MACRO-ENVIRONMENT ANALYSIS – TESLA

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Executive Summary

This report plans to analyze the macro-environment of Tesla Inc critically. The report analyzes
Tesla's PESTEL analysis. These include political, economic, social, technological, ecological,
and legal factors. According to the detailed analysis, Tesla is thriving well in the electric car
market, surpassing its rivals. Its cutting-edge technology and customer satisfaction are factors
that have propelled Tesla to its success. The study also focuses on the swot analysis of Tesla.
The report analyzes Tesla's strengths, weaknesses, opportunities, and threats. Among the
strengths discussed includes the company's fanbase and how they can keep up with the market.
The report also sheds some light on how to aid Tesla scale to greater heights of success.

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Contents
1.0 Introduction...................................................................................................................................5

2.0 Political Factors...................................................................................................................................5

2.1 Tax Credit Incentives..........................................................................................................................5

2.2 International Laws..............................................................................................................................6

2.3 Political Stability..................................................................................................................................6

3.0 Economic Factors................................................................................................................................6

3.1 High Sales and Earnings.....................................................................................................................6

3.2 Cost.......................................................................................................................................................6

3.3 Cheaper Regenerable Energy Resources...........................................................................................7

3.4 Affordability In Developing Countries...............................................................................................7

3.5 Post-Pandemic Economic Recession...................................................................................................7

4.0 Social Factors.......................................................................................................................................7

4.1 Sustainable Society..............................................................................................................................7

4.2 The Market for Status-Oriented Products.........................................................................................8

4.3 Innovative Trends................................................................................................................................8

4.4 Cult of Eco-Friendliness is on the rise................................................................................................8

4.5 Differentiate Profits to All People......................................................................................................8

5.0 Technological Factors..........................................................................................................................9

5.1 Innovative Technology........................................................................................................................9

5.2 Energy Efficient...................................................................................................................................9

5.3 AI and Robotics...................................................................................................................................9

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5.4 Self-Driving Software..........................................................................................................................9

6.0 Ecological Factors..............................................................................................................................10

6.1 Eco-Friendly Advantage...................................................................................................................10

6.2 Cells For Solar Energy......................................................................................................................10

6.3 Improving The Standard..................................................................................................................10

7.0 Legal Factors......................................................................................................................................10

7.1 Defective Product Claims..................................................................................................................10

7.3 Copyright And Patent Laws.............................................................................................................11

7.4 World's Best Employer.....................................................................................................................11

7.5 3rd Party Dealerships.........................................................................................................................11

8.0 Strengths of Tesla (Internal Factors)...............................................................................................11

9.0 Weakness of Tesla (Internal Factors)...............................................................................................12

10.0 Opportunities to Tesla (External Factors).....................................................................................12

11.0 Threats to Tesla (External Factor).................................................................................................13

12.0 Business Leadership Strategies and Cost Leadership Strategies of Tesla...................................13

13.0 Conclusion........................................................................................................................................14

14.0 References........................................................................................................................................15

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1.0 Introduction

Tesla was founded in 2003 by a group of engineers who were motivated to demonstrate that
driving an electric car did not need losing performance, speed, or fun for environmental
concerns. Tesla is a leader in the electric vehicle business. Tesla now manufactures electric autos
and infinitely scalable renewable energy-producing and storage technologies, among other
things. According to Tesla, a zero-emission future should be attained as soon as feasible, if at all
possible. Tesla generated yearly sales of 28.176 billion dollars and an annual gross profit of
$13.606 billion in 2021, representing a 105.22 percent increase over the previous year.
Financing, power battery packs, solar panels, car services, lifestyle items, Tesla Motors
automobiles, electric vehicles, and retail merchandising are just a few of its many offerings, as
are its several other products and services.

