2022 SWOT Analysis of Tesla | A Holistic Look at the Company

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While Tesla Motors certainly wasn’t the first company to create electric vehicles, it certainly was the company that managed to bring the whole idea of electric cars to the fore. In fact, for a company that was relatively unheard of a few decades ago, they certainly managed to claw their way to the top of the automotive market with ease.

For many, Tesla electric vehicles are the go-to electric vehicle. The Tesla brand is synonymous with electric cars in the same way that many think of Heinz ketchup or Kleenex Tissues. The whole idea of self-driving cars from Tesla probably catches people’s attention too.

For investors, the fact that Tesla has been at the fore of the electric vehicle market has been eye-catching too. After all, a company that has gone through the sorts of business growth in the ordinarily closed-off automotive market may be worth a solid investment.

We want to give a SWOT analysis of the Tesla company on this page. Our job is to give you the knowledge to know whether any internal and external factors could impact the company’s growth.

Introduction To The Tesla SWOT Analysis

As with any SWOT analysis, we are going to be looking at the following:

  • Strengths
  • Weaknesses
  • Opportunities
  • Threats

Our goal with this SWOT analysis is to give you the tools to see whether Tesla is a company that will continue to grow in the world of electric vehicle sales or whether other players around the market may grab some of their sales. After all, this is not the only company offering electric cars in the automotive industry.

We will be looking at information from a wealth of different sources to gauge the company’s current and future business performance. This SWOT analysis focuses on publicly available information, and we will ensure that it is as easy to understand as possible.

Who Are Tesla Motors?

Tesla is a relatively new player in the automobile industry. New companies rarely start to produce motor vehicles, particularly with the success that Tesla has had, but launching in 2003, the idea of Tesla vehicles has taken the world by storm.

This company is always trying to push new and advanced technologies in the automotive industry. They are the guys heavily pushing the idea of self-driving cars and ensuring that their vehicles rely on renewable energy. They are the ones most heavily pushing the concept of alternative fuel vehicles.

The CEO of Tesla, Elon Musk, is a well-known player in the business world (and beyond that). However, he never founded the company. He picked it up a year or so after with a bit of investment. As you can probably imagine, this guy will play heavily in our Tesla SWOT analysis.

Oh, and no. The company was not founded by Nikola Tesla. The company is named after him. He is one of the greatest inventors of all time, after all. It is pretty descriptive of what Tesla wants to accomplish in electric vehicles.

The Importance of a SWOT Analysis of Tesla Motors

Traditionally, a Tesla SWOT analysis would be used by the team at Tesla. Any business worth its salt would be constantly focusing on ensuring that it can identify opportunities and threats in the market. A company that does that will be much more likely to succeed.

Since we can’t imagine you working for Tesla Inc, our goal here is a bit different. Our goal is to provide you with the knowledge you need about a company that may seem somewhat mysterious. The information is going to be interesting.

For others, you may try to determine whether Tesla Inc stock is a worthy investment. Tesla’s SWOT analysis will help you out there. However, you are actively encouraged to carry out further research too. The world of electric car technology is constantly changing. We can only imagine that Tesla sales could be quickly hampered or boosted by various happenings in vehicle production.

Tesla Motors Strengths

Let’s jump straight into the strengths of Tesla Inc. These are the things that Tesla has going for it. These are the reasons why their foray into the world of electric vehicles may be a success, and for many of these points, Tesla Inc can be pretty hard to beat.

One of the First Players In The Business

As we said, Tesla Inc wasn’t the first to produce electric vehicles in the automotive market. It was an idea that many companies had tested, but Tesla did things differently. Tesla has managed to position itself where many people believe that the various Tesla models were the first vehicles in the world to be electric. More on that soon, though.

As one of the first players in the market, Tesla’s business model has enabled it to get a firm grasp on electric vehicle sales.

You have to remember that in the electric vehicle industry, many companies struggle to convert from producing gasoline-powered vehicles to their electric counterparts. Tesla Inc has never had this problem. They have always been about electrical engineering, meaning their production line never needed to make the switch. They could get a leg-up on every one of their competitors.

