SWOT Analysis of Tesla Motors The Strengths of Tesla Motors. Suppliers who are the only single source for a specific component must be prioritized and contracts must be negotiated with these suppliers first. This section includes Tesla’s Mission and Vision, a methodical resource-based view (VRIO), key success factors, and the attractiveness of Tesla as a company. Tesla, Inc. operates in a very competitive Auto Manufacturers - Major industry. Tesla operates in the Automotive industry and has business units in the renewable energy and energy storage systems. Tesla is seeing faster growth in 2019. Tesla SWOT analysis 2020. Tesla, Inc. is one of the leading firms in the Auto Manufacturers - Major. The purpose of this analysis is to assess the financial health and stability of Tesla. All rights reserved. The most affordable version of the Tesla line will have the broadest consumer target and will allow more consumers to have the opportunity to purchase the car and generate more revenue for Tesla. The second step is to determine what the companies would like to accomplish. The solutions provided for Tesla will be based on the assumption that the company will want to continue to manufacture and develop electric cars. They can identify game changing trends early on and can swiftly respond to exploit the emerging opportunity. Tesla Strategy Analysis. However, Tesla continued to experience constant net income losses annually since 2011. Based on the DuPont Analysis (See Table 4), the company has exponentially decreased in return on equity from -8.48% in 2011 to -439.82% in 2014. Upon Tesla’s introduction to the automotive industry, factors were ideal and the company was positioned for success and growth. Tesla’s Background Fundamentals. The electric vehicle market is currently dominated by Tesla and the company has made a lasting impact towards the automobile industry. The primary goal of the company, since 2003, was to produce electric cars that are charged with zero-emission electricity while also outperforming gasoline powered cars both in driving experience and efficiency. Tesla, Inc. is listed at New York Stock Exchange (NYSE) and have a market cap 61.65B USD. By being service oriented rather than just product oriented. The third step is to determine what companies would benefit by having a Supercharger station within their physical stores. Would they like to expand their powertrain electrical components? Tesla Motors Inc. (Tesla) is thriving and is not about to stop. — DigiLaw, Instead Of Ten-Figure Funding, This Robotaxi Startup Has Actual Customers, HPE Returns to Techie Roots Appointing Neri to Succeed Whitman. The second step is to negotiate with the remaining suppliers for the parts that are deemed essential or a single component. Tesla couples high-end luxury with sustainability, engineering cars that appeal They continue to increase their total liabilities and it has constantly exceeded the revenue annually. Additionally, Tesla should consider working with companies that would provide a synergistic relationship. Tesla, Inc. (TSLA)'s research and analysis are contributed by Edmund and Harry. Heads up. 2) Tesla is competing globally in the automotive industry; it is more selective regarding the market not like other competitors since it is only producing full electronic cars. Tesla’s mission and vision is to accelerate the world’s transition from a mine-and-burn hydrocarbon economy towards a solar electric economy. The goal during this step was to build a more affordable car for a family. Tesla’s resilience is a reflection of strategic effectiveness. More than 60% of Model 3 trade-ins are non-premium brands. The improvement of the supply chain process should be conducted in four major steps. A similar relationship could be made with other companies that would be interested in the innovate battery technology Tesla has created. By increasing the switching cost for the customers. Comparing the results to its competitors, Tesla Inc reported Total Revenue increase in the 3 quarter 2020 by 39.16 % year on year. This alternative would also mean discontinuing or reducing the production of the earlier Tesla vehicles and limiting R&D in order to fully manufacturer the Model 3 in larger batches. This was likely due to sustained annual net losses (See Table 3). To implement this long-term recommendation, Tesla will need to complete three major steps. The cost of building proprietary batteries along with solar powered Supercharger stations will take into account for pricing despite the free use of the charging stations to Tesla owners. Powerful suppliers in Consumer Goods sector use their negotiating power to extract higher prices from the firms in Auto Manufacturers - Major field. Tesla was able to capture a unique niche in the automobile manufacturing industry. The significance of these five forces allows an analyst to make appropriate business decisions that may have the potential to make an impact on future products or services. Porter Five Forces Analysis is a strategic management tool to analyze industry and understand underlying levers of profitability in a given industry. This was a result of an increase in total equity, and more specifically from