5 Business Principles That Transformed Tesla from Running Out of Cash to the Most Exciting Car Company in the World

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Tesla is synonymous with electric cars and renewable energy, but these aren’t the only things that make it successful. Let’s look at business lessons from Tesla that any CEO can learn from.

Every leader can glean business lessons from Tesla about how they transformed into a $92 billion powerhouse. In this article, we’re going to focus on 5 key lessons you can bring into your own business. 

But first… 

As you may know, the company’s first car, the Roadster, almost caused the manufacturer to crash. The project burned through three rounds of funding that totaled $60 million. Their main problem was struggling to meet orders.

Besides burning through all that cash, the car’s bad reviews also didn’t help.

However, Tesla’s visionary founder, Elon Musk, willed his company to success. Even though the company struggled a lot in the beginning, Musk kept pressing forward with his vision of saving the Earth (and helping his holding of company shares along the way).

Several values helped Tesla become the best car company by market capitalization. One was patience. Another was investing in innovative products. Today, Musk readily admits that the way the company tackled the Roadster project did not bode well… And could have killed the company before it had a chance to mature.

That said, Tesla has come a long way since 2008–2009, and its valuation is now in uncharted territory for a car company. The key to its success isn’t just the vision of its CEO and founder. Tesla succeeded by following a winning set of business principles that you can also apply to your company.

The First Business Lesson From Tesla – Think Big (But Know You May Take Some Time to Get There)

What does “think big” mean in the eyes of Elon Musk? The Tesla CEO is a visionary, interested in space exploration and clean energy. He wants his companies to be game-changers, not just successful.

If you come to market with something that many competitors already offer, it’s generally not enough to be successful. Great products and services need to be unique, or at least very helpful in a way that will create a massive impact. 

The Second Business Lesson From Tesla – Build Up Your Innovation Capital

Innovation is key in gaining an advantage over the competition.

Ideas that are a bit obscure now can be hugely impactful in the future. Sometimes people take time to realize that they need a different product than what’s already on the market.

You can’t innovate without committing enough resources to the process. 

The Third Business Lesson From Tesla – Use the Market to Test the Desirability of Your Product

Big ideas can’t fail. Right?


The electric car was always more of a concept than something people actually wanted, so how did Musk steer Tesla to success in the electric car market?

Before they did anything else, Tesla would make a few test products of an electric car model to demonstrate its power and utility. This would make the car accessible to wealthy buyers. Then the company would use the feedback and revenue to fix any problems. This production model allowed them to assess any issues along the way and lead to Tesla creating a successful line of affordable vehicles.

You too can use these tactics to test the market. Start small and don’t overcommit. You’ll be able to avoid a disaster, like the launch of the Roadster was for Tesla. The small, initial production run also raises awareness for your product and gives you more time to iron out the details.

The Fourth Business Lesson From Tesla – Disruption Starts in Niches

To say that Tesla disrupted the automotive industry would be an understatement. Tesla probably did more for transportation in a decade than any other manufacturer since Ford. It also forced other manufacturers to look beyond hybrid vehicles and pay more attention to fully electric cars.

Why? Because drivers now have more choices. When people have choices, there’s an open market in which even smaller entrepreneurs can have a say and compete.

If you want to stand out and make your business relevant, you have to innovate. Don’t be afraid to disrupt the market by offering an alternative solution that shows a lot of promise.

Tesla has all the hallmarks of a future leader in the automotive industry. You too can own a bigger market share. Just understand that it doesn’t happen overnight… And that becoming successful in one niche can help you build enough capital to branch off.

The Fifth Business Lesson From Tesla – It’s Okay to Take Time to Figure Out the Right Business Model

Becoming profitable and establishing success takes time. So does figuring out the right business model. If you look at Tesla, the Model S now retails for roughly $80,000. That may seem like a lot, but it’s still $20,000 cheaper than the Roadster, and that model launched in 2009.

Establishing production efficiency takes time, as Musk himself admitted to his shareholders, and that’s true for any industry. You can use trial and error to perfect your methods.

Like Musk, you may profit more if you think about the long-term game plan, instead of focusing on the present. Empires aren’t built overnight. Tesla certainly wasn’t, given its awful origin story.

Even before Tesla was profitable, Musk kept aiming to lower the prices of its cars. He has always intended to make electric cars available to everyone. This means more buyers in the long run – and more profits as the assembly lines become more efficient.

What can you take away from Tesla’s story? Understand that success builds on smaller successes. Take smaller steps towards achieving your dream business. Tackle one problem at a time, and of course, constantly improve your products, services, and manufacturing process.


There are many things that you can learn from Elon Musk and how he turned Tesla into an empire. The first of its business principles is to exercise patience. The second is to put more capital into innovation, whether you’re creating better products or becoming more efficient.

It’s all about balance and carving out your own niche so you can branch out when the time is right.

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