The Tesla Corporatio1

THE TESLA CORPORATION 1

The Tesla Corporation

Student’s Name

Course Name and Number

Instructor’s Name

Date


The Tesla Corporation

Introduction

How can a business owner determine whether their business is

on the right track? Why is it important for any business to have

a SWOT analysis of its corporation? For any business to succeed,

it must have a well-laid strategy. This strategy will be an

essential tool to determine whether the business is making

profits or experiences losses. This strategy will also be used by

the business owners to determine the strengths and weaknesses of

the business. Strategic planning of the business helps the

managers and business owners to understanding how the business is

running, what’s new in the market, how competitive the business

is and what necessary changes should be implemented if need

arises. Technology is changing the face of the world. Different

industries especially the automotive industry is catching on to


these new changes hence the emergence of electric cars. Current

paper analyzes the Tesla Corporation using a SWOT analysis.

The Tesla Corporation is a business venture that deals with

the production of automobiles. It is a company based in Fremont,

California. Formerly, the corporation was known as a New United

Motor Manufacturing Inc. (NUMMI). This business came into

existence as a venture competing with Toyota and General Motors.

The establishment of the company was set to April of 2007 in New

Mexico but it was later cancelled. Soon, after one more try have

it established, the company was planned to be founded in San

Jose, California but the establishment of the company was once

again cancelled because the cost appeared to be too high and

therefore the company had to venture into other alternatives for

the business (Finley, 2011).

The company was opened in 1962. It was operating as the GM

Fremont assembly; after that its facilities were used by the New

United Motor Manufacturing Inc. The number of employees in the

company is around 3000 people. By 20th May of the year 2012,

Toyota and Tesla Motors had appeared to announce a joint venture

involved in the development of electric vehicles. The two


companies were to team up on the development and production of

the electric vehicles including the parts. This partnership

included Tesla purchasing part of the NUMMI former site. This

purchase involved mainly the building and was worth around $42

million. Tesla Motors eventually came into full existence in the

year 2003 and turned to be one of the prominent car companies

dealing with the production of electric cars. (the tesla

corporation, 2013).

In mid-October of the year 2010, Tesla Motors eventually

took control over the whole site and it was officially opened on

the 27th of the same month. Only a small part of the land appears

to be used for the assembly of the motor vehicle parts.

Eventually, the first Tesla model S was first delivered during

one of the many events that were held at the factory in June,

2012.

The company’s very first series production model was the

Tesla model S full-sized battery electric sedan. Currently,

around 1000 cars are manufactured on a weekly basis. The current

CEO of the company is Mr. Elon Musk. (Binkiewicz, 2015).

Main Competitors


Because it is the company that deals with the production of

electric motor vehicles, it happens to have some major

competitors in this industry. Some of its major competitors

include; industrial conglomerate, Federal Signal and Ford Motor

Company, which is a multinational industrial manufacture of

automobiles that was founded in 1903. Honda Motor Company was

founded in 1948, while General Motors was established in 1908,

and Oshkosh, which is a truck manufacturer, was founded in 1917.

Nasdaq-listed Kandi Technologies, Spartan Motors, PACCAR Inc.,

Toyota Motor Corp. (TM) Tata Motors, and Wabco, which majorly

manufacturers heavy duty commercial vehicles, are also some of

the competitors of the company.

The current situation in the market for this company

involves the fact that it has its network of around 80 stores

used to sell manufactured cars. These stores are located in Asia,

Europe and North America. In the financial year 2013, the company

experienced gross revenue of up to $2.02 billion. By the year

2014, the market capitalization reached $31.06 billion and it so

happens that the corporation does not pay dividend.


Recently, the company has made profits as compared to the

loss of $0.01 per share in the recent quarter. Evidence shows

that there has been heavy investing in infrastructure of the

company because it has just announced the construction of a new

gigafactory in Reno.

The cost of the batteries that the company is installing in

cars is expected to decline by over 30 percent once the

production process starts. Since September, 2014, the company

seems to be enjoying shares of 17% below the all-time highs in

quotation prices.