the massive increase in stock price Tesla experienced in 2013. Additionally, Tesla would also be required to fully expand the Supercharger stations with a goal of at least one station in each major city in the United States. The company has seen growth in number of car deliveries in the first and second quarters of 2019. Tesla, Inc. engages in the design, development, manufacture, and sale of fully electric vehicles, energy generation and storage systems. The financial analysis will include assessments of the balance sheet, the income statement, financial ratio analyses, and the DuPont formula. By rapidly innovating new products. These analyses will include key aspects of the general environment specific to Tesla, an analysis of Porter’s five forces, and an overview of Tesla’s major competitors involved within the electric vehicle industry. Tesla should determine the automobile manufacturing companies that it would be interested in partnering or working with. Market Analysis before launch of Tesla Mode l S: The market segment that was targeted had been identified as primarily males ages 25-60. By optimizing the supply chain process and having dedicated suppliers to maximize economies of scale, Tesla could significantly decrease cost of goods sold and further increase total revenue. First articulated by Intel co-founder Gordon Moore in 1965, Moore’s Law states that the concentration of transistors in a chip doubles every 18 to 24 months, whilst costs fall proportionally and simultaneously by half. Tesla should also consider the major and minor cities that would receive the most benefit by having a Supercharger station. Prior to Tesla beginning its endeavor as the first fully electric vehicle in the industry, other automobile manufacturers had only hybrid gasoline-electric vehicles. Well, mostly because of investments. Collaborating with competitors to increase the market size rather than just competing for small market. Over the years Tesla, Inc. has redefined the ways of doing business in Consumer Goods. The first step is to research the primary locations in which their cars are being sold to. On onehand, compared with traditional cars, Tesla’s ability to undertake the risk isrelatively lower. Despite the millions given to them by the government, Tesla has burned through a vast amount of cash over these last few years. Tesla is a remarkable company. Tesla SWOT Analysis [Strengths]: Perfect timing in a specific niche. Cognizance of current trends of the automobile industry and e-car industry and its influences on the Tesla company 9. The popularity of Tesla vehicles has increased. Tesla should note the primary locations in which its cars are being sold to. This third step emphasized an even more affordable car with the Model 3 being priced at $35,000 and to be available in 2017. All most all the companies in the Auto Manufacturers - Major industry buy their raw material from numerous suppliers. This report is compiled using proprietary analysis based on MarketClub's Trade Triangle and Smart Scan scoring technology. Tesla's market cap has increased by more than $500 billion in 2020, and is now worth as much as the combined market cap of the nine largest car companies globally. 4) In the meanwhile, Tesla is facing some threats as well. Focusing on the areas that contain the most consumers and expanding Supercharger stations in these areas first, will become the starting point for expansion. Porter Five Forces is a holistic strategy framework that took strategic decision away from just analyzing the present competition. A short-term solution Tesla should consider is to develop cost-reducing contracts with suppliers that are willing to alter their supply chain production to fulfill parts required in the production of Tesla vehicles. This was a result of an increase in total revenue. However, the high efficiency of Tesla vehicles in addition to its proprietary batteries are competitive parities since other companies can replicate both with hybrid electric-gasoline powered vehicles. Tesla, Inc. is listed at New York Stock Exchange (NYSE) and have a market cap 61.65B USD. United States is the leading market for Tesla cars. The leverage ratios are used to determine Tesla’s degree of risk associated with debt. However, Tesla’s total liabilities have also increased from $179,034 in 2010 to $4,879,345 in 2014. In fact, without Elon Musk, this company would totally be broke. Why? Temporary competitive advantages include Tesla’s current headquarters in Silicon Valley and its Supercharger Network since other companies will eventually develop these competencies over time. The unique futuristic design of the cars along with the excellent performance that could rival even the most powerful gasoline powered cars also created a strong desire for driving and obtaining a purely electric car. The increase in cash can be attributed to substantial increase in total revenue (See Table 3). Tesla Inc can conduct market research to understand the supply-demand situation within the industry and prevent overproduction. With a market capitalisation that's risen by more than US$150bn over recent weeks, Tesla seems unstoppable in the eyes of shareholders. Political factors play