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Tesla was founded in 2003 by a group of engineers who wanted to prove that electric vehicles can be better and faster than gasoline cars. Today, Tesla not only manufactures all-electric cars, but also manufactures infinitely expanding clean energy generation and storage products.(Tesla, 2020)
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Tesla's chain of production
Business Structure refers to the type of set up that an investor wants to put in before starting a business and it primary depends on the type of business set up, liability assumed and tax incentives (Wallstreetmojo,2020).
The corporation is the most complex business structure. This is how most of the large organizations are formed. The most important feature of a corporation is that the entity and owners are separate. This restricts the claim of creditors to the business itself. So the owner’s personal assets will not be at risk if the business fails.
A corporation can issue shares, both common shares, and preferred shares. The corporation doesn’t have a maturity, it is a separate entity and lasts forever.
Since its founding in2003, Tesla’s vision was to manufacture
mass-market electric vehicles (EVs) that offered a compelling
customer value proposition. This includes a long range vehicle
that possesses recharging flexibility, one that is energy efficient,
low cost ,and high performing without compromising design or
functionality.
Tesla’s automotive segment comprises of the design, production and sale of fully-electric vehicles. Tesla targets the
premium sedan and SUV markets through its Model S and Model
X, and the main stream vehicle market through its recently
introduced Model 3. The energy generation and storage segment
comprises of the design, production and sale of solar energy
generation systems and energy storage solutions to industrial
and commercial consumers. In essence, the company benefits
from core competencies in power train engineering, vehicle
engineering, innovative manufacturing and energy storage.
Ever since going public in 2010, Tesla has been leading the charge towards alter native power in the passenger vehicle
industry. Currently, Tesla is seen as an innovative, exciting and
powerful player in the global automobile industry. The
company’ s market valuation topped 100 billion U.S. dollars in the first month of 2020.
Globally, Tesla’s vehicle deliveries reached between 367,000 and 368,000 units in 2019. Tesla’s Model 3 has become the world’s best-selling plug-in electric vehicle model. In the fourth quarter of 2019, deliveries of Model 3 vehicles accounted for over 80 percent of the sales volume by product, duping the Model S and Model X products, which were originally aimed at customers in the high-end sphere of the market. With the release of the Model3, Tesla is now targeting broader customer segments.
Tesla is expected to add the Roadster, the Model Y, and the widely anticipated Cyber truck to its currently existing
model line up. However, for Tesla in China, its growth strategy is
mostly driven by the anticipated high demand for the Model 3.
PESTEL Analysis
Tesla enjoys political and government support in the US, there have been a lot of initiatives taken up by the government to encourage the production of electric automobiles. Despite the political tension between China and the US, Tesla has entered China for setting up its production and endeavors to manufacture 500,000 vehicles annually. However, operating in 17 distinct countries, Tesla is subjected to various political patterns and legal factors, for instance, the industry is majorly affected by stringent environmental protection laws demanding to reduce carbon footprints.
While the increase in fuel price is an issue for the automobile industry on other hands it is an opportunity for the e-car industry, a hike in fuel prices leads to a high demand for efficient cars. This is an economic opportunity for Tesla to obtain an exponential growth in revenue. Also, the production of vehicles like Model 3 can be economically beneficial for Tesla to target the middle-class niche.
In the current era, people are greatly concerned about the environment, which leads to customers looking for environmentally friendly solutions for transportation. Moreover, with fuel prices skyrocketing, choosing an electric car is a sensible option. These social aspects are favorable for Tesla, as it manufactures an environmentally sustainable car. The Tesla brand has almost become synonymous with electric cars due to its popularity.
Technology as already mentioned is the greatest strength of the e-car industry. It is a boon that helped develop electric cars and made automatic driving possible with computerization. However, with rapid advancement in technology, it is important for companies to stay updated and upgraded with the newest technology to stay ahead of the competition, as technology can become antiquated in no time. Another big strength, exclusive to Tesla is being an environmentally friendly brand, it meets most of the environmental-related regulations and barely has any impact on the environment. It is a brand that successfully retains itself from having carbon footprints.
The SWOT analysis report of Tesla presents the internal and external analysis of the Company with insightful details. The SWOT 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.
Consumer:
According to recently research, Consumers in the mass market are price-sensitive and may only have one car per household. Therefore, they hope that their vehicles can meet a variety of needs from daily commuting to field trips and from personal to family use. Therefore, Tesla should consider developing Model 3 SUVs to enter middle-class customers (Jiang, 2018). Tesla needed to understand the best target consumers to stay leading in the mass market of EV.
Competitors:
Compared with competitors, Tesla reported that its total revenue for the third quarter of 2020 increased by 39.16% year-on-year. Sales growth exceeded the 7.7% average revenue growth recorded by Tesla's competitors in the same quarter.(CSIMarket, 2020)
Market:
Out of concerns about CO2 emissions and energy shortages, governments around the world are actively encouraging the large-scale adoption of electric vehicles. With its track record in battery technology and performance, Tesla can seize the opportunity to seek more subsidies, subsidies and tax rebates for its mass market consumers. However, the future of Tesla’s as the leading manufacturer of innovative EVs rests on unstable foundations. Financing difficulties, problems with product reliability, and supply chain bottlenecks in the last years are the significant barriers to Tesla’s viability.(O'Kane, 2019)
https://ir.tesla.com/