Tesla: SWOT Analysis of the Leading Electric Vehicle Manufacturer

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Tesla, the renowned electric vehicle manufacturer, has been at the forefront of revolutionizing the automotive industry. With its innovative technologies and sustainable approach, Tesla has not only disrupted the market but also inspired a shift towards cleaner transportation alternatives. By conducting Tesla SWOT analysis, this essay provides a comprehensive understanding of the company's position in the market and its potential for future growth. This analysis explores the internal and external factors that impact Tesla's success and its ability to maintain its competitive edge.

SWOT analysis of Tesla

Strengths (Internal)

Good Engineering and Technical Capabilities

The method of design that Tesla approaches its vehicles with is very unique. Tesla is the first company that introduced fully electric cars to the automobile market. They are not just making electric cars; they are revolutionizing the industry (Hawkins, 2017). Moreover, Tesla builds various supercharger stations where Tesla vehicle owners can charge their cars, unlike its competitors who in contrast use gasoline as a fuel for their vehicles which harms the environment. Furthermore, Tesla produces solar panels for homes, which helps to save lots of money post installation in the long run, and forms an ecosystem that relies on sustainable energy as it reduces dependency on fossil fuels. (“About Tesla,” n.d.). In addition, Tesla, for the first time in automobile history introduced the autopilot system in a commercial vehicle (Hawkins, 2017). Additionally, the software that Tesla embeds in their vehicles can make over-air system updates, which makes the rest of the industry vulnerable to obsolescence. (Hawkins, 2017). All these technological features create a promising outlook for Tesla, as long as it continues to innovate while managing its finances accordingly.

Brand Recognition

Tesla has a strong brand recognition that is based on electric cars, various services it provides and its drive in making renewable energy more commonplace. Furthermore, word of mouth took a big part in developing Tesla’s brand recognition (Korosec, 2017). Most of their supporters do not even own a Tesla vehicle, however, many take them for a test drive via Tesla showrooms or friends who own the vehicle(s). Tesla’s brand recognition plays a significant role in its sales as it helps them generate revenue. Moreover, in 2017, Tesla was the highest ranked brand in the USA, while outstripping huge companies like General Motors and Ford (Korosec, 2017). Brand recognition will continue to grow and contribute to Tesla's success for a long time.

Fast Growing Supercharger Network

Tesla's supercharging stations are an essential part of Tesla's success in the electric car market, as it is in essence the source of the cars’ overall functionality. Tesla’s supercharger stations can be found in various places in the United States, allowing for quick recharges. The difference between Tesla’s chargers and the competitors’ chargers is that Tesla’s supercharger stations charge with a higher speed than that of its competitors. The supercharger network is currently experiencing rapid growth, in which Tesla built 1,324 supercharger stations since the beginning of 2018 alone that provide 10 to 12 charge points to users (Lambert, 2018). Tesla continues to expand their supercharger network by building a large number of supercharging stations in Europe, Asia, Australia, and other continents as well. With the gradual expansion of supercharging stations across the world, Tesla can expect to earn promising financial gains in the future.

Automation Intelligence

Tesla has the luxury of manufacturing its vehicles via the aid of automation intelligence, which gives the company a competitive advantage in the manufacturing sector. According to Clean Technica, these intelligence systems are capable of generating huge numbers of information and are able to “…automate entire processes of workflows,” while learning and adapting as they go (Fortuna, 2018). These systems also cover a vast array of responsibilities from “collecting, analyzing, and making decisions, to guiding advanced robots”, which demonstrates their technological prowess (Fortuna, 2018). According to the same source, these systems allow Tesla to efficiently and in a quality manner manufacture its products (Fortuna, 2018). If Tesla continues to utilize this feature, it can expect to manufacture its products better than its competitors thus, giving them a competitive advantage.

