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Tesla Motors Case Study Analysis

Question :

Tesla Motors is an American multinational company headquartered in Palo Alto, California. Tesla produces battery based electric vehicle, solar panels and solar roof tiles. This is based on Tesla Motors case study analysis. Tesla was incorporated by Martin Eberhard and Marc Tarpenning in the year 2003. Tesla is one of the leading companies in the auto mobile sector. Tesla motors claims that they can update the software in the vehicle over the air (OTA) like an update for a smartphone or an iPhone. But sometimes Tesla delivers blemished vehicles and battles to meet the deadlines which leaves them with less profits. Many competitors use this an excuse which says that Tesla should be considered as an innovator.

  • What do you know about Tesla?
  • Analyse the competition of Tesla after it's establishment?
Answer :
Organization Selected : Tesla

Tesla isn't the inventor of electric cars Robert Anderson did in 1832. But the idea and the product was made popular by Tesla by vigorous promotion. The competitors of Tesla were not manufacturing electric cars until 2008 when Tesla launched its very first electric car i.e. Tesla Roadster. Everybody whether the consumers or the government want to own an environment Friendly car with low emissions transit option. Statistically, the number of Hybrid EV(s) sold in the US didn't break 100,000 until 2005 and 9,750 in 2011. Tesla gives a feature of Autopilot which uses Artificial Intelligence which means the car can drive automatically without giving any commands. There are some incidents about crashes and misusing autopilot. Auto mobile industry needs improvement which Tesla tries to make but still it's very much difficult to succeed in this industry.

 Tesla Motors, Inc

ISSUES:

There are some issues faced by Tesla:

  • High Competition: After the launch of Tesla Roadster in 2008, many competitors arose in the electric market. Tesla Roadster was the first luxurious electric car which gained lot of attention of the competitors. As in 2010, Mitsubishi Motors launched its first electric car. Some of competitors of Tesla are Nissan, Mitsubishi, Ford and many more.
  • Poor Quality: Tesla is a company which doesn't meet the deadlines and sometimes leave the product with some riddles. This leaves a bad image in the market. Bad image will result in poor goodwill which will result in poor market position, less annual turnover and low market value.
  • Controversies: Due to not meeting the deadlines properly and launching the product with some riddles creates controversies. These controversies involves a lot of competition where the competitors tries to deteriorate goodwill of the company and make sure their value of the share diminishes in the market.
  • Tight Margin: Due to huge competition for Tesla after 2008, there were lot of competitors in the market like Nissan, Ford, Mitsubishi and many more. This reduced the profit margin of Tesla. Less profit margin is the result of competition in the market. Tight competition results in Tight profit margin. Competition in the market decides the profit margin for the company as if a company for example Nissan is selling an electric car less than that of Tesla the company is now under the pressure of reducing the prices as otherwise the consumers would prefer the substitute of Tesla i.e. Nissan's electric car. This will result in less profit margin.
  • Lack of Funding: Tesla faces an issue of lack of funding because the company is not making huge profits and possess a low profit margin. This results in less funds available to the company for further innovation. Lack of fund will result in less investment in Research and development which means less innovation which means Tesla is not an innovator any more. Due to this the company will face huge losses and bad image in front of the consumers. Investors and suppliers won't invest in the company as they know that the company might go bankrupt which means no money back guarantee. In simple words, Investors won't invest in the company if the image of the company is not apt in the market.

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Measures:

Tesla took some steps to solve the issues listed above:

  • To solve the issue related with the quality of the vehicle Tesla has taken some measures such as improving the quality of vehicle by increasing the mileage of the car, speed and regular testing of all the vehicles before launching.
  • Regularly monitoring the competition: Regularly analysing the competition in the market and coping with the necessary changes which would increase the quality of the product which will increase the goodwill of the company like use of Autopilot.

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Recommendations:

According to today's world where technology changes so rapidly that outdating period is so less that means the technology gets old within a very short span of time. Tesla needs to work on the problems within and should meet the deadlines and the vehicle should not be launched without any issues in working. The company should work under pressure and then give the outcome on time, this make sure that company is reliable and will definitely meet the requirements with all the testing procedures. This helps in gaining a significant amount of suppliers and investors, this make sure that the company is never out of funds or capital. This will definitely solve the problem of lack of funds and will ensure huge investment in Research and development. This will result in high level of innovation and creativity because the research is done properly and with sufficient amount of resources.

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Tesla should expand itself in various countries like in UK, India, Ecuador, New Zealand and many more. This will ensure high annual revenue for the company and will improve the profit percentage of the company with the increase in goodwill. Increase in Goodwill will ensure that consumers buy more and more cars of Tesla which will again increase the market position of the company and will lead to high market share. This high market share will result in less controversies that means the share value in the market will remain stable and can be the king in the market.

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