Tesl Industry, Situation, And Strategic Analysis

1120 WordsFeb 13, 20175 Pages
Tesla: Industry, Situation, and Strategic Analysis Tesla Motors is an automaker based in Palo Alto, California. In addition to producing electric cars, the company is “also a technology and design company with a focus on energy innovation” (Tesla, 2017). Tesla employs a vertically integrated strategy, centered on the in-house production of nearly all of the components that go into its cars – unlike its competitors that outsource particular production processes (Lambert, 2016). Currently, the company manufactures three electric car models, which include: (1) the Tesla Roadster; (2) Model S, and; (3) Model X (Mangram, 2012). The company’s offerings face competition from other electric and hybrid cars, such as Chevrolet Bolt, Toyota Prius,…show more content…
(3) Moderate bargaining power of suppliers since Tesla is moving towards a vertically integrated operational model, which could push out some of its suppliers, such as Panasonic who supply its batteries. (4) Low threat of substitutes as it remains a unique company in the luxury electric cars sector. (5) Low threat of new entrants as the industry demands high capital and R&D investments. Mostly, Tesla faces the highest pressures from its competitors and buyers. Latest competitive forces come from the U.S. electric car manufacturer Atieva and the Chinese tech company, LeEco (Harris, 2016). On the other hand, Tesla’s buyers lament the high costs of the company’s offerings, which are prohibitive for the mass market. Nevertheless, the company promises to introduce affordable models in the future that would cement its position as an innovative electric car manufacturer to remedy the situation (Tesla, 2017). Nonetheless, Tesla should re-focus its energies on the luxury electric vehicles segment because a rapid expansion into the mass-produced electric automobiles sector could dilute its position, which otherwise generates the bulk of its revenues. If the company still wishes to become a player in the mass market, however, it should opt to license out its technologies to other manufacturers, such as Mercedes, who have the necessary
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