This is one of the reasons why hybrid-electric engines are being encouraged. The Federal
Government of the United States of America provides a tax credit incentive of up to $7500. The
Department of Justice of the United States of America provided a low-interest loan for 465
dollars. The state of Colorado issued a 5000-dollar tax credit incentive to businesses. As of 2021,
Tesla has a compound annual growth rate of 157 percent. With 70,757 workers, Tesla became
the fastest-growing brand globally (Carlier, 2021). Tesla can reduce its carbon dioxide emissions
to one metric ton per year. Tesla's macro-environment study considers politics, economics, social
issues, technology, the environment, and legal factors.

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2.0 Political Factors

2.1 Tax Credit Incentives

Tesla Motors is the industry leader in the field of electric autos, according to Forbes. These cars
use less fuel as compared to conventional autos. In contrast to other electric vehicles, Tesla's
automobiles are powered by energy and electricity. Many of its drivers use electric recharging
stations rather than gas stations while traveling. There are tax credit incentives offered in several
different states and administrations. A relatively short period has allowed Tesla to become the
world's top brand. Businesses and corporations may benefit from the company's dynamic
automobile solutions.

2.2 International Laws

Several international laws, regulations, and business practices influence the cost of commodities
directly and directly. There is a direct correlation between the cost of production and the selling
price of the company's goods. Management should address such concerns—automotive safety
regulations, batteries, recharging stations, and other electric vehicle infrastructure.

2.3 Political Stability

The importance of a stable political climate and government influence cannot be overstated.
Regulations, trade policies, and laws are all possible outcomes. Imports were discouraged by the
Trump administration, which took a protectionist and nationalist approach. This pattern persisted
during his administration, which spanned from 2016 to 2020.

3.0 Economic Factors

3.1 Exchange and Interest Rates

Changes in foreign currency exchange rates are one of Tesla's most notable economic variables.
This is owing to the alternative fuel vehicle manufacturer's international reach of business
activities. Although the United States remains the largest market for electric vehicle

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manufacturers, the number of sales from overseas markets is steadily expanding. In particular,
the firm generated USD 6.66 billion in sales in China in 2020, accounting for 21% of the total of
USD31.54 billion. Tesla experienced foreign currency transaction profits of USD 334 million in
2020 due to changes in exchange rates.

3.2 Inflation (CPI)

The growing inflation rate may have a negative effect on the revenue growth of Tesla Inc. Tesla's
average transaction price increased more than any other carmaker in February, owing to a few
recent price hikes. However, it is still not as high as other brands on a year-over-year basis. This
will affect Tesla's operations negatively since it reduces the buying power of money and
discourages consumers from spending on products and services.

3.3 Unemployment Rate

Having a high unemployment rate would hamper Car Tesla's business strategy in two ways:
First, it won't supply enough buyers for Car Tesla's goods, and second, it will make it more
affordable for Car Tesla to acquire bright and skilled staff.

3.4 GDP and Growth Rate

Over the past decade, the growth rate of Tesla has been improving. The trend has been as
follows:

 Tesla's revenue for the quarter ending December 31, 2021, was $17.719B, a 64.92%
increase year-over-year.
 Tesla's revenue for the twelve months ending December 31, 2021, was $53.823B, a
70.67% increase year-over-year.
 Tesla's annual revenue for 2021 was $53.823B, a 70.67% increase from 2020.
 Tesla's annual revenue for 2020 was $31.536B, a 28.31% increase from 2019.
 Tesla's annual revenue for 2019 was $24.578B, a 14.52% increase from 2018.

This positively impacts the company as it makes it possible for more and more investors to invest
in the company.

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4.0 Social Factors

4.1 The Market for Status-Oriented Products

Tesla posted record fourth-quarter and full-year earnings in a "breakthrough year," despite
supply chain struggles. Tesla has fared better than other automakers in the global supply chain
problem, with analysts expecting a 53 percent increase in revenue to $16.41 billion and adjusted
profits per share of $2.32. The demand is rising every day due to their cutting-edge technology,
which has been incorporated into the vehicles. This is a very positive effect on Tesla Inc.

