Tesla Motors Essay
The Global Business Community The first macroenvironmental factor that Tesla Motors faces is the society and subcultures. In this day in age consumers worldwide have increased their knowledge and sensitivity about its environment. Numerous companies have catered to this need of becoming more environmentally responsible by offering products that are “green” or environmentally friendly. This new growth amongst people and organizations alike of becoming more environmentally conscious has created an opportunity for Tesla Motors with its brand of product.
Tesla Motors produces and sells fully electric cars as well as electric vehicle powertrain components that give off no tailpipe emissions. Also Tesla motor vehicles cut CO2 emissions in half compared to gas burning automobiles that currently dominates the roads today. Environmental consciousness is what Tesla Motors is built on and its pursuit of diminishing dependence upon a diminishing resource for their consumers is what the company values most and depends on most for increasing revenue. The second macroenvironmetal factor that Tesla Motors runs into is the demographics.
The demographics factor may pose as a major problem for Tesla’s success in the future as its product only appeals to those that are able to afford their vehicles. Although Tesla Motors offers a first-rate vehicle when it comes to performance, efficiency, and class the price for the fairly new automobile company is not economically friendly. Currently Tesla’s prices can range from the base vehicle Model S which currently costs roughly $58,000 up to its “signature edition” which is estimated at $105,000.
With its above average cost of the high end fully electrical cars Tesla must integrate a more concentrated segmentation strategy in targeting the correct demographics to foster the company’s success. Tesla Motors should also take into consideration of tackling demographics in regions with higher gas prices compared to others. According to the American Automotive Association California, Hawaii, Alaska, Connecticut, and New York are among the states with the highest gas prices (Kurtzleben, 2011). In accomplishing this Tesla will be able to market to demographics that can offer a higher incentive in purchasing their fully electric vehicles.
The third macroenvironmental factor Tesla faces is in regards to the economic factors. One economic factor that can possibly affect the Tesla would be the prices of petroleum dropping to a low cost for consumers and possibly staying at an affordable price. With an affordable price on gasoline, consumers would be less likely to look for alternatives to combat rising gas and oil prices that we see today, making the high-priced fully electric Tesla vehicle even more unattractive. The economic downturn can also be an ailing factor for Tesla Motors as well.
The economic collapse has caused the buying capacity of consumers to dramatically decrease making individuals across the country a lot more conscious about the spending their hard earned dollar. The automobile industry as a whole has struggled overall with battling record losses in revenue and waiving workers. Being that it is a fairly new competitor within the industry Tesla will find it very difficult for selling and staying above its break-even point with its high-end luxury fully electric vehicle. The forth macroenvironmental factor Tesla faces is the natural and physical factors.
The increased usage of oil and fossil fuel which is mainly being used for transportation and the decreasing of the resource globally play as an opportunity and advantage for Tesla Motors. “Petroleum currently fuels 95% of the United States transportation sector, a sector that demands nearly 28% of total usage” (Musk, 2012). With Tesla Motors’ fully electric vehicles offer consumers a substantially alternative towards saving money from not ever relying on purchasing gas at an ever increasing price due to its low supply and high demand of petroleum.
Minimizing the dependence on petroleum not only reduces emissions, but also will help build a stronger energy economy (Musk, 2012). The fifth macroenvironmetal factor Tesla faces is in consideration of political and legal issues. Tesla has already been involved in several lawsuits. One that has been most notarized is the lawsuit filed against its competitor Fisker Automotive in early 2008 for stealing design ideas and confidential information such as business plans, technology, and trade secrets. Henrik Fisker was hired by Tesla to design its WhiteStar model vehicle in 2007.
After gaining access to designs and confidential information which is Tesla’s competitive advantage he then used the information which enabled Fisker to develop his own high-end electric car which was called Karma. After consulting with an arbitrator Tesla lost its case 7 months after filing the suit due to the finding an interim award in Fisker Automotives favor. The sixth and final macroenvironmetal factor Tesla Motors faces is technology. Tesla holds a technological advantage over all of its competitors in comparison with to the overall performance of the vehicle.
