In this SWOT analysis case, the following strengths shape the capabilities of Teslas business as a competitive player in the automotive and energy solutions industry: Tesla, Inc. is known for its high rate of innovation. As the world enters the challenging post-COVID era, and companies struggle to recover from the massive fluctuations within the market, industries continue to grow and change as time passes. However, its position is the strongest in the US and China markets. While it sold fewer cars in the first and second quarters of 2020 compared to the previous year, sales surged again in the third quarter of 2020 compared to the same period in the previous year. More and more brands are working on their own fully electric models. This SWOT analysis shows that Tesla has the potential to grow in the global automotive market despite aggressive competition. The intense competition is forcing companies to expand their market and enter into developing countries. Other than that, hes a fun loving person. Most of the companys financial year is in 2017, so we compare fiscal 2018 with other companies 2017 financial year as it is more accurate.). Teslas corporate social responsibility strategy and stakeholder management efforts that capitalize on the sustainability trend can help facilitate sales expansion and supply chain expansion. The Institute of Chartered Accountants in England and Wales, incorporated by Royal Charter RC000246 with registered office at Chartered Accountants Hall, Moorgate Place, London EC2R 6EA. It achieved a good performance in all six IIHS crash tests. The company will need to improve its manufacturing capability to cater to popular demand in the leading markets successfully. In this situation, stagnation and no improvement can be frightening for any company. Nonetheless, Toyota uses its R&D budget the most effectively, spending just 3.6% of its total revenue on R&D, while Volkswagen spends 6.7%. The fluctuations in material prices are another threat determined in this SWOT analysis. However, as identified in this SWOT analysis, there are various issues that the car company must address to maintain its competitiveness and improve its profitability. Strategic adjustments to Teslas operations management can minimize the impact of this weakness. Its total sales for the third quarter of 2020 were around 40% higher than the sales during the same period in the previous year. Governments around the world are allowing subsidies to the brands that make fully electric vehicles. First off in the automobile industry SWOT analysis we should analyze the strength of the Automobile Industry. As of now, the tesla supercharger network is robust in key regions and mainly North America. This internal strategic factor is a weakness that limits business growth despite the economic development and opportunities in non-U.S. markets for cars and solar energy solutions. But the Asian automobile market is growing and has a lot of potentials. which are the characteristics of VFM products. How is it standing up to the challenge? It limits the companys customer base considerably against the other brands. It helps companies to make strategies to resolve the potential harms. The external factors that contribute to the weak threat of new entrants against Ford are as follows: High capital costs (weak force) High cost of doing business (weak force) High cost of brand development (weak force) Therefore, the company has focused on growing its network of chargers by including the companys superchargers as well as destination chargers. The global Automotive market is poised to register strong growth with light vehicle sales increasing from around 95 million to over 106 million between 2019 and 2025. It has also increased the sales of cars and vehicles and the growth in the industry is good for the business. These factors have led to higher satisfaction for the Tesla car owners. Luxury commercial vehicles: As many Asian countries economic conditions are stable, their lifestyle is also changing. However, the company is still a lot ahead of other major automakers like VW and Toyota in terms of market capitalization. Industry experts have stated that growing digitalization and advancements in technology will increase the automotive industrys investments to $82 billion by 2020. The density of superchargers is especially very high in the North American region. ROI needs to be capitalized. Toyotas brand and recognition provides the company with a competitive edge over competitors as few other automotive brands are so well-known and reputable. The ease and quality of life improvements the automotive industry brings will only increase the demand for vehicles in the future. Its Model 3 enjoys a 60% share in the US Electric vehicles market. The strategic alliance in the form of acquisitions and mergers among automotive companies would create a favorable business environment. It has helped them to enjoy cheap labor cost and lower production and material cost. Brand value is closely related to brand reputation and recognition. With this SWOT analysis, each