4.2 Cult of Eco-Friendliness is on the rise

Road travel is responsible for 17% of worldwide greenhouse gas emissions, which substantially
contributes to climate change. Efforts to accelerate the deployment of low-emission and electric
vehicles are critical for reducing carbon emissions and achieving the Paris Climate Change
Agreement's central goal of keeping the global average temperature well below 2 degrees Celsius
and as close to 1.5 degrees Celsius as possible pre-industrial levels. Tesla's electric cars emit no
carbon dioxide, making them ecologically beneficial. It's attracting the attention of those who
care about the environment.

4.3 Increased preference for electric vehicles

The worldwide electric car stock reached 10 million in 2020, a 43 percent increase over 2019
and a 1 percent stock share. In 2020, battery electric vehicles (BEVs) represented two-thirds of
new electric car registrations and two-thirds of the stock. China had the largest fleet, with 4.5
million electric vehicles, while Europe had the highest yearly rise, reaching 3.2 million in 2020.
The economic ramifications of the Covid-19 epidemic had a profound impact on the global
market for all sorts of automobiles. New automobile registrations fell by nearly one-third in the
first half of 2020 compared to the previous year. This was somewhat offset by higher activity in
the second half, resulting in a 16 percent year-on-year reduction. Notably, with conventional and
overall new car registrations falling, global electric car sales share rose 70% to 4.6% in 2020.
This has favored the buying of Tesla motors and increased their sales.

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5.0 Technological Factors

5.1 Innovative Technology

Tesla has routinely ranked high on Forbes' ranking of the most innovative firms. According to
U.S. News & World Report, Tesla is now ranked second for Luxury Hybrid and Electric Cars as
of 2021. The Tesla Model 3 received an 8.8 out of 10 rating. The company's unique goods
provide it an advantage in the marketplace.

5.2 Energy Efficient

Due to its eco-friendly electric automobiles, Tesla has become associated with energy efficiency.
The average gas-powered vehicle emits roughly 4.6 metric tons of CO2 into the environment
every year. However, electric automobiles, such as those built by Tesla, generate less than half
the carbon pollution emitted by a regular gas-powered vehicle. Hybrid and plug-in hybrid cars
are also energy efficient. On the other hand, Tesla automobiles are among the most energy-
efficient vehicles on the market since they are powered entirely by electricity.

5.3 AI and Robotics

Automobiles are composed of hundreds of pieces that must be produced and joined to make the
vehicle's structure. Employees or even robots have typically assembled a jumble of components
(think castings, rivets, welding, bolting, bonding, etc.). For more than 50 years, this has been the
process of building an automobile. Tesla, on the other hand, is reversing this trend. They are now
patenting some of the giant die casting machines ever built, and this equipment is already in use
at Tesla's California manufacturing site. The machine aims to build a significant percentage of
the automobile structure in a single piece rather than using many pieces. Tesla will benefit from
several technological advantages as a result of this integration, including:

 Reduced setup time and manufacturing costs

 Less factory space for assembly.
 Product dependability has increased (fewer parts to break or wear out)
 Reduced manufacturing equipment and tooling costs

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5.4 Self-Driving Software

Every Tesla vehicle sold since October 2016 has been installed with Autopilot 2.0 hardware,
establishing the groundwork for a future software upgrade that will give the cars complete self-
driving capabilities, referred to by the company as level 5 autonomy. There is more than 90,000
Autopilot 2.0 vehicles on the road worldwide. According to statistics, around 77 percent of
owners purchased the Enhanced Autopilot package, while approximately 40 percent purchased
the Fully Self-Driving Capability.

6.0 Ecological Factors

6.1 Climate Change

Many countries and world leaders have called for a shift to renewables in a carbon-neutral future
to tackle climate change, including the United States President-Elect Joe Biden. The U.K. is an
example of a country that has called for a shift. The U.K. has decarbonized its energy sector
faster than any other country since 2015. Between 2015 and 2018, the U.K. made gas cheaper
than coal by combining fixed tariffs and the European Union Emissions Trading Scheme
incentives. This tipping point resulted in the shutdown of coal facilities, which prompted
individuals and businesses to abandon continuous coal use, contributing significantly to
greenhouse gas emissions. According to the U.S. Environmental Protection Agency, coal and
natural gas are responsible for around 63 percent of the power produced in the United States.
With the shift to renewables, electric vehicles demand is high hence favoring the market for
Tesla.

