Tesla PESTEL Analysis

Introduction

Tesla PESTEL analysis is a strategic planning tool based on marketing principles to evaluate the environment in which the company operates and identify the external factors that affect its business. The word "PESTEL" is an acronym for the six factors, including political, economic, social, technological, environmental, and legal. Analyzing these factors with the PESTEL framework help companies figure out market trends, plan enterprise risk management, and get a deep insight into the wider business environment. You can apply PESTEL analysis in a range of business scenarios to maximize opportunities to grow your business. PESTEL analysis works best when a company repeats it regularly to keep up with the market trend. 

With the PESTEL framework, management teams can study the key factors that influence the firm. PESTEL works as a more comprehensive version of the Swot analysis focusing only on the critical data and information. Still, sometimes users try to oversimplify data input, resulting in inaccurate results and decisions. Similar to Swot analysis, PESTEL allows users to identify the root cause of any problem and remove threats. Here, discover the meaning and detailed explanation of PESTEL and its factors, download and edit Tesla PESTEL analysis and learn why PDF Agile is the best PDF editor and convertor. 

Background of Tesla

Tesla is the largest automobile maker founded by Martin Eberhard and Marc Tarpenning on July 18, 2003, in California, US. The company started with the name Tesla motors and is mainly known for its self-driving electric cars and lots of achievements in the renewable energy sector based on using solar energy to generate electricity. It provides various services and products, including electric cars and trucks, home grid-scale battery storage, solar-roof tiles, and regular solar panels. Tesla operates through more than 650 retail stores, galleries, and customer service centers. As a public company, Tesla currently has 110000+ employees working around the world.

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PESTEL Analysis of Tesla

The PESTEL analysis of Tesla lists and evaluates the various external factors that impact the company and its business, including political, economic, environmental, social, technological, and legal aspects. It gives a clear understanding of the business environment in which Tesla operates and allows the managing team to capture opportunities and take advantage while removing threats and weaknesses. Here are the details about the factors in PESTEL analysis Tesla.

Political Factor

The political factors consist of leadership and change, government and tax policies, foreign trade policies, and other political activities or factors that might affect your company. Analyzing political factors is essential before launching a new business.

• Tax imposed on companies based on their income.
• Fiscal policy initiatives to help reduce poverty and promote growth.
• Trade disputes for the import and export of raw materials.

Political Factor Example:

Cobalt is the main raw material used in the production of various Tesla models making the demand for cobalt higher than ever. The Democratic Republic of Congo provides 60% of global cobalt production. The gradual increase in demand by Tesla and other electric car manufacturers gave rise to a few political issues like child labor and corruption that might affect the supply chain of cobalt. 

Economic Factor

Tesla's economic analysis evaluates the company's economic growth by accounting for the affecting economic aspects such as inflation and interest rates, exchange rates, and employment rates. 

• Tesla gained 334 million dollars as foreign currency exchange rates in 2020.
• With its zero-emission vehicles, Tesla is benefitting from government tax incentives.
• The cost of electric car batteries is gradually decreasing, creating a major economic factor for electric car manufacturers like Tesla. 

Economic Factor Example:

Tesla's financial analysis proves that economic factors like the change in foreign currency exchange rates and Nevada tax incentives provide the company with various advantages. It helped the company avoid sales tax, personal property and real tax, etc. 

Social Factor

In the Tesla PESTEL analysis, social factors evaluate society's cultural trends, including demographics and living standards. It also accounted for the culture, population growth, religious trends, diversity of race, and other factors that refer to the way of life of stakeholders.

• Identifying customers through the generalization of demographic trends.
• To utilize social factors, understand consumer behavior, beliefs, and bias for good and bad things.
• Finding target customers based on how people communicate, eat, dress, or live their life.

Social Factor Example:

Social factors are not relative to tangible goods, but they substantially affect companies and industries. Take the covid pandemic as an example where every company has to train their employees and hire new staff to implement the work-from-home routine.

Technological Factor

The technological factors in the PESTEL analysis, like research and development of new tech, efficient assembly lines, new production methods, and technology for the advanced production process, create a huge impact for companies like Tesla, whose success is built on innovation advanced technology.

• Automation made the production and assembly process much more efficient for automobile manufacturers like Tesla.
• To gain a competitive business advantage, every company has an R&D facility which affects the costs.
• Improved network infrastructure and cyber security are substantial factors influencing a company like Tesla.

Technological Factor Example:

Integrating advanced technology into various businesses can have excellent or devastating results. Take Uber as an example, as it revolutionized the transport industry. Introducing technological changes also requires the evaluation of financial implications, like companies using cloud storage instead of physical servers.

Environmental Factor

The environmental factors in the Tesla PESTEL analysis analyze the influence of the environment on your business and the adverse effects of your business on the environment, including carbon footprints, pollution, global warming, climate, weather changes, etc.

• Companies track the emission of greenhouse gas to evaluate their carbon footprint
• To check for climate changes that include physical risks like storms.
• To minimize useless waste of freshwater with proper management.

Environmental Factor Example:

All companies must follow the state-provided guidelines on how publicly traded companies should evaluate their carbon footprint after some period to identify climate and ESG disclosure and introduce eco-friendly activities. 

Legal Factor

The PESTEL analysis allows companies to identify the government laws and policies that legally affect their business and organizational structure, such as consumer rights, industry regulations, labor laws, product safety, etc.

• Following the industry, regulations to operate as an organization.
• Get permits and legal licenses to manufacture and trade your products or services.
• To get employee contracts according to employee protection laws.   

 Legal Factor Example:

In the Tesla PESTEL analysis, the legal factor evaluates the various federal laws that protect employees, like minimum wages, health coverage, workplace safety, social security, etc. It helps increase employees' loyalty toward the organization, and working in a healthy environment improves productivity. 

Tesla PESTEL Analysis PDF

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Key Takeaways

The PESTEL analysis evaluates the key external factors that influence an organization and assess markets for the company's current or future business. It is a marketing concept that allows managing teams to understand market trends before business start-up or migration to other countries. Tesla PESTEL analysis is an excellent example of how a company analyzes its business's current and projected growth and creates strategic plans for its future in the market. PDF Agile is the best PDF editor and convertor, with many creative tools for editing, converting, and compressing your PDF document. It supports multiple formats and comes with an easy-to-use interface.

References 

1. CFI “PESTEL ANALYSIS”: From https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/
2. Business Research Methodology “Tesla Pestel Analysis”: From https://research-methodology.net/tesla-pestel-analysis-2/#:~:text=PESTEL%20is%20a%20strategic%20analytical,the%20alternative%20fuel%20vehicles%20manufacturer.
3. Panmore Institute “Tesla, Inc. PESTEL/PESTLE Analysis & Recommendations”: From http://panmore.com/tesla-motors-inc-pestel-pestle-analysis-recommendations
4. Pestel Analysis “Pestel Analysis of Tesla”: From https://pestleanalysis.com/pestle-analysis-of-tesla/.