Tesla’s electric powertrain found in each vehicle allows higher driving efficiencies. With Tesla’s understanding of using energy efficiently the company has created vehicles with superior design by improving technologies of vehicle road-load which encompasses wind resistance, mechanical friction, and tire rolling resistance; energy conversion losses, as well as electric vehicle efficiency. Overall the driving efficiency is 88% compared to 20-25% for traditional gas-powered cars (Musk, 2012). Although hybrids also increase the total efficiency of internal combustion they are still less efficient than Tesla vehicles (Musk, 2012).
Another technological advantage Tesla’s has is its affordability in fueling the vehicle with electricity rather than gas, making it a sound financial decision for consumers. “Tesla vehicles cost as little as $5 to charge; equivalent to $0. 02 per mile. Alternatively, a gasoline-powered car that is rated at 20 mpg cost $0. 15 per mile” (Musk, 2012). Tesla’s has a competitive advantage in regards toward its technology used within its product. However, the main concern is how long Tesla Motors will be able to hold its competitive advantage in regards toward its technology over time. The Market
Heading into the microenvronmental analysis of the paper the first factor that Tesla Motor’s faces is the collaboration. Collaboration with other companies can be beneficial and viewed as a positive for both parties if performed properly. With Tesla Motors’ technological advancements for its electric cars the company has teamed up with major automobile company Toyota towards supplying the company with control systems, batteries, and motors Toyota’s new electric vehicle the RAV4 SUV (Bullis, 2012). Tesla has also recently agreed to provide similar electric car supplies for Mercedes-Benz in a similar deal (Bullis, 2012).
The collaboration microenvironmental factor can be turned into an opportunity for Tesla Motors as leverage. If the company manages to not succeed as an independent automobile manufacturer, Tesla still can have the ability to produce the proper technologies needed in developing an electric car for larger manufacturers. Through collaboration Tesla can also develop itself in become an attractive company to be acquired by larger automobile companies such as Toyota and Mercedes-Benz respectfully. The second microenvironmental factor Tesla Motors faces is in regards to competition.
With nearly every major automobile manufacturer gearing up plans to roll out with their very own electric car Tesla now has to compete with the likes of General Motors, Ford, and Nissan. However these companies will be indirectly competing with Tesla for market share within the niche. Companies that will be directly competing with Tesla are Mercedes and BMW in the market for high-performance luxury electric vehicles (Bullis, 2012). Competition has been expanded into a much broader scope for Tesla Motors since the company was founded back in 2003.
Along with other smaller automobile manufacturers that Tesla must compete with, Tesla has to also compete with companies that provide other energy efficient alternatives such as hybrids, hydrogen powered, flex fuels, and compressed natural gas. The third microenvironmental factor Tesla Motor must account for is its suppliers. It is imperative for companies to have a positive relationship with suppliers in order for the procurement process to be run efficiently and effectively especially when there is more than one supplier needed to fulfill the completion of the overall product.
Procurement is a series of steps that a company takes to obtain or acquire necessary materials (Magal & Word, 2009). It is vital that Tesla stays in complete control of its product lifecycle process as the company deals with many suppliers from different countries all over the world. Besides the company’s powertrain which is built at Tesla’s at headquarters in California, car parts for design such as body panels are produced in France, as well as battery cells shipped from Japan (Musk, 2012).
Tesla can use strategies such as locking in lower prices for different supplies to ensure savings overtime if prices were to be raised. The fourth and final microenvironmental factor that must be taken into consideration on behalf of Tesla Motors are the regulators. Tesla has to be aware and make proper adjustments to its business plans once government regulation occurs. In January of 2012, California, adopted the strongest new clean-air regulation in the United States. California will mandate that one out of seven cars sold in 2025 are plug-ins or full electrics (Woodyard, 2012).
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 27 May 2018