Manufacturing facilities in Asian nations to control cost: To monitor cost and to manage shrinking margins, automobile companies like Harley, Volvo, Bharat Benz, etc. The internal and external factors are summarized Teslas cars also offer a superior battery range compared to the rival EVs and hybrids on the roads. Growth through diversification is another opportunity relevant to this SWOT analysis of Tesla Inc. This Toyota SWOT analysis reveals how one of the most innovative automotive companies used its competitive advantages to become the dominant player in the automotive industry. A SWOT analysis is a self-reflection exercise designed to help improve your business. Perceiving the chances that line up with the companys development is a huge piece of its essential arranging. These subsidies helped Tesla gain ground in the Chinese and American markets against that other EV brands. Published: January 10, 2021Format: PDF + PowerPointPages: 25Words: 5,000Charts/tables: 12, Email: [email protected]. 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). This button displays the currently selected search type. I'm Angela, founder & content creator of SWOT Hub. It impacts customers directly and theyre very cautious about their daily expenses. However, it is still too low as compared to most automobile brands with a global presence. The SWOT Analysis of Automobile Reverse Logistics Development 2.1. To maintain resilience despite changing industry conditions, Tesla needs to address the following threats relevant to this SWOT analysis: Automotive companies aggressively compete against each other. The fluctuations in material prices are another threat determined in this SWOT analysis. In todays globalized economy, outsourcing has become an integral part of business operations. This external strategic factor threatens Teslas market share in the electric vehicle industry. Thats why automotive companies are manufacturing comfortable and safe vehicles to keep in the lifestyle of people. WebTo calculate the market size, revenue from the market sales of Passenger cars, light commercial vehicles and heavy commercial vehicles are considered. Its giving facilities in every aspect of todays civilized society. So, while Tesla sales may have jumped in the third quarter of 2020, once sales again start picking up post-pandemic, shipments from other brands will also grow. If Tesla has achieved stronger brand recognition without spending a fortune on its marketing, it is mainly because of its focus on innovation. The brand is also a strength in this SWOT analysis of the automotive corporation. Such insights can inform and guide corporate governance and management to ensure the growth of the automotive business. What are the top procurement trends and best procurement strategies in 2023? Also, through an understanding of the weaknesses of the business, firms can manage and eliminate threats that would otherwise catch them off-guard. This comes in between the developing market. As supply chains become increasingly complex, procurement has become highly crucial and influential in the production process and continues to grow. These changes will bring demand for two-wheelers and compact cars. It helps companies to make strategies to resolve the potential harms. People will buy Tesla cars only if they have easy access to superchargers needed to charge their cars. Its the worlds largest industry in terms of profit and revenue. In the SWOT analysis model, this strategic factor is a weakness linked to Teslas marketing mix or 4Ps, and other strategies that emphasize exclusivity in distribution. The most valuable and one of the most recognizable automotive brands in the world. One significant competitor has emerged in the form of Polestar. This will also make achieving growth in emerging markets like India difficult because of the high level of taxes there. Korean automakers Hyundai and Kia are both present in the US, Europe, and Asia. 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. It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. Tesla has quickly risen to the top in terms of EV sales in China since it started production in its Shanghai manufacturing facility. Slow Economy: Many economic situations such as sudden unemployment, the pandemic (recent covid-19 situation), etc. Automobile brands are investing a lot of resources in the research and development of renewable clean. The Model 3 earned the 2019 Top Safety Pick award from IIHS. In the third quarter, demand has started picking up, but for the impact of the pandemic to fully go, it will take some time. [8], The company received more 2017 J.D. 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). Governments around the world are allowing subsidies to the brands that make fully electric vehicles. In the second quarter of 2020, the net income of Tesla attributable to common stockholders grew to $104 million compared to a net loss of $408 million during the same period last year. The main Toyotas markets are Japan, United States and China, where the company sells over 50% of its vehicles. 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. Expand internationally and work to secure worldwide production. With growing production, the cost of revenues has also grown for Tesla. Changing lifestyle & customer groups: The increased availability of data and information, shift in consumer demand, and expanded regulatory requirements for safety and fuel economy will fuel the growth of this industry. Fuel prices are highly unstable and volatile. The company has started generating some profits in 2020. Teslas corporate social responsibility strategy and stakeholder management efforts that capitalize on the sustainability trend can help facilitate sales expansion and supply chain expansion. In the SWOT analysis context, this external strategic factor emphasizes the relatively small extent of the companys operations in comparison to large competitors like General Motors and Toyota. However, the subsidies on Teslas Model 3 could be expiring soon, and that could cause a decline in sales. Over recent years, there have been various industry developments that served as or caused trends in procurement. The demand for EVs has kept rising worldwide over the past few years. Apart from growing its existing product portfolio's strength, the company can generate additional sources of competitive advantage through research and development. The purchasing power of the people has dropped because of unemployment and uncertain economic circumstance. Review our They can utilize these chances for their turn of events. It is lower than in the same quarter in the previous year when the company had shipped more than 95,000 units. De Graaf, F. J., & Wilderom, C. P. (2020). For huge companies in this area, it is simpler to distinguish and utilize these chances for their development. However, this does not seem possible given the company likes to deal only in the higher-end segment. But here they are facing the demand for VFM products (value for money). 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. As it is a large industry worldwide, here is an Automobile Industry SWOT analysis describing its strengths, weaknesses, opportunities, and threats. 