PESTEL analysis
Political- Tesla has had their success and failures at the hands of politicians. Since the U.S. government has shown interest in renewable energy and electric vehicles, Tesla was granted a $465 million low interest loan from the Department of Energy, Tesla has paid off the loan, but without it, they may have never been able to get the company to attract so many investors. The federal government also offers a $7500 tax credit for purchasing electric vehicles. Some states, like Colorado and Virginia offer state tax credits over 5,000 dollars to entice customers to buy electric vehicles. On the other hand. The rest of the automotive industry has been fighting back hard with large political contributions through lobbying efforts.
Tesla wants to distribute vehicles from the manufacturer to the consumer, eliminating the third party middle man, the private owned dealerships. A study in 2009 conducted by the Department of Justice; found consumers would save approximately $2200 (3) on vehicles that are sold directly from manufacturers to consumers. So what is stopping them?
Legal- Some states ban some type of car sales directly from manufacturer to consumer. At least 5 states, Michigan being the most recent have banned Tesla from soliciting sales, hiring sales people, or offering test drives. All consumers can do is see the vehicles in a gallery, and then place an order online. Michigan recently passed H.B. 5606, that forces all manufacturers to have third party dealerships. Problem is, dealerships only make so much money from car sales and the rest is from repairs. Electric vehicles have lower maintenance costs making them ill-suited for this type of business model. Also, if consumers and producers are being negatively impacted by laws; isn’t that infringement on a free and open market? Regardless, The only group contributing political contributions and the only one benefiting from the laws being passed are the automotive dealerships.
Economics- Growth rates are slow in the U.S, but that hasn't stopped people from buying cars on credit through “deals” such as 0% financing. The catch that most people don’t realize is that the interest is already added into the MSRP when the car is sold increasing the base price but making it seem as if the customer is getting a deal in the long run. ( source: Paul Fisher, Intermediate Accounting, Spring 2013). New car sales have been rising rapidly since the recession in 2008. The sales are back to the same level they were prior to the market collapsing (5). Tesla has managed to come out of the recession with ever increasing stock prices. The public lent a helping hand by being very optimistic in the company’s future even though they are a small manufacturer.
Social- Most citizens support the idea of investing our taxes into sustainable fuels and products using sustainable resources. Even after most companies who were given large government loans failed to materialize into successful companies; Americans are still supportive of the endeavors to create a sustainable economy. Going green is a very popular term these days
Technology- Tech is at the root of Tesla’s business plan. As mentioned earlier, the company was started in Silicon Valley, California. They are a front runner in automotive innovation and continue to improve and make impacts on the batteries and electric vehicle efficiency. Their improvements in batteries, aerodynamics, and rolling resistance are leading to an increase of 40-50% in range efficiency for the prototype Roadster 3.0; making it the first car to have an expected range of 400 miles (6.)
Environmental- Driving vehicles without consuming and burning gasoline is great, but using electricity derived from coal plants defeats the purpose. Tesla is in the process of developing battery packs to be used in conjunction with solar panels to help utilize the suns abundant energy truely making Tesla eco friendly.
Political- Tesla has had their success and failures at the hands of politicians. Since the U.S. government has shown interest in renewable energy and electric vehicles, Tesla was granted a $465 million low interest loan from the Department of Energy, Tesla has paid off the loan, but without it, they may have never been able to get the company to attract so many investors. The federal government also offers a $7500 tax credit for purchasing electric vehicles. Some states, like Colorado and Virginia offer state tax credits over 5,000 dollars to entice customers to buy electric vehicles. On the other hand. The rest of the automotive industry has been fighting back hard with large political contributions through lobbying efforts.
Tesla wants to distribute vehicles from the manufacturer to the consumer, eliminating the third party middle man, the private owned dealerships. A study in 2009 conducted by the Department of Justice; found consumers would save approximately $2200 (3) on vehicles that are sold directly from manufacturers to consumers. So what is stopping them?
Legal- Some states ban some type of car sales directly from manufacturer to consumer. At least 5 states, Michigan being the most recent have banned Tesla from soliciting sales, hiring sales people, or offering test drives. All consumers can do is see the vehicles in a gallery, and then place an order online. Michigan recently passed H.B. 5606, that forces all manufacturers to have third party dealerships. Problem is, dealerships only make so much money from car sales and the rest is from repairs. Electric vehicles have lower maintenance costs making them ill-suited for this type of business model. Also, if consumers and producers are being negatively impacted by laws; isn’t that infringement on a free and open market? Regardless, The only group contributing political contributions and the only one benefiting from the laws being passed are the automotive dealerships.
