Introduction

This report aims to evaluate the influence of Tesla, Inc. on the global market and its impact
on the worldwide economy, while also examining the company's sustainability efforts and
statements.

In the 21st century, although the wealth of nations is greater than ever before, the turbulence
and instability of the world order is also at its highest. International conflicts have aggravated
uncertainty in the global economy and financial markets. The nature of uncertainty and
instability has been investigated in various existing studies and cannot be understood without
further analysis of new trends in the global economy (Batt, 2018; Dorsser & Taneja, 2020;
According to the geopolitical paradigm in international business, several geopolitical aspects,
in addition to firm-specific and environmental variables, can influence international business
choices. When considering geopolitics in the context of international business, it is critical to
keep the notion of globalisation in mind. Observations of the contemporary worldwide
economic climate draw attention to a few strictly global geopolitical concerns. Regionalism
and bilateral commercial agreements between nations are important factors in shaping
international business connections (As-Sabar et. al., 2000).

Multinational firms are complex organizations with stakeholders – shareholders,

management, labor, suppliers, customers, competitors, and domestic and foreign governments
– whose interests must be balanced and negotiated both within the firm and in interaction
with other agents. Their need to balance the conventional concerns of firms with the vagaries
and risks of the international system leads multinational firms toward distinctive practices.
Those practices, in turn, drive the organization of international markets that affect
geopolitics. Multinational firms unavoidably exert influence over politics through power that
is generated by both structure and process (Abdelal, 2015). They are thus "embedded," to use
Karl Polanyi’s original formulation, in a variety of social, political, and institutional contexts
(Polanyi, 1944). These firms compose industries – organizational fields – of peers,
competitors, suppliers, and customers (DiMaggio and Powell, 1983). Multinational firms
both influence and are reshaped by the institutional contexts of their home countries. And
they interact with the governments of other countries, thereby becoming constituents of
patterns of international relations (Heidenreich, 2012).

About the company

Tesla Motors, an American multinational corporation, was established in 2003 by Silicon
Valley engineers (Stringham, Miller, and Clark, 2015). It specializes in electric vehicles and
battery products and has successfully navigated entry barriers in the automotive industry,
pioneering electric car production (Stringham, Miller, and Clark, 2015). The company's
manufacturing facilities are primarily located in Fremont, California, with expansions
planned in the US and the Netherlands, including the construction of a "gigafactory" for
lithium-ion cell production (The Economist, 2014). Although initially focused on the US
market, Tesla began global expansion, with European deliveries commencing in 2013 and
Asian deliveries in 2014 (O'Hara, 2015). However, challenges such as "range anxiety"
persist, particularly in markets like China, despite successful entries into environmentally
conscious regions like Norway (O'Hara, 2015; "Musk reboots Tesla’s China strategy," 2015).

Tesla financials
In 2022, Tesla achieved a global revenue of US$41.8 billion, while the overall market
revenue reached US$1.7 trillion. The largest portion of Tesla's revenue, accounting for 42%,
came from the passenger cars market, particularly SUVs. The second-largest market for Tesla
was in large cars, contributing 36% to the company's revenue. In terms of market share by
revenue, Toyota led with 11.4%, followed by Ford with 7.9%, and Volkswagen with 6.4%.
Tesla held a market share of 2.46%.

Conceptual Evaluation 1: Global Economy and Contemporary International Business

Tesla has emerged as a significant player in the Chinese market, where intense competition in
the electric vehicle sector prompted the company to reduce vehicle prices, aiming to bolster
sales and secure a larger market share (Bloomberg, 2021). However, this move poses a
potential risk to Tesla's future profit margins, as it commits to maintaining lower prices in
China compared to other global markets for the next decade. Presently, Tesla's Model Y
manufactured at its Gigafactory in Shanghai yields a gross profit margin of 30%, while the
Model S boasts approximately 40% (Loveday, 2021). Analysts caution that China's pivotal
role in Tesla's profitability could lead to significant financial challenges down the line
(CNBC, 2021).

To adapt to evolving market dynamics, Tesla is transitioning to a virtual sales model, seeking
to mitigate rising operating expenses associated with geographical expansion. This strategy
involves reducing costs by forgoing costly showrooms in favor of leasing affordable spaces
in warehouses and mall parking lots. Sales operations will primarily be conducted through a
centralized virtual store, managed remotely by online sales representatives (Dow, 2019).
Furthermore, Tesla's recent establishment of new production facilities in Germany and Texas
is expected to double the company's production capacity, facilitating expanded sales in
Europe and the United States.

Looking ahead, the combination of new factories and strategic pricing adjustments is
anticipated to maintain Tesla's automotive profit margin above 30% in the upcoming quarters
(Levin, 2022). Analyst projections illustrate a steady increase in Tesla's earnings per share,
forecasted to rise from the current $1.29 to approximately $7 by 2024. This growth trajectory
is attributed to Tesla's planned product launches in 2023, anticipated to stimulate demand
(Sozzi, 2022).

