in countries like Sweden where there is a move toward protecting the environment.

Throughout most of its existence, Tesla has been the recipient of government subsidies and some analysts suggest that without these subsidies, Tesla’s vehicles are not be competitive. Indeed, following the phase out of subsidies in Denmark, a country that had been an important market for Tesla, sales dropped notably as consumers bought cheaper combustion engine vehicles rather than higher priced, non-subsidized Tesla vehicles despite the country’s general tendency toward environmentally friendly living. If other governments phase out their subsidies as well, Tesla could find itself in a difficult spot.

Some governments are more likely to subsidize electric cars (and many other products) than other governments. Denmark took a stand to not subsidize (for now) electric cars. Should such subsidies be up to each country or region in a country (e.g., California in the United States), or should there be a world standard enforced perhaps via the World Trade Organization, United Nations, or a similar organization?