The acronym S.W.O.T. stands for S=Strengths, W=Weaknesses, O=Opportunities, and T=Threats. These internal and external factors aid in understanding the strategy of any business. A SWOT Analysis of Tesla Motors will assist in determining the company’s current standing and evaluating its business forecasts and plans for the future.
Tesla is an excellent business case study due to its prominence in numerous business courses. Tesla’s SWOT analysis illustrates how a mature organization capitalizes on growth opportunities. It can demonstrate how the company leverages its strengths to utilize the options while addressing its weaknesses. The SWOT analysis will also reveal Tesla’s expansion plans.
Brief Company History
American automobile and energy solutions company Tesla, Inc. was founded in 2003 with the foresight to accelerate the global transition to sustainable energy while simultaneously becoming the most attractive vehicle. As the company expanded into other areas of the energy business, Tesla Motors, Inc. became Tesla, Inc. Tesla’s pioneering utilization of renewable energy shocked the car industry and had far-reaching effects throughout the world.
Tesla’s initial car, the Roadster, was the first production vehicle to use lithium battery cells. Tesla, a California-based firm, has seen its popularity soar in the United States due to the public’s appreciation of its opulent and uniquely built electric vehicles. SolarCity, Tesla Grohmann Automation, Maxwell Technologies, DeepScale, and Hibar Systems currently offer automotive, automobile repair, finance, energy storage, solar panel, lifestyle product, and retail goods services as the company’s subsidiaries.
| About TESLA, Inc. | |
| Company: | TESLA, Inc. |
| Subsidiary: | Tesla Grohmann Automation, SolarCity, Maxwell Technologies |
| CEO: | Elon Reeve Musk, since Oct 2008 – Present |
| Founders: | Elon Musk, Marc Tarpenning, Martin Eberhard, Ian Wright, JB Straubel |
| Year founded: | 2003 |
| Headquarter: | Palo Alto, California |
| Type: | Public |
| Ticker Symbol: | TSLA |
| Annual Revenue (FY 2022): | $81.5 billion |
| Net income (FY 2022): | $3.33 billion |
| Products & Services: | Auto service, Financial Services, Tesla Motor Vehicles, Solar panels, Lifestyle products, Energy Storage (Power battery packs), & Retail merchandise |
| Competitors: | Ford, BMW, Mercedes-Benz, NIO, Audi, Polestar, Rivian, Lucid, GM, and Volkswagen |
Recent Performance
Stock Performance
Last month, Tesla shares outpaced the Zacks S&P 500 index by 31.9%. A stock with a Zacks Rank #5 (Strong Sell) may underperform the market.
Market Performance
This week marked the most significant weekly performance for Tesla’s shares since May 2013. Elon Musk, CEO of Tesla, stated this week that the company would create 2 million autos in 2023. Tesla’s stock price has recovered after a 40% decline over six months.
In 2022, there were 405278 automobile deliveries compared to the average expectation of 401939.8 based on five analysts, while energy generation and storage were $1.31 billion Compared to $911.20 million based on eight analysts. 90.4% more than the year before. Five analysts predicted a gross profit of $74.54 million, but the actual figure was $159 million. Three analysts’ average forecast for automotive sales was $20.25 billion, so the exact figure of $20.24 billion exceeded expectations.
Revenues Performance
Automotive Revenue was $21.31 billion, compared to the average of $21.33 billion predicted by eight analysts. The annual growth rate was 38.9%. The overall revenue from services and other sources was $1.70 billion, above the $1.49 billion average predicted by seven experts. This number increased by 59.9% compared to the same quarter last year. Gross profit for the automotive industry in 2022 is $5.52 billion. Six analysts projected $5.84 billion in revenue.
SWOT Analysis of Tesla Motors
Strengths of Tesla Motors
Top Employer: Elon Musk, CEO of Tesla, emphasizes skill over schooling. The crew at Tesla resembles this. The organization is a leading graduate recruiter. Tesla promotes creativity and variety. They have routinely appeared on Forbes’ listings of the best employers.
Monopolizing Sales: Tesla has topped U.S. sales of electric vehicles for years. In 2019, three Tesla models were sold. This will help new prospects trust Tesla and purchase cars based on sales.
Innovation and Creativity: Tesla is synonymous with innovation. Modern, luxurious automobile designs offer unparalleled luxury and pleasure. From design to engineering, their electric vehicles are beneficial. The company produced the first electric semi-truck and a sports car. These modifications helped the recent client acquisition of the organization.
