SWOT analysis of Tesla Motors' competitive strengths and market strategy

SWOT Analysis: Tesla Motors

Tesla Motors was founded in 2003 and it specializes in high-end electric vehicles. The company operates out of Palo Alto California and it has over 2000 employees. It was founded by Elon Musk who has prior success in SpaceX and PayPal. The company's goals is to accelerate the transition to electric mobility with a full range of increasingly Despite the fact that it has received loans from the federal government and other tax advantages which are given to alternative fuel vehicle manufacturers, the company still has ups and downs and was even close to being bankrupt as some point. However, recently the company has registered a lot of success that has enabled it to pay loans from the government. Initially the company was only producing expensive sports car that were meant for the rich. Today, the company is expanding and is now producing vehicles that are more cost- effective. Tesla is relatively small compared to other world's major auto manufacturers. It receives a lot of competition from hybrid vehicles like Toyota Prius. Recently, Nissan came up with a fully electric vehicle that is relatively inexpensive. This paper will look at a SWOT analysis of Tesla Motors.

Strengths

The first of Tesla Motors strengths is in its R & D. department and technical mastery in electronic motors as well as the associated components. The biggest strength of Tesla is the ability of the company to output new technology. Its most important technological breakthrough is the electric power train. One of the core competencies of the company is that it develops and sells power train components to third parties such as Daimler and Toyota. Besides having the robust power train, the company has specialized in electric car engines. Tesla wanted the electric vehicle to be very efficient and hence they had to come up with new systems in order for it to be compatible with their electric powertrain. This design constraint is what resulted to the innovation and development of other unique technological features together with making their powertrain modular in such a way that it adapts to various applications. The company has also come up with a complete battery pack system, a unique gearbox and motor design and has redesigned systems like heating and air-conditioning (Tiu, 2013).

The second strength of the company is its location. They build their cars in California which is a good location. This is because, an electric vehicle is a hybrid between gasoline and electric car, California has the best electrical and computer engineers. The company only concentrates on electric cars and has dismissed any other alternatives such as hybrids, fuel cells, ethanol or diesel. The problem associated with fuel cells is the fact that they are always ten years into the future. The problem associated with hybrid and diesel is the fact that at one point in the future oil will run out since it is a finite resource. The problem associated with ethanol is that its ahs to be grown somewhere but getting land to grow is the problem. The electric car technology exists today and as long as the sun shines then we can power electricity. This means that the company will do well now and even in future since solar energy can not be depleted (Boyke, Chneg, Clevers, & Schroed, 2010).

Weaknesses

One weakness is the fact that Tesla motors is only selling electric cars but people have not yet fully accepted the idea of these cars. Consumer behavior changes have to be made in order for purchases to be made. Electric cars need a great consumer behavior change since mot people are used to gas vehicles. Another weakness is the fact that the infrastructure around these electric cars does not exist. This means that even if people buy these cars they would not use them due to the lack of infrastructure. The fact that the company is only ten years old is a weakness. The company lacks brand name recognition as compared to most of its competitors. It is not a well-known brand in the auto industry. This means that it does not have nay operating history. Another weakness of the company is the fact that it has limited revenues and lack of profitability. The car industry is very competitive and hence there is no guarantee that a company will make money despite marketing its cars. Therefore it means that Tesla Motors is venturing into a very competitive industry (Boss, & Sparks, 2014).

Threats

One significant threat to Tesla is the fact that more manufacturers coming up with their own environmentally friendly cars which are equally efficient. Since there are companies that are larger than Tesla, they have more financial resources as compared to Tesla then it means that they will survive longer if oil prices do not go up in future. Another thing is the fact that accidents related to electric vehicles scare away customers. These accidents that are related to electric cars are fire on batteries or engine combustion. Electric cars are still very expensive and hence they still have a limited demand.

Recommendations

Tesla should focus on premium vehicles in order to achieve its goals, if they expand to other sectors then they will end up diluting the company's brand recognition, affect its premium segment sales and bring down its profit margins. In order for Tesla to create affordable electric vehicles they should license their technology to high premium manufacturers such as Mercedes but not to the less premium ones. By doing this Tesla technology will be more standard and companies will be dependent for their electric cars on the improvements that Tesla makes.

The company should also seek to gain a global presence and grow their business through international expansion. They should make sure that they increase their brand awareness. Tesla can do to ensure that they educate people on their electric cars. They should open stores where people can go to these stores and learn the benefits of these electric cars and why these cars belong to the future. Due to the lack of infrastructure, Tesla should build superchargers which are like gas stations but meant for electric vehicles.