Tesla

SWOT analysis of Tesla

Strengths
Energy Efficiency - Tesla is a leading pioneer when it comes to electric vehicles due to
its prominent use of renewable energy sources like solar power.
Partnership - Tesla is collaborating with big giants like Southeast APDA, Yes Energy etc.
These collaborations help is expanding Tesla’s renewable energy efforts and in the global
market.
Highly innovative - Tesla’s design is top class. And they put a lot of thought during
engineering and designing of their electric vehicle to give extreme comfort to their
consumers.
Sturdy Brand Image - The market trusts and expects the company to develop clean
energy and profitable products. It has gained immense fame.

Weakness
Limited Presence - On the one hand, Tesla is working on establishing themselves in a
hypercompetitive automobile market and on the other they are trying to expand globally.
Premium Product Range - Tesla is an established premium clean energy brand. One of the
setbacks they can face is in terms of affordability and a consumer’s trust when it comes to
electric vehicles.
Succession Strategy - Elon Musk has become the brand face od Tesla and it is accepted as
an one-man-show. Although Elon Musk himself has a lot on his plate.
Opportunities
Autonomous Driving Technology - Tesla’s autopilot technology has gained it fame
for its safety and convenience. Making it trustworthy by consumers and the share
market. Tesla’s work in autopilot is constantly evolving.
Environment-friendly cars - As consumers are becoming more environmentally
conscious, the need for more electric vehicles is growing along with the need to
minimise fuel-driven cars.
Battery Production Technology - Tesla is planning on manufacturing its battery cell
in-house. This can be a game-changer as it will help the company lower its production
cost. And will also create many jobs, in turn, helping the economy.

Threats
Increased Competition - Heavy research is being done for automobiles powered by
renewable energy and many big companies like BMW and Volkswagen are becoming
Tesla’s competitors.
New technologies - There are innovative ways of energy being used in vehicles.
Competitive pressure can lead to high operational costs and decreased profit margins.
Long Term Sustainability - It is essential to maintain long term sustainability for a
clean energy automobile company. This is a potential threat due to Tesla’s unstable
manufacturing conditions and limited EV support infrastructure in North America and
several parts of Asia
Tesla's Business Model
Manufacturer Direct - In contrast to traditional auto manufacturers who
sell through authorized dealer networks, Tesla has been working state-by-
state to sell directly to consumers. Franchise laws in many states generally
require cars to be sold through independent dealers, but Tesla has slowly
chipped away at these laws over time, and found alternative sales
channels, for example by selling out of nearby states, leasing instead of
selling directly to consumers, and selling remotely to avoid bans on in-
person sales. The company has also been successful with its lobbying
efforts to change franchise laws in several states.
Tesla's Strategy
Differentiate - Premium Branding - Tesla entered the automotive market
as a premium tier brand with its first car for sale at $100,000. This is in
stark contrast with the traditional automotive manufacturers who sought
to gain wider adoption with low-cost, smaller electric and hybrid vehicles.
Tesla's strategy turned its iconic logo and car into a status symbol, which
has had a greater affect on electric car adoption than earlier low-cost
options.
Scale - Vertical Integration - Tesla's strategy also differs from traditional
manufacturers by pursuing deeper vertical integration. Whereas auto
manufacturers generally focus on the manufacture and assembly of
engines and automobiles, Tesla also owns the marketing, sales, and
service process. Notably, Tesla has also developed its own proprietary
charging centers.
Customer Captivity - Network Effects - An early argument against electric
cars was the lack of a nationwide system for charging, which limited the
range of Tesla's vehicles. Tesla chose to develop its own network of
charging stations (generally through partnerships), which has started to
create a network effects cycle reinforcing the benefits of Tesla ownership,
and creating demand for additional charging stations. The more stations
that are built, the more potential Tesla owners will come into the
network.
Government Intervention - Incentives & Subsidies - Lastly, a key aspect of
Tesla's consumer strategy is to encourage the use of government credits for
the purchase of electric vehicles or solar chargers, which the company also
sells. These available subsidies help lower the cost of ownership for Tesla's
high-priced vehicles, and has allowed the company to maintain its premium
strategy.
To summarize this quick overview of Tesla Inc., the company utilizes one
business model: Manufacturer-Direct, and a mix of four strategies:
Differentiate (Premium Branding), Scale (Vertical Integration), Customer
Captivity (Network Effects), and Government Intervention (Lobbying and
Incentives & Subsidies).