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Tesla is an electric car manufacturer, headquartered in the US. The company is best known for its sustainable product designs, which seek to reduce people’s dependence on fossil fuel. The mission statement for Tesla clearly highlights that the company wants to accelerate the world’s transition to sustainable energy. Over the years, the company has expanded its business to other related sectors and have also entered into multiple international markets. Tesla is one of the most commonly studied organizations in B-schools, so for a business management student, you at least need to have a fundamental knowledge on how this company works. To help you with your college paper we have conducted an in-depth SWOT analysis of Tesla, highlighting its strengths, weaknesses, opportunities and threats.

SWOT Analysis: Tesla

Strength Weakness
  • Strong brand image
  • Sustainable product design
  • Vertical integration
  • Innovation centric leadership
  • Diversified product line-up
  • Poor profit making
  • Delay in product delivery
  • Inability to expand into international markets due to over-dependence on supercharger network
Opportunity Threat
  • High demand for electric cars
  • Support from government bodies
  • Diversification into other sustainable energy projects
  • Introduction of electric two-wheelers in Asia-Pacific market
  • Steep competition from rival market players
  • Exposure to political factors
  • Threat from oil industry lobbies

Strengths

The most vital strength of Tesla is its brand image. The company sets itself apart from any other car manufacturing brands, in terms of its mission, product development and technological advancements. Tesla’s brand image stands tall on the foundation of environmental and ecological sustainability. The firm is quite vocal about its plans for creating a more sustainable future, by reducing people’s dependence on non-renewable energy sources. The company is also considered as an innovator of advanced technologies, which are focused on improving environmental sustainability, customer safety and product performance. This unique brand image of Tesla has enabled the company to attract a large number of customers and investors, thereby creating a strong brand equity.

The strength of the company also lies on its infrastructure. Over the years, the company has built a robust infrastructure, which allows it to deliver unmatched value for its customers. The most notable achievement is its vertical integration approach on manufacturing its own car batteries. The Tesla Giga Factory is the company’s own production plant for manufacturing lithium ion batteries, that power its own cars. This allows the company to have more control over its supply chain, thus achieving higher competitive advantages.

The leadership of Elon Musk plays a crucial role behind the success of the company. Musk is often considered the driving force for the company, which has growth over the years, while facing many challenges. He is constantly looking forward to bring new and innovative technologies into its products to always make them better. Musk’s leadership has also kept the company deeply rooted to the core mission of Tesla.

Finally, Tesla’s strength also comes from its diversification. Tesla is no longer just an electric car manufacturing company;it also produces other sustainable energy-based products such as home power storage solutions and solar panels. The diversification of the company into other sustainable energy-oriented sectors has further strengthened its competitive advantage.

Weaknesses

The most prominent weakness of Tesla is its inability to make sufficient profits. Even though the company has managed to earn increasing revenue and created a strong brand image. It has been struggling to make desired profit for a long time. This as a result can be quite detrimental for the company in the long run as it will restrict its capacity to invest in new product development and will also decline the confidence of the investors. It also means that the company will be unable to meet the demands of the customers due to lack of financial capacity.

Tesla has faced significant issue in delivering its products on time. The production capacity of Tesla has often been questioned, as the customers had to wait for severely long time to get their hands on the product that they have ordered. The long waiting time, indicates poor service quality and can lead to severe customer dissatisfaction. It can make it quite difficult for the company to retain its customers.

The international expansion of Tesla into various international markets is limited by the lack of supercharger network. In order to be operational just like traditional fuel-based cars, the electric cars of Tesla need to be charged on roadwhile making long trips. However, at present these roadside charging stations are only available in abundance in the US and the UK. In order to enter into a new market, the company first needs to ensure that there are sufficient charging stations, otherwise the lack thereof can become a severe inconvenience for the customers.

Opportunities

The demand of electric cars has been found to follow an uphill trend over the recent years. People are more inclined towards purchasing eco-friendly electric cars with zero emission. This trend can be a good opportunity for Tesla to make its business grow in the near future.

In a bid to adopt sustainable vehicles, government bodies are encouraging consumers to purchase electric vehicles by offering tax rebates and other incentives. Moreover, local authorities are also supporting the growth of electric car companies to promote the shift to sustainable energy. This can be quite beneficial to Tesla while catering to new markets and expanding its business.

Tesla also has a significant opportunity in the diversification of its business, into other sustainable energy-based products. At present it only offers solar energy for home use. The company can extend its value proposition to cater to a much larger scale, where it can power an entire community using solar power.

The company can also introduce electric two-wheelers for specific markets such as Asia Pacific, where the popularity for motorcycles and scooters are significantly high. Introducing electric bikes with uncompromised performance will attract a lot of new customers and will help the company secure a strong foothold in those markets.

Threats

Tesla faces the most concerning threat from other market players. The fast-paced growth of the electric car market has attracted a lot of other companies to enter into this sector. Some of the new companies like Lucid Air and Nikola seek to offer identical value proposition to the customers with more added features. Apart from the new companies, Tesla also faces a significant threat from the well-established traditional car manufactures. These companies like Volkswagen, BMW, Volvo, etc. have been operating in the automotive industry for quite a long time. These have necessary financial capital and market expertise to introduce their own lineup of electric cars, to compete against Tesla.

The company faces threats from political tensions between its home and host countries. Since, Tesla operates internationally, any changes in the political relationship between the US and other host nations can have a prominent impact on the business operations of the company. Presently, the political tension between the US and China may impact the company’s operation in the Chinese market, thereby effecting its revenue.

Finally, Tesla faces some threats from oil industry lobbies. The growing popularity of Tesla’s electric cars in the market has the potential to reduce the oil consumption by the car users, thus hurting the business of oil companies. These lobbies have often caused problems for the company and created various hurdles to slow down its growth.

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