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Strategic Analysis of Tesla Motors Inc.
Auconie Nicolas & Kefi Sandes
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Table of content
Executive summary .................................................................................................................... 1
Introduction ................................................................................................................................ 2
Strategic analysis ........................................................................................................................ 3
A) Internal Analysis .......................................................................................................... 3
a. Tesla performances .................................................................................................. 3
b. Organization’s resources.......................................................................................... 3
c. General competences and capabilities .................................................................... 4
B) External analysis .......................................................................................................... 7
a. Macro-environment: PESTEL analysis ...................................................................... 7
b. Competitive rivalry: PORTER five forces .................................................................. 9
C) Diagnostic .................................................................................................................. 10
Potential scenarios ................................................................................................................... 11
Conclusion and short-term recommendations ........................................................................ 12
References ................................................................................................................................ 13
1
Executive summary
This paper is a strategic analysis of Tesla Motors, Inc. wrote to answer the following
problematic: “How Tesla Motors Inc. can improve its strategy to sustain its competitive
advantage on the electric vehicle market and confirm its position as a transformational leader
in sustainable life-style?”.
Our strategic analysis highlights key information concerning internal and external
environments of Tesla Motors Inc. The company is an electric car manufacturer but also an
energy management services provider. Elon Musk is the current CEO and apply
transformational leadership methods to run its business. This transformational leadership led
to tesla diversification from proper car to energy storage and solar cells and is a high
competitive advantage than tesla must care and develop to extend its brand quicker across
the globe. Tesla is relatively young in the industry, it was created in 2003. This youth is a
double -edged which has allowed the electric car manufacturer to develop a short technologic
advance on its traditional competitors but also make the company’s growth especially fragile
and threatened by many variables like legal decisions, technologic issues or deliveries
postpone. According to our external analysis the macro-environment is relatively profitable
for tesla and especially criteria like social, ecological and technologic participate to shape a
solid ground for a next take-off. The present barriers for Tesla to such a take-off are the next
entries of traditional car makers in the electric car market. Indeed, these old companies have
important disposals and can produce far more than tesla currently do. Competitors’
assessment suggests the major part of traditional car makers will have start to deliver high
quality electric models from here to early 2020 maximum. Tesla had already invested money
to increase its production capacity but should inject time and energy to reach a sufficient
threshold soon enough to take the leader position in the high quality electric car market
before its competitors. Otherwise it will be rude to recover. Nevertheless, a development of
the energy management services could provide to tesla sufficient economic resources to
remain important on the market and compete on the long run with classic car makers making
electric vehicles.
Our strategic recommendations for Tesla are to develop Solar roof the larger they could to
extend their brand across the whole world, to create a “Pro-Pack” including tesla model III for
employees and Power Pack for the company energy management, and finally to sign many
partnerships with established traditional car makers to provide them core pieces of their final
electric cars like batteries or engines.
2
Introduction
Tesla Motors Inc is a relatively young public company which build electric vehicles and provide
services for personal and professional energy management. Founded in July 2003 by Martin
Ederhard, Marc Tarpening, JB Straubel, Ian Wright and Elon Musk – Current CEO – the
company is based in Palo Alto California and went public in 2010. The manufacturer whose
name pays tribute to the scientist Nikola Tesla is specialized in commercializing high quality
electric cars empowered by high performing battery packs. Moreover, Tesla sells powertrain
components and produce battery charging equipments to complete its offer.
Tesla Motors started its business by launching its electric sport car called the Tesla Roadster
in 2008 which is known to be the first car using lithium-ions for its battery instead of classic
fuels; The Tesla Roadster shined in the competition of Monte-Carlo (competition for the
alternative energy) where it arouses interest of some powerful individuals. Since, Tesla has
expanded its vehicle offer with tree additional models, the S, the X and the III, whose deliveries
began respectively in 2012, 2015 and 2017. On the long term, Elon Musk’s goals is to produce
a large range of models, counting more affordable cars (the Tesla Roader is worth €84 000)
although keep producing luxury ones. Furthermore, a highly transformational leadership from
Musk consists in making Tesla not only a car maker but more widely a sustainable lifestyle
provider. Emphasizing the move toward ecologic solutions using solar electric energy, which
is today considered as the more reachable sustainable solution, Tesla thus plans to be able
from now to 2020 to produce a complete sustainable package including electric cars, smart
batteries and efficient solar cells technologies.
To achieve its transformational vision while remaining financially reliable, the company is
facing many opportunities. Whether by the sales expansion of its cars from a B2C to B2B, by
selling patented electric powertrain components to automakers just entering the electric car
market or by developing self-driving software making customer experience improved, Tesla
electric car manufacturing know-how is a huge asset in a market still very young. On top of
that, Tesla has applied diversification to its business and has settled some partnership to
produce battery power packs for domestic and professional applications (Panasonic) as well
as highly competitive solar panels with Solar city next acquisition.
According the present overview and additional data used through this report, we have
decided to set up the next problematic to Tesla Motors Inc.
How Tesla Motors Inc. can improve its strategy to sustain its
competitive advantage on the electric vehicle market and confirm its
position as a transformational leader in sustainable life-style?
Strategic analysis
A) Internal Analysis
a. Tesla performances
Tesla Motors’ performances are quiet encouraging. A steady growth in revenues comes to
balance a negative net income what suggests a future ability to create value. Moreover,
investments in R&D, Capital expenditure and operating expenses have steadily increased since
2010 to pick in 2015 explaining an important decrease in cash flows this precise year. By and
large, Tesla performance are significantly related to its position relative to the general industry
life cycle. Indeed, according data, Tesla is slipping from its Birth phase to its Growth phase
meaning that ultimate investments required to face substantial growth and then profit just
happened and require a few years to show sufficient returns. Tesla is therefore in transition
and need more than ever to build a consistent and long-term strategy for its growth and
maturity phase.
b. Organization’s resources
