In an article for MIT Sloan, Hoang and Rothaermel attribute Tesla’s early success to two key strategic alliances with Daimler AG and Toyota Motor Corp. These kinds of partnerships can increase market share and sales for both companies by improving efficiencies in the overall production of the goods or services. They explain that the Daimler partnership provided much-needed growth capital as well as access to superior engineering and the Toyota partnership provided a manufacturing facility located near its Palo Alto, California headquarters.

Similar to General Motor’s strategy of manufacturing electric powertrain components to sell to other car manufacturers like Honda, part of Tesla’s strategy includes selling electric powertrain components to Daimler and Toyota, a kind of nonequity alliance known as a “supply agreement” between the two firms. And even though Tesla makes its own batteries, it currently also maintains a strategic alliance with Pansonic to produce batteries for its electric vehicles. Recently Tesla and Apple sought to form a strategic alliance to produce the Apple car but were not able to reach agreement on terms.