Tesla's current focus lies in expanding its market presence in China and augmenting
production capacities in Europe and the U.S., positioning itself for sustained growth amidst
burgeoning competition from companies transitioning to hybrid and electric vehicles (Sozzi,
2022). Despite the revenue implications of lowered prices in China, Tesla is expected to
maintain a robust financial position, benefitting from ongoing volume growth, market
expansion, and potential cost reductions due to decreasing inflation (Sozzi, 2022).

Tesla Globalization Strategy

Tesla Motors operates within a global value network utilizing various producer and buyer
chains, degree of market mediation, relational networks, and relationships with national
governments. As a producer, Tesla manufactures electric cars and components, establishing
strategic ties with suppliers like Sotira for carbon fiber panels, while internally producing
certain components such as powertrains (Mangram, 2012). It practices direct sales, owning
stores for customer purchases and offering online ordering, though facing legal challenges in
some US states (Stolze, 2015). In terms of market mediation, challenges vary by country; for
instance, in China, addressing range anxiety through the expansion of supercharging stations
becomes crucial ("Musk reboots Tesla’s China strategy," 2015). However, in smaller
European countries, environmental concerns and infrastructure make market mediation less
necessary. Tesla engages in relational networks by partnering with companies for component
purchases, vehicle development, and even forming alliances with competitors like Toyota for
electric vehicle development (Cheong, Song, and Hu, 2016). The construction of its
"gigafactory" signals an intent to sell lithium-ion batteries to other manufacturers. Moreover,
Tesla maintains positive relationships with national governments, benefiting from subsidies
and support for its environmentally-friendly electric cars. In the US, government subsidies
helped overcome financial difficulties (Harkinson, 2013), while in countries like Norway, tax
benefits facilitated high sales rates (O’Hara, 2015). Governments also offered loan programs
to encourage purchases of Tesla vehicles. Through these networks and relationships, Tesla
navigates global markets while advancing its electric vehicle agenda.

Geopolitical trade Challenges Facing Tesla

As a multinational corporation operating in a fiercely competitive and ever-evolving industry,

Tesla encounters various geopolitical hurdles that could impact its business operations and
stock performance. These challenges encompass:

•US-China Relations: The strained ties between the US and China pose a significant
obstacle for Tesla, with trade tensions and tariffs potentially affecting the cost of imported
materials and components from China. Regulatory barriers in China's electric vehicle (EV)
market, such as licensing requirements and quality standards, may hinder Tesla's expansion
efforts in a critical market.

•European Union (EU) Regulations: The EU's strict emissions standards and ambitious
carbon neutrality objectives present both opportunities and challenges for Tesla. While these
standards promote EV adoption, they also intensify competition among EV manufacturers.
Moreover, the EU's emphasis on domestic EV production necessitates adjustments to Tesla's
supply chain and manufacturing strategies in Europe.

•Geopolitical Energy Trends: Tesla's reliance on vital minerals and resources exposes it to
geopolitical shifts in resource availability and competition. Changes in renewable energy
policies and the global energy landscape can affect EV demand and the sustainability of
Tesla's supply chain.

European Union: it has become a significant battleground for Tesla. The EU's commitment
to reducing greenhouse gas emissions and promoting sustainable transportation aligns with
Tesla's mission. However, the stringent emissions standards and targets for EV adoption have
intensified competition in the European market. Tesla faces challenges in complying with EU
regulations and navigating the complex regulatory environment across member states. While
Tesla's Gigafactory in Germany underscores its dedication to local production, it also reflects
the EU's aim for greater control over the EV supply chain. Overall, adhering to EU
regulations and addressing regional complexities are crucial for Tesla's operations in Europe.

Development issues

Tesla's reliance on external resources highlights the need for innovative solutions like
alternative battery technology and closed-loop recycling systems to mitigate strategic
uncertainty. Geopolitical instability, particularly in the US-China relationship, poses
challenges for Tesla's supply chain, as seen in the dependence on China for critical minerals
like rare earth elements (REEs) (Webb et al., 2019). The potential for trade wars and regional
rivalries exacerbates this uncertainty, affecting global access to essential minerals for green
technologies, including electric vehicles (Ford, 2020). China's dominance in mineral
production further amplifies geopolitical concerns, with the US-China trade tensions adding
complexity to Tesla's business environment (Arrobas, 2017).

Tesla's business performance is significantly impacted by geopolitical factors such as trade

wars and economic conditions, influencing market access and supply chain management.
Economic risks like deflation in China and global uncertainties, including conflicts like the
war in Ukraine and the COVID-19 pandemic, affect Tesla's financial performance and
pricing strategies (Johnson, 2019). In response, Tesla is diversifying its operations, expanding
production into markets like India and bolstering supply chain resilience through initiatives
like building Gig factories with significant capacities.

