Tesla Motors was founded by two engineers; HYPERLINK “https://en.wikipedia.org/wiki/Martin_Eberhard” o “Martin Eberhard” Martin Eberhard and Marc Tarpenning in the July of 2003. The company name was inspired by Nikola Tesla, who was a mechanical and electrical engineer, and his work regarding modern alternating current supply systems. In the following year of 2004 Elon Musk became the lead investor of Tesla, by helping the company raise 7.5 million dollars through their first year of funding. Tesla’s motive revolved around the idea of electric energy and harnessing electric energy for the use of mechanical energy within cars. In 2007, Tesla came out with their very first vehicle called the Roadster. The Roadster was a fully electric car, powered by lithium ion cells, featuring a range of over 200 miles, with a single charge. Although the car featured revolutionary range for a fully electric car, at the time, the car also costed over a 100 thousand dollars. Which wasn’t an appealing buy for most customers in the market, considering the price and other semi-hybrid cars available in the market. Looking at Tesla as a company and analyzing its goals and motives, there is an overarching issue of company sustainability through finances and ability to build cars at scale. This paper analyses and takes a closer look at these issues and the stemming forces facing the company.
Tesla is known to be a self-sustaining and innovative business model. The company has targeted a specific distinctive market for its products, therefore faces significant forces within the market segment. Looking at the external forces, the company has a solid upper hand in the Political and legal forces that may be predominating Tesla. This is looking at government invectives for the use of sustainable energy in the automotive market. Tesla can reinforce its finances through government incentives and grants. Tesla also has an upper hand when it comes to emissions laws and regulations, as the cars are semi-sustainable. The closing laws against emissions is widely impacting the automotive industry as companies are constantly having to change the design of their engines to reduce and meet the environmental regulations. This can be seen throughout Bmw and Mercedes Benz as they had been forced to leave behind their traditional inline 6 cylinder motors, and invest more money towards innovating a smaller engine.
Tesla also took advantage Global forces through the custom of global trade agreements which allowed the company to expand internationally. The company had started in California and now expanded internationally, with plans to start the expansion of manufacturing plants internationally as well. This also includes the incorporation of the Tesla charging stations internationally. Sustainable energy allows Tesla to minimize carbon emissions and its carbon footprint as a whole. To put that into perspective, the production cost of the biggest battery from Tesla (a 100 kWh battery) results in about 17.5 tons of carbon dioxide, whereas the typical 6 cylinder engine produces about 1.1 tons of possible carbon per year (considering that the engine runs for around 24 thousand kilometers). So, in theory, a Tesla basically evens out its carbon footprint in around three years. The Tesla Gigafactory has allowed Tesla to scientifically cut down on battery costs and further reduce their economic footprint. Tesla has taken account for the multiple economic forces facing the company and has taken advantage of the market growth available. The option of having a fully electric car has allowed consumers to save money considering the rising gas prices all across the world. On average a Tesla saves around a 100 dollars every month, as oppose to a traditional gasoline engine. Tesla has also taken benefit though building their own Gigafactory for manufacturing lithium ion battery packs, which has allowed them to scientifically cut down on battery costs. This has also sparked opportunity for jobs as they Gigafactory is located in California. Tesla has also had a vast influence when looking at the sociocultural forces, through revolving sustainability and bringing it forwards as a lifestyle. Tesla has allowed consumers the opportunity to support and live a sustainable lifestyle by introducing a level of versatility through a use of their electric vehicles.
Looking at the internal forces for Tesla, this company takes a very unique approach towards their business model. Tesla has actually changed the ways of driving and dominated the industry. Tesla is constantly testing and improving their technology. Although there are many other electric cars out there, but Tesla is the only company that offers the immense amount of range per charge at this luxury for the best price, when consider electric technology. No other electric car offers as many features that are available on Tesla’s models. Tesla also offers fast, easy, and accessible care, whereas with all other companies there are immense amounts of repair time and cost. Tesla also has an extraordinary amount of accessibly, this includes their 585 Supercharger stations in North America. No other electric manufacture offers this level of luxury and convenience. Although the company has a vast amount of strengths, Tesla does have its share of weaknesses that arise from its strengths and stem from the overarching issue of the company. In order for Tesla to provide this amount of luxury to its consumers Tesla is spending tons of funds towards investments. However, this will benefit the company in the long run, but it is also leaving the company with a high level of debt, at the same time.
Tesla has sought out for many opportunities, and in order for them to shift towards a profit minded they have started to seek out cost effective initiatives. These include ramping up the production numbers for their vehicles. The Gigafactory also allows Tesla to grow and reduce production costs at their own levels. Now that they have established a working system, by investing in such enormous assets, Tesla has open itself up in a vastly growing market in which they have all the controlling resources. There are still multiple threats that face the company, more specifically deriving from the issue of funding. As Tesla does have specific plans and goals regarding production, the company does find itself in a loop hole chasing funding for such ambiguous ideas. Funding does determine and or limit Tesla’s future plans and ambitions.
Tesla has revolutionized and changed the way of driving through their vast development of technology. Tesla has managed to achieve such major progress in a very short time. Despite Tesla’s ability to constantly develop and enhance, time is mainly where the problem arises. When the Tesla Model 3 was enounced, more than 400,000 pre-orders were put in place. Therefore, a goal of 5,000 units per week was set as a target, to fulfil the demand. However, with such high demand and very little time, Tesla grew venerable to excessive automation. Because the company was trying to advance so far and do so much in such little time, the margin for error was a lot higher. Tesla was packing so much technology in their vehicle they went a little too ahead of themselves to where many things weren’t even practical nor efficient. There was being too much technology being put all at once. An example of this is that there was such an excessive number of robots throughout the building process of the model 3’s in the Gigafactory that were trying to replace human tasks, that the Gigafactory simply wasn’t effect anymore. The company took too many risks in order to fulfil demand, without taking in consideration of the potential problems. Tesla’s drive to take on an immense number of tasks in such limited time resulted in mistakes and delays. Tesla does have advantage over the competitors when to comes to brand imaging and pricing, however the competition is still catching up and does pose a risk. This does jeopardize Tesla’s future plans and goals when it comes to funding from investors as more and more competitors are coming forward.
Tesla has done an amazing job understanding and taking in account all the external forces that had an effect on the company. Tesla made sure to take account the level of complexity in the environment, by analyzing the forces in order to effectively respond, especially when it came down to opportunities and threats that they faced. Tesla did this through making huge investments towards protecting their spot in the market by recognizing potential competitors. This included the investments in the availability of supercharging stations, technology, and accessibility to their customers. This has allowed Tesla to bring forward a plan of sustainability and practicality in the idea of owning a Tesla. Yet, Tesla did not take account the rate of change in the environment, as they failed to build and establish a solid competitive advantage through increasing efficiency and quality. The company tried to tackle more than they were capable of without assessing the risks and building or following a solid plan. Tesla failed to assess the risks while trying to utilize new information systems and technologies.
Tesla should take a step back from their idea of constant development and assess their inner forces of the company. This will better allow the company to take a better look at the problems arising within the company. An insight into analysis will permit Tesla to further reflect on the issue of funding. Allowing Tesla to focus on being efficient and not only effective. Through this process a clarification of a scope will also be determined, which will allow the company to gauge their resources. Which in return will allow Tesla to effectively figure out and support the technical implementations which are required.
Tesla also needs to take a