Strong Brand Recognition

The word ‘Tesla’ has become synonymous with electric cars. Ask somebody about an electric vehicle; the first name to mind will be Tesla. This is the type of brand recognition a company wants.

Having Musk at the forefront of the business can also help with brand recognition (this could also be a weakness, but more on that shortly). After all, this guy loves to speak and pump up his ideas. It is fair to say that without Elon Musk at the helm, Tesla may not have become the company that it is.

Quality Vehicles

Tesla claims that it is an energy solutions company. They are not a vehicle production company. They are a company that produces vehicles hoping to reduce our reliance on non-renewable fuel sources.

Because of this, Tesla has worked incredibly hard to develop its vehicles. Every step of the process is checked to ensure that it is excellent for the environment. Tesla Motors Inc. has focused heavily on its battery product technology, energy storage systems, and vehicle efficiency.

Many people firmly believe that Tesla is the automotive company that offers the best electric vehicles, which has enabled them to grab a solid chunk of market share, not just in the electric market, but the automotive market as a whole.

National Automobile Dealer Association

Tesla has worked exceedingly hard in the development of a national automotive dealer association. Their efforts have allowed easier access to Tesla models.

While Tesla sales were pretty high, to begin with, their constant efforts to expand ways in which they can get vehicles into the hands of customers have helped their company’s growth.

Interestingly, Tesla doesn’t just have fixed physical locations. They are one of only a few automotive dealers that tours their vehicles in pop-ups, often in some of the most random locations. This has enabled Tesla to offer its vehicles in markets where it wouldn’t usually make sense to have a permanent presence.

Innovative Company

There is no denying that any new Tesla model will always be at the forefront of innovation. Elon Musk is a guy that loves to talk about how innovative his company is. Whether it is with Tesla’s autopilot technology or new ways to produce lithium battery cells.

Recently, you may even have heard of the fully electric semi truck (the Cybertruck), or the idea of Tesla launching vehicles into space (more of a branding exercise than anything).

While Tesla CEO Elon Musk has been known for introducing some pretty crazy ideas to the table, a lot of the ideas that Tesla has come up with have been great and have guided the industry in ways that people could never have imagined it would go.

Masters In Cross-Selling Vehicles

Tesla is a company that has nailed the idea of cross-selling, and we are not just talking about the traditional merchandise that other automotive businesses offer.

While the company has come under criticism, many of its vehicles boast features you must pay to unlock. Guess what? People are willing to pay this cash.

Of course, Tesla vehicles need to be charged. Tesla worked incredibly hard to ensure that they would provide electricity for charging. They have charging points throughout the global market, and the number of charging points is growing regularly.

This means that not only is Tesla getting the initial sale of a vehicle, but they are also grabbing a steady stream of income.

Largest Vehicle Company In The Global Market

The company Tesla Inc. has been one of the most unlikely of stories. Just a couple of decades ago, nobody would have heard of Tesla. Thier global expansion has catapulted them to be the largest vehicle company in the world, though.

It is the innovation at Tesla that has driven this growth. While some may argue that Tesla could suffer a fall from grace when the big vehicle companies catch up, it is very difficult to fall from being one of the largest vehicle companies in the world to nothing.

Employee-Focused

While Tesla has come under a bit of fire for how they treat their employees, the company still attracts some of the brightest minds in the business. Tesla employs many electrical engineers, putting Tesla in a position where other companies struggle.

Tesla benefits particularly hard from the fact that Elon Musk has various other business ventures that many of the top engineers may find themselves working in. A lot of engineers would love to move into the world of space exploration or develop new public transport technologies. This is why you may find that potential employees would rather work for Tesla than anywhere else.

While it isn’t only Tesla targeting the electric vehicle industry, it is only Tesla that has become so innovative. Others are followers. It is fair to say that the employee-focused approach has helped with this.

