Tesla SWOT Analysis

SWOT is an acronym for strengths, weaknesses, opportunities and threats related to organizations. The following Table 1 illustrates Tesla SWOT analysis:

Table 1 Tesla SWOT analysis

Strengths in Tesla SWOT Analysis

1. Tesla benefits from the first mover advantage in alternative fuel vehicles manufacturing to a considerable extent. The company was established in 2003 with the mission “to accelerate the world’s transition to sustainable energy”, right after auto giant General Motors recalled and destroyed its EV1 electric cars.[1] Today, Tesla is an undisputed global market leader in electric vehicles segment. It can be argued that being the first global company exclusively focusing on electric vehicles, Tesla is in a good position to achieve a long-term growth.

2. The numbers of electric vehicles sold by Tesla has been increasing. As illustrated in Figure 1 below, the alternative fuel vehicles manufacturer delivered 180,000 vehicles in the last quarter of 2020. Increasing numbers of vehicles sales is strategically important for the company in a way that it allows benefiting from economies of scale and consequently, the alternative fuel vehicles manufacturer can become more profitable.

Figure 1 The numbers of Tesla vehicles delivered worldwide[2]

3. Innovation is placed at the core of Tesla business strategy and this is reflected in a wide range of business processes. Tesla has been acknowledged as The Most Innovative U.S. Brand in 2017 by BrandZ[3]. The list of innovative features and capabilities of Tesla cars include Enhanced Autopilot Driverless Technology, over-the-air (OTA) transmission to update cars and a long driving range of electric vehicles. Moreover, Tesla has caused a disruptive innovation in energy storage segment in a global scale. It is important to note that despite the innovative features and capabilities of Tesla vehicles, its battery is not patented and the vehicle designs are open source.

As it is illustrated in Table 2 below, Tesla Model S Plaid has been acknowledged as a fastest accelerating car in the world as of April 2021, reaching 60 mph in less than 2 second.  This achievement is attributed to a synergy achieved through product and process innovations.

Table 2 Fastest accelerating cars[4]

4. Brand equity refers to “the value of a brand and is determined by consumers’ perception of the brand.”[5] Tesla owners have strong positive emotional attachment to their cars. Moreover, Tesla is a dream car for hundreds of millions of people worldwide. This is because the company has been effective in associating the ownership of its cars with being cool and environmentally responsible and saving in energy costs. Strong brand equity translates to brand value. Accordingly, Tesla became the most valuable car company in the world and its brand value exceeds USD 208 billion.[6] Strong brand value and brand equity is a considerable strength that benefits the company in many levels.

Weaknesses in Tesla SWOT Analysis

1. Tesla cars are expensive for the majority of users, thus the target customer segment for the alternative fuel vehicles manufacturer is very slim. As it is illustrated in Figure 4 below, the cheapest car, Model 3 starts at USD 35,000 and Model X can be as expensive as USD 124,000. The reasons behind massive price tags include mainly aluminium bodies of vehicles, expensive batteries and necessity to recover huge R&D investments. The electric car maker has plans to produce economy cars for masses as unveiled in a famous blog post by CEO Elon Musk in 2006, but this plan is yet to be realized.

Figure 4 Prices of Tesla cars[1]

2. A high level of indebtness is a major weakness for Tesla. As of February 2021, the alternative fuel vehicles manufacturer has total debt of USD11.69 billion, with USD9.56 billion in long-term debt and USD2.13 billion in current debt. Tesla’s current level of indebtness is a considerable weakness in a way that it threatens long-term growth prospects of the business.

Tesla Inc. Report contains a full version of Tesla SWOT Analysis. The report illustrates the application of the major analytical strategic frameworks in business studies such as PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Tesla. Moreover, the report contains analyses of Tesla leadership, organizational structure, business strategy and organizational culture. The report also comprises discussions of Tesla marketing strategy, ecosystem and addresses issues of corporate social responsibility.

[1] Bihani, S. (2017) “Elon Musk Reveals He Started Tesla After Watching General Motors Destroy Its Own Electric Car” India Times, Available at: https://www.indiatimes.com/news/world/elon-musk-reveals-he-started-tesla-after-watching-general-motors-destroy-its-own-electric-car-323520.html

[2] Q4 and FY2020 Update (2021) Tesla Inc.

[3] Evannex (2017) “Tesla ranked most innovative brand in the US” Teslarati, Available at: https://www.teslarati.com/tesla-ranked-most-innovative-brand-in-us/

[4] Q4 and FY2020 Update (2021) Tesla Inc.

[5] Brand Equity (2021) Corporate Finance Institute, Available at: https://corporatefinanceinstitute.com/resources/knowledge/other/brand-equity/

[6] Klebnikov, S. (2020) “Tesla Is Now The World’s Most Valuable Car Company With A $208 Billion Valuation” Forbes, Available at: https://www.forbes.com/sites/sergeiklebnikov/2020/07/01/tesla-is-now-the-worlds-most-valuable-car-company-with-a-valuation-of-208-billion/?sh=78d563ac5334

[7] Source: Energy Sage (2021) Available at: https://news.energysage.com/how-much-does-a-tesla-cost/