a significant role in determining the factors that can impact Tesla, Inc.'s long term profitability in a certain country or market. As a small content curator, I am always looking for ways to provide new content. In 2010, Tesla total assets were $386,082 and have increased to $5,849,251 in 2014. The powertrain consists of battery pack, power electronics, software, motor, gearbox and control software. The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry. Tesla Inc. The company manufactures electric vehicles since 2003 (Tesla.com 2016). This seems to be backed by a survey from Bloomberg that shows that most buyers traded in vehicles in the price range between US $20,000 – 40,000 (vs. average Model 3 selling price of US $50,528). Political factors: You could qualify for tax credits when buying a Tesla vehicle. They are just awesome. This includes a long range vehicle that possesses recharging flexibility, one that is energy efficient, low cost, and high performing without compromising design or functionality. Tesla is the automotive industry's top company performer according to analysis undertaken by research firm GlobalData. The growing rise of green energy allowed the technological advances made by Tesla to ultimately give rise to a competitive and technological market for consumers. It is done using both, our quantitative analysis of the company fundamentals as well as its intrinsic market price estimation to project the real value. Tesla attempted to reduce switching costs by becoming more flexible with suppliers, but typically only one supplier would emerge fulfill components needed for Tesla vehicles and the supplier would ultimately dictate the prices. The threat of new entrants in the electric vehicle industry is moderately high. Changing the supply chain process overnight would significantly disrupt the manufacturing process. Tesla is leading the automobile industry in sustainability and innovation. PESTLE Analysis of Tesla analyses the brand on its business tactics. Now it is universally apparent on a global scale that Elon Musk is on a mission to monopolize not only the automotive industry, but the transportation industry as a whole, stretching as far as outer space. The initial launch of the Tesla Roadster earned a high margin but most of the earnings were reinvested into R&D to produce successive Tesla vehicles. In this case analysis, three primary segments of the general environment will be used to assess the competitive advantage Tesla has gained within the electric vehicle industry. Since Tesla continues to earn net income losses annually, some alternatives this company may consider pursing includes: transitioning towards the development of hybrid electric-gasoline cars, executing only step three of the master plan, or focusing only in the development lithium-ion batteries. The most significant change in current ratio was between 2012 to 2013 in which the current ratio increased from 0.97 to 1.88. >> READ THE LATEST SWOT ANALYSIS OF TESLA MOTORS FOR 2020 HERE. The company sold approximately 2,500 … The threat of substitute products is moderately low. When it introduced the sedan, called the Model S, in June 2012, it had stopped producing the Roadster. Fern Fort University. However, the substantial annual increases in operating expenses from $313,083 in 2011 to $1.07 million in 2014 in addition to rising annual interest expenses have resulted in consistent annual net income losses averaging $197,576 between 2011 to 2014. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Tesla. Three years after going public, its stock price rapidly increased up $291.42 in 2014. Following the success of the previous Tesla vehicles, the third step of the plan was implemented with the announcement of the Tesla Model 3 in 2014. Over the years Tesla, Inc. has redefined the ways of doing business in Consumer Goods. Tesla’s most significant change on return on equity was from 2012 to 2013 in which return on equity substantially decreased from -12% to -288% (See Table 4). Therefore, the threat of competition is relatively low. As of 2014, Tesla’s current ratio is 1.52 and cash ratio is 0.9. Therefore, by having limited options in terms of suppliers, Tesla was forced to incur high production costs resulting in high prices of Tesla vehicles and significant profit losses. Ion … The bargaining power of the buyers is moderately low. Unlike other automotive companies, Tesla isn’t just focused on selling cars.The vision is much grander than that: Tesla wants to revolutionize the driving experience. The significance of this solution is that Tesla is a supplier of powertrain components for many of the major automobile manufacturing companies. Nobody get fired for buying our Business Reports Templates. Once there are slight ups and downs in the demand forelectrical cars or production delay occurs, Tesla will probably suffer a hugeloss. The net profit margin continued to trend downward with the largest difference between 2012 and 2013 from -3% to -95%. The third step is to finalize all the suppliers who are willing to provide all the parts for Tesla vehicles. Customers often seek discounts and offerings on established products so if Tesla, Inc. keep on coming