Last Updated 16 Dec 2022

Investigation Related To Automobile Market

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Political: Processes and actions of government bodies. Tesla have been through ups and downs in their business. During the times of the debt, Government intervened and provided $465 million low interest loan which also provided the company a boost in their operations. Since Government was interested in fuel efficient electric cars, they provided incentives for electric cars. This also lets Tesla to expand globally.

II. Economic: Largely macro-economic. Economic factors like growth rates, price stability became major factors because of which energy vehicles by Tesla became popular in a short p of time. Rising fuel prices, and rising population let the people direct their choices to cost effective source of energy. Fuel efficient, lower battery costs, and decreasing renewable energy costs made Tesla’s products more attractive to consumers.

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III. Sociocultural: Sociocultural factors played a major in affecting Tesla’s business as people now are more aware of the clean, green and eco-friendly environment so they prefer electric cars. These external factors helped Tesla in its growth opportunities.

IV. Technological: Technology advancement by creating new products and processes. Tesla has a big advantage in technology advancement by introducing electric cars, automated cars. They are the brains behind the automotive innovation which leads to more growth opportunities in the car industry of electric cars.

V. Ecological: Ecological factors involve environmental issues mainly. Tesla’s purpose is driven to make eco-friendly cars so ecological factor plays an important in role in promoting their market. Over last few years, people are more concerned about the global warming and environment issues because of which they switch their priorities to eco-friendly cars. Tesla electric cars, solar panels, batteries are considered safe for environment.

VI. Legal: Official outcomes of laws and legal systems. Some states in the U.S have banned Tesla from offering test drives to customers. Tesla has the opportunity to grow its sales globally through direct sales, which is allowed in some states but others they can only sell through third party dealership which can be seen as a threat.

2. Using VRIO analysis, evaluate whether Tesla has a sustained competitive advantage.

I. Valuable: Tesla has got an edge over many other companies in a short time. They are continually coming up with improved advancements of battery issues, they are making batteries that provide consumers long mileage with short p of charging the batteries. They are also coming with various technologies to overcome environmental issues by introducing solar city and spacex.

II. Rare: Tesla is the master of innovation in their field. It is the first company that started selling electric cars. They are the only automobile company that is not only working towards the automobile but also solar panel manufacturing and space innovations. In general, tesla cars are rare in itself, only consumers can afford to buy it.

III. Costly to Imitate: The technology that Elon Musk’s brings on the table is very hard to imitate. Tesla’s improbable success is the reason of its unique technology, R&D capabilities, and innovation in fuel efficient cars. Tesla has reached at a stage which is not easy for its competitors to take place.

IV. Organization: Elon Musk is the brain behind this game changer innovation so they possess strong organizational capability to sustain their competitive advantage.

• Brand Recognition: Tesla has become famous in a very short p of time, it has gained recognition globally now. The popularity of Tesla known for its sustainable vehicles has risen in the last few years. They have brought innovations not limited to vehicles only but also in energy products which has helped Tesla gained recognition in no time.

• Fast growing super charger network: Tesla is the only brand to become fast growing super charger network. These super chargers are high speed chargers that charge Tesla products instantly. It has been successful in installing fast charges in Asia, Europe, and USA. There were network of 4000 chargers in 2015 and plans to go more than 7000 in 2018.

II. Weakness

• High Prices: Tesla’s products are quite expensive when compared to its competitor’s products. Middle class consumers cannot afford Tesla’s cars which can be considered a weakness in their growth.

• High production and operation costs: Tesla’s production and manufacturing costs are high. The Model S roughly takes up to $28,000 to build the car. They are still working to reduce the cost of productions.

III. Opportunities

• Growing demand of Sustainable products: Tesla’s main opportunity is the awareness of fuel efficient electric cars and its sustainable products. People are more concerned about the environment change, global warming, and the increase in the fuel prices so this automatically direct consumers towards eco-friendly vehicles.

• Autonomous driving technology: Autonomous driving is next big thing coming up in the automobile market. Tesla is planning to launch its first automated driving vehicle by 2019.

IV. Threats

• Competition: Automobile market is a very competitive market. Tesla face competition from BMW, Audi, Daimler, electric vehicles of Nissan, and Chevy. Tesla is still considered new in the market but they have in the market for over many year so they are more financially stable and face huge demands because of their affordability.

• Dealership regulations: Tesla does face dealership regulation which is a big threat for them as in many U.S states they are not allowed to sell their cars directly to consumers instead have their orders executed by a third party. 

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