COMPANY PROFILE -Tesla
Business Sector :Automobile and Energy
Operating Geography :North America, USA, Global
About Tesla :Tesla Inc. was founded in 2003, a Silicon Valley company envisioning and developing vehicles with electric energy to promote sustainability use of energy. It was founded by the duo Martin Eberhard and Marc Tarpenning although many also regard Elon Musk and JB Straubel to be co-founders. The Company grew out as an aspiration after General Motor's debacle with EV1 Electric cars which were recalled and destroyed in 2003. Tesla has production facilities at Fremont, California, Lathrop, Tilburg and Nevada and is headquartered in Palo Alto, California. It is a technology firm and an independent automaker which also has business in energy storage and solar panel production. The Company endeavors to build robust and affordable electric cars. Model S produced by Tesla became the globe's bestselling electric car for two consecutive years in 2015 and 2016. The company employs more than 13000 full time staff across all its divisions. In 2018, Tesla setup its factory in Shanghai, for the first time outside US.
Tesla designs, develops, manufactures and sells fully electric cars. It also sells, installs and maintain energy generation system and storage systems. They are a sustainable energy company offering clean-energy products along with generation, storage and consumption. Sustainable energy products, energy and engineering expertise, and unique business model creates competitive advantage for Tesla over its peers.
Tesla’s mission is “to accelerate the world’s transition to sustainable energy.” The vision statement of Tesla reads “Create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.” The unique selling proposition or USP of Tesla lies in developing fully powered electrical vehicles, which are better, quicker and fun to drive compared to gasoline vehicles.
Tesla Revenue :USD 7.0 billion (FY ending Dec 31st 2016)
Ownership / Major shareholders :
As of April 2018, the major shareholders of the company are as follows –
1) Fidelity Management & Research Co. (12.14%)
2) Baillie Gifford & Co. (7.72%)
3) T. Rowe Price Associates, Inc. (6.99%)
4) The Vanguard Group, Inc. (4.01%)
5) Capital Research & Management Co. (3.57%)
Competitive Analysis of Tesla
Technology is Tesla’s greatest strength and its core competencies are powertrain engineering, vehicle engineering, innovative manufacturing, and energy storage. The company’s ability to utilize the unique benefits of electric power in their vehicles gives the company an edge over its competitors. Not ending there, even the top brands have used innovative technologies developed by Tesla in their productions. Apart from technology, internal factors like political support, a wide range of products, supplier to other manufacturers, sustainable innovation model, developing high-performance vehicles, brand recognition etc., are some of the quintessential strengths of Tesla Inc.
The internal analysis highlights that high production cost, high investment in research and development, high debt load, expensive vehicles compared to competitors’ brands and low production capacity are key weaknesses that Tesla is currently observing.
In 2018, Tesla secured a 210 acre plot in Shanghai, China for production purpose; it is the first time ever the company has planned to move outside the US. China being the biggest global electric vehicle market, turns out to be a golden opportunity for Tesla to establish itself in such a huge and potential market. However, establishing itself in newer markets invites a lot of competitive threats to Tesla. In 2017 Tesla estimated a sale of only 15000 vehicles in Chinese markets giving the company less than 3% of market share. Hence Tesla is prone to high competition from both luxury and less expensive brands.
The SWOT/TOWS analysis for Tesla Inc., is presented in a nutshell below followed by detailed analysis
|1. High product differentiation – electric power train technology|
2. Related diversification in product portfolio – powerpack applications
3. Strong marketing policies and improving customer base
4. Integrated battery manufacturing at Gigafactory
|1. Single source of supply of cells for battery powerpacks
2. Limited experience in new product development and handling multiple models
3. Little profitability and increased assets and debt liability
|1. Increased attention towards reducing fossil fuel consumption|
2. Expanding the ecosystem to explore related market opportunities
|1. Exit of UK from European Union
2. Limited supplier network base
3. Foreign currency exchange rates
4. Huge competition in automobile market
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Detailed SWOT Analysis of Tesla
1. High product differentiation – electric power train technology: Tesla Inc. has positioned itself as a unique brand in the market with core focus on developing automobiles on electric energy – a shift from fossil fuels. The powertrain consists of battery pack, power electronics, software, motor, gearbox and control software. Tesla employs digitized powertrain system whereby the torque to the front and rear wheels are instantaneously & independently controlled thus resulting in better traction control and improved performance.
2. Related diversification in product portfolio – powerpack applications: Tesla harnessed its competence in electric power systems and has started to develop powerpack application products meant for domestic homes in 2013, commercial purposes and utilities since 2014 in blocks of 100Kwh to offer up to 10Mwh. These applications are used for electric market services, power-backup, load shifting etc.
3. Strong marketing policies and improving customer base: Tesla has delivered 50,595 vehicles in 2015 which has increased to 79,865 units in 2016 – an improvement of more than 50%. Coupled with improved sales, Tesla has integrated and diversified marketing policies aimed at increasing consumer satisfaction. Tesla owns its service and sales centres thus getting real time & rapid feedback from the market, improved control on the service operations, better inventory as well as customised warranty packages.
