Tesla Analysis

SWOT Analysis

Strengths

Strong brand equity around the world

Strong culture of innovation

Strong and dynamic leadership team

Economies of scale

Access to low cost capital sources in both the debt and equity markets.

Government policies cater towards production

Weaknesses

Potential lack of focus with the acquisition of Solar City.

Upfront costs relative to other transportation choices is still high

Highly capital-intensive business which requires large amounts of continued investment thereby lowering distributable earnings to shareholders

The product relies on commodities which are subject to high levels of inflation and price volatility.

Threats

The company is subject to economic recessions and depression that can occur unexpectedly

Consumer sentiment towards the brand can change as new competitors enter the companies target markets

Foreign competition can lower prices through various government subsidies and regulations (I.E. China)

Opportunities

Large amount of capital is being dedicated to the ESG space.

Consumers have a large desire to purchase EV due to the rise in gas prices and overall inflation

Opportunities exist in the electrification of other transportation methods such as trucks, airplanes, and more.

SWOT Analysis

Tesla, is one of the preeminent electric vehicle manufacturers in the world. Led by its dynamic CEO, Elon Musk, the company currently has a market value of $ billion. At its peak the company was valued at more than $1 Trillion. The company has very strong brand equity within the market which it allows to command a large portion of the EV market share. In addition, the brand has large share of the consumer mind which it can leverage to not only charge premium prices, but to drive demand (Tesla, 2013).

To begin, one of Teslas greatest strengths is its brand. The brand is synonymous with quality, style, and luxury. As one of the premier auto manufacturers in the world, consumers typically resonate well with the brand and view it positively. This has allowed, the brand to price its products on the premium end of the market, thereby improving cash flow and margins. As a premium brand, the company is well positioned to capture the luxury portion of the electronic vehicle market (Thompson, 2020).

In addition, consumers are very willing to pay premium prices for vehicles in order to help preserve the planet for future generations. This emphasis on enhanced governance, and ESG standards have been a tailwind for Tesla. Consumers are now much more willing to pay higher prices, to engage in a cause they resonate with. Tesla, which can significantly reduce the worlds reliance on fossil fuels, is tremendous in this regard. Likewise, its focus on...

…equity and consumer mindshare. In order to maintain this status within the psyche of consumers, the brand must continually innovate its existing product line to continue to command premium prices. Although listed as a cash cow, cryptocurrency can also be a detriment to the organization is not properly hedged. Here, the overall volatility of the asset class can undermine the performance of the company. Although successful in the past, there is no assurance that the investments in crypto currency will continue to yield the exception results it has achieved in the past (Levin, 2021)

The dogs section, reiterates many of the hardships discussed in the sections above. Adverse production conditions, couple with supply chains shortages can create difficulty in meeting demand for the product. This ultimately can result in lower profitability on a go-forward basis as consumers elect to purchase competitor products instead. The external macro environment, particularly inflation and interest rates can adversely impact the business. Inflation increases the overall input costs needed to produce the product, thereby making it more expensive as these cost increases are past on to the consumer. The rise in interest rates makes is harder for consumers to finance the purchase of the vehicle. It also makes it more expensive for the company to borrower funds to improve…