To maintain resilience despite changing industry conditions, Tesla needs to address the following threats relevant to this SWOT analysis: Automotive companies aggressively compete against each other. For huge companies in this area, it is simpler to distinguish and utilize these chances for their development. The ease and quality of life improvements the automotive industry brings will only increase the demand for vehicles in the future. Not as many drivers (and owners). They can utilize these chances for their turn of events. Volatility in the fuel Prices: From the customers side, the price of fuel always is a big factor. Growth through diversification is another opportunity relevant to this SWOT analysis of Tesla Inc. Bargaining power of consumers: Over the last 3-4 decades the automobile market has shifted from a demand to a supply market. This strategic factor is based on the hierarchy aspect of Teslas organizational structure that facilitates centralized control of the corporation. In the SWOT analysis framework, high prices prevent Tesla from rapidly growing its customer base and market share. Quezada, L. E., Reinao, E. A., Palominos, P. I., & Oddershede, A. M. (2019). It has also increased the sales of cars and vehicles and the growth in the industry is good for the business. Growth through diversification addresses some of the trends noted in the PESTEL/PESTLE analysis of Tesla Inc. The market valuation of Tesla has grown very fast in recent years. The technologically advanced nature of the companys products imposes challenges to suppliers ability to provide the automotive inputs for the companys manufacturing processes. The Development of Automobile Reverse Logistics In recent years the rapid development of China's automobile industry, automobile production and sales are rising sharply, according to the latest statistics, in March 2016, China's auto industry production and sales growth BMW is a German luxury car company with a strong presence in Europe, the US, and Asia. This SWOT analysis puts emphasis on the risk and corresponding threat of new dealership regulations against Teslas strategy of using company-owned stores to sell cars. While this will help the company grow its presence and create more demand, it will also help it beat other brands' competitive pressure. Also, through an understanding of the weaknesses of the business, firms can manage and eliminate threats that would otherwise catch them off-guard. Still, the overall valuation of the company has grown much higher than its rivals. In the SWOT analysis context, this external strategic factor emphasizes the relatively small extent of the companys operations in comparison to large competitors like General Motors and Toyota. How is it standing up to the challenge? Its increasing with the advancement of technology, and alternative fuels such as shell gas, CNG, etc. Its Model 3 enjoys a 60% share in the US Electric vehicles market. However, the pandemic also seems to have pushed the demand for EVs higher, which was evident in the growth of Tesla car sales during the third quarter of 2020. 6. Perceiving the chances that line up with the companys development is a huge piece of its essential arranging. Tesla, Inc. has the strengths to remain successful in the business in the years to come. Therefore, the company has focused on growing its network of chargers by including the companys superchargers as well as destination chargers. The company withstands pressure from competing automakers like General Motors, Toyota, Ford, Nissan, Honda, Bavarian Motor Works (BMW), and Volkswagen. There are specific threats to Automobile Industries, but proper planning can help them to survive the situation. Innovation and advancement: R&D investment by automakers is driven by consumer demands. In the light of low automobile demand overall and shrinking sales of nearly all automobile brands, Teslas sales in the second quarter of 2020 can be seen as a big success. Tesla cars are also enjoying superior safety ratings overall. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); About - Privacy Policy - Returns and Refund Policy. Toyotas brand is the worlds 7th most valuable brand in the world and the most valuable automotive brand, worth US$50.291 billion. Moreover, by comparing ones performance with that of the competitors using the SWOT analysis framework, companies can begin crafting a strategy that helps distinguish themselves from the competitors and compete successfully in the market. The company operates one of the largest research facility network among the automotive companies to achieve the best possible results from its R&D expenditure. The results of this SWOT analysis suggest strategic reform for long-term success in the global market, by increasing effectiveness in addressing the strong force of competition shown in the Porters Five Forces analysis of Tesla Inc. Its sales compared to the past year grew more than 40% during the third quarter. However, only a few prototypes have been available by now and Tesla has pushed semi to low volume production by the end of 2020. Estimates suggest a Puyt, R., Lie, F. B., De Graaf, F. J., & Wilderom, C. P. (2020). However, OEM has to change its functionality in order to go outside of the industry. This SWOT analysis shows that the automotive and energy solutions company has the strengths needed to maintain