Tesla, Inc. is an American corporation established in Palo Alto, California, which provides electric power solutions sustainable in nature as well as electric vehicles to customers. It specialises in respect of the production of renewable electric energy and high-quality electric vehicles for the general public all across the world, involving the United States. Tesla is recognised throughout the world for its Tesla automobiles as well as the incredible performance they deliver on the road (Kim et.al., 2020). Also, Elon Musk, a world-renowned entrepreneur, serves as the company’s chief executive officer. The company was launched in July 2003, and, contrary to widespread assumption, it was not founded by Elon Musk, but instead by two innovators and engineers, Martin Eberhard and Marc Trepanning. Elon Musk joined the company in 2003 as a consultant. The company had been plagued by problems and had gone through a number of CEOs before Elon, who was the principal financier at the time, took over as CEO in October 2008 (Handa et.al., 2020).
Tesla is well-known throughout the world for its marketing strategy that involves spending zero dollars. That’s exactly right. Tesla does not spend any money on marketing other than for new product introductions. This appears to be an odd statement, yet it is correct. In order to maximise the benefits of its operations, Tesla has channelled these benefits into its marketing strategies. Tesla’s mission is to expedite the introduction of environmentally friendly modes of transportation by creating a mass market for electric vehicles (Ajitha et.al., 2021). In addition, the vision of Tesla is to be known as the most innvotive automobile manufacturer of the twenty-first century. Tesla’s CEO, Elon Musk, envisions the company as a technology corporation as well as an independent carmaker with the goal of providing affordable electric vehicles to normal consumers.
PESTEL research is one of the few business strategies that can help new businesses get off the ground. The pestle analysis is a strategic technique for analysing Tesla’s external environment.
Tesla Inc. is eligible for a number of government incentives that could help it improve its financial performance. Consumers who purchase an electric vehicle are likely to be = eligible for a tax credit from the federal government (Almuzel et.al., 2018). There is a tax credit of up to $7,500 from the federal government. In addition, the political stability of many important countries for the automobile industry makes the atmosphere conducive for Tesla’s competitive strategy and intense expansion strategy.
There has been a high and consistent rise in the use of electric vehicles, which is largely due to the global economy. The electric car market had a value of $39.8 billion in 2018 and is anticipated to reach $1.5 trillion by 2025. This is a tremendous chance for Tesla to take advantage of. The falling cost of batteries is another economic aspect. For an electric car, the battery is a significant component of the overall price (Wang et.al., 2020). The development of Tesla’s Powerwall batteries is a big opportunity for the corporation.
People are enthralled by the idea of electric vehicles, and this is especially true for individuals who are environmentally conscious. Being an electric automobile avoids the consumption of fuel, which is good for the environment as well. The maintenance and running costs of electric cars are quite less expensive as compared to regular cars (Du et.al., 2021). Tesla cars are environmentally friendly.
An organization’s macro environment is impacted by technology in various ways, which are analysed as part of the company’s pestel analysis. The rapid pace of technological progress has a significant impact on Tesla, both favourably and badly. Both possibilities and hazards can arise from the use of technology (Jing et.al., 2020). Technology, for example, helps Tesla to maintain its competitive advantage in the marketplace.
Considering that Tesla’s automobiles are environmentally friendly and run-on electricity, the corporation has a lot of room for growth. Tesla Inc. vehicles also adhere to numerous environmental requirements and have a little impact on carbon emissions when compared to more traditional automobiles (Cagle, C, 2019).
PESTEL analysis’s legal elements examine how Telsa Inc.’s macro environment is affected by legal issues. Legal and regulatory difficulties are a problem for Tesla and its CEO, Elon Musk, as well. For a time, many states prohibited Tesla’s direct sales to consumers. Manufacturers are compelled by law in these states to work with third-party dealerships on their behalf.
The Porter’s Five Forces Analysis of Tesla includes a look at the company’s competitors and the forces influencing its sector.
New players in the automobile industry – Tesla, Inc. is under pressure from Major’s lower pricing approach, cost-cutting initiatives, as well as value offerings for customers. To maintain its competitive advantage, Tesla, Inc. must deal with all of the challenges and construct effective barriers (MAOHENG, W, 2018).
Automobile manufacturers obtain their raw materials from numerous vendors. It is possible for Tesla, Inc.’s profit margins to be reduced by suppliers who hold a significant market share. In the Auto Manufacturers – Major category, suppliers in the Consumer Goods industry utilise their negotiation leverage to demand higher prices from their customers.