SWOT Analysis

Strengths

1. The core strength of this company is the current CEO. The

CEO, Mr. Elon Musk had earlier established successful

companies like PayPal and SpaceX. Because these companies

have been successful, the CEO has a positive and successful

track record. This CEO also happens to be very enthusiastic

about the cars he owns. Among his collections are a 2007

Porsche 911 Turbo, an Audi Q7, a 1967 Series 1 E-type

Jaguar, a McLaren F1 and a Hermann BMW. These are some of


the best cars in the market and as the CEO of a car company

owns them, it shows just how much he values cars.

2. In the year 2013, Tesla Motors received an award of the year

for the best motor trend car owing its new creation – the

model S. The competition began in the year 1949 and as one

of Tesla Motors’ cars was perceived as one of the preeminent

and safest cars, it stands for a tremendous advantage and

strength of the company.

3. This company is the first ever company to develop the first

ever fully electric sports car named the ‘roadster’. This is

one more strength of the corporation because other companies

now see it as a major force to reckon.

4. The other strength of the company is that building of the

vehicles is carried out in California. Because they deal

with electric vehicles which appear to be like a hybrid of

gasoline cars and computers, the fact that the company is

situated in California is strength because this is where

they have easy access to the best electrical and computer

engineers.


5. Another added strength is the factory’s space. For its

production, the company uses around 20 percent of its

factory space and hence as new models continue to spring

out, the company does not need to build more factories

because it already has the necessary space. So they do not

have to spend money on building factories but they should

rather spend more on manufacturing and bettering their

products.

6. The decision of the company to be involved in the production

of electric cars only is another major strength. It has

refused to deal with hybrids, diesel, ethanol and fuel cell

cars. This is because all the above might appear to have big

problems in the near future. For instance, fuel cell cars

appear to be always 10 years into the near future, while the

problems exhibited by diesel and hybrids include the fact

that in the near future, oil is likely to run out because it

has a finite source. Ethanol is also associated with its own

share of problems because it has to be grown somewhere.

However, there is the unused and empty land that can be used

for the growing purposes. The decision to venture into


electric cars is strength because as long as electricity

exists, the vehicles will always be powered and as long as

the sun continues shining, electricity will always exist.

One of the solar companies called Solar City is also owned

by the Tesla’s CEO. Moreover, this Solar City Company has

also partnered with Tesla Motors and appears to be

collaborating with it.

7. Celebrities like Arnold Schwarzenegger, George Clooney,

David Letterman, Matt Damon and many others have been seen

in Tesla Motors’ vehicles. This is an added advantage

because most people prefer to be associated with celebrities

and they would purchase the same car that these celebrities

have. This is strength of the Tesla Motors.

8. Apple store markets their products innovatively and hence

have a huge number of buyers. In the same way, Tesla Motors

also markets their products using the same innovative ways

and thus the buyer ratio increases.

9. Building electric cars requires batteries. It can be said

that if too many electric cars are built, the batteries will

soon run out. However, Tesla Corporation has been clever


enough to build its own battery factory. This will curb the

issue of battery running out and put the company out of

business (J. Leach, 2011).

Weaknesses

There are various weaknesses exhibited by this company, some

of which include;

1. The company’s CEO doubles up as the CEO of other companies.

With this busy schedule, it proves difficult to manage the

company, and finding a new CEO also becomes very difficult.

Something can easily go wrong because the CEO has a busy and

tight schedule and can easily overlook certain issues within

the company. Previously, the company fired its CEO and then

went ahead to interview over 20 prospective candidates but

could not find a worthy candidate and hence Elon Musk

decided to take it upon himself to be the CEO.

2. This is an establishment that only deals with electric cars.

As much as it is strength, it is also a weakness because

people are still very much suspicious of electric cars.

However, this problem has been tackled since the Corporation


decided to build a store where the public would view the car

and be informed why this is the car model of the future.

3. Another issue is lack of infrastructure on electric cars.

This company is dealing with this issue by developing

superchargers. These superchargers appear to be similar to

gas stations only that they are to be used for electric

vehicles. Tesla Motors cars are to be charged freely at

these stations. The battery can also be replaced with a

fully charged one at these stations because it takes

approximately 30 minutes to recharge these batteries.

4. Because this company develops everything for these motor

vehicles, there appears to be high cost of production since

the economies of scale seem not to be achieved.

5. Another huge weakness is the high cost of their products.

When compared to their competitors, Tesla Motors appears to

be much more expensive and high costs tend to drive away the

potential market. People would rather opt to buy products

from its competitors because they are much cheaper than

those of Tesla Motors (Lane, 2015).