2020: Tesla became the most valuable automotive company in the world by surpassing its competitors. Fuel-efficient vehicles: Optimization of fuel-driven combustion engines and cost efficiency programs are excellent opportunities for the automobile market. Tesla is a sustainable brand that makes fully electric cars. These external strategic factors are opportunities that Tesla can use to improve its business performance, management effectiveness, and strategic growth. Swot analysis of the automobile industry. Its market cap has surged to around $400 billion in 2020, which is the highest of all the automobile brands globally. Constant product innovation & technological advancement: With the advent of E-vehicles & alternative fuel such as Shell gas, CNG, and others, automobile companies are increasing R&D expenditure to drive the next phase of growth through the use of renewable sources of energy which may be solar, wind, etc. Its shares climbed very fast in August 2020, making Tesla the seventh-largest US-based company for a short period. These factors also affect the growth of the industry. There are specific threats to Automobile Industries, but proper planning can help them to survive the situation. are building their manufacturing facilities in developing nations like India and China. While Tesla's overall market share in the US automotive market was only around 1.3% in December 2019, the company enjoys an enormous market share in the US EV market. 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.). The research on renewable energy sources continues and increases. Both Honda and Nissan are well-known in the US, Europe, and Asia. Changing lifestyle & customer groups: The increased availability of data and information, shift in consumer demand, and expanded regulatory requirements for safety and fuel economy will fuel the growth of this industry. Developing countries need vehicles with fuel efficiency, high mileage, etc. However, the pandemic also seems to have pushed the demand for EVs higher, which was evident in the growth of Tesla car sales during the third quarter of 2020. Strategic adjustments to Teslas operations management can minimize the impact of this weakness. Changing lifestyle & customer groups: As the whole world is going through huge economic development, change in lifestyle is becoming more prominent. The analytical technique of SWOT analysis helps companies to determine and define several critical characteristics: Strengths, Weaknesses, Opportunities, and Threats SWOT analysis, Industry experts have stated that growing digitalization and advancements in technology will, To learn more about SWOT analysis and how it can benefit your company, Low-Cost Country Sourcing/Best-Cost Country Sourcing. It means while Semis may become available for sales by the end of 2020, they will not be available in large volumes yet. Teslas strategic management must overcome the following weaknesses relevant to this SWOT analysis: Tesla Inc. suffers from limited market presence. Which is also making new increasing demand for luxury public transportation systems. Toyotas and its competitors R&D spending (US$ billions), Source: The respective companies financial reports[1][2][3][4] (Toyotas latest fiscal year only runs for 3 months in 2018. Your email address will not be published. With a strong focus on the North American market, Ford is the second-largest US automaker. Using renewable sources could also bring much more success to the market. The automobile industry is marked by heavy competition, but Tesla belongs to a distinct class of automakers. Were the No.1 source for both free and paid SWOT analyses on the web. Moreover, the world economy has slowed down due to the impact of the pandemic. Benzaghta, M. A., Elwalda, A., Mousa, M. M., Erkan, I., & Rahman, M. (2021). The rising disposable income and growing demand for clean-label products and processed food are increasing the market share. Charging a Tesla vehicle costs much less than gasoline. On a correlative and evolutionary SWOT analysis. The March 2020 numbers show the effect of lockdown due to the COVID-19 pandemic. It is an analytical technique that is used to determine and define several critical characteristics of a company: Strengths, Weaknesses, Opportunities, and Threats SWOT analysis. The company can: We use cookies for website functionality and to combat advertising fraud. This SWOT analysis shows that Tesla has the potential to grow in the global automotive market despite aggressive competition. Automobiles give people the opportunity to live, work and travel in ways that were unimaginable a few decades ago. The ease and quality of life improvements the automotive industry brings will only increase the demand for vehicles in the future. The company has established 1971 supercharger stations with 17,467 superchargers. What makes SWOT analysis particularly powerful is that, with a little thought, it can help companies uncover opportunities that they are well-placed to exploit. The company will need to improve its manufacturing capability to cater to popular demand in the leading markets successfully. Often, many vehicle parts are purchased from other manufacturers or suppliers and used to assemble their finished products. For example, the company generates most of its revenues in the United States and has relatively limited operations in other electric car markets. This simply doesnt mean outsourcing risks - or that a company's responsibility ends once the product is sold. Still, considering that the automobile industry is passing through a challenging phase, Teslas performance counts as nothing less than rock solid. How is it standing up to the challenge? The following opportunities are notable in this SWOT analysis of Tesla Inc.: Tesla has the opportunity for global sales expansion. Furthermore, the demand for food These factors define the environment in which the electric vehicle business operates. It limits the companys customer base considerably against the other brands. Power Vehicle Dependability Awards than any other brand. are some factors that can break down the automobile industry. Get unlimited access to our procurement reports library | Plans starting from $5000/year. Origins of SWOT analysis. In both lists, it is the most valuable brand out of all automotive companies. In fact, theyre resisting its growth. In the September- October period, the shares of Tesla declined again. 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. VFM vehicles: The competition among the matured companies is one of the reasons the market of automobile vehicles is expanding to developing countries rapidly. 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%. These cars use fewer parts overall compared to a regular car due to which the maintenance costs for the owner and technical complications are also lower. While many brands have already introduced some efficient EV models, they are also working on improving their battery range. Copyright by Panmore Institute - All rights reserved. The emerging markets like India and Brazil present significant growth opportunities for the EV brand. According to Statista, Tesla delivered around 90,650 vehicles between April and June in 2020, which was around 2250 units higher than the previous quarter. 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. 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