SWOT Analysis for Tesla
Strengths: The first strength of the company is the brand. Tesla is a pioneer in the production of electric cars. Therefore, if you ask an ordinary person about which manufacturers of electric cars he knows, the answer will be Tesla. The second strong point is innovation. Cars produced by the Tesla company are always associated with advanced technologies (Furrier, 2020). The company’s main advantage is artificial intelligence and autopilot, which other companies have not yet managed to reach. The third strength is a unique business model. Most of the company’s car dealerships are used only as showrooms. The purchase of a car is made on the company’s website, where buyers choose the configuration themselves.
Weaknesses: The first weak side is problems with production processes. The company often has problems with the production of the required number of cars. The second weakness is that many people still do not take electric cars for granted and prefer more traditional cars. The third weakness is the heterogeneity of demand for the company’s machines (Furrier, 2020). The problem lies in the cost since the Tesla S model is significantly more expensive than both other Tesla models and cars of other companies.
Opportunities: The first opportunity is excellent growth potential. The demand for electric cars will grow every year. According to forecasts, by 2030, electric cars will occupy a quarter of the entire car market (Walton, 2020). The second opportunity is the global trend for environmental friendliness. Many countries are making plans to reduce the number of cars running on gasoline. The third opportunity is many markets that have not yet been opened by the company, such as India or Russia.
Threats: The first threat is the growing competition from year to year. More and more leading car manufacturers are paying attention to the promising niche of electric cars. The second threat is the frequent lawsuits related to the fact that they question Tesla’s technologies (Furrier, 2020). The third threat is the limitations of the business model. Many countries and states of the United States allow sales only through dealerships. The fourth threat is the lack of laws regulating the rules of the road for self-driving cars.
SWOT Analysis for Nissan
Strengths: The first strong point of Nissan is the brand awareness. The company managed to build around itself the image of a reliable manufacturer that strives to develop technologies. The second strength is the company’s technological innovations. Nissan is not lagging behind its competitors and is developing autopilot technologies (Walton, 2020). The third strength is a large selection of cars with a reasonably low price compared to competitors. In addition, the production of various electric cars is actively developing, which will be sold at an affordable price.
Weaknesses: The first weakness is that large production volumes also lead to high costs. If the cars produced by the company do not meet the requirements of the legislation of any country, then they have to be recalled, which leads to significant financial losses. The second weakness is the lack of investment in the development of new technologies that would allow us to develop as well as, for example, Tesla (Walton, 2020). Thus, the company is not at the forefront of the development of autopilot technologies.
Opportunities: The first opportunity is the global trend for environmental friendliness, which should also open up many opportunities for the development of electric cars. Nissan needs to shift the focus of production to electric cars and, using its production resources, take an advantageous position in this niche. The second opportunity is the development of online sales technologies. Nissan can take advantage of this fact to create large sales channels.
Threats: The first threat is no consistent supply of innovative products. The company has developed numerous products over the years, but they are frequently in response to the development of other players. Second, the supply of new items is irregular, resulting in high and low swings in sales numbers over time (Walton, 2020). The second threat is that despite the rapid transition to the production of electric cars, there is much competition from leading manufacturers who also seek to occupy this niche.
Tables
Tesla
Nissan
Results of Analyses
The conclusion of this analysis may be that at this stage, both companies have many development opportunities. First of all, this is the global development of eco-friendly technologies, which will be an opportunity for many car manufacturers. However, for Tesla and Nissan, several threats are coming from other manufacturers trying to occupy a niche in the production of electric cars.
Discussion Questions
Tesla is highly vertically integrated
What does it mean?
Vertical integration is a supply chain approach that works both forward and backward. Forward vertical integration occurs when a firm buys a customer-facing supplier; for example, manufacturing buys a store. Instead of outsourcing, vertical integration brings a portion of the manufacturing process in-house.
How does this give Tesla an advantage?
Vertical Integration can bring positive effects, such as greater control over product quality, independence from suppliers, greater control over production planning, and efficient investments.
What are the risks to this strategy for Tesla?
The risks that vertical integration poses for Tesla are an increase in the cost of products, which will reduce competitiveness. There are also difficulties in managing and tracking all processes.
What strategy should Tesla focus on
The Tesla company should adhere to the strategy of introducing new models into new segments. This will allow it to increase the number of offers on the market. Also, due to the technological nature of the company, it will be able to compete with existing ones easily. Also, due to the technology, Tesla will be able to offer a cheaper and more technological option.
Regarding their market shares
How was Tesla able to gain such a large share of the EV market in a relatively short period?
When Tesla first appeared — in 2003 — no one believed in electric cars, and until 2013 the company almost did not attract investors (Furrier, 2020). However, gradually, the idea of switching to alternative fuels and getting rid of carbon dependence gained strength, along with the trend towards environmental friendliness. In addition, technological solutions from Tesla allowed it to win a large part of the EV market. Thanks to Tesla, batteries, the most expensive component of electric cars, have fallen in price almost tenfold: from $1000 to $135 per kWh (Furrier, 2020). Now many manufacturers buy batteries from Tesla, and this brings the company a considerable income.
Why was Nissan not able to maintain its position in the market?
Nissan could not maintain its position in the market since Tesla’s technological solutions were far ahead of competitors. Also, Tesla offers a more extensive selection of electric car models. In addition, Tesla’s marketing solutions allowed it to reach the forefront.
Conclusion and Recommendations
What are the advantages and challenges in EV market going forward? What will be the impacts of other big players entering the market?
The prospects for the development and improvement of automotive electric motors and batteries seem to be very extensive, and the number of resources required for such development currently has a negative trend. All this allows us to confidently predict a decrease in the share of cars in the internal combustion engine in the future and an increase in the number of electric vehicles and cars with a hybrid power plant (“Trends and developments”, 2021). The development of the global electric car market largely depends on the initiative of the state and the policy of automakers. The world’s leading automakers are rapidly increasing investments in the production of electric vehicles. The appearance of other manufacturers will increase competition, which may lead to lower prices and an increase in the popularity of electric cars.
What recommendations could you provide for Tesla and Nissan going forward?
In order for Tesla and Nissan to remain competitive, they need to continue to develop the production of various models. Also, it is necessary to focus efforts on improving the brand image.
References
Furrier, A. (2020). Tesla: Business Model and Strategic Analysis. Medium. Web.
Trends and developments in electric vehicle markets. (2021). IEA. Web.
Walton, B. (2020). Electric vehicles: Setting a course for 2030. Deloitte Insights. Web.