The Tesla SWOT analysis reveals that the biggest challenges come from competitive threats within the automotive industry.
While Tesla got a head start and still leads in terms of its digital and electric innovation, other manufacturers are catching up.
More car manufacturers are introducing electric cars and expanding their range. Many of these like Audi, BMW and Mercedes have strong brands and established operations that they can use for electric car production.
Can Tesla maintain its lead as its competitors aggressively ramp up production of electric cars?
In the SWOT analysis of Tesla, I take a look at these questions by analysing the strengths and weaknesses of Tesla as well some of the threats and opportunities it faces.
Table of Contents
What Is Tesla?
Tesla designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems internationally.
Quick Facts About Tesla
Tesla’s mission statement was “to accelerate the world’s transition to sustainable transport.” However, in mid-2016, under Elon Musk’s leadership, the company changed the corporate mission to “to accelerate the world’s transition to sustainable energy.”
To create the most compelling car company of the 21st century by driving the world’s transition to electric vehicles.
Many initially thought it was lunacy when ElonMusk launched Tesla and declared he was going to take on giants like Ford, General Motors, BMW and others.
Back in 2003, that was a bold decision to make at a time when there much of the technology to create a viable electric car was still in its infancy. As an example, in 2003 there were no batteries in terms of capacity and storage that would be able to create a prototype.
Fast forward to today and Elon Musk, Tesla Inc, has transformed the motor industry leaving other established players still playing catch up.
Tesla currently is expanding has a range of consumer and commercial vehicle markets, including Model 3, Model Y, Model S, Model X, Cybertruck, Tesla Semi and a new Tesla Roadster.
Model S is a four-door full-size sedan that we began delivering in June 2012. Model S introduced Tesla vehicle mainstays such as a large touchscreen driver interface, Autopilot hardware, over-the-air software updates, and fast charging through our Supercharger network.
Along with the Model X, the Model S features the highest performance characteristics and longest ranges. Both these vehicles are equipped with a standard dual-motor all-wheel-drive powertrain and are also available in Performance versions with enhanced acceleration and/or top speed and styling.
Model 3 was launched in July 2017. It is a four-door mid-size sedan that is designed for mass-market appeal. The Model 3 is produced in the US and in China at the Gigafactory Shanghai.
Model X is a mid-size SUV with seating for up to seven adults, which was launched in September 2015. Model X has unique features including falcon wing doors for easy access to passenger seating and an all-glass panoramic windshield.
Model Y is a compact sport utility vehicle (“SUV”) built on the Model 3 platform with the capability for seating for up to seven adults.
Future Consumer and Commercial Electric Vehicles
Tesla delivered to the market the first high-performance electric luxury sports car, the Tesla Roadster. The company sold approximately 2,500 Roadsters before ending production in January 2012. However, now it is decided to resurrect the concept car and has built a new Roadster which launched in 2020.
In addition, Tesla has unveiled a number of planned electric vehicles to address a broader cross-section of the vehicle market, including specialized consumer electric vehicles in Cybertruck and a commercial electric vehicle in Tesla Semi.
The Tesla Business Model draws its strength from the unique ecosystem it is building, but others are now catching up.
Tesla Strengths – Internal Factors
The Tesla SWOT analysis begins with a look at the internal strengths and capabilities of Tesla.
Tesla Weaknesses – Internal Factors
The Tesla SWOT analysis weaknesses section identifies the aspects of Tesla that could expose it to threats and present problems in the future.
Tesla Opportunities – External Factors
Tesla has factories in Freemont, US; Tilburg, Netherlands, Berlin, Germany and Shanghai, China.
The factory in Germany is set to open in 2021 and will produce the Model 3 range of cars
The mid-market car sector is critical for volume and also the fleet car sales.
Tesla can exploit its base to produce lower priced mid-market cars that drive higher volume and adoption rates.
Battery Production In-house
Tesla can change from using Panasonic to make its batteries to making its own.
This could open up new revenue opportunities by suppliers other car makes.
This would alleviate problems with supply and help the company to increase its production rates.
Tesla could expand its charge point infrastructure either through further partnerships or even acquisitions.
this could provide useful protection against competitors and provide further data as well as revenue from the infrastructure e.g. offer Tesla car owners beneficial charge rates but charge competitors a percentage commission for using the infrastructure.
Corporates are increasingly having to account for their global carbon footprint as well as develop more sustainable solutions.
Although many corporates have a corporate statement, they have yet to translate these into action when it comes to var fleets. However, there is growing demand from shareholders for greater transparency and more action.
Tesla is well placed to become a suitable car choice for fleet cars if it can produce a broader range that will fit to the budgets for mid-management.
The growing urgency of various governments to accelerate their policies towards a cleaner environment has increased the demand for zero-emission vehicles. Developed nations such as the US, Germany, and the UK are promoting the use of electric vehicles to reduce emissions, which has resulted in the growth of electric vehicle sales.
This trend though could accelerate as other nations also adopt policies and offer incentives to customers.
Tesla Threats – External Factors
The giants in the automotive industry might have underestimated Tesla, but they have now woken up and are investing heavily in electric and digital technologies
It’s important to recognise their size and presence, particularly in the US market which is probably the most competitive market for Tesla
The big players still have a considerable amount of market share, the capital to invest heavily in electric and digital technologies
As an example, General Motors is investing $20 billion into autonomous vehicles – that’s roughly 15x Tesla’s R&D budget
Product Liability Claims
Despite Tesla’s premium quality assurance, it is facing significant product liability claims which could lead to a big financial penalty.
Tesla has launched many autopilot vehicles, and not all of them have been successful. The company has faced lawsuits and claims related to the failure of technology including cars set on fire. If these liability claims continue, then Tesla may be subjected to greater financial setbacks.
Even in China Tesla has a long way to to go to catch to the same volumes as to its competitors.
The coming years will be a test of how well Tesla performs in this crucial market.
As cities get more congested new regulations and policies could change and lead to more dramatic shifts in how we tackle pollution and congestion problems. More cities may ban cars and force the use of public transport systems.
the sharing economy has grown and become a growing trend, particularly among younger generations. With the high cost of living in cities and the trend towards city living, sharing vehicles might be the new normal.
Luxury cars might not fit into this model though.
Lack of Critical Materials
Tesla uses lithium-ion cells in their battery packs but global demands increasing as other car manufacturers ramp up their electric vehicle production.
Tesla could face disruptions in the supply of these vital raw materials due to the increased prices as well as in other vital elements needed for batteries e.g. nickel, copper, and cobalt. All these materials could affect the company’s production line severely in the future.
Currently, there are no regulations for self-driving vehicles in the majority of countries, including the US. Tesla’s though is continually pursuing this as part of its overall strategy, in other words as a competitive edge. However, by the time regulations come into play to allow autonomous vehicles others car producers could have the same or similar technology.
Tesla SWOT Analysis Summary
The Tesla SWOT analysis shows that the biggest threat comes from competitors. Tesla’s competitors ready have strong infrastructure, distribution and models that they can transform to electric. This would secure sales and limit Tesla’s growth.
Tesla has built a strong brand and continues to innovate and that could result in a future where Tesla becomes a household name for a long time to come.