SWOT Analysis of Tesla (Tesla SWOT)

By: | Tags:

SWOT Analysis of Tesla (Tesla SWOT)

This is a detailed SWOT analysis of Tesla. The purpose of this article is to analyse the strengths of Tesla as a company as well as the weaknesses it currently has. It also examines the opportunities that the company should explore, and the threats it must fend off. Tesla was founded in 2003 and the first car it had launched was the Roadster back in 2008 (Tesla, 2021).

Strengths of Tesla

Tesla has really led the way when it comes to manufacturing all electric cars. It delivers on all aspects across the board. This includes performance, safety and efficiency. For example, The Model X has become the quickest, safest and most capable sports utility vehicle in history as it has received 5-star rating across every category from the U.S. National Highway Traffic Safety Administration (Tesla, 2021). The Model X became the first SUV ever in history to revive a 5-star safety rating from the National Highway Traffic Safety Administration as well as the European New Car Assessment Programme.

Tesla became the first company to manufacture an all-electric car that goes from 0-60mph in under four seconds with the Roadster. The company then repeated it with the Model S, Model X and the mass market Model 3. The Model X won the CleanTechnica’s award in 2015 and Tesla won the award again in 2018 when the Model 3 came out.

In addition, Tesla had unveiled the autopilot feature in 2014 and automatic lane change in 2015. Furthermore, while many had criticised Tesla, it mass produced a car that had Falcon wings curtesy of the Model X and had produced 50,000 units in a year (Shahan, 2018).

Though Tesla suffered financially in the past, it is worth mentioning that it announced a profit of $721 million for the year 2020 on around $31.5 billion in sales, backed by the rise in deliveries and higher revenue from regulatory credits. This is in sharp contrast with its performance in 2019 that saw a loss of $862 million (Elliott, 2021).

Weaknesses of Tesla

Weakness is the next area of discussion in the SWOT analysis of Tesla. Tesla’s debt amount is around $10.67 billion (Collins, 2019). The company is losing its value as the markets for its products are weakening.

Tesla’s global presence is limited compared to some other leading automobile companies. Likewise, many customers have shared their frustration with the brand on social media over a number of build-quality issues.

Tesla’s overall manufacturing capacity has been in question for a long time. It spent years to improve it manufacturing process; however, it is not yet in a commanding position. In fact, Elon Musk once termed the manufacturing failure as ‘production hell’.

One of the biggest problems that Tesla faces is that its cars are in the premium end of EV market. As a result, they are still very expensive compared to the rest of the market. For instance, the cheapest car it sells in the United States is around the $40,000 mark and it is even more expensive in Europe. Moreover, in terms of price, Tesla is not able to compete with its competitors in Europe such as the Renault Zoe which is significantly cheaper (Morris, 2021).

Opportunities for Tesla

Tesla has many opportunities to explore for it to be able to grow as a company. While it produces all electric cars, it also produces infinitely scalable clean energy generation and storage products (Tesla, 2021). It can possibly consider releasing other all electrical products so that it can expand it products range and generate more revenue.

Tesla has its main factory in California. In addition to this, it also has a new factory in China which is helping it to lower the production costs (BBC, 2020). Moreover, it is building a new factory in Germany and has plans to open a new one near Austin, Texas.  These new initiatives should improve the manufacturing efficiency of the company.

Emerging markets offer excellent opportunities for growth for Tesla. Though the global lockdowns affected virtually everyone in 2020, a growing middle class is out there in these countries who are looking forward to embracing all-electric vehicles.

Threats to Tesla

Threat is the last topic of discussion in the SWOT analysis of Tesla. While Tesla still dominates the EV market globally, its competition is constantly getting bigger. In October 2020, the best-selling EV in Europe was the Volkswagen ID.3 which is a compact car. In November 2020, the best-selling EV was the Renault Zoe followed by the Volkswagen ID.3 and then the Hyundai Kona. The Model 3 came in fourth in November last year while the Model S and the Model X were not even in the top 20. To make things worse the technically worse off Audi e-tron did make the top 20. This was a cause for concern for the European investors (Morris, 2021).

Legal threats and penalties may turn out to be costly for Tesla. For instance, it was ordered to pay a penalty of £14 million in Germany in 2020 for failing to comply with battery recycling laws. It was also fined $20 million in 2018 by a federal judge in the USA for a misleading tweet by Elon Musk.

We hope the article ‘SWOT analysis of Tesla (Tesla SWOT)’ has been helpful. You may also like reading SWOT analysis of Volkswagen and SWOT analysis of General Motors (GM). Other relevant articles for you are:

Competitors of Uber (Uber competitor analysis)

SWOT analysis of Tata Motors

SWOT analysis of Ford Motor Company

If you liked any of these articles, please feel free to share with others by clicking on the social sharing icons provided.

Last update: 29 March 2021

References

BBC (2020) Tesla growth continues despite economic upheaval. Available at: https://www.bbc.co.uk/news/business-53507269 (Accessed: 1 February 2021)

Chowdhury, S. (2021) Carmaker Nio is ‘well positioned’ to capture a lot of China’s electric vehicle market, analyst says. Available at: https://www.cnbc.com/2021/01/12/china-electric-vehicles-market-nio-tesla-tsla.html (Accessed: 1 February 2021).

Collins, J. (2019) Tesla Has Failed Massively As A Public Company. Available at: https://www.forbes.com/sites/jimcollins/2019/08/21/tesla-has-failed-massively-as-a-public-company/ (Accessed: 1 February, 2021).

Elliott, R. (2021) Tesla Posts First Full Year of Profitability, available at: https://www.wsj.com/articles/tesla-tsla-4q-earnings-report-2020-11611708257  (accessed 28 March 2021)

Morris, J. (2021) Tesla’s Dominance Could Be Under Threat Sooner Than You Think. Available at: https://www.forbes.com/sites/jamesmorris/2021/01/16/teslas-dominance-could-be-under-threat-sooner-than-you-think/ (Accessed: 1 February, 2021).

Shahan, Z. (2018) 8 “Impossible” Goals Tesla Has Achieved. Available at: https://cleantechnica.com/2018/10/14/8-impossible-goals-tesla-achieved/ (Accessed: 1 February, 2021).

Tesla (2021) Tesla’s mission is to accelerate the world’s transition to sustainable energy. Available at: https://www.tesla.com/en_GB/ (1 February, 2021).

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.