Tesla, Inc. is undoubtedly one of the world’s finest and most well-known firms. As evidence of this, the name inspires pictures of its quirky CEO and electric automobiles rather than Nikola Tesla, the famed inventor. How did the brand reach such huge success? In this post, we’ll go over Tesla’s SWOT analysis to gain an improved sense of what’s going on beneath the bonnet of this mysterious but incredibly profitable tech company.
In this Tesla SWOT analysis, you’ll learn how Tesla has transformed the electric vehicle (EV) market via vehicles that combine modern technologies with environmental sustainability.
Tesla’s range contains the Model S, Model 3, Model X, and Model Y, each of which caters to a particular market sector. The Model 3, noted for its price and effectiveness, has gained momentum in the general auto industry. Tesla’s supremacy is reinforced by its extensive network of Superchargers, which improve the practicality of EVs by allowing for long-distance driving. As the worldwide demand for electric vehicles grows, Tesla strives to lead in creativity and testing the limits of what electric vehicles can accomplish.
Musk has consistently been a CEO who values abilities and expertise over academic degrees, and this is reflected in how Tesla employs its staff. However, establishing an idea and then being competent to implement it as a successful recruiting plan are two distinct things.
To do this, Tesla created a rather innovative but productive two-step recruitment procedure. The first phase is similar to the standard interview procedure employed by regular recruiters, except it prioritises experience in the appropriate fields over academic credentials. Applicants who pass the preliminary step go to the subsequent stage of the recruiting process, which includes practical sessions that assess each applicant’s practical ability.
As of the time of writing, Tesla had a total market valuation of $547 billion, ranking it as the world’s ninth most highly valued corporation. Despite being about half its peak value of $1.06 trillion in 2021, the company remains a secure investment, with most shareholders seeing excellent prospective growth potential. Tesla’s brand is also highly valuable, with a valuation of $76 billion in 2023, roughly twice that of 2022.
While Elon Musk has been criticised for some of his unconventional leadership styles, one cannot dispute that he has had a good impact on the Tesla business model. Currently, the corporation uses a mix of logical and divisional organizational designs, but it is also noted for its internal adaptability.
Several elements can be attributed to the achievement of Tesla’s distinctive organizational structure, including Musk’s direct approach and several unconventional rules he imposes. To improve communication, avoid excessive meetings, exit meetings when they’re no longer useful, and avoid inflexible pathways.
Despite having a greater market valuation than well-known automakers including General Motors, Toyota, Ford, Volkswagen, and others, Tesla produces far fewer automobiles. However, when it comes to electric automobiles, Tesla vastly outperforms all of its competitors, strongly establishing its reputation as the world’s leading maker of electric vehicles. In 2021, the firm sold over 900,000 electric automobiles, the most popular of which was the Tesla Model 3.
Tesla has been allowed to leverage the market’s trend toward producing greener technology such as electric automobiles, solar roofing systems, and battery packs. This has enabled the organisation to incorporate this into the core of what the company symbolises, developing code for both now and in the future.
We can now determine areas where Tesla still needs to improve despite its advantages by examining the weaknesses of the components in this SWOT analysis.
Even though Tesla employs a lot of highly qualified people and has cutting-edge technology and a ground-breaking manufacturing method, the company frequently experiences manufacturing and delivery delays. This is probably because the business produces extremely complicated technology with a wide range of supply chains and intricate logistics.
Due to numerous disruptions in the supply chain, the company is required to halt accepting orders for new shipments at specific periods, a problem that is frequently observed with their line of electric vehicles. This problem also affects the Tesla Solar Roof, causing months-long delays in installations.
Although the Tesla brand is renowned for consistently creating ground-breaking innovations, they have occasionally been criticised for being overly confident and even deliberately dishonest by making promises about technologies that are either unfinished or nonexistent. Musk, for instance, has been exposed for making battery-related claims that turn out to be incompatible with the rules of physics.
There have been other occasions when the business has had to retract statements it made about completely autonomous vehicles, its unsuccessful attempt to fully automate its manufacturing process, many setbacks with the eagerly anticipated Tesla semi-truck, and of obviously, the infamous Tesla bot. These conflicts only work to damage the company’s brand and make investors less confident in it.
Elon Musk’s leadership style and talent-spotting skills are undoubtedly effective, but his inflexible attitude and propensity to put financial gain ahead of the well-being of his employees have resulted in an abnormally elevated turnover rate, particularly among executive staff. A few employees have even gone so far as to call Tesla workshops cruel and sweatshops, given that the typical employee stays with the company for just 3.7 years.
