Overcoming Barriers to Entry in an Established Industry: Tesla Motors

Posted: 11 Mar 2016 Last revised: 28 May 2016

See all articles by Edward Stringham

Edward Stringham

San Jose State University

Jennifer Miller

University of Arizona

J. R. Clark

The University of Tennessee at Chattanooga

Date Written: July 30, 2015

Abstract

The automobile industry's high costs of entry, economies of scale, and network effects from distribution, fueling, and service lead many to conclude that new entrants have no chance. Tesla Motors has overcome many barriers to pioneer electric cars. Starting with partnerships and a minimum viable product, Tesla is working to innovate and scale up. Tesla now produces a top-selling luxury car and has a market capitalization twice that of Fiat Chrysler and half that of General Motors or Ford. Tesla has shown that a startup can enter and disrupt the status quo in one of the most established industries.

Keywords: innovation, barriers to entry, electric cars, entrepreneurship, Silicon Valley, case study, environmental protection, environmental policy

Suggested Citation

Stringham, Edward and Miller, Jennifer and Clark, Jeff R., Overcoming Barriers to Entry in an Established Industry: Tesla Motors (July 30, 2015). Available at SSRN: https://ssrn.com/abstract=2746171

Edward Stringham (Contact Author)

San Jose State University ( email )

San Jose, CA 95192-0066
United States

Jennifer Miller

University of Arizona

Department of History
Tucson, AZ 85721
United States

Jeff R. Clark

The University of Tennessee at Chattanooga ( email )

Department of Economics
Suite 313 Fletcher Hall
Chattanooga, TN 37403-2598
United States

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