Opportunities


Some of Tesla Motors Company’s opportunities include;

1. Support from the government. The government and other

organizations have a mission to educate the public about

using environmentally friendly goods and this includes motor

vehicles. Electric cars are environment friendly and for

this reason, there appears to be an exemption from duties on

these vehicles and this provides a huge opportunity for the

Tesla Corporation. People begin to care more and more about

various environmental issues and because of this, the ideal

car to have is an electric car.

2. Tesla Motors plans to launch a passenger car in the near

future. This company has partnered with the Mercedes smart

car. They can use this opportunity to learn more about these

smart cars and use the knowledge they have attained in

developing the planned passenger car.

3. Toyota and Daimler have also decided to purchase electric

vehicles from Tesla Motors and hence they can use this

opportunity to manufacture many cars because in the near

future, different companies might also follow the example of

Toyota and Daimler by purchasing cars from Tesla Motors.


4. The price for oil continues to increase because the supply

is limited. With this increase in prices, many people will

opt for electric cars because they do not use oil which is

an expensive commodity. If oil becomes expensive, then motor

vehicles powered by oil will also become difficult to

maintain. For this reason, the electric car will be an added

advantage and this is an opportunity for the Tesla Motors.

5. When the company improves the quality control process, the

prices will be drastically reduced.

6. Because these motor vehicles use batteries, they can exploit

this opportunity by using the same batteries to store solar

energy. This would save a lot of time because the battery

can always be recharged by the power stored in the battery.

(Thomas Bateman, 2012).

Threats

Some of the threats faced by this corporation are;

1. The company has a desire to produce, distribute and sell its

products for an average price, which at the moment seems

very difficult to do because of the current business model.

Because the prices for electric cars are still high,


potential buyers shy away from such deals as they cannot

afford paying for the car. These prices appear to be the

biggest threat for the company because they produce and

develop cars and the market is not readily available.

2. The competition is getting tougher because more and more

companies appear to be developing their own environmentally

friendly cars. The company has realized that it is not the

only company dealing with environmentally friendly cars.

Some of the companies appear to be larger than Tesla Motors

and hence their financial status is higher than that of

Tesla. This implies that they can endure to stay in the

market for a long period if the prices for oil do not

increase in the near future.

3. Accidents that occur with these electric powered vehicles

tend to scare away potential clients. Anytime an accident

that is caused by electric malfunction or the battery takes

place, it appears to be on the lime light by being in the

front pages of the news. For this reason, more people are

shying away from electric powered vehicles and this proves

to be a threat for the company. Accidents that occur due to


combustion engines are rampart but they do not make the

front news as the accidents caused by electric vehicles.

4. Previously, the younger generation was seen to be much

interested in cars. However, things have changed because

they no longer seem interested in motor vehicles. Some of

these electric vehicles have targeted the young generation

but it seems like they are not too willing to buy such cars

due to lack of interest. This is a major threat for the

company because it shows a situation whereby there is a

willing seller but no willing buyer.

According to this SWOT analysis, there are different areas

that offer opportunities for change. For instance, because people

are still suspicious of the electric cars, the company can change

this attitude by opening show rooms where the public can be

allowed to view these vehicles and ask any questions as well as

express any doubts they have. This might go a long way in

changing the attitude of the public about electric vehicles.

All over the world, there are different gas stations where

motor vehicles owners can fill up their gas tanks when they are

running out of gas. This is another area that appears to offer an


opportunity for change because these electric car companies can

also have its own stations that are used by electric vehicles to

recharge or change their car batteries.

This SWOT analysis indicates that the S model is the only

model of this company. This is another area offering opportunity

for change because the company can exploit this by developing and

designing different car models (kotler, 2012)

Improving the batteries will also change the company’s

outlook. Over the years, batteries have been improved by only 8%,

so once this company improves the batteries, the income will be

increased.

A strategy shows the company the direction it needs to

follow in order to achieve its set goals and fulfill its mission.

A strategic plan serves as a road map in carrying out strategy

and in the end achieving long-term positive results. According to

the SWOT analysis that was carried out regarding the Tesla Motors

Corporation, there are different areas that are essential for

strategic planning. One of these areas is the competition.

