Tesla SWOT Analysis

SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following table illustrates Tesla SWOT analysis:

 

Strengths

1.      First mover advantage

2.      Increasing numbers of vehicles sales

3.      Expertise in innovation

4.      Brand recognition

Weaknesses

1.      Expensive price tags of Tesla vehicles

2.      Burning though cash with no profit in view

3.      Huge amount of debt (USD 10 billion)

4.      History of overpromising and under-delivering

Opportunities

1.      Development of lower priced models

2.      Strengthening of Tesla ecosystem

3.      Shifts in consumer environmental attitudes

4.      More government incentives

Threats

1.      Manufacturing delays risks

2.      Crashes and fires in Tesla cars

3.      Threat of new competition

4.      Decrease in the price of oil

Tesla SWOT analysis

 

Strengths in Tesla SWOT Analysis

1. Tesla benefits from the first mover advantage in alternative fuel vehicles manufacturing to a considerable extent. The company has been started in 2003 with the mission “to accelerate the world’s transition to sustainable energy”, right after auto giant General Motors recalled and destroyed its EV1 electric cars.[1] Today, Tesla is an undisputed global market leader in electric vehicles segment. It has been estimated that the sales of electric vehicles will represent up to 25% of total global automobile sales by 2025.[2] Accordingly, it can be argued that being the first global company exclusively focusing on electric vehicles, Tesla is in a good position to achieve a long-term growth.

2. The numbers of electric vehicles sold by Tesla has been increasing, as it is illustrated in Figure 3 below. During the second quarter of 2018, Tesla delivered just under 41,000 units, of which some 18,440 were deliveries of Tesla’s Model 3, about 10,930 were Model S, and more than 11,370 were deliveries of Model X.[3] Increasing numbers of vehicles sales is strategically important for the company in a way that it allows benefiting from economies of scale and consequently, the alternative fuel vehicles manufacturer can become profitable.

Tesla SWOT Analysis

The numbers of Tesla vehicles delivered worldwide[1]

3. Innovation is placed at the core of Tesla business strategy and this is reflected in a wide range of business processes. Tesla has been acknowledged as The Most Innovative U.S. Brand in 2017 by BrandZ[2]. The list of innovative features and capabilities of Tesla cars include Enhanced Autopilot Driverless Technology and a long driving range of electric vehicles. Moreover, Tesla has caused a disruptive innovation in energy storage segment in a global scale. It is important to note that despite the innovative features and capabilities of Tesla vehicles, its battery is not patented and the vehicle designs are open source.

4. Tesla enjoys a high level of brand recognition in the global scale. Until Tesla, electric vehicles had seemed like a compromise for motorists. Despite consistently failing to meet production targets, as discussed further below in more details and burning through billions of dollars, Tesla has a market capitalization of more than USD 52 billion.[3] Thanks to inspirational leadership of CEO Elon Musk, innovative nature of the business in a high potential industry and a range of other factors, Tesla enjoys an exceptionally high level of brand recognition globally.

 

Weaknesses in Tesla SWOT Analysis

1. Tesla cars are expensive for the majority of users, thus the target customer segment for the alternative fuel vehicles manufacturer is very slim. The flagship Model S sedan costs USD71,000 not including a USD10,000 extended battery or other upgrades and options, whereas Model S costs USD 78,000.[4] The reasons behind massive price tags include mainly aluminium bodies of vehicles, expensive batteries and necessity to recover huge R&D investments.

2. Since its foundation in 2003, Tesla has not made any profit and the company continues burning through increasing amount of cash. Although, the company had revenues of USD 11,76 billion in 2017, it had a net loss of USD 2,24 billion for the same period.[5] In the first quarter of 2018 alone, Tesla burned through USD 745,3 million in cash and posted record net loss of USD 710 million.[6] This situation is causing concern among investors with adverse effects on company’s share prices.

Tesla Inc. Report contains a full version of Tesla SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Tesla. Moreover, the report contains analyses of Tesla leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of Tesla marketing strategy, ecosystem and addresses issues of corporate social responsibility.

Tesla Inc. Report 2018

[1] Bihani, S. (2017) “Elon Musk Reveals He Started Tesla After Watching General Motors Destroy Its Own Electric Car” India Times, Available at: https://www.indiatimes.com/news/world/elon-musk-reveals-he-started-tesla-after-watching-general-motors-destroy-its-own-electric-car-323520.html

[2] Pressman, M. (2017) “FIRST MOVER: HOW TESLA WILL CONQUER MARKETSHARE AS THE AUTO INDUSTRY MOVES TOWARDS ELECTRIC VEHICLES” Evannex, Available at: https://evannex.com/blogs/news/first-mover-how-tesla-will-conquer-marketshare-as-the-auto-industry-moves-towards-an-ev-future

[3] Statista (2018) Available at: https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/

[4] Statista (2018) Available at: https://www.statista.com/statistics/502208/tesla-quarterly-vehicle-deliveries/

[5] Evannex (2017) “Tesla ranked most innovative brand in the US” Teslarati, Available at: https://www.teslarati.com/tesla-ranked-most-innovative-brand-in-us/

[6] Tesla Market Cap 2009-2018 | TSLA (2018) Macro Trends, Available at: https://www.macrotrends.net/stocks/charts/TSLA/tesla/market-cap

[7] New Tesla cars may be too expensive for the everyday driver (2018) Business Tech, Available at: https://businesstech.co.za/news/motoring/245795/new-tesla-cars-may-be-too-expensive-for-the-everyday-driver/

[8] Annual Report (2017) Tesla Inc.

[9] Tesla posts record $710m net loss as it struggles to produce Model 3 cars (2018) The Guardian, Available at: https://www.theguardian.com/technology/2018/may/02/tesla-loss-model-3-elon-musk