6.2 Covid-19 Impact

Covid-19 has impacted many industries, including Tesla. Tesla suspended production at the
Fremont factory in California. This was because of the government directives to help curb the
spread of covid-19 in the USA. Due to covid-19, the company also shut down its operations in
New York. The vehicle output dropped from 25%-20%, and Tesla's growth rate dropped to 40%
from 50%.

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6.3 Improving The Standard

Steps like zero-emission vehicles, electric vehicles, and supercharging stations have raised the
bar for environmental protection in the tech and automotive industries. True, Tesla's
contributions to saving the planet are substantial. Compared to today's tiny gasoline automobile,
an electric vehicle might require 6,100 fewer gallons of fuel during its lifetime. On average,
electric automobiles emit half, if not less, of the emissions of a comparable gasoline vehicle. In
2008, Tesla introduced the Tesla Roadster, a sports automobile. Tesla got $465 million in low-
interest loans from the U.S. Department of Energy in June 2009 as an incentive to help
enterprises working on sustainable industries. Its IPO in 2010 enabled it to invest in a production
plant in Fremont and then develop a family model that was a huge hit. Only when new
technology becomes available to individuals with little financial resources will the car sector be
able to contribute to reducing global warming significantly. Thus, the company aims to establish
luxury product lines that generate significant profits to fund the research and manufacture of
mass-market electric cars that can truly replace the majority of the gasoline alternatives on the
market.

7.0 Legal Factors

7.1 Defective Product Claims

Tesla's Autopilot mode has been blamed for several mishaps, leading many to doubt the
company's technological capabilities. Consumers have sued for product liability and defective
product allegations in other cases. The corporation might lose a lot of money if issued in this
way. After an influx of media coverage regarding the lawsuits, Tesla suffered a 25% drop in their
shares.

7.3 Copyright And Patent Laws

Tesla's expansion and success depend heavily on its cutting-edge design, engineering, and
manufacturing processes. As a result, its technology should be better protected by strengthening

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its copyright and patent regulations. Tesla's technology, designs, and features would be stolen if
it did not protect them.

7.4 Employment Law

Tesla broke national labor laws when it unfairly prevented workers from unionizing. Judge
Amita Baman Tracy ordered the carmaker and CEO Elon Musk to take numerous steps to correct
the infractions, including reinstating and compensating a sacked pro-union employee. The court
also ordered Musk to host a public meeting and read aloud the NLRB's findings to
manufacturing workers, telling them that the firm had breached the law.

7.5 Environment Protection Law

The Environmental Protection Agency has accused Tesla of failing to demonstrate that it
complies with federal emissions regulations for dangerous air pollutants. The EPA is specifically
looking for information on how Tesla manages "surface coating" on its vehicles. Fires, poor
cleaning, and maintenance occurred at Tesla's primary U.S. vehicle manufacturing in Fremont,
California. In a tented "paint hospital" at the Fremont facility, some vehicle retouching was done
to address faults in paint on the automobiles.

7.6 UN Global Compact

Tesla has adopted the U.N. global compact policies. Tesla must maintain good status with the
United Nations Global Compact. If Tesla's ESG score continues to rise, its scale might impact its
industry peers' long-term position. It's hard to predict how Tesla's ESG score will evolve in the
future, but their decision to stop accepting Bitcoin as payment for environmental concerns has
made headlines.

8.0 Strengths of Tesla (Internal Factors)

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There are several ways in which a company's internal talents and competencies might affect the
success of an automobile sector. SWOT analysis can be used to determine Tesla's strengths.