Economics- Growth rates are slow in the U.S, but that hasn't stopped people from buying cars on credit through “deals” such as 0% financing. The catch that most people don’t realize is that the interest is already added into the MSRP when the car is sold increasing the base price but making it seem as if the customer is getting a deal in the long run. ( source: Paul Fisher, Intermediate Accounting, Spring 2013). New car sales have been rising rapidly since the recession in 2008. The sales are back to the same level they were prior to the market collapsing (5). Tesla has managed to come out of the recession with ever increasing stock prices. The public lent a helping hand by being very optimistic in the company’s future even though they are a small manufacturer.
Social- Most citizens support the idea of investing our taxes into sustainable fuels and products using sustainable resources. Even after most companies who were given large government loans failed to materialize into successful companies; Americans are still supportive of the endeavors to create a sustainable economy. Going green is a very popular term these days
Technology- Tech is at the root of Tesla’s business plan. As mentioned earlier, the company was started in Silicon Valley, California. They are a front runner in automotive innovation and continue to improve and make impacts on the batteries and electric vehicle efficiency. Their improvements in batteries, aerodynamics, and rolling resistance are leading to an increase of 40-50% in range efficiency for the prototype Roadster 3.0; making it the first car to have an expected range of 400 miles (6.)
Environmental- Driving vehicles without consuming and burning gasoline is great, but using electricity derived from coal plants defeats the purpose. Tesla is in the process of developing battery packs to be used in conjunction with solar panels to help utilize the suns abundant energy truely making Tesla eco friendly.
Vrine Analysis
The Tesla companies’ greatest resource may be their knowledge. Unlike the rest of the auto manufacturers, Tesla is a new company with new ideas. The values, mission, and founding of the firm are based in technology. This could make it harder for other auto makers to copy or reverse engineer their products. So far, Tesla is the only company to make an electric vehicle that can commute over 200 miles while still having a stylish body that appeals to the masses. Knowledge can be easily spread throughout the industry; and Tesla Motors must keep the people who provide them this resource. To do so, the company must continue to grow the company, improve technology, and reward those who contribute. Maintaining a dynamic environment open to new ideas could be key in retaining the people who have the knowledge of their technology. Legally, non-disclosure and non-compete agreements may be required by the ones working on the tech in order to keep Tesla Motors ahead of the competition.
Additionally, the knowledge Tesla has is costly to imitate. Large manufactures have spent billions trying to create an electric vehicle with hybrids being the best thing they can come up with. If it wasn’t for large loans by the U.S. government, Tesla Motors would not have gotten off the ground. Lastly, unlike the other manufactures, Tesla has the greatest opportunity to capture the value of its resource; knowledge. It captures this resource through another.
The fabric of the company is based off innovation and forward thinking. Being branded as a Silicon Valley tech company, gives the company a greater opportunity to attract the new employees who can contribute to the knowledge that the company has. This quality is one of a kind in the U.S. market and impossible to imitate by the other auto manufacturers. The other companies may offer electric vehicles in the future, but none of them will capture the eyes of new recruits from colleges like UC-Berkeley, Stanford, and the California Institute of Technology.
The Tesla companies’ greatest resource may be their knowledge. Unlike the rest of the auto manufacturers, Tesla is a new company with new ideas. The values, mission, and founding of the firm are based in technology. This could make it harder for other auto makers to copy or reverse engineer their products. So far, Tesla is the only company to make an electric vehicle that can commute over 200 miles while still having a stylish body that appeals to the masses. Knowledge can be easily spread throughout the industry; and Tesla Motors must keep the people who provide them this resource. To do so, the company must continue to grow the company, improve technology, and reward those who contribute. Maintaining a dynamic environment open to new ideas could be key in retaining the people who have the knowledge of their technology. Legally, non-disclosure and non-compete agreements may be required by the ones working on the tech in order to keep Tesla Motors ahead of the competition.
Additionally, the knowledge Tesla has is costly to imitate. Large manufactures have spent billions trying to create an electric vehicle with hybrids being the best thing they can come up with. If it wasn’t for large loans by the U.S. government, Tesla Motors would not have gotten off the ground. Lastly, unlike the other manufactures, Tesla has the greatest opportunity to capture the value of its resource; knowledge. It captures this resource through another.
The fabric of the company is based off innovation and forward thinking. Being branded as a Silicon Valley tech company, gives the company a greater opportunity to attract the new employees who can contribute to the knowledge that the company has. This quality is one of a kind in the U.S. market and impossible to imitate by the other auto manufacturers. The other companies may offer electric vehicles in the future, but none of them will capture the eyes of new recruits from colleges like UC-Berkeley, Stanford, and the California Institute of Technology.