Brand Image: Most Valuable Automotive Company: Despite its difficulties, Tesla sold 936,172 vehicles worth $53.8 billion in the fiscal year 2021. Due to an increase in deliveries and profits of $5.6 billion, the company’s market capitalization reached $1 Trillion. It surpassed the market value of the top five automakers (Toyota, Volkswagen, Daimler, Ford, and General Motors). Market value makes Tesla the most valuable automaker.
Better Positioned: According to analysts, Tesla can withstand economic turbulence better than other American automakers. First, Tesla’s revenues will exceed $53 billion in 2021, and the company will deliver over 900,000 automobiles, double the quantity supplied in 2020.
Energy Efficiency: Tesla pioneered electric vehicles by utilizing renewable energy sources such as solar power. The excellent 142 MPGe fuel efficiency rating the EPA has given the 2021 Tesla Model 3 Long Range is according to recent and ongoing data. If they upgrade to the Model 3 Performance, it will reduce their score to 113 MPGe.
Effective Partnerships:Tesla collaborates with market leaders such as Southeast APDA and Yes Energy. These alliances extend Tesla’s objectives in the renewable energy sector and the global market.
Weaknesses of Tesla Motors
Tesla’s Dependence on Musk’s Brand Image: Tesla has grown since its founding, but its success depends on Elon Musk. Tesla’s reputation draws buyers. Musk, however, manages other companies, making Tesla challenging to run.
Manufacturing Issues: Tesla cars have had autonomous accidents due to production issues. Mechanical breakdowns and other manufacturing issues are more frequent due to high-quality inventions. Thus, Tesla repeatedly delays launch, production, and building.
Lack of High-Volume Production: Tesla pioneered energy-efficient cars. Its variations have yet to be mass-produced. The company faces production costs, organizational resources, and Gigafactory 1 expansion issues despite its plans to mass-produce Model 3 automobiles.
Shortage of Batteries: Tesla CEO Elon Musk said in annual shareholder meetings that battery shortages had slowed production. The absence hurt electric cars and energy storage sales.
Financial Uncertainty: Affluent companies can win market share. Tesla owes $5.38 billion. To pay off debts, the corporation should delay expansion, cut investments, sell assets, etc.
Opportunities for Tesla Motors
Sales Expansion in Untapped Market: The Asian vehicle and renewable energy industries, which are underdeveloped, present the most significant possibility for the corporation to increase its sales significantly since Tesla must expand internationally to strengthen its financial stability and market presence.
Less Expensive Car: Tesla’s high price is owing to its unorthodox focus on innovation, which requires substantial financial support to sustain new technology. Model 3 is a cheaper Model S with less range, power, and amenities. Tesla has excellent audience growth potential.
Bringing Battery Production Technology In-House: Tesla intends to produce its battery cells in-house. This initiative has the prospect of being revolutionary because it will help the corporation reduce production costs. In addition, it will generate many jobs, boosting the economy.
Autonomous Driving Technology: The autopilot of Tesla is safe and comfortable. They are increasing consumer and stock market confidence. Tesla’s autopilot advances.
Environment-Friendly Cars: As individuals become more environmentally conscious, electric automobiles and the need to minimize gas-powered vehicles increase.
Introduction Of Pickup Trucks: Many businesses profit from technology. Automation reduces costs. By gathering more client information, technology improves trading.
Exploit Air-Taxi Market: Urban air-taxi services were envisioned and developed to minimize traffic and pollution by 2025. Tesla can make eVTOL vehicles, and its second-largest shareholder has invested millions in air taxi firm Lilium.
Technological Advancements: Tesla’s high prices reflect its standing as a luxury brand and its innovative technology. Fewer features and more models might attract a more extensive customer base. The Tesla Model 3, a cheaper and less-featured version of the Model S, is an excellent starting point.
Economic Factors: Tesla’s expenses are through the roof as a luxury automaker with cutting-edge technology. There is significant room for offering fewer features and a wider variety of models to appeal to a bigger audience. The Tesla Model 3 is an ideal starting point because it is less priced and features a lightweight counterpart of the Model S.
Threats for Tesla Motors
Increased Competition: Tesla’s competitors include BMW, Volkswagen, and renewable energy vehicle researchers.
Product Liability Claims: Despite Tesla’s enhanced quality assurance and production standards, the vehicle industry is accustomed to massive product liability lawsuits, which the firm anticipates as one of its most significant financial blows. Tesla autopilot cars can crash. Company products have been sued for technological failure. These liability lawsuits may cost Tesla more.
Slow Client Adaptation: Every organization needs client approval. Corporations benefit from adaptable consumers. It is slow and easier, causing Tesla problems. Electric automobiles motivate the company.
