Pestle analysis of Tesla. Tesla Motors Inc. is an American electric vehicle manufacturing company. Martin Eberhard and Marc Tarpenning are the founders of Tesla motors and they established the company in July 2003. The name of the brand “Tesla” is a tribute to the famous physicist, scientist, and inventor of the early 20th century, Nikola Tesla. The headquarter of the brand is situated in Palo Alto, California, USA.
Tesla has grown into the world’s leading brand in a very short time. The company offers dynamic automotive solutions to businesses and companies. Some of the major products and services of the company are financial services, power battery packs, solar panels, auto services, lifestyle products, Tesla motors vehicles, electric vehicles, and retail merchandising.
Tesla has employed roundabout 48016 people to manage different operations of the company in 2020. Some of the major competitors of the company are the 2018 Volkswagen e-Golf, 2018 BMW i3, 2018 Nissan Leaf, 2018 Hyundai Ioniq EV, 2018 Kia Soul EV, and 2018 Chevrolet Volt EV.
Today, we’ll discuss the pestle analysis of Tesla Motors Inc. Here we’ll focus on the macro-environmental issues of the company’s business and their impact. If you want to learn about the internal factors of the company, check out the swot analysis of Tesla Motors. Here’s the pestle analysis of Tesla;
Political factors affecting Tesla Motors
Tax Credit Incentives
Tesla Motors is the world’s leading automotive manufacturer in the field of electric vehicles. They require less fuel than traditional cars. Tesla’s vehicles use both power sources; fuel and electricity. Often its drivers prefer to use electric recharging stations to refill the batteries, rather than gas and fuel stations.
Some of the States and governments provide tax credit incentives. It’s because to promote the usage of hybrid-electric engines. The US Federal Government provides tax credit incentives up to 7500 dollars. The US Department of Justice offered a less interest loan of 465 dollars. The state of Colorado provided tax credit incentives of 5000 dollars.
There are many international laws, regulations, and business activities that have a direct relation with the cost of the supplies. The cost impacts the price, and the price ultimately impacts the sale of its products. The management should consider such issues. Like safety standards of automobiles, batteries, recharging stations, and other infrastructure of electric vehicles.
Stable political environment and government influence also play an important role. It may result in the form of regulations, trade policies, and laws. For instance, the Trump administration was protectionist and nationalist and it was discouraging imports by increasing the import taxes. It continued to happen for 4 years during his presidency from 2016 to 2020.
Economical factors Impacting Tesla Motors
High Sales & Earnings
According to a statistical estimate by MacroTrends, the annual revenue of Tesla was 28.176 billion dollars. Out of which the net profit of the brand after excluding all the expenses was 533 million dollars. The annual revenue increased by 15.38% and net income decreased by 163.48%. Even though the company has performed very well if you keep in mind the lockdown and shutdown of businesses.
According to an estimate, Tesla Motors has sold roundabout 88400, 90650, and 139300 vehicles in the 1st, 2nd, and 3rd quarter of 2020. If you consider the circumstances of the pandemic, then it’s a huge volume of sales. The company sold approximately 367500 vehicles in 2019.
Some of the main elements in the manufacturing of Tesla’s vehicles are lithium, cobalt, steel, aluminum, nickel, and lithium cells. The market and prices of such elements and materials are unstable. Even a small change in the price of those supplies could have a big impact on the retail price and sale of electric vehicles.
Lower Renewable Energy Resources Cost
The cost of renewable energy sources like solar panels and lithium batteries is a major topic of discussion in economic and business circles. A decrease in the price of batteries would increase the sale of Tesla’s electric vehicles. When the sale increases, it would also increase the profitability of the company.
Luxury in Developing Economies
When we look at the growth and economy of the developing countries, owning a car is still a luxury. It’s because of the exchange rate and taxes. Tesla’s electric vehicles are too expensive for them to buy it. A proper infrastructure of charging stations across the country is also a major issue. It can only succeed if the government provides incentives, lower the taxes, and promote the sale of electric vehicles.
Post-Pandemic Economic Recession
It’s almost the end of 2020 and the beginning of 2021; we spent the whole year of 2020 in the pandemic, lockdown, and the shutdown of businesses. It’s not over yet; the recession of the post-pandemic world is yet to come. It means that people would lose their jobs and their purchasing power would drop. Resultantly it would become difficult for people to afford the company’s products.