up with new products then it can limit the bargaining power of buyers. Tesla became the first automobile company to successfully create and design a fully electric and rechargeable vehicle that was both beautiful and capable of competing with gasoline powered cars from even the most established automobile manufacturers in the United States. Despite the … Imagine a future in which every person waking up in the morning has a car fully charged from a solar charger. If you’ve already read part 1 and 2 of this 3 part article, skip to part 3 here. By experimenting with product designs using different materials so that if the prices go up of one raw material then company can shift to another. Tesla primarily competed with General Motors’ hybrid electric Chevy Volt, Toyota Motor Corporation’s hybrid electric Toyota Prius, BMW’s i-series, and Daimler AG’s Mercedes-Benz B-Class Electric Drive. The VRIO constructed below (See Table 5) highlights Tesla’s important competencies and strategic advantages. Based on Table 5, the greatest competencies of Tesla include its innovative CEO, Elon Musk and the unique/futuristic design of its modern electric vehicles with each competency achieving a “sustainable competitive advantage” as these competencies cannot be easily replicated. The aim of this market analysis is to recommend Tesla Motors the best suit international market. The second step is to determine the most likely major and minor US cities that would benefit by having a Supercharger station. As the primary issue currently facing Tesla involves its financial situation, the solutions, recommendations, and implementation process will be based upon the improvement of Tesla’s current financial status. By analyzing all the five competitive forces Tesla, Inc. strategists can gain a complete picture of what impacts the profitability of the organization in Auto Manufacturers - Major industry. By building a sustainable differentiation, By building scale so that it can compete better. Coincidentally, the debt ratio also increased between 2011 to 2012 from 0.69 to 0.89 indicating that the increase in total equity was financed through increases in accounts payable and long-term debt thereby increasing the debt ratio (See Table 3). 1. The futuristic concept of the vehicles and the eco-friendly mission of the company has helped drive Tesla’s stock price from roughly $20 per share up to $300 per share. During the initial public offering of Tesla in 2010, the company closed with shares valued at $23.89. So, it only seems fitting to include a Musk update. Anyways, I hope you guys enjoy this rather off topic post. If suppliers are not willing to negotiate, expand search for suppliers who will be able to accommodate Tesla requirements or suppliers with alternative parts. The most significant change in Tesla’s equity ratio was between 2011 to 2012 in which the equity ratio decreased from 0.31 to 0.11 as a result of a decrease in total equity and an increase in total assets. The smaller and more powerful the customer base is of Tesla, Inc. the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers. When a new product or service meets a similar customer needs in different ways, industry profitability suffers. Market Analysis before launch of Tesla Mode l S: The market segment that was targeted had been identified as primarily males ages 25-60. 7. This PESTLE analysis of Tesla Inc. contains major findings about the company. ANALYSIS - Tesla future models. In order to promote competition among suppliers, Tesla should consider exclusivity contracts in which each supplier is guaranteed a manufacturing contract if they remain committed towards providing necessary Tesla parts. See Tesla, Inc. (TSLA) stock analyst estimates, including earnings and revenue, EPS, upgrades and downgrades. PESTLE Analysis of Tesla analyses the brand on its business tactics. There is more competition, however, now entering the higher-end electric and self-driving car market. With the production of the Tesla Model S, the second step of the action plan was implemented. Tesla, Inc. has to manage all these challenges and build effective barriers to safeguard its competitive edge. The four-step plan was initiated with the launched of the Tesla Roadster in 2006. The industry analysis will focus on three primary analyses that will be tailored for Tesla. Other companies would have to innovate on a level beyond that of Tesla and produce a product that is significantly superior in order to be an acceptable substitute. The third alternative Tesla should consider is to stop the production of the vehicles and focus only on the production of lithium-ion batteries. This four-step chronological action plan was the blueprint Tesla utilized to manufacture electric cars with the goal of charging with zero-emission electric power. See Tesla, Inc. (TSLA) stock analyst estimates, including earnings and revenue, EPS, upgrades and downgrades. 2,000 Superchargers worldwide that were free to use for Tesla a synergistic relationship Tesla was able dictate. Is moderately high deliveries in the automotive industry 's top company performer according to analysis undertaken by firm. 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