ASSIGNMENT OF

STRATEGIC MANAGEMENT

APEX GROUP OF INSTITUTIONS, RAMPUR

(AFFILIATED TO AKTU, LUCKNOW)

(SESSION 2023-25)

Under the guidance of

SUBMITTED TO: SUBMITTED BY:

Mrs. Monika Mam Ramanpreet Kaur

1. Company Overview

Tesla, Inc. is an American electric vehicle (EV) and clean energy company founded in 2003 by
engineers Martin Eberhard and Marc Trepanning, with Elon Musk joining as an investor and later
CEO. Tesla is primarily known for its electric vehicles, which have become synonymous with
innovation in the automotive sector. The company also produces energy storage solutions and solar
products under the Tesla Energy division.

Mission: To create the most compelling car company of the 21st century by driving the world's
transition to electric vehicles.

Vision: To accelerate the world's transition to sustainable energy.

Key Business Activities: Tesla manufactures electric vehicles (Model S, Model 3, Model X, Model Y,
Cyber truck), solar products (solar panels and Solar Roof), and energy storage solutions
(Powerwalk, Power pack, and Mega pack).

2. SWOT Analysis

Strengths:

Innovative Technology: Tesla is a leader in electric vehicle technology and autonomous driving
features, like its Autopilot system.

Brand Recognition: Tesla has a strong brand associated with sustainability and high-performance
electric vehicles.
Vertical Integration: Tesla controls much of its supply chain, from battery production to vehicle
assembly and software development.

Gig factories: Tesla’s global manufacturing presence, including Gig factories in the U.S., China, and
Germany, enables large-scale production and cost reductions.

Weaknesses:

High Production Costs: Despite improvements, Tesla still faces relatively high production costs
compared to traditional automakers.

Quality Control Issues: Tesla has faced criticism regarding quality control, including reports of
inconsistent build quality and production delays.

Dependence on CEO Elon Musk: Tesla's brand and strategy are heavily influenced by Elon Musk,
making the company vulnerable to potential leadership changes or controversies surrounding him.

Opportunities:

Expansion into Emerging Markets: As demand for EVs grows, Tesla has opportunities to expand in
emerging markets such as India and Latin America.

Energy Market Growth: Increasing adoption of renewable energy presents opportunities for Tesla’s
solar and energy storage solutions.
Advancements in Autonomous Driving: Tesla’s advancements in self-driving technology could
provide a competitive edge in the future of transportation.

Threats:

Intense Competition: Traditional automakers (e.g., Ford, GM) and new entrants (e.g., Rivian, Lucid
Motors) are rapidly developing EVs, creating a more competitive environment.

Regulatory Challenges: Tesla faces scrutiny over its autonomous driving technology, environmental
regulations, and its labor practices.

Raw Material Shortages: Tesla depends on rare earth metals and other materials for battery
production, which may become harder to obtain as demand rises.

3. Porter’s Five Forces Analysis

1. Threat of New Entrants:

Moderate. While the capital-intensive nature of automobile manufacturing and the technological
expertise required can deter new entrants, the increasing interest in EVs, government incentives,
and the growth of tech-driven startups have lowered the entry barriers in the electric vehicle market.
Companies like Ravia and Lucid Motors have demonstrated that it is possible to enter the EV space.

2. Bargaining Power of Suppliers:

3. Bargaining Power of Buyers:

Moderate. While Tesla’s vehicles offer unique features and a high-quality driving experience, the
growing number of electric vehicle options available to consumers increases buyer power.
Customers can easily switch to alternative EV brands, reducing Tesla’s pricing power.

4. Threat of Substitute Products or Services:

Moderate to High. With the rise of hybrid vehicles and hydrogen-powered cars, Tesla faces
competition from both traditional and new energy solutions. However, the long-term focus on
electric vehicles gives Tesla a competitive edge in the immediate term, especially as governments
worldwide push for EV adoption.

5. Industry Rivalry:

High. Tesla operates in a highly competitive environment with both established automakers (Ford,
GM, Volkswagen) and new entrants (Rivian, Lucid Motors) increasing their investment in electric
vehicles. Tesla has the advantage of being a pioneer, but rivalry is escalating as competitors improve
their EV technology and diversify their offerings.
4. Strategic Challenges

1. Intense Competition:

The EV market is becoming increasingly crowded, and Tesla faces growing competition from both
legacy automakers and new entrants. Companies like Ford (Mustang Mach-E), General Motors
(Chevy Bolt), and new EV startups like Rivian and Lucid Motors are vying for market share.

2. Production Challenges:

While Tesla has ramped up production, it still faces challenges in scaling up efficiently. Issues like
quality control, battery supply constraints, and production delays can impact its ability to meet
growing demand for EVs.

3. Regulatory Risks and Public Perception:

Tesla faces scrutiny over regulatory issues, particularly concerning its self-driving technology and
labor practices. Any negative publicity or government intervention could harm Tesla’s reputation
and operational freedom.

4. Supply Chain Vulnerabilities:

Tesla's reliance on specific suppliers for components like lithium-ion batteries makes it vulnerable
to disruptions. Increasing demand for electric vehicles worldwide could lead to shortages of key
materials and hinder Tesla’s ability to maintain production at scale.

5. Strategic Recommendations

1. Strengthen Battery Technology and Supply Chain:

Tesla should continue to invest in battery technology innovation to reduce costs, improve
performance, and secure access to raw materials. Expanding its own mining operations for lithium
and other key materials would also mitigate supply chain risks and ensure long-term sustainability.
2. Diversify Vehicle Portfolio:

While Tesla’s focus on high-end models has been successful, the company should accelerate the
production of more affordable electric vehicles, like the Model 2, to capture a broader market.
Expanding into new segments, such as electric trucks and more affordable sedans, will help Tesla
compete with new entrants and traditional automakers.

3. Expand into Emerging Markets:

Tesla should further focus on emerging markets where EV adoption is beginning to grow but is still
underdeveloped, particularly in countries like India, Brazil, and Southeast Asia. Tailoring products
for local needs (e.g., lower-cost models or different charging infrastructure) would help capture a
significant share of these markets.

4. Improve Autonomous Driving Capabilities:

Tesla’s leadership in autonomous driving technology offers a strategic opportunity. By enhancing its
Autopilot system and advancing toward fully autonomous driving, Tesla could differentiate itself
from competitors and potentially create new revenue streams, such as offering ride-hailing
services.

5. Strengthen Customer Loyalty and Brand:

Given the power of brand recognition, Tesla should enhance its customer experience, both online
and in-store, through improved service and loyalty programs. Ensuring high standards of quality
control and after-sales services will help to maintain customer satisfaction and foster brand loyalty.