Trading Landscape of Tesla

Student Name: Magadan Madalin

Student ID: 21429852

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Executive Summary
Tesla Motors was founded in 2003 by Elon Musk, Martin Eberhard, and Marc Tarpenning. Elon
Musk was one of the company's co-founders. These three developers from Silicon Valley wanted
to demonstrate that electric automobiles can be just as cool as gas-powered ones. Palo Alto, in
the state of California, is the location of the headquarters for the Tesla Motor Company. They
presently have over six thousand people working for them, and you can find Tesla vehicles on
the roads in 37 different nations. Elon Musk, the billionaire founder of PayPal, invested in Tesla
Motors in April 2004 and entered the Tesla board of directors. Through the use of his resources,
he was able to underwrite a sizeable portion of the Series A capacity expansion round, which
totalled 7.5 million dollars.

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Contents
Executive Summary.........................................................................................................................1

Introduction......................................................................................................................................3

Analysis of the industry of Tesla.....................................................................................................4

Five-forces Model........................................................................................................................4

PESTEL Analysis........................................................................................................................5

SWOT Analysis...........................................................................................................................6

International Trade Position of Tesla..............................................................................................8

Factors affecting the Economy........................................................................................................9

Factors of Politics............................................................................................................................9

Effects on the Environment.............................................................................................................9

Factors of Society..........................................................................................................................10

Recommendations for Tesla..........................................................................................................11

Conclusion.....................................................................................................................................12

Reference list.................................................................................................................................13

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Introduction
When determining a company's business environment, all of the company's specific factors are
considered. When it comes to a variety of issues, such as the government's social standards and
policies, new technological breakthroughs, political obstacles, and so on. Automakers such as
Tesla produce environmentally efficient vehicles. Tesla has long been a leader in the field of
self-driving cars. Electricity powers autonomous vehicles, and technological advances are always
being launched. Tesla is improving its organizational strategy and developing new approaches to
cope with the issues of today's economic climate. Autonomous vehicles employ a variety of
technical features in their vehicles to provide the best possible customer service. The economic
context for self-driving cars is discussed in this article.

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Analysis of the industry of Tesla
Industry analysis is a kind of market assessment that is utilised by researchers and analysts to
investigate the competitive variety inside an industry. These automobiles have also exceeded
luxury car standards. A high-tech panorama covering and a 17-inch multitouch dashboard are
two examples of this (Cawthorne, 2014). Tesla is a pioneer in selling automobiles online, a
strategy that allows them to avoid having to deal with salespeople. So, the analysis is given
below:
1. Michael Porter's five-force model
2. PESTEL analysis
3. Assessing SWOT analysis
Five-forces Model
In 1980, Michael Porter presented his technique known as the "Porter's 5 Forces." In his book
"Competitive Strategy: Techniques for Analyzing Industries and Competitors," Michael Porter
refers to the "five forces hypothesis." Tesla’s five forces are:
Risk of Interference
Due to the low entry barrier, there is a significant likelihood of new players joining the market.
Tesla's primary rivals include electric vehicle (EV) start-ups, oil and coal cars, and major
manufacturers migrating to EVs. BYD, XPeng and Li Auto are some of the leading Chinese EV
start-ups. Due to various access to a massive mass market, a well-established distribution
network, and government assistance, they have a strong position in the market (Bruce, 2012).
Power of Suppliers to Negotiate
A limited supply chain network gives suppliers considerable negotiation power. The market for
electric vehicles is still in its infancy but expanding. Presently, German manufacturers supply the
great majority of Tesla car components. Tesla's manufacturing will be affected by any disruption
to the German economy, such as the COVID-19 stoppage or a climate crisis.
Buyers’ power to negotiate offers
Tesla targets the luxury market and demands premium pricing for its products, which reduces the
negotiation leverage of buyers. Due to the intense competition in the low-end market, Tesla must
compete in the higher end of the market. Market differentiation at the premium end is a key
source of persistent competitive advantage that may help a firm compete effectively in the
market.