Social factors affecting Tesla Motors
Advancements in technology and internet connectivity have made the world a global village. The other thing it did that it has also made people realize that the impact of carbon emission and pollution. Now they want to develop a sustainable society both for nature and human beings. Tesla’s electric cars are a promising step towards a sustainable future.
Capturing Status Oriented Market
One of the important things about Tesla is the uniqueness, innovation, and status symbol. It’s also a social need that we want to look different and show our status. If you purchase Tesla’s car, it would be different than conventional cars and eco-friendly. That’s how the company can attract the status-oriented customer market. They would even pay more to maintain their status and uniqueness.
Tesla has maintained a public image of launching unique and innovative models. The company has always kept in mind the needs of customers and developed the trends accordingly. In other words, Tesla’s cars have made positive contributions to the customers’ lives and the automotive industry.
Trend of Eco-Friendly
There’re certain trends like a healthy lifestyle, exercising, organic food, and eco-friendly technology are growing for the past few years. Tesla’s electric vehicles are the environmental-friendly with zero carbon emission. It has attracted the attention of the environmentally-conscious market.
Improving Wealth Distribution
Many people in the 3rd world countries don’t have sufficient resources to afford the luxury of cars and vehicles. They share economic resources. The UN and other organizations are promoting the usage of sustainable technology in developing countries. Ultimately it would improve the lives of people.
Technological factors affecting Tesla Motors
Tesla spends millions of dollars on the research and development of innovative technology. It won’t be wrong to say that Tesla has changed the tech automotive industry for the better and made a positive impact. Semi-electric trucks and sports cars are some of the main examples of innovative designs that the company has launched in the market. The innovative products provide the company a competitive edge in the market.
Electric cars, lithium-ion cell batteries, and fuel efficiency are some of the prominent examples of utilizing energy efficiently. With the innovation of energy-efficient technology, the company was able to develop a trend of a sustainable future.
Automation & AI
One of the most important features of Tesla is the automation and the usage of artificial intelligence. For instance, OTA (over the air) vehicle software, updates like any android and iPhone smartphone. Such autonomous technology may seem cool, but many people have difficulty accepting it. It’s because they aren’t how autonomous their car would be.
Self Driving Software
Companies like Google, Uber, and others have successfully launched their self-driving cars. In April 2019, Tesla added the feature of Autopilot software in its vehicles. People can buy Autopilot software from Tesla’s account.
Legal factors Impacting Tesla Motors
Defective Product Claims
The Autopilot mode of Tesla has caused some accidents, and many people have raised the question about the company’s technology. There are also other incidents where people have filed a lawsuit about product claims and defective products. Such lawsuits could cost the company a lot.
Patent & Copyrights Laws
The design, technology, and uniqueness are very important for the growth and profitability of Tesla. Therefore, the company should improve its copyrights and patent laws to protect its technology. If the company doesn’t, other brands would steal Tesla’s technology, designs, and features.
World’s Best Employer
According to a report by Forbes, Tesla was one of the world’s best in 2019. The company’s ranking has declined due to the pandemic of covid-19. Tesla has always been an ideal place for fresh talent, young graduates, and job seekers.
3rd Party Dealerships
Many countries do not permit foreign companies like Tesla to directly sell products in their countries. It means that foreign companies have to establish a proper supply chain and dealership system to engage with customers.
Environmental factors affecting Tesla Motors
Fuel efficiency and environmental-friendliness are the two major advantages of Tesla Motors that the brand has over competitors. Other automotive brands don’t have such an advantage. That’s why people are eager to buy Tesla’s vehicle because it reduces fuel and maintenance costs. Most importantly, it doesn’t emit carbon into the atmosphere and cause pollution.
According to an estimate, Tesla has set up solar panels (3.5 Gigawatts) and they generate 13 terawatts of clean energy. The company uses this energy for various purposes like supercharging stations and other production facilities. The brand has also developed the world’s biggest lithium-ion battery in South Australia.
Raising the Standards
Steps like zero-carbon emission, electric cars, and supercharging stations have raised the standards of environmental protection for all other tech and automotive industries. It’s quite right to say that Tesla’s contributions towards saving the planet are high.
After a careful study of the pestle analysis of Tesla Motors, we have concluded that the company is indeed an innovative market leader in the automotive industry. The supply chain, dealership, product claims lawsuits, and other threats are a real danger to the company. The brand should work on them if it wants to go global.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.