SWOT and PESTLE Analysis: Tesla, Inc.
Tesla is a company based in California, America, and was founded in the year 2003. It was named after Nikola Tesla who was an electrical engineer and a scientist. Tesla’s products include electric vehicles and clean energy. These products are sold all over the world through the internet and a network of Tesla stores and galleries. This has accelerated the adoption of electric vehicles all over the world. There are different models of vehicles produced in Tesla where the Model X sport utility vehicle and the Model S sedan are the two main fully electric vehicles. At Elite Academic Brokers, we can help you get more insight into Tesla and critically analyze the company. Our team of experts can help you out with any query and any research on Tesla and other topics. For now, we are going to look at the strengths, weaknesses, opportunities, and threats in Tesla.
Let’s start with our Tesla SWOT Analysis with strengths of Tesla, Inc. The strengths and the points given below ensure Tesla’s efficiency, profitability, expansion, and popularity in the market as compared to other companies and their competitors.
Innovation and Quality – Tesla’s quality and innovation rate are very high considering the current two models which are fully electric and attractive styling. These features are distinct from other automotive companies. Tesla focuses on the quality of its models improving and updating them with technological advances. Production of quality products and innovation in Tesla has ensured increased profitability and competitiveness in the market hence financial gains in Tesla.
Strong brand image – Technological innovations have ensured a strong brand since most customers are satisfied with Tesla’s products hence greater trust. Tesla has become one of the most recognized brands by turning innovative ideas into reality. The strong brand image has also been influenced by the personal brand of its CEO, Elon Musk who has a great influence on most people. A strong brand image leads to high sales for Tesla. The Tesla ratio analysis has shown a significant increase in Tesla inventory turnover with higher conversion of its inventory onto sales.
Strong control over its production and manufacturing processes – Tesla being the leading automotive company can manufacture most parts that are used in the production of their vehicles hence reducing their reliance on other manufacturing companies and becoming less vulnerable. Tesla has also invested in the manufacturing facilities hence an important aspect of their company.
Tesla dominates the US electric vehicle sales – This is seen where two of Tesla’s models are in the top three of the sales. Model 3 is in the first position of the most electric cars sold and Model S comes in the third position. The increased car sales of Tesla increase its profitability hence a financial gain.
Limited presence – The market of Tesla outside the US market is limited since Tesla is not able to produce vehicles at the desired pace. Its portfolio is limited as compared to other automobile companies due to the limited supply chain which hinders the growth of profit in other regions by Tesla. The US and China are the leading markets for Tesla’s products and hence to increase customer base and market share faster, Tesla needs to focus on these markets. This is by establishing the service stations and supercharger networks in these regions.
High operational costs – Tesla’s main focus is on innovation and quality in its products. To achieve this a lot of money is used in research and development and also in other costs involved. The cost of revenue has grown over the years hence increasing the total operating costs. As the operational cost for the development and manufacturing of electric vehicles is still far more than its counterpart so our tesla industry analysis shows identify this as a weakness in the current scenario.
Manufacturing complications – This is brought about by the high standard of innovation set by Tesla hence facing increased risks in production and mechanical complications. This is a major problem as it delays the launching of their vehicles. In our Tesla motors case study analysis we found out that there are still many complications associated with harnessing green energy to become a perfect substitute for current options.
Now we can make out how these Tesla strengths and weaknesses can be manipulated by the company for its best interest. Let’s dive on to the opportunities and threats prevailing for Tesla by having an overview of the other two factors of Tesla Motor SWOT Analysis.
Market diversification – Tesla’s venture into new products like battery production will help the company avoid an economic downturn hence increasing its manufacturing rate of the vehicles and reducing the cost of production. This can become a prime tesla organizational strategy to lead to increased sales for Tesla in both batteries and electric vehicles.
Sales expansion in the untapped market – Tesla’s presence in most of the regions in the world is limited. The market for automotive in most of these regions is unsaturated and not satisfied. Tesla tapping into these ready markets with its ready products could lead to market expansion hence increased financial gains.
Introduction of a pick-up truck – Pick-up truck accounts for more than 15 percent of the US automotive market according to the National Automobile Dealer Association. This is a great opportunity for electric vehicle growth and hence a huge opportunity for Tesla to venture into this with its innovative and quality vehicles.
Increasing Competitors – There is intense and aggressive competition in the automotive industry as some companies like Volkswagen are now producing electric vehicles and also the competition from fuel-dependent vehicles is still increasing. Most of these companies have focused on their marketing and heavily invested in research and development hence a major threat to Tesla which has to improve its marketing strategy.
Regulatory threats – There are strict regulations by the government in the automotive industry hence high compliance costs by most automotive companies. This affects Tesla’s expansion plans hence hindering the overall profitability growth. There are significant hurdles for tesla motor’s organizational structure to perform equally well in different countries having a different set of rules for businesses.
