Tesla Case Study

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TESLA Case Study

Tesla, Inc.

 

Type of Industry

Automotive

Headquarters

Palo Alto, California, United States of America

Sales/Revenue

US$ 21.461 billion

Area Served

Worldwide

Number of Stores

NA

Competition

  • Kia Soul EV.
  • BMW i3.
  • Nissan Leaf.
  • Volkswagen e-Golf.
  • Hyundai Ioniq EV.
  • Chevrolet Volt EV.

USP

Energy efficient vehicles  

Target Group

Young adults who are environment conscious

Products

automotives

Website

www.tesla.com

Tesla Case Study Introduction

The American automotive and energy giant, Tesla Inc. (Tesla) has succeeded in sustaining its business success in a thorough and appropriate manner. Based in Palo Alto, California, United States of America, Tesla has specialized in manufacturing electric car and environmental products like solar panel. The Tesla case study is essential to conduct in order to understand how the Company has succeeded in sustaining its profitability throughout and how the Company has succeeded in sustaining its global market reputation. A SWOT and PESTLE analysis of the Company is also required in order to understand the factors that have contributed to the growth and development of Tesla’s business.

Tesla SWOT Analysis

Strengths

The primary strength of Tesla, as revealed by the Tesla case study, is that, the Company has got a unique position in the automotive market on a global basis. The Tesla case study reveals that, integration of innovation in production of automotives has added to the business strength of Tesla in a thorough and effective manner. It is through effective integration of innovation in the production process that Tesla has been able to manufacture energy efficient cars and this has added to the business strength of the Company. Moreover, it has been observed that Tesla’s contribution in changing the way people used to commute has also added to the Company’s business and market strengths. Besides, the Tesla case study reveals that, the robust sales growth of the Company has strengthened the Company even more. The increase in sales is an indicator to the fast paced growth and development of Tesla not only in the United States but also in other countries.

Weaknesses

Financial scarcity has been identified by the Tesla case study as one of the primary weaknesses of Tesla. In this respect, it has to be noted that excessive investment in research and development (R&D) processes has often put the Company in financial crisis and this has added to the weakness of Tesla quite thoroughly. Moreover, for indulging in rapid business expansion, Tesla has to invest hugely and this also adds to its financial vulnerabilities. Moreover, a high debt load has also been pointed out to be one of the primary weaknesses of Tesla. It is noteworthy in this respect that, in order to pay the interest payments on the debts the Company has to often face some financial glitches.

Opportunities

Despite having weaknesses, Tesla is provided with some specific opportunities by the automotive market. The Tesla case study reveals that Tesla has the opportunity to develop more gigafactories that can fulfill the Company’s production targets and increase the Company’s automobile production rate. The Tesla case study reveals that the Company has the opportunity to enhance its market hold by producing more energy efficient vehicles like Model 3. Moreover, the Company has the opportunity to implement more cost-reduction strategies in order to relief itself from overload of debts both in the short run and long run. Besides, the establishment of more gigafactories for production of batteries for its Tesla’s energy efficient vehicles will also provide opportunities to the Company for business growth and development.

Threats

Stiffer and a higher degree of competition within the automotive industry worldwide should be considered a serious threat to Tesla’s global business. Moreover, financial crunch has posed serious threat to Tesla’s objective of funding its ambitious production ramp. Such funding problem has to be resolved in order to stay in the competition in the long run.

Tesla PESTLE Analysis

Political Environment

Political environment plays a crucial role in determining the future of a business. This holds true for Tesla too. The Tesla case study reveals that the significant stability in the political sphere of the United States and the stability of the government of the United States have provided Tesla with the chance of expanding its business not only in the United States but also in some other countries. This has added to the business strength of Tesla. Moreover, government incentives for production of electrical automobiles for ensuring environmental health have also provided opportunities to Tesla to grow its business exponentially. Also, it has to be noted that new global trade agreements have also opened the doors for Tesla to venture into new and potential markets in the emerging economies.

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Economic Environment

Certain economic conditions, as revealed by the Tesla case study, have contributed to Tesla’s business growth and development. For instance, the decreasing cost of batteries provides ample opportunity to Tesla to grow and expand its business in both developed and emerging economies worldwide. Moreover, the Tesla case study reveals that the Company has been benefitted by new economic regulations that promote energy efficiency in automotives. Besides, the decreasing cost of renewable energy also provides opportunities of business growth to Tesla. But economic instability in the European Union should be considered a threat to Tesla’s European business section.

Social/Socio-Cultural Environment

The demand on the part of the majority of the members of different societies across the globe for low-carbon lifestyle has provided opportunities to Tesla to grow and expand its business in both developed and emerging economies. The Tesla case study reveals that customers’ increasing preference for energy efficient cars also provide chances to Tesla to penetrate deep into new markets. Besides, improvement in the process of wealth distribution in the emerging markets has also provided scopes to Tesla to target newer and potential customer segments.

Technological Environment

Tesla is a technology driven Company and hence, the lower cost of technology diffusion in the United States has come to the aid of the Company in terms of business growth and development. Moreover, the Tesla case study reveals that the high rate of technological change has compelled Tesla to integrate more innovation in its production process, thereby, enhancing its product quality thoroughly. Besides, the increasing rate of business automation has also helped Tesla in reducing its production cost and in enriching its production methods and processes.

Legal Environment

The enhancement and increase in the rate of implementation of international patent protection laws have helped Tesla in sustaining its business growth and product line expansion in a thorough and effective manner. It should be noted that higher energy consumption regulations have also impacted positively on Tesla’s profitability and sales growth. Moreover, a strong dealership sales regulation in the United States has helped the Company to establish a strong supply chain management policy.

Environmental Factors

Tesla’s ability to manufacture energy efficient automotives has helped the Company in establishing itself as an environment-friendly business entity in the global market. This has also enhanced its market reputation in a thorough and explicit manner.

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