4. Integrated battery manufacturing at Gigafactory: Tesla is building up a new facility – Gigafactory at Nevada which will integrate the battery manufacturing process which is currently dispersed across various regions. This will be a significant push towards attaining economies of scale which will reduce the operational costs by around 30% thus will allow Tesla to increase its profitability.
This section is available only in the Complete report on purchase.
This section is available only in the Complete report on purchase.
1. Exit of UK from European Union: Tesla operates its European business from Netherlands – Amsterdam and Tilburg. Customer sales & services, manufacturing operations, logistics network for all European nations is controlled from Netherlands.it was possible due to a single European Union committed to free flow of goods and services across all the nations. Thus, with the exit of United Kingdom from European Union, free flow of labor and goods across the borders of UK will be difficult than before calling for extra expenses on taxes, tariffs and surcharges. Thus, UK market calls for special attention for Tesla in order to make its presence sustainable.
2. Limited supplier network base: Tesla has limited supplier’s base for sourcing its components. Due to this, Tesla faces huge challenges in developing alternative suppliers for themselves. Thus, it reduces Tesla’s bargaining power with suppliers as well as increases its vulnerability towards operational failure subjected to failure of the suppliers to produce the components.
3. Foreign currency exchange rates: Tesla has its manufacturing locations concentrated mostly in US but aims at capturing global markets – China, Norway, Canada and Japan. Strengthening dollar will lead to either higher product prices in those markets thus affecting affordability or decreasing revenues when calculated in terms of dollar while the operational costs are estimated in dollars. This leads to uncertainty in demand as well as financial estimation for the company.
4. Huge competition in automobile market: Tesla Inc. being a relatively young company faces a huge competition from the established automobile players in the market – Daimler, BMW, Volkswagen, Toyota etc. which are having established business operations over decades. They have huge customer loyalty, stable supplier base as well as huge cash/credit sources to finance new technological developments. Thus, competing with these established players poses a threat to Tesla’s supply chain as well as sales fortunes.
Major Competitors :
Major Brands :
- Model S
- Model X
- Model 3
- Solar Roof
- Tesla Semi
Key Business Segments / Diversification :
Recent Acquisition / Mergers / Alliance / Joint Ventures / Divestitures :
|Perbix||Factory Automation||2017||Acquisition||This deal allowed Tesla to become more self-sufficient by incorporating a supplier into the company and achieving factory automation. The terms of the deal remain undisclosed.|
|Grohmann Engineering||Engineering company||2016||Acquisition||This deal was completed for $135.3 million and led to the formation of the ‘Tesla Advanced Automation group‘. The speed and efficiency of the manufacturing process greatly improved after this deal.|
|Solar City||Solar power systems||2016||Acquisition||Completed for $2.6bn, this acquisition allowed Tesla to expand on its solar power product range. It could now incorporate selling of its products than simply leasing them.|
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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
2. Insights into the SWOT analysis of Tesla, examining in detail its prevalent Strengths, Weaknesses, Opportunities, and Threats.
3. Gain knowledge of how technology and the company's core competencies have exhibited a competitive advantage to Tesla over its competitors
4. The PESTLE/ PESTEL/ STEEPL Analysis for in-depth analysis of all external factors namely, political, economic, social, technological, legal and environmental and highlighting their impact on the automobile industry and specifically for the electronic car manufacturing segment.
5. Provides holistic information about Tesla's share price, mergers and acquisitions, strategic partnerships and alliances, capital raising, market value, market segmentation, and equity transactions
6. Insights into Tesla’s business diversification, eliciting its key business segments
7. Analysis of the acquisitions, mergers, alliances or partnership ventures that Tesla Inc., consented with deal valuations and the synergies that were achieved with them.
8. Cognizance of current trends of the automobile industry and e-car industry and its influences on the Tesla company
9. A brief overview of Tesla’s founders, headquarters, turnover, revenue, subsidiaries, and employee strength. Followed by a comprehensive company analysis to gain knowledge about company information, company profile, business model, business plans and marketing strategy
10. Synopsis of Tesla’s business model, business case and examination of key business segments and diversification.
11. Review of the Tesla’s USP or unique selling proposition, mission statement, and vision statement, along with a peek into the company’s key performance indicators, value proposition and success factors
References used in Tesla Analysis Report
1. Annual Report- http://www.annualreports.com/Click/19957
2. Revenue- https://www.cnbc.com/2018/10/24/tesla-earnings-q3-2018.html
3. Tesla’s Successful Marketing- https://www.talkwalker.com/blog/tesla-marketing-strategy-social-ceo
4. Tesla’s Strategy is Risky and Aggressive, But it Has Worked-https://www.technologyreview.com/s/601876/teslas-strategy-is-risky-and-aggressive-but-it-has-worked/
Copyrights and Disclaimer
Tesla Inc. SWOT and PESTLE analysis has been conducted by Anindya Sadhu and reviewed by senior analysts from Barakaat Consulting - an Ezzi IT and Business Consulting venture.