Tesla SWOT Analysis - Detailed discussion on where the firm stands
Tesla, Inc. has been making waves among tech and automobile enthusiasts all over the world. Although the company is comparatively new, it finds itself in the news everyday with its many promising and game changing innovations. Here is a Tesla SWOT analysis detailing the various factors that affect the company today.
Founded in 2003 as Tesla Motors, Inc., the company’s promise of creating best-in-class electric vehicles was a big one. This plan of automobiles running on clean energy was nothing short of revolutionary. However, the energy-saving, luxury-centric approach towards automobiles has seen a mixed reception in the automobile industry. Even in 2021, while the brand name is well recognized, it’s not doing amazingly well in sales.
The company was named after Nikola Tesla, a scientist and inventor famous for first coming up with AC motors and was founded by Martin Eberhard and Marc Tarpenning. A year later, in 2004, Elon Musk of the PayPal mafia contributed US$6.5 million of the initial US$7.5 million round of investment. Musk has been CEO since 2008. Today the firm has multiple services such as auto services, financial services, etc. through its subsidiaries, besides motor vehicles.
Coming to the specifics of the Tesla SWOT analysis, it’s known that the company has often seen more losses than profits financially. In the luxury car domain, too, brands such as BMW, Audi, etc. have been around for way longer and have established a strong foothold.
At the same time, being future oriented and offering something new makes Tesla, Inc., Inc. a promising company for the coming years. Although, does this give a worthy challenge to competitors of Tesla and how does the firm fare against them?
In this Tesla SWOT analysis, we’ve focused on the various factors that account towards Tesla’s internal strengths and weaknesses and external opportunities and threats. Read on to see how the firm fares today, places it’s already good at and can use to capitalize on, as well the areas which need improvement.
TABLE OF CONTENTS
Tesla, Inc. - Overview
| Company Name | Tesla, Inc. |
| Founder(s) | Martin Eberhard and Marc Tarpenning |
| Founded in | 2003 |
| Company Headquarters | Palo Alto, California, United States |
| Present CEO(s) | Elon Musk (Oct 2008–) |
| Company Type | Public |
| Industry | Automotive industry, Battery Energy storage, Photovoltaic systems |
| Number of Employees | 70,700+ (2020) |
| Annual Revenue | 31.54B (2020) |
| Operating income | $1.994B (2020) |
| Area of service | 35 countries including USA |
| Link to website | www.tesla.com/ |
Tesla SWOT Analysis
Strengths
Tesla, although a newer firm in the automotive market, has a number of strengths which act in its favor. These are as follows:
- Innovation: Tesla as a brand has been known for its innovative style. The vehicle designs are fresh and top class, providing extreme comfort and quality to the buyer. Their electric vehicles are handled in the best way from design to engineering and they keep adding value to their products. For example, the company has recently developed the world’s first fully electric semi truck and new sports car. These innovations act as a major catalyst towards attracting new customers.
- Energy Efficient Electric Cars: A number of firms are now moving towards electric vehicles and creating new models, but Tesla has proven to be the best provider of quality in this field. Tesla’s cars provide excellent range, and can take you up to 600 kilometres on a single charge. 3 of Tesla’s models, S, 3, and X are at the top of the list of how far a single charge can take you.
The use of renewable energy also makes it a very viable option for future generations. Given that the world as a whole is moving towards sustainable growth, these features give Tesla a huge competitive advantage.
- Top Employer: Tesla CEO Elon Musk has been known to keep a stand on the skills above educational qualifications. This shows in Tesla’s employees, too. The company is a top employer and hires highly skilled individuals. There is a diverse set of employees and innovation is encouraged in Tesla. They have successfully appeared in Forbes lists for top employers in multiple categories over the years.
- Domination in US Electric Vehicle Sales: As per stats, Tesla has been the dominant company in electric vehicle sales over the past few years. In 2019, 3 of the 7 top electric vehicles sold were Tesla models. This goes to further build trust among new prospects and encourage them to buy Tesla cars based on previous sales.
Weaknesses
There are some internal factors that can negatively affect Tesla’s growth. We have summarised some of them here:
- Limited Production: To provide high quality, it’s obvious that there would be a lot of cost included. However, this high cost of production hinders Tesla’s volume of production. Production cost, management resources and space are a major constraint. The company is present in only a few countries, though and can’t make use of the better availability of resources in other countries.
- Reliance on Musk’s brand image: Tesla has come a long way since its start, but even now a lot of its success depends on Elon Musk alone. His brand image is what makes a lot of customers want Tesla products. However, Musk also has other ventures to contribute to and carrying Tesla on his shoulders alone is a challenge.
- Complications in Manufacturing: Vehicles by Tesla are often in the news for meeting with accidents due to being driven automatically. The high standard of innovation increases the risk of mechanical failures and other complications during production. Delays in launch, production and manufacturing are seen all the time due to this in Tesla.
- Inability to meet demand: The above factors inevitably lead to an inability to meet demands. The constant experimentation and complications in the process could lead to an imbalance in the supply and demand of Tesla cars in the market.
Opportunities
External factors that Tesla can take advantage of to increase their sales and production are plenty. These factors include:
- Global expansion: As stated above, Tesla is found in only about 35 countries. This leaves a whole plethora of countries and markets that the company can still tap into and try to sell products in. Asian countries, where the electric vehicle market is just beginning to stir, are an amazing opportunity for Tesla to tap into.
- In-house battery production technology: Tesla has been externally sourcing its batteries and a limited supply of these has been a hindrance in the past. However, the company now plans to bring the production of their batteries in-house. If executed well, this could save a lot of time and money for the company.
- Economic viability: Being a luxury car company providing innovative features, the rate of Tesla’s products are over the roof. However, there is plenty of scope for providing slightly lesser features and range and making more economic models that cater to a wider audience. The Tesla Model 3 car is a good starting point for this, as it’s a less expensive version of the model S, lacking some features.
- Autonomous driving: While this has seen some downsides due to accidents in the past, Tesla can greatly capitalize on autonomous driving technologies in the coming years. Improving on this technology to make it failsafe is a must at this point for the company as it’s continued to attract a number of customers.
Threats
- Competitive market: More and more companies are moving towards greener production and as such, Tesla faces heavy competition from competitors across the world. These companies provide items at cheaper prices enabling more customers to purchase them. As such, Tesla is threatened by companies having a stronger hold on the automotive market and now moving towards green production.
- Slow customer adaptation: Tesla offers innovative solutions, but these might not be accepted by customers immediately. Besides, the product liability claims that Tesla has faced are in no way helpful to what the company is trying to achieve. Given this, a large number of consumers are still wary of buying Tesla products and this is a major hindrance to Tesla.
- Shortage of raw materials: To make their products, Tesla makes use of high-end metals and alloys such as Aluminium, Steel, Nickel, etc. in the manufacturing process. These materials are expensive and not always easily available. Any changes in the cost of these materials could greatly affect Tesla’s production.
- Legal complexities on self-driving vehicles: Self-driving vehicles are very new in most areas and as such, there are no proper regulations around their use. This has led to legal issues in the past and continues to threaten the company’s growth.
Summary of Tesla SWOT Analysis
As highlighted in the above sections, Tesla’s SWOT analysis shows that it’s got a good mix of internal and external factors affecting its growth. While the factors such as innovation and smart employment act in the company’s favor, complications in manufacturing and limited production can be a major weakness. External factors like extensive competition are also a threat to Tesla’s growth, but they have some amazing opportunities in untapped markets.