In the swot analysis tutorial, I will perform Tesla swot analysis strengths, weaknesses, opportunities and threats. We will find out those internal and external environmental factors affect the Tesla Inc. performance, market share and profitability.
Tesla Motors is an automotive company which is engaged in manufacturing alternative energy vehicles such as hybrid vehicles, solar-powered cars as well as battery-operated cars. Tesla is considered to be the pioneers of sustainable energy options; the company has a strong research and development team which have expertise in benchmarking green technologies. While Tesla motors are popular for innovation within its models, the global network of stores is also growing exponentially. Despite of this, the automotive manufacturer is facing many challenges in making its automobiles accessible and affordable.
In the following paragraph I will perform swot analysis of Tesla Inc.
SWOT Analysis Strengths of Tesla Inc.
Innovative Systems and Processes
Tesla key strength is the practices of adopting innovative and sustainable manufacturing processes. From its vehicle to solar energy to energy storing system, every product is innovative and sustainable. Model X and Model S of Tesla motors are completely electric, high performing vehicle having exceptional functionality.
Vehicle sales of the company are growing significantly across the globe. Since 2012 Tesla has sold over 53200 units till December 2018. In the fiscal year 2018 Tesla Motors delivered 245000 units whereas in 2017 only 103,020 units were delivered. According to the Tesla Inc. annual report 2018, the company generated $21.461 billion whereas in 2017 the revenue was $11.758 billion. Tesla Model 3 success greatly influenced the financial performance in 2018. Keep in the mind the affordability 63,359 units of Tesla Model 3 were delivered in the Q4, FY2018.
Tesla is a widely recognized brand. It has attracted heavy recognition and publicity because of its differentiated business model. Brand recognition is a very important factor and is helpful in generating higher sales for the company.
Research and Development
Technology has always been centric for Tesla and its cutting-edge technologies are the result of extensive research and development. Other automobile brands have also utilized tesla’s technologies like Tesla powertrain by Mercedes-Benz, Tesla battery packs by Dialmer and Tesla motor by Toyota. From the last few years Tesla has been investing in Research & Development. According to Statista, Tesla R&D cost for the FY 2018 was amounted $1.46 billion which shows 5% increase from 2017 which was $1.378 billion. Tesla R&D investment to Revenue ratio was 14.7% and this show the intensity of R&D.
SWOT Analysis Weaknesses of Tesla Inc.
Tesla cars are relatively costlier than other vehicles brands in the market for example GM, Toyota, BMW, Ford, and are ranked as premium category vehicles. This high price of vehicles is a major weakness of Tesla Inc. which has kept the sales of the automotive manufacturer from growing exponentially. Tesla Model 3 is less costly as compare to Tesla Model S and model X. but even then not affordable by many middle class customers.
Low Market Presence
The sales presence of the company is heavily dependent upon its supercharger network. When the supercharger network will grow, the sales of the brand will also grow. This eventually led to limited presence and requires both time and investment to grow.
High Operation and Production Costs
Operational and production cost of the motor company is higher. Though, Tesla has managed to reduce its manufacturing costs through Model X and Model S however, the R&D and laws and regulations may turn out to be costly as complying with regulations can increase costs.
Tesla is manufacturing automobiles in a single plant situated in Fremont, California. The plant has the capacity to manufacture about 500,000 vehicles whereas; the maximum vehicle production in the country has been limited to this amount making it difficult for the manufacturer to target increased sales volume.
SWOT Analysis Opportunities of Tesla Inc.
Asian markets are emerging as a lucrative option for Tesla and there are some major opportunities hidden in the Chinese market. Tesla, by focusing upon its supply, sales and maintenance network can help its brand grow faster in the region. The company has already started the construction of Gigafactory Shanghai which will help to reduce the cost and attract more customers in the Chinese and Asian market.
Growing Demand for Electric Cars
Electric cars are experiencing high demand and many other top automobile brands are working to launch their electric car before 2020. Tesla also has plans to release its electric car that is fully automated which will be equipped with self-driving hardware and will provide a high level of safety to human driving.
Low Cost Vehicles for Middle Class Customer
The middle class customer is increasing considerably and is a major opportunity of growth for international brands. Though, Tesla vehicles are not affordable by middle class customers however, the company is engaged in reducing its operation and manufacturing costs which will help in making Tesla vehicles affordable for middle class customers.
SWOT Analysis Threats of Tesla Inc.
Tesla is facing severe competition from both environmental friendly and luxurious automotive brands Volkswagen, Toyota, Ford etc . Since the manufacturer holds the image of a premium brand, breaking the image and manufacturing more affordable vehicles will take time.
Legal and Regulatory Requirements
Legal and Regulatory Requirements can turn out to be very costly and can also result in increased costs. Currently, Tesla is operating in many countries which mean that the business has to deal with legal and political rules and regulations within those markets. Before entering any country Tesla has to comply with the rules of US States and other countries.