Disruption of Supply Due to Shortage of Materials: Tesla may face supply issues due to growing material costs. Aluminum, steel, lithium, nickel, copper, cobalt, and lithium-ion batteries are suppliers. These commodities’ fluctuating prices could slow production.
Elon Musk’s Erratic Behavior Affecting Tesla’s Reputation: Musk’s creativity defines Tesla. His unusual actions and impetuous emotions have undermined Tesla’s distinctive and respected brand. His amateurish marijuana use on Joe Rogan’s show was criticized. Tesla’s stock plunged roughly 9% due to this creative genius’s strange behavior.
SWOT Comparison Chart
| Tesla | BMW | Mercedes-Benz | Audi | |
| Strengths | Top Employer. Monopolizing Sales. Innovation and Creativity. Brand image. Better Positioned. Energy Efficiency. Effective Partnerships. | Global Reach. Strong R&D Department. Brilliant Advertising. Highly Trained Workforce. Large Product Portfolio. | Brand reputation. Sponsorships. Global factories. Innovative. Financial stability. Develops markets well. Product portfolio. | Technology. Brand Image. Product Portfolio. Excellent Designs. |
| Weaknesses | Tesla’s dependence on Musk’s brand image. Manufacturing issues. Lack of High-Volume Production. Shortage of Batteries. Financial Uncertainty. | Limited Market Size. Increasing Debt. Reducing Market Share. Electric Cars. | Maintenance and Service Costs. Distribution Network. Conflicting objectives. | Diversification. Communications. High-Maintenance. |
| Opportunities | Market expansion. Cheap Car. In-House Battery Production. Autonomous Driving. Eco-cars. Pickup truck introduction. Air-Taxi Market. Innovations. Economics. | Newer Models. Lower Price Segment. Increasing Affluence. Expanding in Emerging Markets. | Luxury car demand. Alliances. Asian markets are advancing. Automotive industry growth. Innovation. | Increase in Target Market. Explore Mature Markets. Increasing Manufacturing Capability. |
| Threats | Competitiveness. Products Liability. Customer Adaptation. Materials shortage disrupts supply. Tesla’s Reputation Damaged by Elon Musk. | Tough Competition. COVID-19. Increasing Petroleum Prices. Increasing Regulations on Cars. | Rigid Rivalry. Fuel cost. Volatility. Economic. Instability. Fixed costs. Laws. Raw Source. | Fewer Markets. Increase in Fuel Cost. Luxury Cars Risk. Increase International Market. Government Policies. Competitors. |
Recommendations for Tesla Motors
In our SWOT Analysis of Tesla Motors, we have found that Improving manufacturing efficiency is the primary strategy recommendation that Tesla should prioritize. The company intends to enter new international markets and add semitrailers and public vehicles to its product offerings. To retain profitability, Tesla must continuously boost efficiency and reduce expenses. Tesla is expanding production for this endeavor. Gigafactory 3 in Shanghai is nearing completion, producing cars at a 50% lower cost per unit than current manufacturing lines.
Based on this evaluation, Tesla should take the following activities immediately:
- Tesla must continue researching other energy sources as Lithium is a volatile material with limited quantities.
- Concentrate on obtaining customers’ trust and long-term company confidence.
- Develop a commercial presence in Asia.
- Employ the concepts of economies of size and scope.
Additionally, they have been expanding their product line to make it more accessible to a broader range of customers, including those with lower disposable incomes. Tesla will soon be able to dominate the market and fulfill its ultimate aim of promoting the widespread adoption of electric vehicles to make the world more inventive, secure, and environmentally pleasant. If a rival company offered a rebate or added a feature to their hybrid or electric vehicle, Tesla intended to take action.
References
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- Dane, K. (2022, January 2). Mercedes Benz SWOT analysis 2023 – Daimbler-Benz AG. Business SWOT Analysis. Retrieved February 3, 2023, from https://bswotanalysis.com/mercedes-benz-swot-analysis/
- FZE, B. B. (2023, January 16). Recommendations for the future success of Tesla. UKEssays. Retrieved February 3, 2023, from https://www.ukessays.com/assignments/recommendations-for-the-future-success-of-tesla-2021.php
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- Mehta, R. (2022, December 29). SWOT analysis of Audi 2022. Digiaide.com. Retrieved February 3, 2023, from https://digiaide.com/swot-analysis-of-audi/
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- Xaif. (2022, October 27). Complete SWOT analysis of Tesla – 2023 study. IIDE. Retrieved February 3, 2023, from https://iide.co/case-studies/swot-analysis-of-tesla/
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