TESLA’S COMPETITIVE ADVANTAGE:

Tesla Motors’ source of competitive advantage comes from its ability to use an existing
technology in a more efficient way. They have differentiated themselves from their
competitors in the automotive industry by revolutionizing the lithium ion batteries to hold
more charge and in effect, provide better mileage compared to conventional hybrid or plug-in
based electric vehicles.
 Innovative lithium ions battery:
Tesla Motors launched their cars with it and entered a market where there were few
competitors. Hybrid cars were in production before their entry but Tesla was the first to
introduce cars reliant fully on battery power. To gain a lead over competitors, Tesla made
highly efficient battery pack to give cars a better mileage. By compacting thousands of highly
efficient Lithium-ion cells into a liquid-cooled battery pack Tesla created highest energy
density batteries in the industry.
Competitors can imitate this technology but Tesla has a significant first mover advantage. A
new model development for an established automaker can take anywhere from 1 year (e.g.
Toyota) to a decade (Mercedes & BMW) besides having significant fixed costs investment.
 LARGE NETWORK OF SUPERCHARGER STATIONS:
Tesla’s electric vehicles require long charging durations for the batteries. A full charge of a
Tesla car from home plug takes around 12 hours but 40 minutes from a Supercharger station.
Still it is comparatively long to conventional fuel based vehicles. So Tesla Motors has offered
the option of switching batteries at the Supercharger station with a fully charged one.
Moreover, for the premium car model owners, this service will be fully free. The only
downside is the low number of these supercharger stations in the US.
Tesla plans to increase the number of its service stations by 75% and Supercharger stations
by 200 globally this year. However, Tesla does not have to be the only one developing the
supercharger stations. Because of Tesla’s opening up the patents, other automakers will not
only develop cars but will also have to develop the supporting infrastructure. Given the small
size of the EV market, it doesn’t make sense for a rival competitor to make proprietary
charging stations as it could, in effect, kill the market.

 UNIQUE DIRECT-TO-CUSTOMER SELLING MODEL:

Tesla has played a differentiation game by focusing on providing a unique consumer
experience by selling directly to the end users without the middle man route of dealership.
Customers get to customize their car before purchasing online. Tesla runs over 50 stores
worldwide and because of full control over its operations, gets to maintain the same level of
customer service at these locations.
OBJECTIVE 2:

Current market Scenario of Tesla

The mile per gallon (MPG) standards for passenger cars under CAFE (Corporate Average
Fuel Economy) in the US remained static between 1990 and 2010. However, CAFE
passenger car MPG standards rose sharply in 2011 and 2012. These prompted manufacturers
to begin offering a wider array of alternative fuel and hybrid vehicles in the US in order to
comply with the rising standards. Under new agreements finalized by the Obama
administration in August 2012, MPG standards are set to rise steadily between now and 2025.
Consequently, it is essential for manufacturers to look to hybrid and electric vehicles in an
attempt to increase the average fuel efficiency of their vehicles, releasing more of these
vehicle types in the US market. The return to relatively high gasoline prices in the US in 2011
had a positive effect on the hybrid market: the market returned to rapid expansion in 2012.
Higher gasoline prices drove price conscious motorists towards purchasing hybrid and
electric cars, as potential running cost
savings increased, justifying the typical premium paid by consumers at the purchase of hybrid
and electric cars. Toyota is the clear leader in the Hybrid and Electric car segment in the US,
with a 2013 market share of 58.2% in terms of volume. It offers both plug-in mid-range
sedans as well as premium EVs under the Lexus brand. Ford has been in the ascendancy in
recent years: its share of the US hybrid segment has increased significantly, and it has also
seen similar success in the plug in segment. However, in 2013, Toyota’s market share was
almost 9% lower than for the whole of 2012. Consequently, strong sales of Ford, Nissan and
Tesla plug-in vehicles have eroded Toyota’s overall market share. It will be interesting to see
how the industry will shape up in the coming years with new and small players like Tesla
trying to leapfrog the incumbents in Toyota and Ford.
 RESEARCH METHODOLOGY

DEFINATION OF RESEARCH

1. “A systematic search for knowledge”

2. “Movement from known to unknown”

3. Research in common refers to search for knowledge. One can also define research as

a Scientific and systematic research for pertinent information on specific topics

It is a way to systematically solve the research problem. In it we study various steps that are

general adopted by a researcher in studying his research problem along with the logic behind

them. It is important for the researcher not only to understand the research methods and

techniques but also the methodology.

A careful consideration of study regarding a particular concern or problem using scientific

methods. According to the American sociologist Earl Robert Babbie, “Research is a

systematic inquiry to describe, explain, predict, and control the observed phenomenon.

Research involves inductive and deductive methods.”

Inductive research methods are used to analyze an observed event. Deductive methods are

used to verify the observed event. Inductive approaches are associated with qualitative

research and deductive methods are more commonly associated with quantitative research.

The study is based on secondary data where I have gone through some research paper,

journal, case study, and websites to collect data for my study based on Tesla motors.
OBJECTIVE 1

Tesla’s Strengths

Let’s start with the strengths of Tesla Inc. that will include the positive aspects of the
company, which have reinforced the position of Tesla to become one of the most dominant
companies in the world.

