In-Depth SWOT Analysis of Tesla

Introduction

Nicola Tesla will forever be remembered for his remarkable milestones in both electrical engineering and Radio technology. Today, a company is named after him. Tesla Inc., formerly known as Tesla Motor Inc. is an American energy solution and automobile manufacturing company. Tesla owes its success in just a short period of time to its innovative business and marketing model. This Tesla SWOT analysis report reveals the Strengths, Weaknesses, Opportunities, and Threats of this organization.

Tesla’s Strengths

Some of the identified strengths contained in this SWOT analysis of Tesla include:

A diverse and incredibly good work environment: Tesla offers an exciting work environment for people of all races, cultures, and religious and political differences. They have received rave reviews for their impact in providing one of the most inspiring workplaces around. A Wall Street Journal report suggests that much. Tesla even appeared on the Forbes list of America's Best Employers 2021.
A highly profitable organization: In 2021, Tesla sold 936,172 electric-powered vehicles to record a sales revenue figure of over USD$53 billion. Tesla would go on to declare more than USD$5 billion in profits. This would increase Tesla's market capitalization (cap) to more than USD$1 Trillion, thereby exceeding the market cap of Ford, Volkswagen, General Motors, Toyota, and Daimler put together.
Increasing delivery of ordered electric vehicles: Tesla has steadily increased the number of electric vehicles manufactured and delivered to owners. The number of vehicles supplied in 2021 was 936,172, and this represented an increase of up to 87% from the number of electric vehicles delivered in 2020.
Diversification and effective cross-sell initiatives: InsureMyTesla is an insurance initiative launched by Teska Inc. to provide comprehensive insurance coverage to every one of their electric-powered vehicles. This insurance policy initiative was formulated by Tesla Inc. in conjunction with insurance giants Liberty Mutual.
Continual Innovation: This is what distinguishes Tesla Inc. from other automobile companies. Tesla's innovative products consist of the world's first-ever electric-powered semi-truck as well as a number of sports cars.
Strategic market position: Recording a sales revenue of USD$53 billion in 2021, Tesla has positioned itself as a foremost global automaker.
Unique business and marketing strategies: Tesla operates a very unique and highly effective business model. Tesla employs some of the most innovative and smartest people in the world. They apply unconventional marketing strategies that have helped ensure their success in the industry.

Tesla’s Weaknesses

While Tesla has obvious strengths, they also have some weaknesses worth mentioning. Here are a few weaknesses as contained in this SWOT analysis of Tesla.

Complication in manufacturing: Tesla is leading the way in innovative energy solutions and electric-driven automobiles. The problem with innovative products is that there is a greater likelihood of complications during the production process. Delays in meeting expected launch targets due to these complications can adversely affect the valuation and profit margin of the company.
Low production volume: Tesla is not known to produce a large number of electric automobiles across all its models. The Gigafactory 1 may need expanding for any drive to increase production. Also, the high cost of production and limited resources are constraints to expanding the volume of production.
Limited battery supply: The drop in the production volume can also be attributed to the limited availability of batteries. Without an adequate supply of batteries, the volume of production of both energy storage systems and electric-powered vehicles will also be limited.
Elon Musk: Musk may be heavily responsible for the success of Tesla, but he could also be a weakness. The reason for this is that Elon Musk is preoccupied with many projects, such as; The Boring Company and his exploits in building space exploration vehicles under the Space Exploration Technologies Corporation. With his interest in other projects, Elon Musk is unlikely to devote all his energy into promoting the company.
A rising debt profile: To continue with research and development into innovative alternative energy projects, Tesla needs finance from creditors. This has led to a debt profile of over USD$5 billion. To manage this debt, the company needs to increase the production and supply of its automobile and energy solution products. But as mentioned already, they are constrained by a shortage in battery supply, rising production costs, and a lack of sufficient production space at Gigafactory 1.

Tesla’s Opportunities

Some of the opportunities open to Tesla include:

Producing more affordable vehicles: Tesla automobiles are quite expensive and out of reach of the average person. This is mainly because their vehicles are highly innovative, requiring substantial financial investment in both technology and the workforce. However, Tesla can take advantage of an even greater market share of the automobile industry by producing more affordable electric vehicles.
Expansion into new overseas markets: The Asian market is huge and has massive potential for boosting the company's revenue. However, to establish itself in these new oversea markets, Tesla will need to produce more affordable energy solutions products and vehicles. The Tesla Model 3 electric vehicle is comparably less expensive than Model S because it has lower power, range, and functionality.
In-house lithium-ion battery production: Tesla can increase the supply of batteries by engaging in the in-house production of battery cells. At present, Tesla plans to produce their batteries rather than relying solely on supplies from Panasonic.
Producing a line of electrically powered pickup trucks: It is estimated that pickup trucks make up approximately 17.6% of the automotive market in the US. This is according to the market share information of the National Automobile Dealer Association. By starting up the manufacture of a line of electrically powered pickup trucks, Tesla would be able to position itself and gain a significant share of the market.
Diversification into other innovative markets: Tesla has the requisite human resources and technology to diversify into the air-taxi solution services market. Tesla can invest in manufacturing electric Vertical Takeoff and Landing vehicles or eVTOL. There is a potential for being a leader in this emerging market in the not too distant future.
Large order from Hertz: Hertz has ordered a total of 100,000 electric-powered Tesla vehicles. Such a large order increases the company's revenue while saving production costs in the process.

Tesla’s Threats

Tesla also faces some threats to its business, and some of these are highlighted below;

Competition: The threat of competition to Tesla’s electric vehicles is something that Tesla should take very seriously. There are other alternative fuel companies as well as firms making self-driving vehicles. Also, traditional automobile companies like Mercedes, Ford, Toyota, Volvo, and General Motors are now actively involved in manufacturing electric vehicles.
The threat of liability claims on Tesla products: The threat of liability aims on Tesla electric vehicles is a genuine concern as it could lead to huge financial setbacks. In addition, lawsuits can greatly damage the reputation of the brand.
Increased number of defective products: Tesla's innovative products are at risk of being recalled due to factory defects. This can have an adverse impact on both the margins of the company and its reputation.
Self-driving vehicles still raise concerns: There is the fear that the world is not yet prepared for self-driving vehicles. This fear stems from concerns raised about the safety of other road users and pedestrians. This has a great impact on Tesla’s decision-making process, as they are reluctant to invest time and money building self-driving vehicles that would not be readily acceptable due to huge safety concerns.
The danger of lithium-ion batteries: The batteries used to power Tesla's electric vehicles make use of lithium-ion cells. This in itself is dangerous as lithium is known to be an explosive compound. Tesla vehicles have been known to suddenly erupt in flames due to the batteries being highly volatile.

Mind Map

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Key Takeaways

This Tesla SWOT analysis report highlights the strengths of Tesla, its weaknesses, possible business opportunities, and threats. One of the key strengths of Tesla is its innovation and skilled manpower which has seen them earn sales revenues of over USD$53 billion and profits of more than USD$5 billion in 2021.

However, this alternative fuel automobile brand has weaknesses, such as complications in manufacture due to the use of new technologies. Also, Tesla has the threat of lawsuits and product liability claims which can seriously damage the reputation and finances of the company.

But one key opportunity that is open to Tesla is diversification into lithium-ion battery production. This can increase their supply of batteries which invariably can lead to an increase in the manufacture of electric vehicles.

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