Customer adaptation and adoption – Tesla’s production and sustainability in the market for electric vehicles highly depends on the customers’ willingness and readiness for change. If the customers do not adopt and adapt to electric vehicles, it will be a major challenge for Tesla. It is important for them to determine tesla’s resources and capabilities so that they can promote and convince consumers to buy their products for a better future.
Disruption of supply due to a shortage of materials – Materials used in manufacturing change with time and this poses a major threat. The increasing prices of these materials are a cause of concern in Tesla since it can delay or hinder the production of vehicles hence decreased financial gains.
High-risk factor due to usage of Lithium-ion – The use of lithium on the battery pack in Tesla has caused damages since lithium is highly reactive and has caused fires to the cars. This being known to the public has affected the reputation of Tesla.
Given above are among the few points of Tesla’s SWOT analysis. There so many other factors and Elite Academic Brokers can help in their discussion. We see that there are strengths, weaknesses, opportunities, and threats in Tesla. If Tesla focuses on and maximizes both the opportunities and strengths and tries to work on the weaknesses and threats, there will be increased growth in most aspects of Tesla.
PESTLE Analysis for Tesla, Inc
Though there is no doubt that Tesla, Inc is one of the leading companies in automobile and power generation but there are many remote and macro-environment factors that can prove to be very vital for the success of its ventures. Elite Academic Brokers have covered most about Tesla’s internal analysis in our swot and now by doing a brief PESTLE analysis for Tesla here we will try to figure out the Tesla external environment factors which can play a vital role in the growth and performance of this organization. We will use this tool to draw analysis for political, economic, social, technological, environmental, and legal factors from the long-term growth perspective of this company.
Political factors – There are many political factors that can affect the business of this company and these factors keep on changing with countries Tesla is targeting for its potential growth. There are many positive aspects such as favorable political policies for trade, subsidies offered by various governments for encouraging pollution-free vehicles, and the stability of the political scenario of the target country. Tesla can use these factors to its advantage but there are some other factors also such as unstable economies especially in the regions from where most of the raw material for the company’s products such as the Democratic Republic of Congo and increasing corruption have a significant adverse effect on their growth strategies.
Economic Factors – Fluctuating currency rates can be considered as the most noteworthy economic factor for Tesla. There are significantly up and downs in the transactional gains and interest expenses by this company due to fluctuating rates over the past few years. The company’s growth is also subjected to the taxation policies by the government and local authorities. Increasing demand for emission-free vehicles had enabled Tesla to reap benefits from the tax relaxations and incentives from governments across various countries. Inflation, rate of interest, and factors such as unemployment rate are also significantly contributing economic factors determining the success of Tesla, Inc.
Social Factors – Tesla can exploit various social factors prevailing these days to achieve better success. Increasing focus on the use of renewable energy resources, increasing purchase power of customers in developing countries, and growing focus for sustainable economies has created a great opportunity for this company to have a better edge over its competitors. Studies show that people from all parts of the world are focusing on eco-friendly lifestyles with minimal carbon footprints so this makes a very good opportunity for Tesla to come up with more innovative vehicles and green power solutions to exploit these opportunities.
Technological factors – Tesla is one of the leading companies to bring technological innovations in the automobile sector. Though it is already working on many outstanding technologies such as self-driving capabilities and voice commands it can work on identifying the latest innovations from the counterparts and applying the better versions of those innovations to maintain its edge over those competitors.
Environmental factors – It is undoubtful that Tesla, Inc. is a pioneer for producing green energy technologies and its emphasis on it provides it with a bright future for many years to come. Tesla is gaining the popularity and trust of consumers from all major economies and is a big hope for the transformation of the automobile sector into zero-emission and greener perspectives. Tesla’s continued efforts to develop more efficient sources of green energy are leading it to a bright future in the automobile and energy sector.
Legal Factors – While performing our PESTLE Analysis we found that there are many legal factors that can affect the further growth and expansion of Tesla. Tesla needs to consider the local governing laws related to the manufacturing and sale of its vehicles and related products as they are very vital for its success. Every country has its different set of rules and regulations for the business and there are many other legal factors also such as labor unions, patents, direct selling regulations, and many others to ensure swiftness in its operation and growth. One prominent example of the company’s failure for this factor was Tesla’s safety problems at its Nevada Gigafactory. Failure to comply with these laws and regulations can bring huge penalties for the company which can put a highly adverse effect on revenue.
Tesla is indeed one of the leading companies that give us hope for a better and greener future. Though there are no doubts that it is the number one choice for the people who opt for electric cars but PESTEL analysis by Elite Academic Brokers shows that the company has to focus on political, technological, and legal factors to make sure they comply with the different situations prevailing in the specific target markets. The focus on self-driving abilities and AI is good but we have many cases of accidents due to failures in Tesla self-driving features. The company also needs to understand economic and political factors to gain better control of its marketing strategies and should avoid incidents that happened in its Nevada Gigafactory to maintain tesla internal environment and image as a prominent innovator for a greener tomorrow.
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