January 12, 2018
Tesla is in a unique situation when it comes to market share and size. The automotive industry is a hugely competitive industry and has been for a while. Elon Musk entered the electric car industry, which is brilliant because in 2013 global sales of plugin electric cars were less than 1%. The electric car market has continued to see growth year after year and could be the way of the future.
Many competitors have jumped into the electric car industry to compete with Tesla with some of the bigger names being companies like Chevrolet, Nissan, and Toyota.
Tesla really separates itself from the competition with the quality of its product and the level of differentiation. The Tesla Model S can reach up to 265 miles when fully charged compared to the next product by Nissan (Leaf) that can only reach about 84 miles. Tesla has better technology making their product better.
Elon Musk is great when it comes to innovation. He is continuously listening to consumer needs and making the necessary adjustments. I remember reading a story of a customer complaining about a charging station, Musk immediately tended to the need and fixed it.
The electric car industry is extremely subject to changes in technology with companies innovating as much as possible to gain a competitive edge.
I think this industry has great potential. Not only are electric cars becoming the new hot thing because of the way they look and the technology associated with them, but people will also connect in an emotional manner, as it is safer for the environment. I expect to see tremendous growth in this industry. If I were an investor I would strongly consider this industry as I believe it will pick up in the future at some point because oil is a natural resource that will eventually run out.
The Model S contained over 2,000 parts and components that Tesla was sourcing globally from over 300 direct suppliers, the majority of which were currently single-source suppliers. Many thought alternative suppliers would prove to be costly and time consuming so a long-term deal was not made. Tesla ended up buying different plants and contracted with companies to manufacture their products.
Products in the industry are discretionary, meaning that consumers can buy at their availability when they want to. This makes it hard to increase sales, as a products lifetime is much longer than other industries. Buyers are also new to the industry and market so may need more convincing to switch from a gas-fueled car to an electric car.
In my strategic recommendations for Tesla I will focus on what I think are the two most important weaknesses within the company that they should focus on and improve on.
I think this is huge for Tesla going forward. They really need to focus on expansion and building on their presence. I believe before marketing their cars and products they need to have more charging stations. With the lack of charging stations it’s essentially like Apple selling you an IPhone with no charger, once it dies your screwed and have to figure out a plan. Sometimes in business you have to work from back to front and what I mean by that is they should start investing more of their money into charging stations and not necessarily their cars. The reason I think this is because I am speaking from a consumer standpoint. Sure, I would love a Tesla but why would I buy one if there is no where I can really go in Maine to charge it? My strategic recommendation would be to start implementing more and more charging stations across the U.S as that will be one of the deciding factors that draws customers in.
This is also something that Tesla should continue to look into. They have recently done R&D on electric cars and potentially selling cheaper cars for everyday consumers. I think this is huge because people view Tesla as a car that is too expensive for them and out of reach. This can correlate with weakness #1 because if there are limited amount of charging stations than why would someone want to make a pricy investment on something that may not work out or be able to charge. I know Tesla is currently working on making cars possible for everyone in regards to price so my recommendation would be to keep on that path because once they start selling cheaper cars, everyone will be trying to buy one.
Follow @AllThingsGoodCo on Instagram for more news updates every day.
Leave the first comment