Public Domain Tesla, Inc. This SWOT analysis shows that the company has the strengths needed to maintain profitability in the long term.
While the electric vehicle manufacturer has reported operating losses in every year since its IPO, the company has certainly been exciting auto enthusiasts. As an investment, Tesla is an interesting selection, as well. The stock also has a good amount of risk. One of the primary questions that investors are asking is Vrio tesla motors will the company finally turn a profit?
The stock price has been very volatile over the last few quarters, but will it be able to climb steadily higher, thanks to the new Model 3?
Are the shares are a good long-term investment, given the fierce competition and production-related concerns? We will address these issues by performing an easy-to-follow SWOT analysis of the company, evaluating its Strengths, Weaknesses, Opportunities, and Threats.
The Business Tesla Motors designs, develops, manufactures, and sells high-performance fully electric vehicles and energy storage products. It has established its own network of vehicle sales and service centers, as well as Supercharger stations around the world to accelerate the widespread adoption of electric vehicles.
As of December 31,it operated locations, along with Supercharger stations in North America, Europe, and Asia. The company currently produces and sells two fully electric vehicles, the Model S sedan and the Model X sport utility vehicle. As of December 31,Tesla has delivered overnew Model S vehicles worldwide, after its first shipment in June The Model X was first delivered in the third quarter of They are sold through a network of Tesla stores and galleries, as well as through the Internet.
The company also sells energy storage products, including the 7 kWh and 10 kWh Powerwall for residential applications and the kWh Powerpack for commercial and industrial applications. These products, marketed under the Tesla Energy brand, were first delivered in the third quarter of As of December 31,the company had 13, full-time employees and was headquartered in Palo Alto, California.
The company was founded in and had its IPO on June 29, Strengths Unique Position in the Auto Market: Tesla is not just in the business of selling cars.
It is transforming the way we drive, and the company is delivering innovative new technologies to do so. While Tesla is not the only auto manufacturer that offers electric vehicles, it has created, and dominated, the market for luxury, long-range electric automobiles.
This market is distinct from the one for less expensive electric vehicles, as well as the market for luxury gas-powered vehicles. The extraordinary growth has been driven by strong global demand for the Model S.
First-quarter orders for the Model X, which was introduced in the third quarter ofincreased fivefold on a sequential basis. Management plans to deliver 80, to 90, of these two brands in However, the new Model 3 has been stealing the spotlight in recent weeks.
Weaknesses Burning Through Cash: Tesla has been burning through significant amounts of cash over the years. This is largely due to the significant investments it has made in research and development for the transformative technology in its cars.
It is also the result of the rapid expansion the company has experienced in just a handful of years. Because of these large cash outlays, Tesla has reported negative free cash flows and earnings for nearly every year since its IPO.
As a result, Tesla has been forced to raise more debt and sell more shares. The company has a relatively high debt load. Interest payments on this debt are fairly significant, and will likely continue to cut into earnings.
If the company is unable to satisfy its debt obligations, because of insufficient cash flows, it may have to reduce or delay investments and capital expenditures, which could hamper future growth. While this is still out reach for many consumers, the price tag puts the vehicle in the same price range as lower-end Mercedes-Benz and Audis.Tesla- Strategic analysis.
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3. Using VRIO analysis, evaluate whether Tesla has a sustained competitive advantage. Question of Value: The answer is definitely yes for Tesla because Tesla's products are going to solve a major problem for the humanity, i.e., reducing reliance on fossil fuels.
The company's clean energy products can become mainstreams with improved technology and affordability and resolve energy demand %(25).
vrio framework for tesla motors Value- One of Tesla’s most valuable assets and capabilityies is their state of the art production fasicility.
The machines and computers running in that facility is capable of churning out new and improved products in an efficient manner.
Tesla Motors Case Study by Team Ferris Ohio University MBA Based on VRIO framework, Tesla has a valuable resources and capabilities. Tesla Motors is the first company entering in fully electric car industry and it has powerful technology that increases net revenue and decreases cost%(3).
Tesla Motors is a global company, and is present on different geographical markets. Throughout the analysis, I will be using Tesla ’ s own segmentation: North America, Asia and Europe.