of the Automobile Industrys strengths, weaknesses, possibilities, and threats on the market was emphasized by their company. In 2019, the company delivered around 3,67000 units, which was a sharp rise from around 2,45000 in 2018. OEM (original equipment manufacturer) should consider working with experts and manufacturers of the other industries. While Tesla has emerged as a comparatively resilient company during the pandemic, its sales declined during the first two quarters of the year compared to the previous year caused by the pandemic. Microsoft Corporation SWOT Analysis (2016), Zora Neale Hurstons Their Eyes were watching God: Analysis. Yet it is undoubtedly a symbol of progress and innovation, despite the negative factors. are the economic factors which will daunt the automobile industry for an extended period. The emerging markets like India and Brazil present significant growth opportunities for the EV brand. The company has earned over 60% of its revenue from the U.S. alone. For 2019, its operating expenses stood at $4.14 billion compared to $4.4 billion in 2018. The method is often used at the start of or as part of a strategic planning exercise. The company has started generating some profits in 2020. Recent events in the international politics has slowed down global economic activity. Its focus on technological innovation has mainly driven tesla's growth. For example, the company generates most of its revenues in the United States and has relatively limited operations in other electric car markets. The brand is also a strength in this SWOT analysis of the automotive corporation. collaborating on marketing and promotion, sales of vehicles, production, research and development, and As more countries are open to the automobile industry the market will keep on expanding and developing. Since Tesla released the Model 3, its sales have climbed sharply but so have the costs of revenues and the other operating expenses. OEM priorities: OEM means Original Equipment Manufacturer. The Tesla brand is a symbol of innovation and sustainability in line with Elon Musks business goals. The companys goal on being ahead of its competition by introducing some of the most innovative vehicles in the market has proven to be a successful strategy. Among the automotive companies, only Volkswagen spends more on R&D than Toyota. Even the Tesla Model 3, which is the lowest priced car in the Tesla range, is priced at around $48,000. As supply chains become increasingly complex, procurement has become highly crucial and influential in the production process and continues to grow. Innovation and advancement: R&D investment by automakers is driven by consumer demands. Strengths Environmental awareness of Bangladesh Government Lower duty charge Table 1. This is giving the consumers the opportunity to bargain their way as the companies have more stiff competitions to win among themselves. High employee turnover: The employee turnover in the automobile industry is found to be higher when compared to several other sectors. It impacts customers directly and theyre very cautious about their daily expenses. Origins of SWOT analysis. Also, it is estimated that the global automobile market will witness growth in the future but it will not be enough to make up for the slump caused by the coronavirus (Covid-19). Volatility in the fuel prices: For the consumer segment, fluctuations in the fuel prices remains the determining factor for growth. These procurement trends include technology changes, novel strategic approaches, new processes, and necessary adaptations to change. Government regulations: Regulations like excise duty, no entry of outside vehicles in the state, decreasing number of the validity of registration period, and volatility in the fuel prices pose considerable challenges to automobile companies. Growth through diversification addresses some of the trends noted in the PESTEL/PESTLE analysis of Tesla Inc. Teslas advantage lies in its batteries. Apart from zero-emission of their vehicles and their superior battery range, they are also among the safest and require nearly no maintenance than the other vehicles. Tesla may still not be the largest automobile company in the world regarding car production and sales. Given how automobile demand has crashed due to the pandemic, Teslas performance is nothing less than stellar. BMW is a German luxury car company with a strong presence in Europe, the US, and Asia. ICAEW.com works better with JavaScript enabled. SWOT Analysis of Walmart (5 Key Strengths in 2022), SWOT Analysis of Starbucks (6 Key Strengths in 2022), SWOT Analysis of Samsung (6 Key Strengths in 2022), SWOT Analysis of Ford (5 Key Strengths in 2022), SWOT Analysis of Coca Cola (6 Key Strengths in 2022), Automotive, Housing, Financial Services, Other. In terms of pricing, the companys electric vehicles are relatively more expensive than competing cars, especially those that have internal combustion engines. The company withstands pressure from competing automakers like General Motors, Toyota, Ford, Nissan, Honda, Bavarian Motor Works (BMW), and Volkswagen. I'm Angela, founder & content creator of SWOT Hub. Tesla is the leading EV brand in the world. It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. In the last few months only, Tesla stocks have climbed insanely and steadily. In evaluating Tesla, an analysis of SWOT factors (strengths, weaknesses, opportunities, threats) provides insights on how the business can approach challenges in the industry. The demand for EVs has kept rising worldwide over the past few years. These changes will bring demand for two-wheelers and compact cars. The trend of fuel and cost-efficient vehicles is increasing among customers for the past few years. Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. The brand is also a strength in this SWOT analysis of the automotive corporation. Manufacturing, research and sales operations worldwide, combined with a huge number or vehicles sold, as well as advertising spending has helped the company to create one of the most recognizable brands in the world. This means that Toyota needs to spend less on R&D to generate the same amount of revenue than its key rivals. In relation, this SWOT analysis determines that Teslas limited access to innovative supplies is a weakness that prevents the company from rapidly expanding internationally. are the economic factors which will daunt the automobile industry for an extended period. Also, different regulations of the government regarding alternative fuels can also affect inventories. WebAccording to Carlier (2021), among the global automobile industry, Toyota also held the title of having the highest market share of 8.5% in the year 2020 (See Figure 1). According to sources, Tesla sold more than 64,000 units in the US in the third quarter of 2020 compared to around 52,000 units during the same period in the previous year. Rising competition: Presence of a large number of players in the automobile industry results in intense competition and companies eating into others share, leaving little scope for new players. Autodrive and other technologies make these cars safer and performance-wise superior to the other cars on the roads. But as electronic content is increasing companies need to think out of their traditional way to make more profit out of it. Huge, efficient R&D spending has allowed Toyota to gain a competitive advantage over its competitors and to become one of the largest automotive manufacturers in the world by researching and introducing the leading-edge technology and vehicles to the consumers. Perceiving the chances that line up with the companys development is a huge piece of its essential arranging. Heres the swot analysis of the automobile industry as follows; Some of the main automobile brands have transferred their production facilities into emerging Asian countries like India and China. India's Automotive Market was valued at USD 100 billion in 2021 and is expected to reach USD 160 billion in 2027, registering a CAGR of 8.1% over the forecast period (2022-2027). Also as more nuclear families are increasing demand for vehicles is also increasing. VFM vehicles: The competition among the matured companies is one of the reasons the market of automobile vehicles is expanding to developing countries rapidly. All the information is supported with data from the most trusted sources. Lang, J. W., Reber, B., & Aldori, H. (2021). The dependent growth rate: As many derivatives such as the validity of the registration period, no entrance for outside vehicles, and fuel prices are in the hand of the government, it always affects the growth of the industry. However, the subsidies on Teslas Model 3 could be expiring soon, and that could cause a decline in sales. Automobile Industry swot analysis offers the brightest part of the opportunities offered by the Automobile Industry. Manufacturing facilities in Asian nations to control cost: To monitor cost and to manage shrinking margins, automobile companies like Harley, Volvo, Bharat Benz, etc. Overall, Tesla cars offer a superior riding experience compared to most cars on the road, and therefore they easily stand out from the competition. The case of the solar roofs Tesla had promised is also similar. These factors are weaknesses that can reduce competitiveness and slow the growth of the automotive firm. However, the demands of the emerging markets are a bit different, and they want VFM (value for money) vehicle. If the company wants to increase its footprint in the existing and new markets, it will need to grow its supercharger network in all the markets. In 2012, the company was the first automotive company to produce over 10 million vehicles in a single year. Such insights can inform and guide corporate governance and management to ensure the growth of the automotive business. As a luxury carmaker, Tesla has positioned itself to a specific, and limited, class of consumers. SWOT analysis applications: An integrative literature review. Korean automakers Hyundai and Kia are both present in the US, Europe, and Asia. In the US, while Teslas overall share in the automotive market