Another area that will help in the strategic planning is the

weaknesses of the company. According to the SWOT analysis, Tesla


Company appears to have various weaknesses. One of them is lack

of infrastructure. For instance, based on the SWOT analysis, it

is evident that different people owning motor vehicles fuel their

cars at gas stations when they run out of fuel. This gives this

company an opportunity to realize that because it is involved in

the production of electric motor vehicles, it also needs to have

super chargers where its consumers can do their own ‘fuelling’.

To achieve this goal, the weakness exhibited must be addressed by

the company.

The second area of the SWOT analysis that appears to be

essential is the opportunities. Opportunities come once in a

while and it would be good if the company exploited the

opportunities that were given to it similarly to the support it

gets from Mercedes smart car. This is a rare opportunity that can

help in developing new models of cars by the company.

The last essential area of the SWOT analysis that can be

used to determine the strategic plan is the strengths. The

company’s strengths are one of its strong points. It can exploit

these strengths to its advantage. For instance, one of the

strengths is that it was the very first company to produce


electric sports cars. It can use this for the benefit of the

company by striving to produce other cars so that it can become

the ‘first’ company to produce such products.

For a company to realize its full potential, it has to have

its set mission concerning what it wants to achieve in the long

run. It is just like Tesla Motors that has determined its mission

as the car company that deals solely with electric powered

vehicles. They have turned down offers to indulge in other powers

like ethanol and hybrid. This mission sets it apart from other

companies

Once the strategic plan is put into place, its success must

then be measured. One of the ways of measuring success is using

the outcome measures. It is every business owner’s dream to lead

his or her business to success. Once these various changes and

new measures have taken place, then the outcome should be

positive. If it comes out as positive, then it is safe to say

that the strategic plan was successful. Looking at the business

outcome gives a platform to determine whether the business is

bringing profits or losses. (Jacqueline M. Stavros, 2011)

Conclusion


How can a business owner determine whether his or her

business is on the right track? This question can be easily

answered if the company carries out a SWOT analysis and draws up

a strategic plan to help it in planning and achieving long-term

desired goals.

In the motor vehicle industry, different companies have

emerged and they are trying to outdo each other by producing the

best products. To remain competitive in business, research must

be carried out on how the competition is running and carrying out

its business and hence generating positive aspects of the

competition and change concerning the mistakes that the

competitors seem to be making so as to rule the market and get

the best return. It is evident from the SWOT analysis that among

the threats that Tesla Company is facing is stiff competition

because different motor vehicle companies are emerging and

developing their own environment friendly vehicles. This shows

the company that it is not the only one dealing with

environmentally friendly cars and hence for it to achieve its

goals, it has to come up with a strategic plan of the business.


A company needs to use money to make money. The sole purpose

of setting up a business is to gain profits or good income from

the business. Financial assessment helps the company to predict

the future and plan for it. Once financial assessment is done,

the company is at a better position of controlling the finances

by deciding which areas need to be changed so as to achieve its

long term goals. Once they have the financial knowledge, then it

would be easier to determine which finances go to which projects

thereby helping it achieve long-term goals.

References

the tesla corporation. (2013, 7 20). Retrieved 5 13, 2015, from A SWOT

analysis: Can Tesla Motors save the world?:

blog.trejdify.com/2013/07/a-swot-analysis-can-tesla-motors-

save.htm


Binkiewicz, N. (2015, 4 4). Research And Markets. Retrieved 5 13,

2015, from Tesla Motors, Inc. (TSLA) - Financial and

Strategic SWOT: www.researchandmarkets.com › ... › Company

Reports › Automotive

Finley, M. D. (2011). The Tesla Conspiracy. law offices of michael D

finaly.

J. Leach, R. M. (2011). Entrepreneurial Finance. Cengage Learning.

Jacqueline M. Stavros, G. H. (2011). The Thin Book Of® SOAR: Building

Strengths-Based Strategy. Thin Book Publishing.

kotler P., a. K. (2012). marketing management. Harlow: Pearson

Higher Education.

Lane, M. J. (2015). The Mission-Driven Venture: Business Solutions to the

World's Most Vexing problems. John Wiley & Sons.

Thomas Bateman, S. S. ( 2012). Management : Leading & Collaborating in the

Competitive World: Tenth Edition. McGraw-Hill Higher Education.

The Tesla Corporatio1

Documents

Transcript of The Tesla Corporatio1