MarketWatch reported that the company’s executive turnover rate in 2019 was projected to be roughly 27%. In comparison to figures discovered at several other prominent tech businesses, this was not extraordinarily high, even if it was greater than that of the 15% group average. But compared to the industry average of 9%, the executive turnover rate of employees directly under Musk has been identified to be 44%. This demonstrates Musk’s tendency to fire staff members who irritate or let him down, even if it means damaging the business.
Even though sales of electric vehicles have skyrocketed in recent years, conventional fossil fuel-powered cars still dominate them in many regions of the world. Seals that originated in Europe and China have been the main drivers of this cruise; the United States accounts for a shockingly small portion of new electric vehicle purchases. Consequently, by making large investments to promote the sale of electric vehicles in countries like the United States along with other regions like Asia and Africa, the company can greatly increase the size of the customers it serves.
Tesla can significantly lower this cost for customers even though the firm cannot fully take responsibility for the high price of its products. Changing the brand’s perception from one of selling upscale electric luxury cars to one that targets a wider variety of customers is one method to achieve this.
Assume that the company wants to continue ruling the electric vehicle industry. In that scenario, it might want to give this some serious thought because it will be up against producers of electric vehicles who are concentrating on launching a line of reasonably priced models, as well as less expensive fossil fuel alternatives provided by well-known brands like Toyota and General Motors. To his credit, Musk has acknowledged this problem and stated that a $25,000 Tesla model will be released. Proposals for this electric car with a mid-range price tag, however, have not come to pass.
Contrary to popular belief, many products, including Tesla cars, are not made entirely in the warehouse. Many essential parts that go into Tesla appliances are first produced by outside tech businesses. One of the most important parts of each Tesla device is the battery, which is one of these.
It goes without saying that the company is putting itself at greater risk of supply chain delays and interruptions by outsourcing a number of essential supply chain components—a reputation that the company already has. Consequently, by producing batteries in-house, Tesla will be able to gain more control over the crucial elements of their manufacturing procedure.
Tesla’s ongoing technology innovation is a key strategic component. Its reputation as the leader in innovation is a major component of its brand image. This indicates that the business needs to keep working hard to make sure that it stays in this position thanks to the leadership team’s combined efforts, solid financial support, and a sizable talent pool.
A lot of well-known businesses are working hard to change their business procedures and production methods to ones that are more sustainable. One well-known radio company that has embraced this practice is Tesla. It can still do more, though, by positioning itself at the vanguard of the movement toward a more sustainable future by using its strong brand equity and uniqueness.
Other companies have indeed made investments in the electric vehicle sector before Tesla. Nevertheless, it is the first to get the public’s attention. For years, Tesla has surpassed its nearest opponents owing to its distinctive brand positioning and technological advantages over other electric vehicle makers.
Nevertheless, Tesla has begun to lose some of its market supremacy as other manufacturers massive organisations like Ford, Chevrolet, Hyundai, and Kia have entered the market. Sales for Tesla continue to surpass those of rival electric car makers. However, the question of whether or not it can sustain this edge in the face of rising consumer disappointment, increased competition, and less expensive competitors to its products has begun to emerge.
The need for the world to switch to more sustainable energy sources, like renewables and electric vehicles, has long been acknowledged. However, recent global shocks have made governments, people, and even corporations reevaluate the precise means by which the schools will be implemented.
Numerous government initiatives aimed at advancing green technology substantially fund and support a large number of the technologies that Tesla develops and distributes. A major decline in funding and support for these projects due to changes in public opinion could be devastating to the company in the long run.
Metals Every sector faces supply shortages and other challenges specific to its manufacturing process. Rare earth metals including cobalt, nickel, and neodymium constitute a number of the most important parts of electric vehicles and solar panels, two of Tesla’s main products. Supply disruptions, trade disputes, and sharp price swings might seriously compromise tech companies’ access to these resources. A major threat to the continuous supply of these basic earth metals is the ongoing trade disputes between the United States and China, which in regards to mining and manufacturing, provides the majority of these raw materials. Tesla is not impervious to these potential fluctuations in supply.
The story of Tesla, from niche automaker to technical innovator, has not been easy to follow. The corporation has overcome all of its challenges to become the unambiguous market leader in the electric car sector and a major player in other sustainable technology fields, despite a history of both technological innovations and scandals. Whatever the future holds for the company is unknown, but it is realistic to say that, like the well-known inventor after whom the business was named, Tesla has unquestionably made a lasting impression on the tech industry.