Weaknesses (Internal)

Expensive Vehicles

Tesla is no exception to strategic weaknesses. Figuring out and addressing the weaknesses of a company has a crucial impact to the corporation’s future growth. Firstly, the major setback for Tesla’s achievement of greater potential success are the high prices that its vehicles are listed at. Currently, Tesla has a limited selection of cars, including the Model S, Model X, Model 3 and Roadster. Out of the four models, the cheapest is the Model 3 (standard interior) at a price of $40,900 CAD, however, even at its lowest price the Model 3 is unaffordable to many Canadian households, as according to Statistics Canada, the median total income of Canadian households is $70,336 CAD based on the year 2015 (Statistics Canada, 2017). With the median annual income being $70,336 CAD, many Canadians do not have enough purchasing power to buy a Tesla car without it putting financial pressure on them, as according to Dave Ramsey, those who are looking to buy a car should not spend more than half of their annual income on the car as the car will depreciate in value leaving the owner “crippled” in terms of such a financial value loss (Dave Ramsey, n.d.). Since the Model 3, is more than a half of the annual median household income for Canadians, the effect is, the lack of overall Tesla car purchases among Canadians in relation to American purchases, in where Tesla makes its most revenue (Narayanan, 2018). Without a doubt, the high prices of Tesla cars is a major purchasing decision all over the world, not just in Canada, thus, Tesla ought to look in reducing its vehicles’ prices to attract more buyers.

Unreliable Vehicles

As I have mentioned before, Tesla does not possess a diverse inventory of vehicles from which consumers are able to choose from depending on their financial status and personal preferences. Even with four models to choose from, Tesla is ranked as one of the least reliable car brands in the industry. According to the data provided by Consumer Reports, Tesla is ranked as one of the most unreliable car brands in the market, as it ranked third-worst, taking 27th place out of 29 car brands in 2018 (Consumer Report, 2018). It is important to note that consumers seek products and services that they feel will satisfy their needs but, with Tesla cars already being highly expensive which prevents a huge portion of the world’s population from purchasing the brand’s cars, the low reliability ranking does not attract many people either. In order for Tesla to further its progress in the industry and potentially increase its market share it should focus on producing cars that buyers feel pleased with rather than experiencing cognitive dissonance like realizing the brand’s or its vehicles’ low reliability. Furthermore, Tesla as a brand, ranking third-worst in 2018, its Model X is ranked third worst in reliability in 2019, while its Model S dropped in reliability ranking due to suspension problems (Consumer Reports, 2019). Continuation of such poor ratings will do Tesla no good, thus, a focus must be put on increasing reliability of its products.

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Poor International Presence

As I briefly mentioned before, Tesla generates a huge portion of its revenue in the United States (U.S.). Based on the 2017 reports, Tesla nearly exceed 50% of its vehicle deliveries, to the U.S. with China in second place, only getting a delivery of 16%, along with other countries getting a even smaller delivery units (Narayanan, 2018). This indicates that Tesla recognizes that the U.S. is their largest consumer market, thus, focusing more on delivering its vehicles to the country as it provides them with greater revenue. In the long run, this will have a negative impact on the company’s future growth, as they are putting less effort on increasing their sales in other regions, hence, losing possible net income.

Opportunities (External)

