Let’s examine how Tesla’s organisational structure facilitates its success.
Tesla is the leading automotive and EV luxury company in the world.
What makes them stand out in the automobile market?
I think we’d all agree that their products’ unique style and features are the first and foremost things that attract buyers. However, the collaboration and structure between their teams and employees are also exemplary.
Tesla employs over 140,473 people, and it takes a meticulous approach to managing communication and harmony among them.
Let’s dive in.
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What is Tesla’s organisational structure?
Tesla has not made any official announcement about its organisational structure.
However, its annual reports and research papers indicate a functional organisational structure.
It divides the company into different divisions and departments according to their skills, such as engineering, sales, marketing, etc.
Additionally, as a global company, Tesla caters to its customers worldwide.
It has set up different teams for each department across branches to get the best of both worlds — local expertise and subject matter experience.
Clear communication is key at Tesla. Each employee reports to a department head, ensuring a transparent and informed decision-making process that underpins Tesla’s unparalleled success and profitability.
By leading with expertise, Tesla ensures it stays at the forefront of automotive needs and gives its customers the quality and luxury they deserve.
Check out our ultimate guide to organisational structure.
Who are the leaders of Tesla?
Tesla’s functional organisational structure is led by key specialists in their field. Elon Musk oversees all the operations as the CEO.
These leaders hold the following positions in the company:
- Robyn Denholm – Chairman
- Elon Musk – Chief Executive Officer
- Vaibhav Taneja – Chief Financial Officer
- Tomas Vikstrom – Head of Development
- Tom Zhu – Senior VP, Automotive
- Lars Moravy – VP, Vehicle Engineering
To understand what they do better, let’s look at their priority tasks:
Robyn Denholm – She is a spokesperson and the chairman, and as a board member, she takes charge of governance policies.
Elon Musk – The backbone of Tesla. Elon leads all product design, engineering and global manufacturing of the company’s electric vehicles, battery products and solar energy products.
Vaibhav Taneja- Serving since 2023, Vaibhav is responsible for all company financial decisions.
Tomas Vikstrom – With extensive knowledge of engineering and manufacturing, Tomas leads development and Tesla and caters to the vast needs of their clients’ needs.
Tom Zhu – He oversees the electric carmaker’s assembly plants and sales operations.
Lars Moravy – He is the lead engineer and technical lead for a team of 1000+ engineers, technicians, and analysts in charge of all Tesla vehicle hardware design vehicles.
The role of each leader at Tesla complements the other.
For example, if Lars hadn’t guided the team of 1000+ people to create the hardware design, Tom wouldn’t be able to kick off the process at assembly plants or attract sales.
It’s a joint effort that makes the ideas shine at Tesla.
Also, check out Google’s organisational structure.
What is the importance of functional organisational structure for Tesla?
Functional structure focuses on accountability, quick decision-making, and hierarchy, which streamlines all communication in the company.
It works for Tesla because it allows them to pick the best players for a specific team.
Tesla’s organisational structure has helped it expand globally and earn profits of up to $21.30 billion in the first quarter of 2024.
Why does this structure work for Tesla?
Let’s find out:
- Promotion opportunities: If you’re an expert working on similar functions daily, Tesla will allow you to learn more and apply for promotions within your domain. Who knows? You might also become a team leader after years of exceptional work.
- Focus on excellence: Tesla leads the EV luxury market by dividing each function into departments where experts work to create flawless designs and products.
- Training cost efficiency: Employees need to be trained only in a single area, which helps the company save on training costs.
This structure is beneficial for Tesla because if it wants to launch new products in the future, it can simply create new divisions led by new experts.
In this way, it won’t have to let go off old employees and also make way for new talent.
Pros of Tesla’s organisational structure
Let’s jump in.
1. Promotes ideas with open communication
Often, the underdogs in a company have the best ideas.
As per an insider memo, I found that Tesla promotes open communication.
If an employee has a good idea, they can directly reach out to their leader and share it. (Time to put on the idea hats)
Communication is easy and fast in Tesla because of the organisational structure, as there is only one head. So the employee can connect with them directly.
This encourages employees to share their ideas and come forward without hesitating.
Open communication builds trust amongst employees, increases engagement, and gives a voice to the employees.
As such, Elon encourages employees to share all ideas and emphasises that an idea that saves as little as 20 cents is also valuable.
2. Boosts innovation
As of November 2023, Tesla offers six vehicle models: Model S, Model X, Model 3, Model Y, Tesla Semi, and Cybertruck. The Cybertruck is Tesla’s next product on the horizon. Tesla is also planning to build a new mass-market electric vehicle codenamed “Redwood” in mid-2025.
Its latest launch of CyberTruck alone made up for a hike in Tesla’s total sales.
Hence, their emphasis on idea generation and expert leadership can bring positive results.
The functional organisational structure of Tesla allows ideas to flow openly from the bottom to the top, which boosts innovation.
3. Gain customers’ support
The NPS score of Tesla is 97.
From this scale, you can see that NPS scores between the range of 71-100 are excellent. This means that their customers are satisfied with their service and are loyal to the company.
Every project here focuses on the “Sustainability” and “Needs” of the customers.
This is why Tesla has the highest number of loyal customers compared to any other car manufacturer.
It’s a surprising score because Tesla doesn’t do much conventional advertising and can still swoon customers worldwide.
This can only mean one thing — exceptional quality and customer experience.
Tesla is able to maintain their high praise among customers through the focus on an organisational culture that has a constant emphasis on quality.
It keeps bringing the customers back and spreads good word of mouth.
4. Create efficient teams
With a head who leads their respective department, Tesla has removed the unnecessary red tape that slows down the company’s processes.
With direct links between leaders and departments, Tesla ensures that each head is ready to guide their ship as soon as a new project comes in.
They’re in charge of talented individuals and help them implement their skills to create the best for the customers.
5. High profits
Tesla revenue was $25.500B for the quarter ending June 30, 2024, a 2.3% increase year over year.
Efficient teams and a focus on functional expertise give the company high quarterly profits, which allows it to retain its talented workforce.
Working in collaboration with a leader motivates the employees to work hard and capitalise on the growth.
Cons of Tesla’s organisational structure
Tesla displays impressive growth with its organisational structure. But everything comes with its own set of challenges.
The drawbacks of Tesla’s organisational structure include:
- Dissatisfaction: Working at a fast-paced company like Tesla leads to burnout. When employees work continuously on the same tasks, their routine becomes monotonous.
- Communication overload: Between the messages from the team and cross-departmental communication, leaders can get overwhelmed with messages and miss key emails or texts.
- High employee turnover: With high pressure to impress the department head, employees might get stressed and opt for a job somewhere else.
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