PESTLE analysis for Tesla Motors
PESTLE analysis has grown to be one of the fundamental strategic tools used by organizations to analyze critical factors, which include; Political, Economic, Sociological, Technological, Legal, and Environmental that influence a business from the outside. The framework is flexible making it possible for organizations to use it in a range of different scenarios and further provides significant insight into the external factors impacting an organization (Rastogi & Trivedi, 2016). Tesla Motors is an example of a multinational organization that had quickly gained international popularity since 2010 when it went public. PESTLE analysis on Tesla Inc., therefore, provides an opportunity to ascertain how the company will survive in the automotive industry.
PESTLE analysis for Tesla Motors
Some of the political factors affecting Tesla’s business include the governmental incentives for an electric automobile, the political stability witnessed among the major markets for the automobile industry, and the new global trade agreements. A precise analysis of the political factors, therefore, shows that Tesla has multiple opportunities for growth as incentives offered by the government can be used in strengthening the company’s financial performance. Also, with political stability among major markets, the environment has become favorable for Tesla’s intensive growth strategy and its competitive strategy. Tesla is also impacted by various economic factors like decreasing battery costs, economic stability issues, and decreasing renewable energy costs. While the global economy is showing a consistent growth trend and remains stable, electric cars are also gaining popularity daily which presents an opportunity for Tesla (Chen & Perez, 2018). There are also social factors impacting Tesla’s business, and in this context, it is essential to identify the fact that electric car is fascinating for most people and owning such a vehicle technically increases an individual’s social status. There is also growing popularity of low-carbon lifestyles.
Tesla is also impacted by various technological factors in either a positive or a negative way. The company operates in a highly dynamic technology environment, which poses both threats and opportunity. Tesla uses the available technology to manage its competitive edge in the industry and further incorporated the latest technology to enhance the company’s product portfolio. On the other hand, environmental factors impacting Tesla Motors include the issue of climate change, which comes as an opportunity for the company. The electric vehicles produced by Tesla comply with various environmental regulations and do not have an impact over carbon emission (Mangram, 2012). Tesla seemingly faces multiple legal factors that impact its operations. For instance, there is the issue of dealership sales regulations and energy consumption regulations. Dealership sales regulations require manufacturers to engage third party dealership, and this will come as more expense and less profit for Tesla.
Comments and recommendations
Based on the research, I ultimately see a future for Tesla Motor’s electric vehicle due to some reasons. For instance, the government has come out supporting the development of electric and hybrid cars, which provides a conducive environment for the growth of the industry. The trend of the economy also presents a significant opportunity for future growth, and the electric vehicle market is expected to reach $ 1.5 trillion by 2025. Dynamism in technology also provides a future for the company as it is presumed that driverless technology is already being incorporated into the Tesla model (Chen & Perez, 2018). To maximize revenue and increase future survival, Tesla should consider strengthening its financial performance from the incentives coming from various governments. The company should also take advantage of expanding free trade agreements to open multiple operation centers overseas, which will give way for higher production. On the other hand, Tesla should consider increasing business automation, especially on the processes within the company, to allow sufficient growth. The company should also adopt a proper infrastructure to update and upgrade any form of obsolete technology.