Swot analysis of Tesla motors. Tesla Motors is a US clean-energy and electric vehicle company. Marc Tarpenning and Martin Eberhard laid the foundation of Tesla motors in July 2003. The name of the company is from a famous scientist, engineer, and inventor Nikola Tesla. The headquarter of the company is in Palo Alto, California.
Retail merchandise, Tesla Motor Vehicles, Lifestyle Products, Auto Services, Solar panels, Power battery packs (Energy Storage), and financial services are some of the main products and services of Tesla Motors. The company achieved success because of providing energy solutions to the companies and dynamic automotive.
According to a report by macrotrends.net, the annual revenue of Tesla motors in 2020 was 28.176 billion US dollars. It has increased roundabout of 15.38%. The net income of the company was 533 million US dollars, and it has decreased by approximately 163.84%.
According to an estimate, approximately 48016 are working for the company by the end of 2020.
2018 Chevrolet Volt EV, 2018 Kia Soul EV, 2018 Hyundai Ioniq EV, 2018 Nissan Leaf, 2018 BMW i3, and 2018 Volkswagen e-Golf are some of the main competitors of Tesla motors.
Today, we’ll study the swot analysis of Tesla Motors. How the company has achieved success during a very short time, its internal factors. If you want to learn about the external and macro-environmental factors, check out the pestle analysis of Tesla. Here’s the swot analysis of Tesla Motors;
Strengths of Tesla Motors
Automotive Market Leader
Despite the lockdown and shutdown of businesses across the world, Tesla Motors managed to sell approximately 139300, 90650, and 88400 cars in the 3rd, 2nd, and 1st quarter of 2020. It shows the growth and progress of the company. According to an estimate, the company sold 367500 cars in 2019.
The reason behind such exponential growth is the brand’s commitment to research and development. Tesla has emerged in the automotive industry in a very short time and left behind competitors like Mercedes and BMW.
According to the ranking of Forbes, Tesla motors is one of the most ideal places for young graduates, innovative job seekers, and fresh talents. Even Forbes has features the company in its Best Employer category in 2019. Although the company’s ranking has dropped in 2020, it’s because of the covid-19 pandemic.
Best Electric Vehicles
The electric vehicles of Tesla have left many top competitors behind in the race. It’s because Tesla’s cars prove to cover more distance than competitors. According to an estimate, the Model S of Tesla travels 600 Km of distance with a single battery charging. The Opel Ampera covers a distance of 520 Km with a single battery charge, and it’s the nearest competitor of Tesla.
Dominated the US Electric Cars Market
According to an estimate conducted by Statista, Model 3 of Tesla was the most sold car in 2019. Its sold volume was 18791. Chevrolet Volt was at the 2nd position and it sold roundabout 155477 cars. The Model S of Tesla came at the 3rd by selling 134392 cars in 2019. It shows the dominance of Tesla’s electric cars.
Whether it’s the sports cars or semi-electric truck, Tesla has always launched innovative design and technology in the automotive market. Now the automotive market expects new tech products from the company. It helps the company to compete and gain a financial edge in the industry.
Insurance & Diversification
Tesla has recently initiated a new project by the name of InsureMyTesla by associating its vehicles with Liberty Mutual Insurance Company. It has also helped the company to diversify and protect its resources.
Supplying to other Manufacturers
When we talk about the automotive spare parts of the company, Tesla has the competitive edge of manufacturing and delivering it to the other brands like Toyota. The company supplies parts of powertrains that Toyota uses in RAV4 EV (2nd generation Toyota Car)
Tesla outsources some assembling processes and other components to other companies. It helps the company to reduce cost which is a huge competitive edge.
Toyota motors, Google, Panasonic, and Daimler are the major partners of the company.
Tesla has recently finished the construction of its 3000 acres of the giant factory by the name of Gigafactory. The company has established this factory for the production of lithium batteries for its cars. The development would help the company to achieve a speed of 0 to 60 miles within 3.2 seconds.
Weaknesses of Tesla Motors
Not meeting the Demand
According to a study, the demand for Tesla electric cars is growing in the market. The company hasn’t been able to meet the growing demand of customers. For instance, the company says that if you place your order today and the brand would deliver you the car after one year. It’s not an effective marketing strategy.
Whenever you innovate in the mechanical processes, then it raises many complications in the production. That’s why the manufacturing and production processes of Tesla have been slowing down in terms of launching new products in the market.
For instance, the company faced a lot of issues in the production of the Model X and it delayed the distribution of the product over and over again. The manufacturing of the battery module of Model X also caused a lot of difficulties for engineers in the assembly lines of Gigafactory.
Sole Representative of Tesla
Tesla Motors has accepted the fact that the company’s CEO, Elen Musk, is the one-man-show. He’s an energetic person. But he has got enough on his plate. For instance, he is engaged in other projects like The Boring Company and launching a space vehicle at the Space Exploration Technology Company.
Battery Shortage Issue
Elon Musk, CEO of Tesla, has accepted the fact that the company has a limited supply of batteries. It has slowed down the production and manufacturing rate. The shortage of products decreases sales.
Less Production volume
When we talk about clean-energy vehicles, Tesla is undoubted the pioneer. But the company hasn’t been able to launch a new model at a mass scale. The management of vast resources and production costs are some of the other issues that the company is facing at the Gigafactory.