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The risk of substitution
Tesla holds a 1.2% percentage of the global automobile market and a 14.5% share of the global
electric vehicle market. Unlike start-ups, large companies have an established customer base.
Tesla's brand loyalty is its most significant competitive advantage (Firth, 2014).
Industrial competition
In the electric car industry, start-ups, major manufacturers, and well-used brands all vie for
market dominance aggressively. Thru the pricing and differentiation strategies, competitors
impede Tesla's brand recognition and profitability growth.
PESTEL Analysis
Any organization's macro-environment is analysed using a PESTEL analysis, or PEST analysis,
which is also known as a PEST study (Pindyck and Rubinfeld, 2018). Analysis of the outside
environment requires this PEST or broad factor analysis. PESTEL factors refer to external
effects on an organization's infrastructure.
Political factors
This portion of Tesla Inc.'s PESTEL/PESTLE Directly measures how governments influence
businesses and the macroenvironment. A vast array of social variables, including government
agencies, impact businesses and industries.
Economic factors
This section discusses the impact of the financial climate on the macroenvironment. These
circumstances contain a variety of automobile industry-influencing elements.
Socio-cultural factors
Individuals, consumers, and investors have an influence on a company's macro and remote
settings. This section of the Tesla Inc. report evaluates how the company relates to current
societal trends in the areas it covers (Adam, Netlibrary and Al, 2017). To maximise the benefits
of these external factors, the company's executives must employ strategies that maximise these
advantages.
Technological factors
Technological considerations assess how technologies impact the firm's distant or
macroenvironment. The expansion of Tesla's automotive manufacturing solutions companies

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depends on the availability of technologies. Materials engineering technique, for instance,
determines the performance and cost of the company's batteries.
Environmental factors
Now, environmental variables emphasise the impact of environmental circumstances on the
distant or macroenvironment of a global firm. Environmental changes, for instance, have an
impact on the distribution of potential materials in the organization's industrial activities.
Legal factors
Here, regulatory concerns are categorized based on their macroenvironmental effect. Legislation
and legal systems influence managerial decisions and business success. For instance, Tesla's 4P
or marketing mix must adhere to stringent legal requirements. Both the company's intellectual
resources and business relationships are governed by the law.
SWOT Analysis
Tesla is one of the most discussed and analyzed firms. This SWOT analysis will expose Tesla's
business model's key factors. This research also includes strategic reforms based on SWOT
criteria (strengths, weaknesses, opportunities, and threats).
Strengths
 One of the Best Places to Work
 The World's Most Valuable Automobile Firm
 Class-leading electric vehicles
 Cross-selling and diversification of Tesla's electric vehicle delivery services are increasing.
 Improved Positioning for an Innovative Company (Manning et al., 2015)
 Strategies that are unconventional but effective
Weaknesses
 Complications in Manufacturing
 The value of a brand may be affected if it cannot meet demand.
 Batteries are in short supply due to a lack of production capacity.
 Only Elon Musk may speak on behalf of Tesla.
 Fear of Losing One's Job
 Occupational Health and Safety
 Disputes in the Boardroom

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 Tesla is being sued for alleged sexual harassment and assault
Opportunities
 Expansion of sales into previously unexplored markets for lower-cost vehicles Internalization
of battery production technology
 Confidence in the Tesla Air-Taxi Market Increased with the Introduction of Pickup Trucks
 A contract for 100,000 Tesla’s signed with Hertz
Threats
 Claims for Product Damage
 Several Defects in the Competition Products
 Confidence in the long run
 Personalization for the End-User (Porter, 2016)
 Tesla's Reputation is Hurt by Elon Musk's Reckless Behaviour
 There are no regulations in place for self-driving cars because of the use of lithium-ion
batteries, which have a high-risk factor.
 Supplies are disrupted due to material shortages.

