Tesla Motors Macroenvironment and Industry Analysis
This paper examines the external environment facing Tesla Motors as a luxury electric vehicle manufacturer. It evaluates the macroenvironment across social, economic, and regulatory dimensions, noting shifting consumer attitudes toward electric vehicles, the importance of the Chinese market, and the role of government incentives. The paper then applies Porter's Five Forces to assess industry profitability, finding moderate supplier power, strong buyer loyalty, low rivalry intensity, high entry barriers, and a significant threat of substitutes. The analysis concludes that while current industry conditions present profitability challenges, the long-term outlook for electric vehicles is highly favorable, driven by millennial environmental awareness, projected market growth, and Tesla's first-mover advantage.
- Macroenvironment Overview: Tesla's niche position in a shifting landscape
- Social and Economic Conditions: Consumer attitudes, generational trends, and economic factors
- Regulatory and Political Environment: Sales restrictions, tax incentives, and charging infrastructure
- Industry Environment and Competitive Positioning: Market size, competitive framing, and profitability context
- Porter's Five Forces Analysis: Supplier power, buyer power, rivalry, barriers, and substitutes
- Conclusions: Long-term EV growth potential and Tesla's strategic outlook
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What makes this paper effective
- The paper grounds its environmental analysis in specific data points — market size, CAGR figures, revenue percentages — giving claims concrete evidentiary weight rather than relying on generalizations.
- It systematically applies Porter's Five Forces as an organizing framework, walking through each force with Tesla-specific evidence rather than describing the model abstractly.
- The conclusion effectively links current unfavorable conditions to a convincing long-term growth narrative, using oil price dynamics and generational shifts as forward-looking drivers.
Key academic technique demonstrated
The paper demonstrates strong applied framework analysis. Rather than simply describing Tesla's situation, the author uses a recognized strategic management tool (Porter's Five Forces) to structure the industry evaluation, then integrates macroenvironmental scanning (social, economic, regulatory) as context. This layered analytical approach — moving from broad environmental forces to specific competitive dynamics — is a hallmark of business strategy writing at the undergraduate level.
Structure breakdown
The paper is organized into two major analytical sections followed by a conclusion. The first section surveys the macroenvironment, subdivided by social/economic and regulatory/political dimensions. The second section covers the industry environment, opening with competitive positioning before applying Porter's Five Forces systematically. The conclusion synthesizes both sections into a forward-looking assessment of Tesla's long-term strategic position.
Macroenvironment Overview
Tesla Motors competes in a niche segment of the automobile industry — specifically the electric car segment, and within it, the luxury component. The macroenvironment is an interesting one, not least because it is in a state of flux. The traditional model of the gasoline-powered automobile has been so dominant for so long that it seems almost inconceivable that this model is changing. Yet, with climate change, peak oil, and a number of other issues, there is a groundswell of public opinion that is shifting.
Surveys have revealed that acceptance of electric vehicles is not universal, but is stronger among women and older consumers, and those with a high level of environmental consciousness. Men perceive their knowledge of the issues surrounding electric cars to be high, while there is actually no evidence to support that claim; men score lowest on acceptance of electric vehicles (Ziefle et al., 2014). That said, Tesla has built considerable buzz for itself. Perceptions of the Tesla brand are generally high, and brand awareness is also showing evidence of growth. Ultimately, the social environment is moderately positive — and possibly improving — for Tesla.
Social and Economic Conditions
There is growing thought that the social environment will continue to improve for Tesla. Increasingly, younger people have a high awareness of climate change and are spurred to make consumer decisions based on their vision for the future. As their nickname suggests, millennials have a vision for the future rooted in the 21st century, quite different from the dominant economic and social model in which baby boomers and Generation X were raised. The social environment projects to become much more favorable going forward.
The economic environment is generally good for Tesla. The company sells in the luxury segment, where price sensitivity is low and sensitivity to broader economic conditions is also reduced. That said, the company does emphasize in its advertising that its product is cost-effective when fuel savings are factored in, indicating that the company believes there to be some degree of price sensitivity among its target market. The economy in the United States is growing slowly, and in Europe perhaps even more so. In the critical Chinese market, there are concerns that slowing growth will adversely affect Tesla (SCMP, 2015). The Chinese market is particularly important because a significant portion of the company's growth projections for its current models are based on expansion in China, which Tesla views as a major potential market.
References
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MSN Moneycentral (2015). Tesla Motors. Retrieved November 20, 2015 from http://www.msn.com/en-us/money/stockdetails/financials/fi-126.1.TSLA.NAS?ocid=qbeb
Perkowski, J. (2014). Electric cars: a review of 2014. Forbes. Retrieved November 20, 2015 from http://www.forbes.com/sites/jackperkowski/2014/12/12/electric-cars-a-review-of-2014/
SCMP (2015). Tesla electric cars struggle to ignite Chinese market. South China Morning Post. Retrieved November 20, 2015 from http://www.scmp.com/news/china/money-wealth/article/1771599/tesla-electric-cars-struggle-chinese-market
Tesla Motors (2014). Tesla sales banned in Arizona, Texas and New Jersey. Tesla Motors. Retrieved November 20, 2015 from http://my.teslamotors.com/it_CH/forum/forums/tesla-sales-banned-arizona-texas-new-jersey
Tesla Motors (2015). Support: Incentives. Tesla Motors. Retrieved November 20, 2015 from http://www.teslamotors.com/support/incentives
TMR (2013). Electric vehicles market to rise at 19.2% CAGR from 2013 to 2019. Transparency Market Research. Retrieved November 20, 2015 from http://www.transparencymarketresearch.com/pressrelease/electric-vehicles-market.htm
Voelcker, J. (2015). Tesla superchargers still free in China; fees on sign apply to private charger. Green Car Reports. Retrieved November 20, 2015 from http://www.greencarreports.com/news/1099062_tesla-starts-charging-for-charging-in-china-superchargers-still-free-for-owners
Wakabayashi, D. (2015). Apple targets electric car shipping date for 2019. Wall Street Journal. Retrieved November 20, 2015 from www.wsj.com/articles/apple-speeds-up-electric-car-work
Waters, R. (2015). Delivery shortfall holds back Tesla. Financial Times. Retrieved November 20, 2015 from http://www.ft.com/cms/s/0/c6903a96-b23f-11e4-80af-00144feab7de.html
Ziefle, M., Leusmann, S., Kasugai, K., & Schwalm, M. (2014). Public perception and acceptance of electric vehicles: Exploring users' perceived benefits and drawbacks. Retrieved November 20, 2015 from
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