Buyers want to buy the most products at the lowest feasible price (Musonera et.al., 2019). Tesla, Inc.’s long-term profitability was put under strain as a result of this. As Tesla, Inc.’s client base gets smaller and less powerful over time, so does the bargaining power of Tesla’s customers and their ability to get better deals and offers from the company.
The industry’s profitability suffers when a new product or service attempts to fulfil the same client demand in a new way. Product or service alternatives might constitute a major threat if their value proposition is notably distinguished from the market’s current offerings (Perkins & Murmann, 2018).Rivalry among the existing competitors
Prices will fall, as well as the industry’s total profitability will be reduced, if there is fierce competition among the existing companies. The Automobile Manufacturers – Major industry in which Tesla, Inc. operates is extremely competitive (Fisher et.al., 2019).
There are four components to the SWOT analysis: strengths; weaknesses; opportunities; and threats (SWOT). To understand a company’s strategy, it is important to look at both internal and external elements. Effective use of corporate resources can be achieved by detecting possible dangers and developing a model to reflect them.
(AI, 2022)
The World’s Most Valuable Car Company
In 2021, Tesla sold 9,50,000 vehicles worldwide, an increase of 87 percent from the previous year. When it reached $208 billion in market value, Toyota’s market cap was surpassed, making Toyota the world’s most valuable automaker.
The attributes of a firm that help it achieve its goals are known as a strong organisation. As an example, a company’s financial resources, staff expertise, brand loyalty, products, and so forth (Bhardwaj et.al., 2020).
Tesla is one of the major dominators in the US in regard to electric vehicle sales. Tesla is one of the “Big Three” participants in the electric automobile market, with Ford and General Motors.
Due to their high quality of innovation, the manufacturing of their Model X was delayed as a result of frequent innovative adjustments, such as the delays in production.
Tesla’s company is heavily reliant on battery electric automobiles and plug-in electric vehicles, which can lead to a scarcity of batteries from time to time. This creates direct impact upon the sales of electric vehicles as well as energy storage devices.
Tesla’s biggest chance right now is to get into Asia’s fastest-growing EV, automation, and renewable energy market, which is India.
Tesla is aiming to make its cars cheaper so that people from all economic backgrounds can benefit from the company’s cutting-edge technology. So, for example, it has just unveiled the Model 3, a more inexpensive version of the Model S (Thomas et.al., 2019).
There is a risk that Tesla’s market share would decline as a result of this new technology’s drawbacks.
Changing exchange rates are a problem for a global corporation like Tesla, whose suppliers are regional and whose customers are located all over the world.
The Bowman Strategy Clock, as introduced by Cliff Bowman, “represents different positions within a market where customers (or potential customers) have different requirements” in respect of value for money. Additionally, these positions represent a wide range of general competitive advantage strategies (Shao et.al., 2021).
Bowman’s clock strategy
(AI, 2022)
One way Tesla Motors stands out from the competition is by marketing its vehicles to an elite clientele who are both well-off and ecologically conscientious. It will be tough to reach out to and compete with other automaker brands since the ordinary individual will not purchase an electric car with limited range and a patchy charging network which costs more than $60000. (Bilbeisii & Kesse, 2017). Since it lacks money, production capability or size to compete on the basis of cost, Tesla cannot pursue low-cost or hybrid methods. Due to its distinctive design and cutting-edge technology, Tesla has been able to sustain itself on the basis of its product’s ability to attract buyers. As a result, Tesla is in a position of strength in today’s competitive market, giving it a distinct edge (Valentin, M, 2019).
The resource-based perspective (VRIO) study is used to assess a firm’s competitive advantage. Managers can use the VRIO framework to assess their company’s resources and capabilities. VRIO stands for Valuable, Rare, Unique, and Organized.