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International Trade Position of Tesla
When Tesla was formed in 2003, electric automobiles were prohibitively expensive. Tesla's
strategy, according to Elon Musk, is to build high-end, low-volume autos, such as sports cars, for
clients who are less price sensitive. It could allow them to steadily lower battery costs, leading to
decreased, higher-volume automobiles. The Roadster, Tesla's first automobile, was a low-volume
model that cost over $100,000. The Model S and Model X are less expensive premium vehicles.
The Model 3 and Model Y are less expensive and aimed for a higher price point, with over
100,000 vehicles produced each quarter. Licensees agree not to claim Tesla for infringement of
its intellectual property or to replicate its designs. Tesla's technology is protected by trademarks
and sensitive information. Tesla's current profit (TTM) is $62.19 billion, according to the
company's most recent financial filings. The company's revenue in 2021 was $53.82 billion
dollars, up from $31.53 billion dollars in 2020. The total revenue generated by a corporation via
the goods sold or services is referred to as revenue. Unlike earnings, there are no deductions for
costs. The income was $62.19 billion in 2022.

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Factors affecting the Economy
Macroscopic influences affect a company's success in macroeconomics, not microeconomics. A
direct influence on a single company and the entire industry or related sector is what this refers
to. This affects the company's activities in addition to microeconomic elements (Council et al.,
2017). To put it another way, ignoring it even a little could wind up hurting you in the long run.
To put it another way, Tesla vehicles represent the apex of modern engineering. As the desire for
cheaper and more comfortable automobiles grows, Tesla is already being put to the test. Self-
driving cars require complex computer code to operate. For Tesla cars to escape criminals, they
must be extremely secure (Hamilton, 2016). While driving a Tesla, you don't have to worry
about the car's artificial intelligence (AI). Using the greatest components is essential for this type
of component. The Tesla automotive module, made in a factory, also has design features that
should be highlighted. Tesla values the privacy of its customers.

Factors of Politics
In the twenty-first century, the so-called Fortune 500 businesses are active in a wide range of
countries, though not in all of them. A country's exchange rate is higher when it sells more items
than it imports. Tesla will earn good profits if the value of the local currency is higher. A
weaker-than-expected exchange rate will make it difficult for Tesla to make money (Aristotle,
2017). Trade policy is crucial in this situation. If the government gives financial incentives to
automobile manufacturers who produce vehicles with low carbon emissions, Tesla will be a
more profitable company. The laws and policies of each country are unique.
A country's fiscal strategy may influence its financial structure. The people in charge of the
banking industry have the last say on what happens. Enterprises such as those constructing self-
driving cars are heavily influenced by tax legislation (Dubrin, 2016). A fiscal system that favours
enterprises will allow Tesla to operate more efficiently. Tax policy dictates that enterprises
follow a set of laws and regulations to benefit both businesses and consumers.

Effects on the Environment

Every firm must take into account the position of the organization. If a company isn't adapted to
a particular area, it won't be a success. A company's performance can be affected in a variety of
ways by its environment. Ice cream sales increase as the temperature rises (Kinne, 2017). In war
zones, Tesla cars aren't meant to be used. It's meant to be used regularly. Tesla cars, which don't

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use fossil fuels, won't be as efficient if you reside in an energy-scarce country like India,
Pakistan, or Bangladesh. In this region, users of autonomous vehicles face a hostile environment.
An autonomous vehicle produces no carbon dioxide emissions, which is a significant plus for the
environment.

Factors of Society
There are numerous societal aspects to take into account. The purchasing patterns of consumers
have a substantial impact on the financial health of a business. People in different countries tend
to buy things in similar ways. Passengers with disabilities benefit from self-driving vehicles.
With Tesla's self-driving cars, there'd be no need for physical disabilities to operate them. In
underdeveloped countries, we can see birth rates are higher (Linda Klebe Treviño and Weaver,
2017). As a result, people are more likely to buy a larger vehicle. New Tesla models, on the other
hand, have been thoroughly tested and found to be safe. The adoption of self-driving cars will be
dependent on the growth of the global population (AVs). If the population grows at a healthy rate
and is well-educated, there seems to be a good chance that more people will buy Tesla cars.
People's daily routines have a significant impact on car sales. In order to make autonomous
vehicles more accessible, manufacturers are scrambling to keep production costs as low as
possible. Self-driving cars are now widely accepted by the general public. There is still a long
way to go before we get to our final destination.