profitability in the long term. Luxury commercial vehicles: As many Asian countries economic conditions are stable, their lifestyle is also changing. Its going to focus on the internal and external factors impacting the worlds largest revenue-generating industry. They are trying to emerge in the market by building facilities. Tesla may still not be the largest automobile company in the world regarding car production and sales. Furthermore, attracting and retaining employees in the automotive industry can be very challenging, especially in the case where competitors are doing what they can to lure the best talent. The ecological and sociocultural trends in the industry environment matches the diversification opportunity identified in this SWOT analysis. Automobiles have been increasing the quality of life for the past century by giving mobility, comfort, and safety. The whole region is so vast that it has so many unexplored markets. The company can: We use cookies for website functionality and to combat advertising fraud. A SWOT analysis identifies the strengths that a firm can use to overcome its weaknesses, exploit opportunities, and address threats. However, limited global operations remain a weakness that, along with other issues identified in this SWOT analysis, Tesla Inc. must address to maintain international competitiveness and corresponding business growth and expansion. In this situation, stagnation and no improvement can be frightening for any company. It helps companies to make strategies to resolve the potential harms. But as electronic content is increasing companies need to think out of their traditional way to make more profit out of it. Changing lifestyle & customer groups: As the whole world is going through huge economic development, change in lifestyle is becoming more prominent. The declining economic conditions have made it even more difficult for companies to survive. The internal factors that limit organizational performance are identified in this aspect of the SWOT analysis of Tesla Inc. Some of the brands like BMW, Toyota, and Tesla have already launched electric vehicles, while others are working e-vehicle technology. Based on overall performance, Tesla vehicles are classified among the best on the roads. With growing production, the cost of revenues has also grown for Tesla. The automobile industry has become very competitive and various brands are using multiple ways to gain a competitive advantage in the market. It also indicates that tesla will see higher success in the coming years, driven mainly by the growth in demand for EVs. The company will need to improve its manufacturing capability to cater to popular demand in the leading markets successfully. Volatility in fuel prices: For the consumer segment, fluctuations in fuel prices remains the determining factor for growth. are some factors that can break down the automobile industry. For example, the company can increase its revenues through additional operations in Asia, such as through company-owned distribution or new dealership agreements. The company will need to expand its production capacity to meet popular demand. Tesla directly sells its products to customers without dealership involvement. Fuel-efficient vehicles: Optimization of fuel-driven combustion engines and cost efficiency programs are excellent opportunities for the automobile market. These cars use fewer parts overall compared to a regular car due to which the maintenance costs for the owner and technical complications are also lower. The following opportunities are notable in this SWOT analysis of Tesla Inc.: Tesla has the opportunity for global sales expansion. WebAccording to Carlier (2021), among the global automobile industry, Toyota also held the title of having the highest market share of 8.5% in the year 2020 (See Figure 1). Still, considering that the automobile industry is passing through a challenging phase, Teslas performance counts as nothing less than rock solid. Origins of SWOT analysis. People will buy Tesla cars only if they have easy access to superchargers needed to charge their cars. Swot analysis of the automobile industry. Changing consumer preferences and growing government support for environment-friendly vehicles are driving both the premium and nonpremium automobile brands towards electric mobility. It is the market leader in battery-electric car sales in the United States. Tesla's position has strengthened fast in recent years, and the company, apart from increased sales and profits, is enjoying swift growth in its market capitalization. In evaluating Tesla, an analysis of SWOT factors (strengths, weaknesses, opportunities, threats) provides insights on how the business can approach challenges in the industry. While the company has grown its density of superchargers and destination chargers in its existing markets, it is also a key hurdle to finding new market growth. If the company wants to increase its footprint in the existing and new markets, it will need to grow its supercharger network in all the markets. One of the main factors driving fast growth in popularity and sales of Tesla cars is the companys focus on technological innovation. As it is a large industry worldwide, here is an Automobile Industry SWOT analysis describing its strengths, weaknesses, opportunities, and threats. 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