Tesla have undoubtably succeeded in making electric cars cool. Everyone thought of these cars as incredibly boring and uninteresting before Tesla hit the scene so aggressively.
Today we will go over a swot analysis of Tesla in order to learn more about the business.
- Tesla has a very strong brand image. When people think of Tesla they don’t think of a company that is just about selling vehicles. Tesla has transformed the way we travel by delivering innovative ideas and turning them into reality. Although Tesla is not the only automaker offering electric vehicles, it has developed and dominated the luxury electric vehicles industry. There is no other company that is a synonym of electric cars.
- The strong brand is also highly influenced by the personal brand of its CEO, Elon Musk.
- Tesla also has a very strong control over its production processes. A prime example is the fact that they manufacture themselves most of the components needed to produce a vehicle. This leads to much less vulnerability to other companies and parties that are usually involved in the production process.
- Tesla’s biggest problem at the moment is the low profitability compared to the sales volumes.
- They are constantly re-investing in research and development. From the $ 6.8 Billion of their revenue the profit was a mere $312 million.
- Tesla also faces the problem of limited presence in markets outside the U.S. There are markets that have the financial power and are eager to buy but Tesla is not there yet. They also face the problem of a limited supply chain, and they are unable to produce vehicles at the desired pace.
- Lastly, one of the biggest factors that prevents the significant sales growth is the pricing. Despite it being quite fair for the overall product value, the average consumer can’t justify the cost and make the purchase.
- The model 3 is here to solve this problem, but it still unattainable for many of the car buyers.
- Expanding towards developing markets. A prime example would be the affluent asian automotive market.
- The second opportunity for Tesla would be to increase the capabilities of it’s supply chain in order to keep up with all the new demand and sales.
- Tesla could also be largely benefitted by diversifying into other types of businesses and markets. By selling other types of products, they can reduce their vulnerability to a possible economic downturn that will hugely affect the demand for luxury vehicles.
The factors that limit Tesla’s performance and overall output are:
- The fierce competition. The big companies now want a piece of the electric vehicle pie. After observing how big the demand is, they are building their own electric cars. They have the advantage of a lot of capital to allocate, as they are big established businesses already. Not only that, Tesla has also to keep up with the very volatile prices of materials essential to the production like lithium.
Lastly, one more problem that Tesla has to overcome is the regulations in some states like Virginia and Texas that don’t allow the direct selling of automobiles. Tesla doesn’t have dealerships in operation, apart from some showrooms where people can go and observe the car. All the selling is done exclusively on-line. Such regulations could prevent the company from selling their cars to certain states.