Tesla Motors Weaknesses

No company is perfect, so for the next part of the Tesla SWOT analysis, we will look at Tesla’s weaknesses. These are the issues that may send Tesla from being a big player in the industry to barely a player at all.

Struggling To Meet Vehicle Demand

Tesla is setting up a vehicle production line from scratch. It is one of the only major companies that has done so in recent years. Because they are producing electric instead of gas vehicles, they can’t just copy somebody else’s design either. Everything had to be planned from scratch.

This did mean that, during the early days, Tesla struggled to ramp up production. Some of the early buyers of the vehicle were waiting years for their vehicles to be produced.

While many of these production issues have been dealt with, Tesla is not a company that is capable of dealing with a massive wave of sales. If the electric vehicle industry really starts to take off, as predicted, then there is a chance that potential Tesla customers may want to look elsewhere for their vehicles.

High Vehicle Costs

Setting up a new production line isn’t cheap, particularly if you are struggling to meet your promised production demand.

Tesla is losing money on every vehicle that they sell. However, they are still making a profit. This is because they are relying on selling regulatory credits.

Other vehicle companies are making a profit when they sell their vehicles. Many of these are being sold for a far cheaper price than Tesla. So, while Tesla may eventually sell competitive and profitable products, they are not quite yet.

Unless Tesla can deal with their high operational costs, the company will continue to struggle. Although, there is some indication that the production cost may be falling, and as sales expansion targets other countries, it may fall even further.

Elon Musk

Some would argue that Musk is a positive, and others would say he is negative.

As the CEO and a fairly outspoken guy, the whole of Tesla has been built around him. He is the spokesman. He is the one that people mostly associate with Tesla. He has positioned himself that way.

The problem is that Elon Musk doesn’t quite know when to be quiet. He always has something to say (see: his Twitter account), and he has often been criticized for making somewhat wild claims that are difficult to achieve. He has worked hard to position himself as one of the smartest people in the world, even if that isn’t the case. He is a businessman through and through.

While many people were fine with Elon at the start, it seems that a lot of the positivity surrounding him has dwindled over the years. This may change even more after the recent acquisition of Twitter (one that he initially didn’t want to make).

Global Battery and Chip Shortage

Every company has struggled with a global chip and battery shortage. However, Tesla has worked even harder than other companies.

While they have moved to in-house battery production, they are still struggling to gain the raw resources that they need to produce batteries, as well as struggling to get their hands on chip technology behind their vehicles.

Many automotive producers had to temporarily shut down production over the last few years as they didn’t have the components they needed to make their products. While Tesla never fell into this category, it is known that it struggled.

When a company relies so heavily on the global production market, particularly one that is struggling right now, it is a weakness for the business. As we said, Tesla has been trying to move a lot of things in-house, but there is only so much they can do.

High Amount of Debt

Tesla currently has $ 5 billion in debt. This is a huge decrease from 2020, but debt is debt. Any company that has debt needs to continue to push its products. If they so much as dwindle, it can send the company down.

There is some indication that Tesla has been saddled with a bit of debt due to Musk’s Twitter acquisition, but this has yet to be confirmed. Hopefully, it hasn’t been as this could spell problems for the company.

Remember, Tesla is profitable at the moment due to those credits. However, if that system is changed or production costs rise, then the debt will build. Tesla would have no way to pay off debt without taking on new debt.

Employee Issues

While Tesla has been able to secure some of the best employees in the business, it is also a company that has struggled massively with its growth. It hasn’t had the opportunity to develop the best employee management system.

The company has come under fire for lax safety standards, poor training, overworking employees, and even attempting to make them work during the pandemic. There has even been a massive sexual assault lawsuit related to the company.

These factors may not impact the company in the short term, but the issues could pile up. It could spark an exodus of the best talent and may even encourage potential Tesla customers to look elsewhere for their fancy electric sports car.

Tesla Motors Opportunities

There are a variety of things that Tesla can do to boost the profitability of their company, and help them to stand out a bit more amongst the myriad of vehicle producers that are likely to enter the market over the coming years.