is only 1.3 percent, its share of the EV market has grown to above 60%. Volkswagen is a well-known brand with a strong presence in Europe. Also, big companies like Harley, Volvo, Bharat Benz, etc are making manufacturing facilities in Asian countries because of their high resource and cheap workforce which is also one of the reasons for the growing Asian market. Often, many vehicle parts are purchased from other manufacturers or suppliers and used to assemble their finished products. Expanding its supercharger and destination charger network is critical to finding faster growth. However, OEM has to change its functionality in order to go outside of the industry. The ease and quality of life improvements the automotive industry brings will only increase the demand for vehicles in the future. Furthermore, attracting and retaining employees in the automotive industry can be very challenging, especially in the case where competitors are doing what they can to lure the best talent. Teslas management can expect better performance and resilience in the global market for electric automobiles and energy solutions upon addressing the SWOT factors identified in this analysis. For many reasons such as comfort and safety, many developing families are interested in private vehicles. are some factors that can break down the automobile industry. Furthermore, the demand for food De Graaf, F. J., & Wilderom, C. P. (2020). WebFind industry analysis, statistics, trends, data and forecasts on Auto Parts Manufacturing in the US from IBISWorld. Tesla cars are made mainly for the higher end of the market. Other factors that have led to increasing EV demand worldwide include government subsidies and the zero environmental impact of these cars. There are specific threats to Automobile Industries, but proper planning can help them to survive the situation. We have dissected the SWOT analysis for companies in the automobile industry below: Evolving industry: The automobile industry is a highly growing industry, continuously contributing to growth and development. Automobiles give people the opportunity to live, work and travel in ways that were unimaginable a few decades ago. The weaknesses or areas to be improved are discussed next in the Automobile Industry swot analysis. The company has experienced a sharp increase in its vehicle sales in 2019, and despite the decline in demand due to the pandemic, it has retained a lot of its growth momentum. The industry is also trying to use renewable sources of energy such as solar, wind, and others. SWOT Analysis Of Tesla. Once the pandemics effect is over and economic activity revives again, these markets will again start seeing growth. Its increasing with the advancement of technology, and alternative fuels such as shell gas, CNG, etc. Privacy & Cookie Notice. Google SWOT Analysis 2023: A Resourceful Report! All brands have alike felt the impact of the pandemic on their manufacturing and supply chain networks. You can find more information about the business in Toyotas official website or Wikipedias article. This industry is also contributing to job creation and skill development. Not since Henry Ford perfected his first production line in search of a faster horse has the automotive industry faced such sweeping change. Teslas cars also offer a superior battery range compared to the rival EVs and hybrids on the roads. Now, a customer has got a lot of options to choose from, and it has given the power to the customers to purchase whatever they like. The company spent around $1.34 billion on research and development in 2019. 2. This external factor especially highlights the fluctuating and generally increasing cost of lithium, a material used in the companys energy storage products. Required fields are marked *. Tesla cars are also enjoying superior safety ratings overall. Using renewable sources could also bring much more success to the market. H&M SWOT Analysis 2023: A Detailed Report! Charging a Tesla vehicle costs much less than gasoline. Toyota is famous for its innovative culture. A large base of upper middle class consumers in these regions is waiting eagerly for Tesla to set its stores there. Toyota, which produced and sold 8.964 million vehicles in 190 countries in 2018 alone, has one of the widest consumer reach in the world. This simply doesnt mean outsourcing risks - or that a company's responsibility ends once the product is sold. Even during the pandemic when the demand for automobiles has continued to fall around the world, the company is enjoying stronger sales and growth. [1], Figure 1. Furthermore, attracting and retaining employees in the automotive industry can be very challenging, especially in the case where competitors are doing what they can to lure the best talent. This aspect of the SWOT analysis focuses on the external factors that present potential growth and development for the automotive business organization. Toyota brand is also one of the most reputable brands in the automotive industry. In this swot analysis, we will analyze the leading strengths and weaknesses of Ford