According to the financial statement of Tesla Motors, the company has a debt of 455 million US dollars. The balance sheet of the brand has a negative cash flow. Such a huge debt amount makes the company vulnerable to financial risks.
Negative Affect of Model X
Tesla Motors has recently introduced a new high tech car in the market by the name of Model-X. It’s very costly compared to the other products. Many people have raised the question that a battery car should be cheaper than a fuel car. Some price-conscious customers compare prices.
Parted ways from Daimler & Mercedes
Tesla motors used to provide supplies to the Daimer and Mercedes. But the company hasn’t remained a strong supplier in the spare parts market. According to a report by International Business Times, Mercedes-Benz uses to buy spare parts and other supplies for the B-Class Electric Drives. But it has stopped its purchases.
Mercedes-Benz has spent approximately more than 550 US dollars for the production of powertrain and battery technology.
Opportunities available to Tesla Motors
In-house Battery Production
Tesla Motors started the production of its batteries. It’s a big step for the company. If the brand does it successfully, it would accelerate the production and manufacturing rate. It would also reduce the cost. The company gets its batteries from Panasonic.
The reason Tesla’s vehicles are costly is that the company is always up to launch an innovative product in the market. Creativity and innovation in technology require huge finances to cover its costs.
The new version of Model 3 has an economical price than Model S with fewer features, range, and power. It seems like Tesla is expanding its customers’ market and it’s an admirable step.
The Asian market presents a great opportunity for Tesla. The automotive industry in Asia hasn’t grown in terms of renewable energy vehicles. When we talk about Tesla’s plans of reaching the global audience to stabilize its market position and finances, the growth potential is there.
With the proven record of profitable consecutive years, the stock market has got the utmost trust and confidence in Tesla Motors. That’s why the price of the company’s stock has been increasing.
According to the market share data by the National Automobile Dealer Association, the automotive market share of Tesla’s pickup truck is 17.6%. It shows the company’s strengths and growth potential of electric vehicles.
People have been realizing the significance of nature that fuel cars are polluting the environment by emitting carbon into it. The realization is the first step towards taking an actual step. It would be buying an efficient and environmentally friendly mode of transportation.
Threats Tesla has to face Motors
Self-driving cars, electric cars, fuel plug-in hybrid, and fuel hybrid are some of the major competitors of Tesla. Many economic automobile brands like Ford, Toyota, General Motors, and Volvo and Luxury brands like BMW, Mercedes, Audi, and Lexus are also fierce competitors.
The abovementioned brands are offering environmentally-friendly vehicles at an affordable price. It’s a great threat to the company. Many customers can’t afford unique and innovative tech cars (Tesla’s Products).
Tesla assures the customers market about the high standards and quality of its vehicles. But many customers have experienced it otherwise. They’ve filed product liability claims, and those claims are a great financial setback to the company.
Tesla has also installed an autopilot mode in its vehicles, but it’s not successful in every case. Many people have filed product failure and claim lawsuits about the company’s technology. If it continues, the brand would face huge financial losses.
Adaptation of Customers
There are some basic business concepts that a business can’t run successfully unless people are accepting its trends. It’s no doubt that Tesla is introducing innovative tech vehicles into the market. But pioneering in any field is a very cruel process. You have to be ready for rejection and high costs. Now it all depends on the customers’ willingness to accept the change into electric vehicles.
Assuring customers about the quality of your products play a significant role in establishing a public image of your business. When we talk about Tesla’s manufacturing processes, many customers have doubts about the company’s sustainability. Therefore, the brand would face a great challenge of building a long term public image.
Tesla’s innovative tech vehicles and complex mechanical engineering may seem good. But they have caused a lot of problems and defects. Many customers have found issues in the features, manufacturing, and designs of its vehicles. It could jeopardize the company’s image in the long term.
Self Driving Cars concern
According to a survey conducted by YouGov, most of the US adults approximately of the age of 55 don’t feel safe in self-driving cars.
No Proper Regulations for Self Driving
Many countries including the US don’t have specific rules and regulations for self-driving vehicles. There are restrictions on self-driving cars in some areas, and it has impacted the company’s sales. The uncertain legal issues create problems for the company’s self-driving project.
Risk of Lithium batteries
Lithium is a highly explosive and reactive element and the company uses lithium-ion batteries in its vehicles. It makes Tesla’s vehicles risky. For instance, there are cases where the company’s vehicles caught fire and emitted smoke. Those cases have brought negative repute to the company.
Lithium-ion cells, steel, cobalt, aluminum, copper, nickel, and lithium are some of the main supplies of Tesla’s vehicles. The price range of all those materials is volatile. When the price changes; it impacts the production line and sale of Tesla’s vehicles.
Behavior Elon Musk
The personality and character of Elon Musk have established a strong reputation for the company. But some incidents of his impulsive behavior have labeled the company an iconic innovative brand. Some people considered it inappropriate when they smoked marijuana in the podcast of Joe Rogan. According to an estimate, the stock value of Tesla has decreased roundabout 9% by his behavior.
After an in-depth study of the swot analysis of Tesla, we have concluded that the company is indeed the world’s leading innovative vehicle manufacturing company. Elon Musk’s behavior, manufacturing delaying, inconsistent price range, and other issues pose a serious threat to the company. The company should work on them and become a reliable and consistent brand.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.