These efforts aim to address geopolitical risks while meeting the rising demand for electric
vehicles worldwide. Geopolitical energy trends, including shifts towards clean energy and
regulatory changes, play a crucial role in shaping investor sentiment towards Tesla,
highlighting the importance of monitoring geopolitical developments for Tesla's stock
performance Understanding these geopolitical factors is crucial for both Tesla and its
investors to navigate uncertainties and plan for future growth.

Conceptual Evaluation 3: Tesla and Global Business Responses to Sustainability

The emergence of electric vehicles (EVs) dates back to the 20th century, yet it wasn't until
the 21st century that Tesla, Inc. disrupted the market, making electric cars a viable alternative
to conventional gasoline vehicles. Tesla's mission to accelerate the adoption of sustainable
transport has been instrumental in revolutionizing the auto industry (Rowland, 2016).
Through its strategic focus on sustainable energy, Tesla envisions facilitating a global
transition to renewable resources (Martins et al., 2015). Initially, Tesla aimed to alter
consumer perceptions toward electric mobility by offering eco-friendly, efficient, and zero-
emission battery electric vehicles (BEVs) along with lithium-ion battery packs (Furr, 2020).
Over time, Tesla expanded its offerings to include clean energy solutions through solar-
powered infrastructure, consistently growing its revenue and strengthening its global position
(Furr, 2020).

Achievements in Sustainability as per Tesla (2022). 2021 Impact Report.

1. In 2021, Tesla commenced measuring Scope 1 and Scope 2 greenhouse gas emissions,
aligning with GHG Protocol standards.

2. A comprehensive materiality analysis in 2021 identified key Environmental, Social, and

Governance (ESG) topics through input from internal and external stakeholders.

3. Tesla's solar panels generated more electricity than consumed by its vehicle fleet and
factories from 2012 to 2021.

4. Since 2021, Tesla initiated a benefits concierge service for LGBTQ+ employees.

5. Tesla provided support for victims of natural disasters such as Hurricane Ida, Kentucky
Storms, and the Texas Winter Storm.

6. Despite increased car production rates, global recorded injuries decreased.

7. Tesla vehicles earned 5-star safety ratings from rating agencies across the U.S., Europe,
and Australia since 2019.

Tactical Approaches to Sustainability

At the tactical level, Tesla strategically develops networks and collaborations to deliver high-
quality, efficient EV models and energy solutions. Collaborative efforts include partnerships
with industry incumbents such as Daimler, Toyota, and Lotus Cars for EV model
development and alliances with Panasonic for automotive-grade lithium-ion battery packs
and joint R&D initiatives (Fleming, 2013). Tesla's direct-to-consumer sales approach enables
 unique buying experiences, fostering direct feedback channels and influencing consumer
attitudes toward EV adoption. These collaborations not only advance sustainable practices
within partner industries but also shape consumer behavior toward eco-friendly mobility
solutions.

At the tactical level, the company develops networks and collaborations to create and deliver
high-quality efficient EV models and energy solutions. The challenge for the company’s
SBM, therefore, revolves around the ability to influence change in hardware and system
architecture by promoting incremental and transformative changes. To address this, the
company entered into collaborative and manufacturing partnerships for EV models with
incumbents in the same industry (i.e., alliances with other automakers—Daimler, Toyota, and
Lotus Cars), and also in different or unrelated industries (i.e., an R&D alliance with an
electronics firm—Panasonic) (Fleming, B.,2013). The alliance with Lotus Cars helped the
company become more efficient during the initial stages of building a new sports car for the
market. With Panasonic, the company entered into a supply and R&D agreement, first, for the
supply of automotive-grade lithium-ion battery packs for Tesla Model S and subsequently for
the joint-development of automotive-grade battery cells. The company has developed a direct
relationship with the B2C customers, where, instead of selling cars through a franchised
dealership, it sells directly to customers. Tesla established a direct connection with customers
to give them a unique buying experience and constantly interacted with them to receive direct
feedback regarding the vehicle performance. These collaborations helped the company
influence the practice of its’ partners and collaborators towards sustainability, and also
modify the buying behavior and attitude of customers towards private consumption of EV.

Conclusion

The geopolitical impact of Tesla on the economy underscores the interconnectedness between
global politics and business operations. As Tesla expands its footprint in various regions, it
becomes increasingly susceptible to geopolitical tensions, trade disputes, and regulatory
challenges. The company's reliance on international supply chains and market access makes it
vulnerable to shifts in trade policies and diplomatic relations. Moreover, geopolitical
uncertainties can affect Tesla's financial performance, investor sentiment, and overall
business strategy. However, Tesla's proactive stance on sustainability and its innovative
approach to electric mobility position it as a key player in shaping global energy transitions
and driving positive change. Ultimately, navigating geopolitical complexities is essential for
Tesla to sustain its growth trajectory and continue leading the charge towards a more
sustainable future in the global economy.

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