Source: https://medium.com/
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Tesla is going to led a revolution in future with respect to its technological advancements. With regard to the battery’s advancements and its impressive range (up to 250 miles), Tesla has a major competitive advantage. |
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On top of all of that, Tesla is working to create a global network of supercharger stations that would let drivers to go up to 200 miles in only 30 minutes rather than the several hours it would take at a standard station (Liu & Meng, 2017). |
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Tesla is also putting its faith in self-driving cars and remote software upgrades to keep its engines running at their best, in addition to batteries. |
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Research and development (R&D) and manufacturing facilities have been massively invested in by Tesla to attract the best and brightest minds. These variables have resulted in considerable cash burns in both operational and investment operations during the previous four years (AI, 2022). |
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Tesla’s efforts in the home development business have been aided by its Powerwall and Solar products. |
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At some time, it might be intriguing to build an electric supersonic vertical take-off as well as landing jet which will be the new futuristic uptake of the company. |
A major objective of Tesla is to speed the transition of the world’s energy supply from fossil fuels to renewables. In 2008, during the Los Angeles Auto Show, Tesla Roadster, the company’s first cutting-edge as well as high-performance electric sports car, was presented. Elon Musk, CEO of Tesla Motors and Co-Founder of PayPal, said, “Tesla Motors wants to help expedite the move from a mine-and-burn hydrocarbon economy forward towards a solar electric market, which they believe in is the dominant in the market, but not sole, sustainable choice” (Teece et.al., 2018).
For the time being, Tesla CEO Elon Musk has stated that the company plans to “begin at a premium price, where consumers are prepared to pay, as well as then push the market down as swiftly as possible to large unit volume and lower pricing with each subsequent model.” As a result, Tesla’s competitive strategy in the automobile industry is to target both high-end and low-end customers by offering a wide range of options (Teece, 2018). By increasing its research and investment every year, Tesla sets itself apart from its competitors by creating a highly innovative and distinctive environment for increasing profits on an economy-wide basis.
Market penetration is Tesla, Inc.’s primary growth strategy at the moment. This strategy aims to expand the company by boosting sales in already successful divisions. Sales of electric automobiles are an example of an area where the company is looking to expand. Corporations may maximise their profits in the markets in which they are currently active by using this approach. Tesla’s long-term objective of gaining a larger proportion of the global market is linked to this ambitious expansion strategy (Zhao et.al., 2021). Revenues are predicted to rise as a consequence of aggressive marketing as a result of this strict strategy.
Tesla, Inc.’s growth strategy in respect of alluring success is market expansion. This strategy calls for the firm to increase its global footprint by entering new markets. By building new offices as well as facilities all around the world, for example, the company has been progressively increasing its worldwide footprint. The company’s goods are now only available in a few countries, though this is expected to change soon (HBR, 2022). As per the Tesla’s mission and vision statements, this strategy is aimed to assist the firm attain international leadership in the vehicle sector, as well as deliver energy solutions for transportation and other industries. A company can broaden its market reach by providing distinctive products that capture the interest of customers in new regions using the differentiation generic method (Gali et.al., 2020). As per Tesla Inc.’s “market development intensive” strategy, the company’s strategic objective is to expand its worldwide business by developing relationships with several other companies which make it easier to enter new markets (mangram, 2012).
As a strategic plan, Deliberate strategy is one in which an emphasis is placed on achieving the corporate objectives that have been set. Focusing on specific objectives and ensuring that significant resources are used to achieve them is the purpose of this strategic management approach to business management (jiang & Lu, 2018).
Tesla has to keep increasing production efficiency and lowering manufacturing costs as it offers lower-priced mainstream automobiles. Battery manufacturing skills have been bolstered by acquisitions, partnership expansions, and research into producing a company-proprietary battery. The firm is also considering entering the mining business to source raw materials for battery production. The firm has said that it would be able to achieve complete autonomy by 2022 (HBR, 2022).
Established automakers, on the other hand, like Ford, GM, and others, have a three-tiered ecosystem of third-party suppliers unlike Tesla having its own in house development models (Alkim et.al, 2017). This hinders rapid technological advancement and iteration. Instead of profiting from the suppliers’ profit margins, vertical integration enables a considerably faster rate of innovation and technological growth (Andersen et.al, 2017).
Tesla has decided to make 20 million vehicles by 2030 and enter into nations such as India, and other nations by increasing the number from 3,059 Supercharger stations in over 40 countries to more enhanced level. Tesla is growing at 50 % in every year and beyond that in the next two years (AI, 2022).
A company’s strategic management relies heavily on an emerging strategy. If the corporation continues to follow its intentional or planned strategy, it may be certain that a dependable but unintended strategic action has been carried out to avoid bad and unexpected effects (Akakpo er.al, 2019). An emergent strategy is one in which a new strategy is devised to avoid or minimise the negative impacts of unanticipated events when a certain approach (deliberate strategy) is being implemented and subsequently implemented. In the lack of specific goals or purposes, an organization’s emergent strategy tends to develop through time. Untested, reactive, and unanticipated are common characteristics of the emerging techniques (HBR, 2022).