The following factors which are believed to be Tesla’s stronger points have ensured the
company’s profitability, expansion, and popularity, especially in the long term.

1. A Top Employer Company

Any organization is as good as it employs. In the case of Tesla Inc., it is one of the key
factors for the company’s remarkable success. Wall Street Journal reports that Tesla has
emerged as an ideal company for employees due to its diversity and innovation-encouraging
culture.

It has recently been listed as one of the ideal places to work, attracting young jobseekers with
fresh talents and energy. The company has also been featured in Forbes’ ‘America’s Best
Employer 2019’.

2. The Leading Automotive Company

Despite its issues, Tesla’s sales have only increased. It has become a leading automotive
brand for 2019, delivering 367,500 vehicles.

Thanks to its unparalleled advancement in innovation and luxury simultaneously, the

company has left behind some very exclusive automobile brands like Mercedes and BMW.

3. Best in-class Electric Cars

Tesla has left behind every other brand in the race of the finest electric cars. When compared
by their range, Tesla’s electric cars have proven to be the best covering maximum distances.
The recent comparison shows that Tesla occupies the top three places in terms of range. The
Tesla Model S will get you the furthest – traveling up to 600 kilometers on a single battery
charge. The nearest another brand has got is the Opel Ampera, with a range of 520
kilometers.

4. Tesla Dominates the U.S Electric Vehicle Sales

According to Statista, Tesla model 3 is the most sold electric vehicle of 2019 with a sales
number of 187,971. On the second position, Chevrolet Volt stands, with 155,477 cars sold.
Where Tesla model S is again on the third position with a close call, having 134,392 cars
sold. In short, Tesla is topping the electric car sales chart.
5. Cross-sell and Diversification

Tesla has launched a comprehensive insurance program for its vehicles in association with
Liberty Mutual insurance company called as InsureMyTesla.

6. Innovative Company

Tesla has a very high rate of innovation, (not to forget the recent developments of world’s
first fully electric semi truck and new sports car). Therefore, the market trust and expects the
company to develop competitive and profitable products which of course leads to substantial
financial gains.

Tesla’s Weaknesses

All the internal factors in a company which causes any damage or bounds performance
evaluation are identified weaknesses in the SWOT Analysis. So, these are some of the
shortcomings of Tesla’s organizational structure, which reduce its competitiveness and
business growth.

1. Manufacturing Complications

The higher standard of innovation, the greater will be mechanical complications and
production risk factor. Tesla faces continuous launch, manufacturing and production ramp
delays while launching their new vehicles and other products.

2. Unable to meet demand might affect brand value

Due to highly experimenting and complicated procedures, Tesla’ might face an unbalanced
supply and demand, unable to meet the production requirement. In fact, their delivery rate in
the first quarter of 2019 is quite alarming. The company has delivered 63,000 cars in the first
quarter of 2019, which is a 31% drop from last quarter of 2018.

3. Lack of High Volume Production

There is no doubt that Tesla is the pioneer of actual energy-saving cars. But it has failed to
produce high volumes of automobiles for any of its models. Even now, as the company plans
to manufacture Model 3 vehicles at high volume, it faces issues in terms of production cost
and management resources and space expansion in Gigafactory 1. 

4. Shortage of Batteries

In the annual shareholder meetings, CEO Elon Musk accepted that their production rate has
decreased due to the limited supply of batteries. The shortage directly affected the sales of
electric vehicles and energy storage systems.
5. Elon Musk as Tesla’s Sole Representative

Tesla accepts that the company is a ‘one-man show.’ Sadly, that man, Elon Musk has a lot on
his shoulders to give his hundred percent to the company. Musk is also deeply involved in
other projects like space launch vehicles at Space Exploration Technologies Corporation and
The Boring Company.

Tesla’s Opportunities

The opportunity section of this SWOT Analysis emphasizes the emerging chances of growth
for the company.  It is an external factor which, when identified, can help Tesla to improve its
business performance, management structure, and strategic growth and other aspects.

1. Sales expansion in untapped Market

The most significant opportunity for the company right now is the Asian market, which is
still unsaturated in the field of automotive and renewable energy markets. Especially in the
situation where Tesla needs to expand its global market to increase its financial stability and
stronger market presences.

2. Less Expensive Car

Tesla is expensive due to its unconventional reliance on innovation, which requires maximum
financial support to entertain new technology.

Recently, Tesla has launched Model 3, which is a more affordable version of Model S with
less range, power, and fewer features. However, it is an excellent opportunity for Tesla to
expand the size of their audience market.

3. Bringing battery production technology in-house

Tesla intends to make its own battery cells. The move can be a big game-changer as it will
help the company to increase its manufacturing rate while reducing its production cost.
Currently, Panasonic is their primary supplier of battery. 

4. Introduction of pick up truck

According to National Automobile Dealer Association market share data, Pick up truck
accounts for 17.6 percent of the US automotive market, which  has huge opportunity of
growth in Electric Vehicle. 

