In the pestle analysis tutorial we will perform Tesla pestle Analysis to analyze the external environment factors and how these factors affect the performance of Tesla.
Tesla Inc. formerly known as Tesla Motors, Inc. is an American based Automotive and energy company headquartered in Palo Alto, California. The company was founded in 2003 and ranked bestselling electric car manufacturer in the word in the year 2018.
The pestle analysis is a strategic tool that will analyze the external environment of Tesla. What are the company opportunities and threats? How the company will compete in the automotive industry. Will Tesla be able to increase their loyal customer base by offing more affordable and advanced technology cars in the market?
Table of Contents
How Political Factors Affect Tesla Inc.
Tesla Inc. can avail the opportunity for strengthening its financial performance through various incentives offered from the government. According to the Federal Government consumers can qualify for tax credit upon purchasing of an electric car. The Federal Government offers tax credit upto $7,500.
In addition to this, political stability of many major markets for the automobile industry makes the environment favorable for Tesla’s competitive strategy as well as for its intensive growth strategy.
Government has taken many stances for supporting the development of hybrid and electric vehicles. The Department of Justice granted a low interest loan of $465. It amount of loan helped to the company to expand its product. A Senior Analyst Michelle Krebs said, “It helped move them to the next step”.
How Economic Factors Affect Tesla Inc.
Electric cars are gaining popularity day by day which is mostly connected with the global economy. Global economic growth is expected to remain at 3% in the year 2019 and 2020. In 2018 the electric vehicle market was $39.8 billion which is expected to reach $1.5 trillion by 2025. This economic factor is a great opportunity for Tesla to capitalize.
Another economic factor is decreasing battery costs. Battery is an important cost factor in the total cost of any electric vehicle. Tesla’s Powerwall batteries development is a great opportunity for the company. They are making it more affordable and accessible. This factor will help the company to produce more affordable EV.
Additionally, materials cost is also on a decline which is some good news for Tesla. The more popular Tesla electric cars are amongst the consumers the lower will be the material cost and the more cost-effective the vehicle will be for public.
How Social Factors Affect Tesla Inc.
The idea of an electric car is fascinating for most people and this is especially true for those who are more eco-friendly. An electric car eliminates the use of fuel which is better for the environment also.
Moreover, electric cars are also less expensive than those of traditional cars in terms of maintenance and running cost. Tesla automobiles are environmentally sustainable.
In this Pestle/Pestel Analysis of Tesla Inc. another social factor is the social status. Mostly people are judged based on what type of the car people own. Having an electric car is a good idea that will increase social status.
How Technological Factors Affect Tesla Inc.
Technological factors is that part of pestel analysis which determine how technology affect the company macro environment.
Rapid technological change is a key factor that can affect Tesla positively and negatively as well. Technology gives tesla both opportunities and threats. For example, technology helps tesla to manage its competitive edge in the marketplace. The company effectively used technology to enhance its product portfolio. Even according to the company CEO Musk, in near future Tesla model will be equipped with fully driverless technology, which if possible, will be a great technological competitive advantage for Tesla Motors over its competitors.
With the passage of time every technology become obsolete. But the solution is always there to upgrade and updates the obsolete technology. If we think about Tesla, every Tesla EV on the road is obsolete. Being a technological company, Tesla have to face positive and negative impact of technology.
How Environmental Factors Affect Tesla Inc.
In this pestle analysis framework, environmental factors are the key opportunities for Tesla since the cars are environment friendly and use electricity. Tesla Inc. vehicles are also in compliance with several environmental regulations and barely have an impact over carbon emissions in comparison to that of traditional cars.
Focusing more on the environment, the company build a strong brand image and recognized among industry leaders. From electronic vehicles to that of other energy-saving Tesla has maintained its focus on sustainability as well as saving energy. In terms of environmental impact, Tesla enjoys a good reputation and the company is working towards making its supply chain to be more energy efficient.
How Legal Factors Affect Tesla Inc.
Legal factors are that part of PESTEL analysis which find out how legal issues influence Telsa Inc macro environment. For example, Tesla and Musk is facing several law suit and regulatory issues and investigations.
Two tesla crashes occurred in the 2019 and the National Highway Traffic Safety Administration and Transportation safety Board are investing the main causes of these crashes.
Many States temporarily blocked the Tesla Sales directly from manufacturer to consumer. According to these states manufacturer are required the engage third party dealership. This legal requirement can affect the Tesla car delivery. Furthermore having a dealership means more expense and less profitability.
There are other legal issues like patent rights and energy consumption regulation. Tesla have to comply with law and regulations to smoothly run the business activities.