A look at how an emergent strategy might be used to inform future strategic planning processes Using an emergent strategy, such as Tesla’s, can help increase an organization’s future strategic planning. An emerging strategy’s key purpose in future strategic planning processes is to assist organisations alter their strategic plans to focus on producing goods and services that suit the demands of their customers (Kim & Lee, 2022). It also eliminates the possibility of firms continuing to sell items or services they believed or assumed the consumers wanted when they were executing the intentional approach. A corporation that continues to pursue a faulty strategy has a far greater danger of incurring enormous losses as a result of providing services or goods that do not match the expectations of their customers (Hashmi & Biesebroeck, 2016).
As part of its strategy to increase its operations and market share, Tesla has implemented a premium pricing strategy that aims to gain entry into the luxury market. Despite this, Tesla has been forced to forsake this plan in the last three years and deploy a low-priced strategy after losing a big piece of the market. Due to the decline in revenue, the company’s long-term viability was threatened. Because the corporation invested sufficient resources, this newly-emerging approach was a success (Gouda & Tiwari, 2021).
This inventive company is required to maintain its capacity to accept complementarity multifunctional transportation solutions offered in conjunction with experts whose identities will become clear via the formation and administration of ecosystems which embrace convergent technology. Competitors will have a difficult time emulating such an eco-system once it has been developed (Shiu et.al, 2017).
The connected automobiles sold by Tesla are the most visible manifestation of the company’s digital revolution. Tesla presently sells five versions of electric vehicles that are linked to the internet and driven by sensors including cameras, radar, and ultrasonic sensors (Moritz et.al, 2015). Autonomous remote firmware upgrades for safety, performance, and entertainment are presently available solely from Tesla, making it the only car manufacturer offering this feature. When it comes to delivering value to customers, Tesla’s digital connectivity will help the business to continue disrupting the automobile sector (Rimmer, 2018).
As a result of using Testa’s linked automobiles, a connected ecosystem has been developed. Autonomous driving will become a reality because to Tesla’s ability to learn from its consumers through data. All of the company’s first- and second-generation automobiles have been logged for data collection. The business has amassed 8 billion miles of driving data thus far. In order to engage with its consumers, Tesla created smart procedures throughout the firm. As a result of the dealership model, automotive makers have typically placed a middleman among themselves and their customers. There is no middleman between Tesla and the customer (Agnihotri & Bhattacharya, 2022). Through customization, Tesla’s online and in-store experience have allowed for personalisation. It is possible for customers to personalise their vehicles by selecting options such as the basic model, exterior colour, wheels, and inside features such as autopilot (Jing, 2020). As an additional benefit, Tesla offers personalisation after the car has been purchased by storing customers’ preferences (such as seat position, mirror location and temperature) in the cloud for quick restore. No other automaker can match Tesla’s ability to customise and tailor its products for each and every customer thanks to its innovative smart-processes (Kudachimath & Ragashetti, 2015).
With the use of digital goods and processes, Tesla has been able to provide value to consumers and establish new types of interactions between the firm and its users. When it comes to self-driving cars, Tesla has a leg up since it has amassed a large amount of information about its customers. Tesla is all set to go all supersonic in future, and leading the electronic vehicle including autonomous ones to a whole new level.
The examination of Tesla’s present market position revealed that the company has built a strong brand name in the market as a result of efficient supply chain operations, significant technical innovation, and a greater emphasis on environmental sustainability. As a result, the following recommendations are made for Tesla:
Conclusion
To conclude, it has been established that Tesla is one of the major Electric car firms that has gained a name for its environmentally friendly and sustainable solutions. Tesla’s present high fixed expenses of conducting business will be able to be offset by an increase in demand. Their high-tech nature necessitates extensive research and development to keep ahead of the competition, and offer more appealing automobiles in the future. Because of the rapid development of their Supercharger network, the company incurs considerable expenditures in order to minimise a danger to their business and enhance customer happiness. They should continue to invest in this business strategy as a long-term investment in the company’s future. An external market survey of the electric car sector also revealed that consumers’ growing concern for environmental sustainability is driving up demand for electric automobiles. Innovative strategy is needed to help the firm realise its goal of making the world a more sustainable place expanding the company’s market reach and expand its operations to become sustainable company with reference to the transition practices across the world by simultaneously gaining economic success
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