Electric Vehicle Market Growth in Asia-Pacific

As the competition in the electric vehicle market increases so does the pressure on Tesla to stay on top of its lower-price alternatives entering the market. That means constantly searching for opportunities to be ahead. Globalization is the future of all business and fitting; global expansion is an opportunity Tesla should take advantage of (Management, Fourth Canadian Edition, 2018). The market for electric vehicles is huge in Asian countries such as China, thus, entering said market will increase Tesla’s overall market share. With the increasingly popularity of electric vehicles as well as ride-sharing applications such as Uber, Tesla has opportunity to expand their operations into other industries; creating services such as self-driven Ubers, and other customizable add-ons found by analyzing consumer data. Tesla’s most obvious opportunity lies within the recent social trend of green consumers; capitalizing on the greenmarket. Tesla’s current business model is structured around using alternative energy, by increasing promotional activity and talking with this segment of consumers Tesla can work to further its presence as a company in the greenmarket. Moreover, The Asia-Pacific electric vehicle market is predicted to boom in the next decade due to the increasing incomes in the Asian economy and desire for greener alternatives (DeBord, 2017). This presents a big market for Tesla, who has been focusing the last year on North American markets (O’Kane 2019), to expand their presence in the Asia-Pacific market and capitalize on the large population of consumers. Previously, there were many regulations China upheld that prevented foreign carmakers to operate under full ownership, however, in recent years regulations have changed, thus, make it easier for these foreign companies to do business in the country (Wang, 2018). Seeing as the demand for electric vehicles is very present, Tesla should employ market development strategies to exploit the Asia-Pacific market and increase shares.

Expansion into New Markets and Industries

In continuation of the previous point on expanding into Asia-Pacific, as any person studying social trends could tell you, newer generations are worrying less about purchasing their own cars and relying heavily on ride-share services such as Uber. This opens up the opportunity of entering the service industry. The invention of self-driving cars puts a timeline on the public need for drivers, when you analyze these two separate facts a new public service is realized; self-driven Ubers. This is just one example of the product/service innovation capabilities Tesla can jump on and work with app developers towards. According to an article published by Nielson (2015), being environmentally friendly is an asset to doing business today as well as economically, since society is willing to pay more for greener alternatives. This means increase market shares for companies displaying high degrees of environmental stewardship. The current mission statement of Tesla is “to accelerate the world's transition to sustainable energy” (“About Tesla, n.d.), is gaining them publicity in the public spotlight. By having their name already tied in with a positive public image Tesla has the opportunity to further benefit from its green-initiatives. Co-working with the green consumer segment of the market by requesting their feedback, holding focus groups/surveys and involving them in major decisions, Tesla can innovate their current products to match demand as well as design marketing and promotional activities to target more of the green market.

Threats (External)

Aggressive Competition

Aggressive competition is on the rise for Tesla in 2019 as the electric vehicle (EV) market continues to grow. Gaus (2018) noted Tesla’s high-end models would face a challenge as high-end vehicles from Porsche and Mercedes-Benz announced their coming into the market in 2019, meanwhile BMW and Audi continue to release their EV models. Moreover, there is a challenge being presented in the lower-end vehicle market as well, with Nissan, Kia, and Volvo all releasing new models this year. Not to mention, Volkswagen’s new EV release at a price of roughly $35,000 CAD. The market for these energy efficient vehicles is expanding and is projected to continue so. These new entrants, substitutes, as well as some of the companies that have already established themselves in the market have the ability to match Tesla’s production volumes. They have greater financial and marketing capabilities as well, which means Tesla will be need to compete on a larger scale and at higher volumes. Even though Tesla is arguably the most popular electric vehicle manufacturer, this status could change in accordance to how the market changes. Tesla faces a big test of losing its control at the top of the electric vehicle market if it does not adapt to the growing competition.