Stronger Focus on Autonomous Driving Technology

The development of autonomous driving technology has been a primary goal of Tesla ever since the company was founded.

While they have had some success, the company hasn’t quite nailed the tech. However, if they can nail it, they will have far safer vehicles. This can lead to a boost in sales (people love vehicle safety).

Moving More Production In-House

As we mentioned earlier on in this Tesla SWOT analysis, Tesla has been moving a lot of production in-house. However, not everything is there. Some battery production technology is produced in-house, but a lot is outsourced.

This means that there are opportunities for Tesla to cut costs in a bloated manufacturing line. It also means that the company may be more resilient to global production market changes.

Untapped Markets

Tesla has been spending a lot of its time focusing on the western markets. However, India and China are some of the largest vehicle markets in the world. They are also some of the most heavily polluted (primarily due to the population size).

Strategic growth in these markets could lead to a boost in Tesla’s business.

More Affordable Vehicles

As we have mentioned before in this Tesla SWOT analysis, Tesla’s vehicles are not cheap by any stretch of the imagination. They are firmly focused on the upper end of the market.

Since the world is currently on the cusp of a recession, Tesla could do well to try and tap into the more affordable vehicle market. This is where a lot of the business lies, and every other major player in the car business gets most of its cash from the cheaper vehicles, not their big, flashy ones.

Technology Development

It is fair to say that Tesla is one of the most innovative companies in the business. A constant focus on technology development could lead to patents. Access to these patents could be sold, generating even more cash for the company.

This is something that we expect to happen with Tesla’s autopilot system. It is probably why Tesla is pushing the tech so hard.

Tesla Motors Threats

Tesla doesn’t sit alone in this business. So, for the final part of our Tesla SWOT analysis, we need to look at those threats.

Increased Competition

More and more companies are looking to enter the electric vehicles market. Each new player, particularly those that have been around for decades, poses a sizeable threat to Tesla.

Remember, this is a company that has struggled with supply issues. Their competitors have not. While Tesla still produces some of the best vehicles, they have been known to lose sales to their competitors simply because they cannot meet demand.

Global Recession

This is one of those external factors that will be hitting Tesla hard. As we write this, we are at the tail-end of 2022. The world is heading into a recession, and vehicle sales do not do well in a recession.

Company Controversies

While the company has had many controversies, many have not been discussed heavily outside certain arenas. However, with the acquisition of Twitter and his penchant for media attention, Musk has started to become more of a public figure. He is a guy that attracts some controversy.

While Musk can draw sales to the company but also turn people away.

Global Supply Chain Issues

As we have said, the company strives to move as much in-house as possible. However, global supply chain issues still show no sign of easing up for Tesla. This will impact production.

New Tech

Electric cars are new tech. Everybody is looking for a slice of the pie. Competitors can be just as innovative as Tesla, and if they can develop something great, Tesla may lose out.

Remember, this is a fast-moving and new business. Things can change at a moment’s notice. Tesla needs to entice Tesla customers to their tech. They don’t want to lose out.

Conclusion

While Tesla is a strong company, we are sure that this SWOT analysis has shown you that a lot can lead to more success for the business, but many internal and external factors can negatively affect the stock price. We anticipate Tesla remaining in a strong position for a long time, but who knows what the future holds. After all, nobody expected Tesla to gain this market position.

FAQs

What are Tesla’s main competitors?

The main competitors to Tesla are other electric vehicle manufacturers including Audi, BMW, and Mercedes-Benz.

What is the scope of Tesla’s business?

Tesla’s business covers the design, manufacture, and sale of electric vehicles.

What is Tesla’s mission statement?

“To accelerate the world’s transition to sustainable energy.”

What are some of the challenges Tesla faces?

Some of the challenges Tesla’s faces include increased competition, global recession, and company controversies.

What are some of the opportunities Tesla has?

Some of the opportunities Tesla has included technology development and access to patents.

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