Leadership and Change Management - Tesla

Buddhika D.

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Leadership and Change Management - Tesla

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Themes

Tesla, Elon Musk, multinational corporation, electric vehicles, energy storage, solar energy, leadership, management, change management, corporate culture, innovation, energy transition, organizational culture

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Abstract
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Abstract

Tesla, Inc. (2003) is an american multinational corporation and a leading producer of electric vehicles, energy storage devices, and solar energy solutions, with its headquarters in Austin, Texas. As a company, they design, manufacture and sell battery electric vehicles like Model S, Model 3, Model X, Model Y, and energy storage products like the Powerwall and Megapack. Pursuing a mission to accelerate the transition to sustainable energy, Tesla has risen as one of the automotive and clean energy industries' top players under the leadership of CEO Elon Musk (Qin, 2022).
Without question, Tesla is a must study for investment, leadership and change management. From a leadership perspective, Elon Musk is hands on and has a strong vision bucking the trends dictated by the widely accepted leadership style today. This leadership approach, however, also shows some drawbacks, especially because there is high employee turnover and others of the organisation's changes. Furthermore, the aggressive expansion and the innovation strategy adopted by Tesla necessitated that organisations have effective change management as a way to overcome the resistance from the organisation and operational efficiency. The study of Tesla offers insights into the management and leadership tasks required in an organisation that operates at an aggressive pace in a highly dynamic environment with a lot of new ideas and inventions.

Case Selection and Problem Statement
Problem Statement
Theoretical Framework
1. Leadership Theories applied to Tesla
2. Change Management Theories applied to Tesla
3. Application of Theories to the Case
Critical Analysis
1. Tesla's Organizational Culture, Legal, Ethical, and Change Management Challenges
2. Data and Evidence
Recommendations
Implementation Plan

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[...] The relentless move of Tesla to pursue innovation brings about significant challenges in change management. The rapid development cycles and the production targets that the company imposes on its employees make them resistant to them. Since the Model 3 has been a long time coming, scaling up production to satisfy global demand, while still maintaining quality, has been a persistent issue known nowadays as the 'production hell' during the Model 3 launch. Furthermore, robust management is needed about the processes of balancing advanced AI and robotics integration with workers' adjustment. [...]

[...] Tesla Inc., [online] Available at: https://www.tesla.com/ns_videos/2021-tesla-impact-report.pdf [Accessed 10 February 2025]. The Wall Street Journal Another Thing Musk Hates About Germany: Absentee Workers at His Tesla Plant. The Wall Street Journal, [online] Available at: https://www.wsj.com/business/autos/elon-musk-german-tesla-factory-workers-0317574f [Accessed 10 February 2025]. The Wall Street Journal Tesla Shares Leap 22% After Elon Musk Predicts Sales Rebound. The Wall Street Journal, [online] Available at: https://www.wsj.com/business/autos/teslas-profit-falls-for-second-straight-quarter-3e849b36 [Accessed 10 February 2025]. The Guardian Tesla Shares Jump on Third-Quarter Earnings Even as Expected Revenue is Lower. The Guardian, [online] Available at: https://www.theguardian.com/technology/2024/oct/23/tesla-quarterly-earnings-report-musk [Accessed 10 February 2025]. [...]

[...] As a leader in the EV and AI sectors, Tesla faces huge legal, regulatory and ethical issues. However, the regulatory landscape in relation to the electric vehicles is complex and the different jurisdictions have strict environmental and emissions and safety norms. Recently, Tesla has always faced regulatory scrutiny, notably in the U.S. and the European Union for rules pertaining to self-driving, AI combine and autonomous car. Additionally, automation and forced layoffs of the workforce are raised as ethical concerns against automation and reliance on AI and robotics with Tesla aiming to move further into reliance on AI and robotics. [...]

[...] The leadership challenges of Tesla have weaned it despite its successes. Key positions such as general counsel and CFO have racked up high numbers of departures in recent years at the company. Tesla had five separate departures of its general counsel since 2018, demonstrating some instability in its ranks of leaders. The executive has also been concerned about employee turnover. There are reports of Tesla's complicated environment and demanding work culture has led to very high attrition rates (Bohr International Journal of Finance and Management, 2022). [...]

[...] Situational Leadership Musk adapts his leadership style based on circumstances. During critical periods, such as the Model 3 production ramp-up, he adopted a more directive approach, making swift decisions to address challenges. In contrast, during innovation phases, he fosters a more participative environment, encouraging creative problem-solving (The Wall Street Journal, 2023). Charismatic Leadership Musk's charismatic persona engenders strong loyalty among employees and customers. His public presentations and bold promises captivate audiences, creating a dedicated following. However, this charisma can also attract criticism, especially when expectations are unmet or when his unconventional behavior raises concerns. [...]

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