I. Tesla has always been linked with technological advancement and a willingness to try
new things.
II. Giant robots and high-tech automation allow them to operate at a high level.
III. For example, the company focused on electric and alternative-fuel cars to become the
market leader as a monopolist manufacturer.
IV. Elon Musk, the company's founder and CEO, has a highly motivated and self-driven
crew.
V. As an alternative to franchise dealerships, they have a vast and expanding bespoke
distribution system to distribute their automobiles in the country's key areas.
VI. A marketing staff of nine employees works for them, and they claim that no outside help
is required for product branding.

9.0 Weakness of Tesla (Internal Factors)

Another internal element to consider is a sector's weakness, which may uncover the industry's
weaknesses and limits. The findings from the investigation will help Tesla overcome its
shortcomings and expand like a veteran;

I. The manufacturing facility in Fremont has limited capacity and has trouble aiming for
more enormous volumes.
II. Despite Tesla's unique and advanced future technologies, most of its consumers are still
ignorant of the efficiency and applicability of such systems. Only a tiny segment of the
general public is aware of the critical importance of these unique items.

10.0 Opportunities to Tesla (External Factors)

According to the results of the analysis of Tesla, the firm has a wide variety of prospects to
expand and beat its other rivals and car industry manufacturers.

The following are some of the chances that Tesla has to offer;

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 I. The company has the financial resources to create the next generation of automotive
technologies without borrowing capital.
II. There is a potential to develop the company globally and bring innovative electric cars to
new markets. It is urged to Tesla that they should take advantage of increasing their sales
worldwide.
III. Tesla has seemed to be calm and concentrated as it works toward its sales goals
worldwide.

11.0 Threats to Tesla (External Factor)

For a firm, the strengths of its rivals are a source of danger or menace. As a result, Tesla has
certain flaws, and its competitors have strengths, both of which are a source of threat or risk for
the company(EdrawMax, 2022). Tesla will have to take into consideration the following threats
and devise measures to deal with them:

I. Because Tesla is concerned with customer happiness, the company's most significant
risks were customers' concerns about pricing, car maintenance costs, cost of ownership,
and the long-term viability of a battery-powered vehicle.
II. Several new manufacturers began operations in 2013, with the Nissan Leaf, Chevrolet
Volt, and Toyota cited severe competitors.

12.0 Business Leadership Strategies and Cost Leadership Strategies of Tesla

As part of its efforts to obtain a competitive edge over other automotive companies, Tesla Inc.
has used generic tactics throughout the worldwide automotive sector. A generic strategy
represents the company's approach to competing in the market. It has been discovered through
the study and detailed analysis of all strategy adjustments that the company is concentrating its
efforts on competing with General Motors Company. The companies such as Toyota Motor
Corporation, Honda Motor Company, Nissan Motor Company, BMW, and Volkswagen
Company utilize advanced technologies to produce electric vehicles, as has been observed.

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Tesla's growth is continuously developing, and this change results from the company's rising
popularity and profitability. The firm's generic strategy is to differentiate itself to get a
competitive advantage. Increasing market penetration is the most critical part of Tesla's intense
growth plan. With the development of Tesla's Giga Factory, it will be hard for new entrants to
compete with its output. Its mass-market approach ensures that it maintains leadership across all
economic tiers. Tesla has secured long-term plans to maintain its position as a market leader.

13.0 Conclusion

In conclusion, profitability at Tesla, Inc. has steadily increased over time. These results are
attributed to Elon Musk's leadership and popularity. The firm is well-positioned to strengthen its
worldwide automotive operations by addressing the competitive situation. Despite this, the
organization must constantly adapt to keep up with the trends identified by this research. These
changes affect automotive, battery/energy storage, and energy generating companies. As a result,
the company must evaluate its performance compared to other automakers and suppliers of
energy solutions.

The study of Tesla Inc. shows that the company has several prospects for development. Free
trade agreements, for example, make it simpler for businesses to extend their operations abroad.
As a result, a suggestion is to expand the company's activities worldwide. Increasing its
marketing aggressiveness is also suggested to grow its market share outside of the United States.
Given Tesla's limited sales activities in international areas, this step might lessen market-based
risk.

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