The Impact of Electric Vehicles (EVs) on the Automotive Industry. A case study of Tesla, Inc.

The Impact of Electric Vehicles (EVs) On the Automotive Industry. A Case Study of Tesla, Inc. Student Name Institutional Affiliation Date The Impact of Electric Vehicles (EVs) On the Automotive Industry. A Case Study of Tesla, Inc. Introduction Electric vehicles (EVs) have caused a transformative shift in the automotive industry. EVs have caused a significant move from traditional internal combustion engines towards more sustainable solutions in the transport sector. As a result, EVs have attracted a lot of attention, given their disruptive ability in the traditional automotive industry. At the forefront of this transport revolution is Tesla Inc., a business that has disputed the automotive industry with innovative EVs that have improved market expectations and enhanced environmental sustainability in transportation, which has for a long time been a major source of pollution. This research focuses on the impact of EVs on the automotive industry, with a specific focus on Tesla as the case study. By undertaking a SWOT analysis and financial performance analysis, this study will explore how Tesla has revolutionized the automotive industry and the challenges it has faced. In particular, the research question will be guided by the following research questions: 1 How does Tesla, Inc. differentiate itself from traditional automobile manufacturers in the automotive industry? 2 What are the advantages and disadvantages of manufacturing and selling EVs for Tesla, Inc.? 3 How are customers reacting to the rise of EVs, and what factors are driving adoption? 4 What are the ethical considerations and hazards involved with the manufacture and use of EVs, and how does Tesla, Inc. oversee them? Methodology The study utilized a mixed-methods approach where both qualitative and quantitative data collection techniques were used. The primary research is obtained through surveys and interviews with consumers and industry specialists. Additional quantitative data is obtained from market trends and sales data on the automotive industry. The use of both qualitative and quantitative data collection methods is critical in enhancing the reliability and rigor of the study. The approach ensures that weaknesses of one data collection approach are offset by the second method. This allows the findings to be more reflective of the automotive industry, hence applicable to a wider population. Data Analysis SWOT Analysis * Strengths Tesla has various strengths that have propelled the business. Firstly, Tesla enjoys strong brand recognition and loyalty. Over the years, Tesla has built a reputation as a leading brand in the EV market, which has allowed it to enjoy a gold-standard reputation (AlphaQuery, 2024). The business has established itself as a leading innovator in the EV industry. Environmental sustainability has been hailed as a major step towards combating global warming. Businesses that are working towards reducing carbon dioxide emissions have received praise for their efforts. Tesla’s move to specialize in EVs has earned it a lot of recognition, especially among clients who are concerned about sustainability. This strong brand image is essential in driving consumer demand and enhancing loyalty. Secondly, Tesla is at the forefront of technological innovation. The business has invested resources towards research and development, especially on battery technology and autonomous driving capabilities. Tesla has recognized the importance of innovation in differentiating itself from other EV manufacturers. The business invests more resources towards including technology capabilities in its vehicles. This has allowed Tesla to come up with more technologically advanced vehicles compared to its competitors. Thirdly, Tesla has employed vertical integration to improve its efficiency. Tesla controls a majority of its critical manufacturing aspects. For instance, Tesla owns its manufacturing facilities, retail stores, and a network of superchargers. Vertical integration has allowed Tesla to be more efficient and flexible since it controls the most critical aspects of its manufacturing and sales. * Weaknesses Tesla, like the other EV manufacturers is facing consumer dissatisfaction due to the limited fast-charging infrastructure. EV owners are voicing more frustration due to their inability to access fast-charging spots. In a 2023 EV driver survey conducted by Plug in America, clients cited an increase in broken or non-functional chargers. The EV owners were also concerned about fewer charging locations in their vicinity. While the Tesla Supercharger Network was better compared to its competitors on every metric, when consumers experience more frustrations, they are less likely to be incentivized to purchase EVs, which would lower Tesla's sales. Further, Tesla has challenges in the production and delivery. While the company has made improvements in its production process, it has not managed to scale up production to meet the delivery targets (NASDAQ, 2014). The inability to meet demand has led to customer dissatisfaction and impacted Tesla’s financial performance. At the same time, Tesla has challenges with the service and repair network for its vehicles. The increase in EV sales has caused the business to struggle in scaling the service and repair network to meet the demand, causing clients to wait for longer times. This can reduce the intake for EVs, especially for consumers who do not wish to spend a lot of time waiting to have their vehicles serviced or repaired. * Opportunities The EV market is expanding, which allows Tesla to improve its performance. The demand for EV vehicles is expected to continue growing globally, which presents a significant opportunity for Tesla. Countries are recognizing the threat of global warming due to the burning of fossil fuels. As a result, there is a gradual shift in environmentally friendly energy sources. This recognition has pushed governments to put efforts towards carbon-free mobility, with EVs at the forefront. According to IEA (2024), the near-term outlook for EVs is encouraging. For instance, in the first quarter of 2021, global EV car sales increased by 140% compared to the same period in 2020, especially due to sales in China and Europe. The EV stock is expected to reach 145 million in 2030, accounting for 7% of the road fleet (IEA,2024). The global expansion of the EV market presents an opportunity for Tesla to access a more global market, which will boost its sales. Moreover, autonomous driving is positioned to be part of the new era of transportation. Tesla has advanced its autonomous driving technology capabilities, which positions it to be a global leader in driverless cars. With these advanced driving capabilities, Tesla is better positioned to increase its market share in the future, as driverless cars become more acceptable. Furthermore, technological advancements in battery technology promise to create batteries tha...