Tesla's Industry and Competitive Conditions

Tesla: External Environment Report
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Tesla: External Environment Report
The Industry the Company Operates in
Electric vehicles and energy storage and production are the focus of Tesla, Inc.'s research and development. As a result, the company's principal concentration is on developing all-electric automobiles. Besides renting and selling these items, the company also provides services relevant to its product offerings. In addition to selling automotive regulatory credits, the Company's automotive business sector includes the development, production, construction, marketing, and leasing of electric vehicles. It also offers vehicle regulatory credits. As a side note, the automobile industry encompasses not only goods but also services and other components. Vehicle non-warranty aftermarket services, retail sales of consumer goods and autos, the sale of previously used vehicles, sales by the company's acquired firms to third parties, and the sale of automotive insurance are some of these aspects (Yan, 2020). Its energy production and storage business offers incentives for installing solar energy systems and the design and manufacturing of solar energy-producing equipment and associated services. The company's automobile offerings are model 3, Model Y, Model S, and Model X. The two lithium-ion battery energy storage solutions offered by this firm are Powerwall and Megapack.
Regarding global sales, Tesla maintains its position as the market leader in the electric car industry. Remarkably, Tesla ($5.5 billion) was the world's eighth-most profitable vehicle business even though the firm only had two assembly lines operating in the previous year (Sull & Reavis, 2019).
Current Industry Condition
Automakers like General Motors and Ford were operating in a parallel universe to Tesla for most of last year. Because of a lack of computer chips, G.M. and Ford stopped one facility after the other—sometimes for months—leaving dealer lots empty and driving up vehicle costs (Teece, 2018). Since 2020, Tesla has sold roughly twice as many vehicles as it did, piling up record sales quarter after quarter.
Tesla's capacity to produce crucial components is more important than the sales of one year's cars. They may be more dangerous to established auto giants like G.M. and Volkswagen than most industry executives and regulators understand. They may also be a model for other emerging electric vehicle startups. Substituting more gasoline-powered vehicles sooner would aid the effort to decrease emissions that cause climate change (Thomas & Maine, 2019). There is a risk that this might harm the many local and national governments that depend on conventional vehicle manufacturing to provide employment and tax money to their citizens.
When it comes to how Tesla beat the rest of the auto business, the company and its mysterious CEO, Elon Musk, have kept quiet. In the end, it became evident that the corporation had a better grasp of technology and its supply network. Tesla could predict demand better than companies that manufacture several times as many vehicles as it does. A dramatic decline in sales early in the epidemic shocked other automakers, who had not purchased enough chips or components quickly.
In the absence of the processor's Tesla had hoped to employ, the business had to improvise and modify the available processors' software. Large automakers couldn't do this since their software and computer capabilities were mostly provided by other parties. When dealing with chip manufacturers, many automakers also depended on these vendors. Because of their lack of influence, the automakers could not negotiate with the government.
Electric cars are also becoming more competitive as conventional automakers react late with models consumers want to purchase instead of small electric vehicles traditionally created to appease regulators. Due to high demand, Ford said this week that it would almost treble the Lightning's manufacturing, an electric variant of its iconic F-150 pickup truck. Tesla's pickup truck will not be available for purchase for at least a year. Due to easing shortages of semiconductors and other components and improved adaptability by manufacturers, the prognosis for conventional automobile manufacturers is expected to improve in 2019. Although the chip issue has passed, the carmaker's basic advantage will stay. Electric cars are Tesla's only product line, free of outdated practices and habits.
Porter’s Five-Forces Model
Despite the problems indicated in this Five Forces study of the global automobile industry, Tesla Inc. (previously Tesla Motors, Inc.) can preserve its profitability thanks to strategic actions. Using the Five Forces Analysis established by Michael Porter, companies and the industry landscape may better comprehend the influence of external variables on their business models. This Tesla Five Forces research aims to investigate the influence of external factors on the automotive and energy solutions businesses.
Competitive Rivalry or Competition with Tesla, Inc. (Strong Force)
For consumers, Tesla, Inc. competes with several different companies. Car and energy solutions businesses face rivalry in a Five Forces Analysis phase. The car business is dominated by a small number of firms. Under Porter's Five Forces paradigm, Tesla, Inc. is less affected by external factors like this (Jing, 2020). But these businesses tend to be aggressive in product development and marketing. For example, there is a lot of advertising in the automotive industry. A portion of the answer is Tesla's marketing mix, or 4Ps, which aims to combat this aggressiveness. It's simpler for customers to transfer brands since switching costs are lower, which encourages competition. Car and energy solutions market competition is a major strategic management aspect, according to Tesla's Five-Forces analysis.
Bargaining Power of Tesla’s Customers/Buyers (Moderate Force)
Here, consumers' effect on enterprises and the industrial environment is taken into consideration via the Five Forces Analysis. Tesla's sales are directly influenced by the company's consumers. Since switching to another automaker is so inexpensive, Tesla customers have fewer roadblocks. Because of this external force, the company and other players in the automotive industry are under a great deal of stress, as shown by Porter's Five Forces model. In many cases, however, customers' bargaining power against Tesla Inc. is restricted since replacements are hardly available. Because public transportation is scarce in many suburban areas, driving is the most convenient choice for customers. Consumers have less influence on Tesla since they only purchase and keep one or a few cars at once. Consumers' negotiating power is low, so they are just a secondary management concern in this portion of the Five Forces analysis. Generic and intense initiatives of Tesla Inc. are a reflection of this emphasis.
Bargaining Power of Tesla’s Suppliers (Moderate Force)
Businesses like Tesla Inc. rely on the quality of their suppliers to stay in business. The supply of goods required by businesses is one-way suppliers impact the industrial environment. There is a lack of forwarding integration among Tesla's suppliers. In other words, suppliers have very little say in how their products are distributed or sold. To deal with Tesla, suppliers may use third-party intermediaries or go direct. According to Porter's Five Forces analysis, it has little influence on t...