Yasir Sarkar

Roll: 55, Batch: 54D

Tesla Inc.
Tesla Motors is a company that designs, manufactures, and sells electric cars and electric
powertrains components. The company was founded in 2003 Elon Musk, Martin Eberherd, Marc
Tarpenning, Straubel, and Ian Wright. They went public on mid 2010 in NYSE. They gained
widespread popularity when they produced their first car, Tesla Roadster, in 2008. In 2012, they
came up with a full sized luxury sedan, Tesla S, and was awarded the Motor Trend Car of the
Year Awards for it in the following year. Tesla motors plan to make a sports car and then quickly
gain market share by making the mainstream sedans. With a different approach to cars, electric
ones, it is going to be interesting to see how Tesla survives (or falls) in this automotive industry.

PESTEL Analysis
Political: Tesla Motors Inc. has a major advantage of getting government incentives as its
technology is insignificant carbon emissions from the vehicle. Also, expanding free trade
agreements will make it easy for Tesla to reach different zones of the world. The markets Tesla is
targeting are very stable political markets and it will help them boost up business.
Economic: Decreasing battery costs is helping Teslas business of electrical parts. Also,
nowadays renewable energy source are expanding. As it gets popular at an exponential rate, Tesla
is going to be much more attractive and affordable to the general public. Of course, Tesla has to
keep in mind the economic environment in developing countries as it can be unstable sometimes.
Sociocultural: Nowadays, low-carbon lifestyle and dependence and switching to renewable
energy source is a big advantage for the company. It increases demand for the electric vehicles.
Also, wealth distribution in the major markets are being equally distributed, this will help Tesla
with their financial long term goals.
Technological: Technology is growing and expanding at an exponential rate. This will both help
and undermine Teslas effort to grow. Tesla can adapt to newer technology and make its cars
much more user friendly and affordable. At the same time, they have to keep an eye on the
technology used to make cars as that specific technology might be obsolete within a few years or
months. Tesla can take advantage of automation and AI (Artificial Intelligence) and integrate
these systems in their car, creating and upholding the demand for unique cars.
Environmental: Teslas biggest strength should be this sector. Their main theme is environment
friendly cars. The electric cars has insignificant carbon emissions and goes with a lot of
environmental laws and regulations. This is their USP. The rising environmental change
programs and waste disposal programs give in to Tesla and they can make their business survive
and achieve great heights with these.
Legal: There is an expanding international patent protection. Tesla can thus expand overseas and
be regulated and rest assured. They can promote their vehicle in other countries being in line
with energy consumption regulations. If direct sales is allowed in a country/state, they can
expand through it as well.

Porters 5 Forces Analysis

 Yasir Sarkar
Roll: 55, Batch: 54D

Competitive Rivalry: There are only a small number of significant firms operating in the
automotive market. This external factor limits the effect of competition on companies like Tesla
Motors, Inc. However, these firms are generally aggressive in innovating and promoting their
products. Such condition strengthens the effects of competitors against Tesla. Also, the low
impediments for customers to buy cars from other manufacturers (low switching costs) further
strengthen competition.
Bargaining power of buyers: The low switching costs reduce barriers in Tesla customers
tendency to purchase cars from other providers. This external factor imposes a strong force
against the company and other players in the automotive industry environment. However, the
availability of substitutes is only moderate in many cases, thereby limiting customers bargaining
power against Tesla. For example, many customers in suburban areas have limited access to
public transportation, making it more practical for them to drive their own car. In addition, the
low volume of purchases (each customer buys and keeps only one or a few cars) reduces the
influence of customers on Tesla.
Bargaining power of suppliers: Teslas suppliers have a low level of forward integration. This
external factor refers to suppliers limited control in the distribution and sale of their products.
For example, some suppliers use third parties to sell their materials to Tesla, while others directly
transact with the company. In addition, most of these suppliers are moderately sized, thereby
having limited influence on the automotive industry environment. Another external factor is the
moderate level of supply, which empowers suppliers to affect Tesla, but only to a limited degree.
Threat of substitutes: The low switching costs enable substitutes, such as public transportation,
to easily attract customers. This external factor imposes a strong force against Teslas industry
environment. However, the moderate availability of substitutes limits such influence of suppliers.
In relation, many substitutes have only a moderate level of performance in satisfying customers
practical needs, thereby further limiting such force against Tesla.
Threat of new entrants: Tesla Motors, Inc.s business is difficult to compete with, especially
because of the high cost of brand development. For example, the company already has a strong
brand that new entrants find difficult to match. In addition, automobile manufacturing has high
costs, which impose a barrier to new firms. Also, large players like Tesla benefit from increasing
economies of scale, which new entrants can only achieve upon exceeding a production
threshold.