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Recommendations for Tesla
As the market for electric vehicles (EVs) continues to grow, Tesla need to make an effort to
become either the largest electric vehicle manufacturer or one of the largest. There are fewer
people aware of electric vehicles and fewer charging facilities in several states located in the
centre of the United States. The company ought to make more investments in Refueling stations
in such as these high-sales locations all around the country. If they do more promotion, more
people will become aware of their automobile and the unique bargains they provide in
comparison to those of other firms. As well as growing their product line for low-income
consumers. With Tesla's market position, they can simply take over and fulfil their ambition for
innovation and a safer, cleaner world with EVs. When a competitor offered a hybrid or EV
incentive or accessory, Tesla reacted (Davis and Benn Steil, 2013). Every plan was well-thought-
out, funded, and necessary to make the company's products superior to ever and better than their
opponents. Tesla's multiple options and incentives should help them acquire more customers,
especially now that the Model 3's pricing has been reduced. Compared to hybrids and internal
combustion engines, self driving vehicles have a higher price elasticity. Evs are adaptable since
they aren't as common as many people believe; most people think about hybrids when they hear
the term "electric vehicle." Tesla's factory specialises on electric vehicles and delivers a high-end
model at a cheap price. The demand for Tesla's products is elastic, but the supply is inelastic.
Tesla has sufficient money and demand forecasts to avoid losses.

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Conclusion
Today, self-driving automobiles are really needed. In the near future, autonomous vehicles will
make up a larger share of the market. Autonomous vehicles that generate no co2 would be the
standard in the future as consumers become more environmentally conscious. At a time when
we're already trying to maximize the use of renewable power while simultaneously lowering the
use of fossil fuel, companies like Tesla will lead the way into the future. There is still a long way
to go before Tesla's self-driving car model can be regarded as the ideal future for all people.
Many stumbling blocks have already been mentioned.

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Reference list
Adam, F., Netlibrary, I. and Al, E. (2017). The challenges of sustained development : the role of
socio-cultural factors in East-Central Europe. Budapest ; New York: Central European
University Press.

Aristotle (2017). Politics. Indianapolis, Indiana: Hackett Publishing Company, Inc.

Bruce, A. (2012). A managers guide to motivating employees. New York: Mcgraw-Hill.

Cawthorne, N. (2014). Tesla : the life and times of an electric messiah. New York: Chartwell
Books.

Council, R., Council, R., Transportation, I., Council, R., Council, R., Council, R. and
Transportation, I. (2017). Societal and economic factors. Washington, D.C.: Transportation
Research Board.

Davis, E.P. and Benn Steil (2013). Institutional investors. Cambridge, Mass. ; London: Mit.

Dubrin, A.J. (2016). Political behavior in organizations. Los Angeles: Sage.

Firth, L. (2014). The media. Independence.

Hamilton, J.T. (2016). Security. Princeton University Pres.

Kinne, O. (2017). Environmental factors. London: Wiley-Interscience.

Linda Klebe Treviño and Weaver, G.R. (2017). Managing ethics in business organizations :
social scientific perspectives. Stanford, Calif.: Stanford Business Books.

Manning, G.L., Ahearne, M., Reece, B.L. and Mackenzie, H.F. (2015). Selling today : creating
customer value. Toronto: Pearson Canada.

Pindyck, R.S. and Rubinfeld, D.L. (2018). Microeconomics. 9th ed. Ny, Ny: Pearson.

Porter, M.E. (2016). Competitive Strategy: Techniques for Analyzing Industries and
Competitors. New York: Free Press.

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