5. Market Confidence in Tesla

The stock market has shown confidence in Tesla after seeing two consecutive profitable
quarters. The price of Tesla stock has doubled since the start of this year.
Tesla’s Threats

The threat factor is combined with the phenomenon which stops the company from taking
full advantages of the benefits that can be derived from the available strengths. Therefore,
these are the few threats which Tesla faces to maintain the business despite the unpredictable
conditions of the market.

1. Product Liability Claims

Despite Tesla’s premium quality assurance and high standards of manufacturing, the
automobile industry, in particular, is accustomed to facing significant product liability claims
which the company’s fears to be one of the biggest financial blows.

Tesla has launched many autopilot vehicles, and not all of them have been successful in case
of an accident. The company has faced lawsuits and claims related to the failure of
technology in their products. If these liability claims continued, then Tesla may be subjected
to greater financial setbacks.

2. Extensive Competition

Tesla, Inc. faces aggressive competition from both alternative fuel vehicles (Hybrid, Plug-in
hybrid, fully electric car) and self-driving technology. Many automotive brands in the luxury
segment like Mercedes, BMW, Audi, Lexus and in the economy segment like Toyota, Ford,
Volvo, General Motors are getting ready for a fierce competition.

Many brands are not only launching or planning to launch their environment-friendly/ self-
driving technology but also, they are offering them at a comparably lower price. It is a
definite threat for a company like Tesla, which thrives on its unique value for innovative cars
which are extremely expensive and unaffordable for many.

3. Product Defects

Due to highly complex engineering for innovative vehicles, Tesla’s cars and other energy
products have exhibited major flaws in many cases. The defected products often have
weaknesses in design, manufacturing, and other features which can harm the company’s
image permanently.

4. Long term confidence

For any company, the assurance of long term sustainability is essential to maintain the public
image and the company’s morale. Tesla, due to its unstable manufacturing conditions, suffers
from disbelief among the public about its long-term existence, which can result in a
deficiency in further business development.
Conclusion:

In this SWOT analysis for the company, we highlighted each of the strength, weakness,
opportunity, and threat which Tesla faces in the market. To grow its market, share and
financial stability, Tesla needs to take vigorous actions. Yet there is no doubt that despite the
negative factors, the company is an ultimate symbol of progress and innovation.

OBJECTIVE 2:

Competitors of TESLA MOTORS:

 KIA MOTORS:
With its headquarters in Seoul, South Korea, Kia Motors is recognized as the top competitor
of Tesla. The company has around 13 manufacturing units and is the second-largest
manufacturer of automobiles. Kia Motors effectively utilizes the services of their dealers and
distributors to make sure that their products are accessible in more than 172 countries. You
cannot disagree that Kia provides serious competition to Tesla due to the popularity of their
cars, which includes Optima Hybrid, Rio Sedan, and Picanto.
 BMW:
Bayerische Motoren Werke, which is commonly referred as BMW, is a multinational
automotive manufacturing company. Although its headquarter is based in Munich, yet it is
known for its production of automobiles and motorcycles across the globe in regions
including the United States, South Africa, United Kingdom, Brazil, China, and Germany.
It is considered as a major competitor of Tesla due to the reputation it has earned from its
electric cars and high-performance model.
 NISSIAN:
Nissan is another multinational automobile company, which is regarded as the top competitor
of Tesla. Based in Yokohama, this company is acknowledged as the major producer of
electric vehicles. This is supported from the fact that it sells 320,000 electric vehicles
annually across the globe as of April 2018. Moreover, it offers a diverse range of brands and
products and is known for innovating new services and products.
 VOLKSWAGEN:
Volkswagen Group, which also known as Volkswagen AG, is a reputed Tesla competitor and
manufacturer of automobiles from Germany.
It is famous for producing “peoples’ car,” even though its history dates back to World War II.
To cope up with the growing competition, Volkswagen offers sportier car models and focuses
more towards advancement and modernization.
  CHEVROLET:
Chevrolet is another major competitor of Tesla and a division of General Motors Company.
This automobile manufacturer is popular for its medium-duty trucks, subcompact cars, and
electric vehicles, which are sold across the globe.

 PORSCHE:
Porsche is considered as a major name in the list of competitors of Tesla due to its
recognition across the world. This German-based auto company is known for its automobiles
and are considered experts for producing high-quality Boxster roadster and sports car. The
charging station of Porsche is something popular as being the fastest charging station in the
world.
Additionally, the company is known for its models, which includes Porsche Macan, Porsche
Cayenne, Porsche Boxster, and Porsche Cayman.
 VAUXHALL:
Vauxhall is amongst the oldest manufacturer of automobiles in the UK and a major
competitor of Tesla. Unlike other luxury brands, Vauxhall ensures that its products are
equipped with advanced technology and features reliability that everyone seeks to achieve.
Vauxhall E- Corsa: Vauxhall E-Corsa is an economical electric vehicle. It can be charged
easily in your garage or house with a home charging kit. With a range of 211 miles, this
electric vehicle offers a perfect alternative to Tesla.