Motor Company and the opportunities and threats before its business. It would provide an additional benefit of an environmentally friendly feature for the marketing of the brand. Over its 75 years history, the company received hundreds of awards accolades in vehicle design, safety, environment-friendliness and manufacturing operations. Tesla also has the opportunity to expand its supply chain to support the global expansion of production and sales operations. Changing lifestyle & customer groups: As the whole world is going through huge economic development, change in lifestyle is becoming more prominent. But here they are facing the demand for VFM products (value for money). However, it is still too low as compared to most automobile brands with a global presence. These are ideal conditions for an emerging market. Benzaghta, M. A., Elwalda, A., Mousa, M. M., Erkan, I., & Rahman, M. (2021). In An automobile industry SWOT analysis will help you understand what competitors are leading and losing the race. One of the main factors driving fast growth in popularity and sales of Tesla cars is the companys focus on technological innovation. Tesla Inc.s Organizational Culture & Its Characteristics (Analysis), Tesla Inc. Five Forces Analysis (Porters Model) & Recommendations, Teslas Mission Statement & Vision Statement (An Analysis), Tesla, Inc.s Generic Strategy & Intensive Growth Strategies (Analysis), Tesla, Inc. PESTEL/PESTLE Analysis & Recommendations, Tesla Inc.s Organizational Structure & Its Characteristics (Analysis), Tesla, Inc.s Marketing Mix (4Ps) Analysis, Tesla, Inc.s Corporate Social Responsibility & Citizenship, Stakeholders, Tesla, Inc.s Operations Management: 10 Decisions, Productivity, General Motors Company SWOT Analysis & Recommendations, Toyota External Analysis: Opportunities & Threats, General Motors Mission & Vision Statements - An Analysis, General Motors Organizational Structure for Flexibility in Regional Markets, Toyotas Organizational Culture Characteristics: An Analysis, Toyotas Mission Statement & Vision Statement: An Analysis, Ford Motor Companys Mission Statement & Vision Statement: An Analysis, General Electric Company (GE) SWOT Analysis & Recommendations, General Motors Generic Strategy & Intensive Growth Strategies, the Porters Five Forces analysis of Tesla Inc, Teslas generic strategy for competitive advantage and strategies for intensive growth, Teslas organizational or corporate culture, Teslas organizational structure that facilitates centralized control of the corporation, Teslas corporate social responsibility strategy and stakeholder management efforts, Teslas corporate mission statement and corporate vision statement, United States Department of Commerce International Trade Administration Automotive Industry, United States Department of Commerce International Trade Administration Energy Industry, High rate of innovation in business processes, Strong control on business processes based on vertical integration, Strategies that intentionally limit market presence, Limited access to supply for innovative products, Global sales expansion for electric cars and solar energy solutions, Increased business diversification beyond electric vehicles. Save my name, email, and website in this browser for the next time I comment. According to Counterpoint Research, Tesla accounted for around 23% of EV sales in China in June 2020. The demand for luxury commercial vehicles like Bharat Benz, Chrysler, Daimler, and Volvo is increasing in developing countries. For any company, it is crucial to focus on its shortcomings. The external factors that limit or reduce Teslas organizational performance are covered in this aspect of the SWOT analysis. This also implies that there will be a rise in competition in the automobile industry like never before. In todays globalized economy, outsourcing has become an integral part of business operations. Transitioning your category procurement strategy beyond cost-saving and into a strategic function of the organization. Apart from these things, Tesla cars are loaded with technology. Also, the company manufactures many of the components used in its automobiles, and sells its cars through company-owned locations. In the third quarter of 2020, Tesla cars' sales were at least 40% higher than in the same period in the previous year. Full-year sales in the world's biggest auto market fell 1.9% to 25.3 million vehicles in 2020, the data showed. The results of this SWOT analysis suggest strategic reform for long-term success in the global market, by increasing effectiveness in addressing the strong force of competition shown in the Porters Five Forces analysis of Tesla Inc. increase the automotive industrys investments, are building their manufacturing facilities, fuel-driven combustion engines and cost efficiency programs. Expand internationally and work to secure worldwide production. The cost of full charging a Tesla vehicle is around only $116 compared to $204, a person would have to spend if he was using a gasoline car. 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