Lithium Market

The lithium market is experiencing supply shortages and continuous fluctuating prices. Tesla has repetitively made price adjustments to their vehicles throughout 2018 indicating that demand is perhaps not where the company wants it to be, this being a cause of slow battery module production. The reason for the slow battery module production is due to the supply shortage in the lithium market, a concern for the whole electric vehicle market. The demand for lithium is at a high in today’s market, especially with the expansion into the electric car market. In an article published by Bloomberg News (2018), vice chairman Wang Xiaoshen of Jiangxi Ganfeng Lithium Co. (forecasted second largest producer of lithium, and supplier to Tesla) states, suppliers will face volatility into at least mid-year of 2019. This means that new car projects could be delayed. For Tesla, this means that they may not be able to keep up with the demand from their consumers, which is already a growing concern for the company. The volatility facing the lithium market indicates risk because the prices will continue to fluctuate (as it has continually for years), and therefore will continue to be unpredictable. Directly related to this is the bargaining power of buyers, because Tesla only has a relationship with one supplier for this material, the supplier will dictate the prices. Indicating little bargaining power in this business to business exchange (B2B). This is also true for consumer buyers of Tesla cars (B2C). Tesla vehicles are already unaffordable for a lot of people and depending on which way prices for lithium are headed, it could affect the company’s total costs and ultimately influence the pricing of vehicles. This is not the first time Tesla has faced problems in obtaining the required materials needed for manufacturing and production, Bomey (2017) wrote on the “severe shortfalls” of supply of high range batteries in 2017, another example of the continuous unpredictability of the market, therefore Tesla will need to analyze these market trends carefully.

Laws and Regulations

Laws and regulations in the United States is a major regulatory factor creating a barrier for the sale of Tesla vehicles. Kenwall (2018) notes, Tesla does not operate with the same distribution methods as many other automakers such as Fiat Chrysler, GM and Ford who manufacture their vehicles, which the dealerships then sell to customers. Tesla on the other hand, relies on directly selling to the customer. Many states in the US do not approve of this method of selling, as thirteen states have bans on direct vehicle sales, eight allow direct sales but within a certain limitation and nine other states allow unrestricted direct sales but, with a legislation in place restricting the method. Overall, thirty of the total fifty states have some form of restriction in direct sales. These laws and regulations create a large barrier in what could potentially be a big chunk Tesla’s sales. As long as these laws and regulations stay in place, the competition will be able to control this segment of the market. Tesla can only hope that some flexibility is made to open up the opportunity for them to increase its sales potential.


As a result of our SWOT analysis and Tesla’s job cuts, we recommend that Tesla focuses on pursuing global expansion, not only through vehicle sales, but also through the additional development of supercharger stations across the world. All which provide an opportunity to improve their poor international presence. Furthermore, it is essential that Tesla increases production volumes despite the 7% cut in full time employees. With the help of automation intelligence as one of the company’s strengths, they will be prepared to do just that, and ready to compete with the aggressive competition entering the market. Elon Musk, in a company update email to employees wrote “Higher volume and manufacturing design improvements are crucial for Tesla to achieve the economies of scale required to manufacture the Model 3 at $35k and still be a viable company.” (Ohnsman, 2019). The release of the Model 3 will surely improve Tesla’s weakness of producing expensive vehicles, however, we highly recommend that the company further aims to reduce its vehicles’ prices in order to become more accessible to the public. If Tesla could achieve these goals with the Model 3 it will undoubtedly help the company further succeed among the increased competition, and despite certain regulatory factors which are potentially limiting sales.


In conclusion, Tesla's strengths lie in its engineering and technical capabilities, strong brand recognition, fast-growing supercharger network, and automation intelligence. These strengths have enabled Tesla to establish itself as a leader in the electric vehicle market. However, the company must address its weaknesses, including the high prices of its vehicles, reliability issues, and poor international presence, to sustain its growth and appeal to a wider customer base.

To seize opportunities, Tesla should focus on expanding into the Asia-Pacific market, where the demand for electric vehicles is projected to grow significantly. Additionally, Tesla can explore opportunities in new markets and industries, such as ride-sharing services and self-driven Ubers, to diversify its revenue streams and tap into the growing green consumer market. However, Tesla must also navigate external threats, including aggressive competition, the volatility of the lithium market, and restrictive laws and regulations. By closely monitoring market trends, diversifying its supply chain, and advocating for favorable regulatory changes, Tesla can mitigate these threats and continue to thrive in the evolving automotive industry.

Overall, Tesla's strengths and opportunities outweigh its weaknesses and threats, positioning the company for continued success if it strategically leverages its advantages, addresses its weaknesses, and adapts to the changing market landscape.


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