Macroenvironment
Tesla Motors competes in a niche segment of the an automobile industry, which is the electric car segment. Specifically they occupy a luxury component of that segment. The macroenvironment is an interesting one, not the least because it is in a state of flux. The traditional model of the gasoline-powered automobile has been so dominant for so long that is seems almost inconceivable that this model is changing. Yet, with climate change, peak oil and a number of other issues, there is a groundswell of public opinion that is shifting. Surveys have revealed that acceptance of electric vehicles is not universal, but is stronger among women and the aged, and those with a high level of environmental conscious. Men perceive their knowledge of the issues surrounding electric cars to be high, while there is actually no evidence to back that up, and men score lowest on acceptance of electric vehicles (Ziefle et al., 2014). That said, Tesla has built some good buzz for itself. Perceptions of the Tesla brand are generally high, and the brand awareness is also showing evidence of growth as well. Ultimately the social environment is moderately positive, and possibly improving, for Tesla.
There is some thought that this will change, however. Increasingly, younger people have a high awareness of climate change, and they are spurred to make consumer decisions based on their vision for the future. As per their nickname, millennials have a vision for the future that is rooted in the 21st century, much different from the current dominant economic and social model, which is rooted in the 20th century in which the baby boomers (and up), and Gen Xers were raised. The social environment projects to become much more favorable going forward.
The economic environment is generally good for Tesla. The company sells in the luxury segment, where price sensitivity is low, and where sensitivity to economic health is also lower. That said, the company does make a point in its advertising to note that its product is cost-effective when the cost of fuel is taken into consideration, indicating that the company believes there to be some level of price sensitivity among its target market. The economy in the U.S. is growing slowly, and in Europe perhaps even more so. In the critical Chinese market, there are concerns that slowing growth with adversely affect Tesla (SCMP, 2015). The Chinese market is an interesting one in particular, because a lot of the company's growth projections for its current models are based on growth in China, which Tesla sees as a major potential market.
The regulatory environment is one of perpetual challenge for Tesla. For years, it has faced obstacles from entrenched interests in car dealerships, because of its model of self-distribution, cutting out the dealerships. Tesla sales have been banned in some states as a result of this conflict (Tesla, 2014). The political environment is also relevant in terms of the support for electric vehicles in general and Tesla in particular. Americans receive a tax benefit of $7,500 for the purchase of a Tesla, and there are a number of state level incentives as well (Tesla, 2015). These are important because they help to create a market for the company's products. In some cases, competitor products are also eligible for these rebates, but for gasoline-powered vehicles they are not. There is also the question of support with respect to building out superchargers and other charging infrastructure -- in China for example there was the question of government support for building out this critical infrastructure (Voelcker, 2015).
Industry Environment
Tesla has two main competitive advantages. First, it has superior technology, and second it has established a brand reputation as the leader in its field. The company competes in the electric car niche of the global automobile industry. The industry as a whole is worth an estimated at $9 trillion (IBIS World, 2015). Of this, the electric vehicle market was worth $83.54 billion in 2012, with an estimated 19.2% CAGR, implying that in 2015 the size of the electric car industry should be around $142 billion (TMR, 2013). Thus, electric cars are a niche market worth 0.015% of the global automobile market. Tesla, with revenues of $3.8billion in the last four quarters, accounts for 2.6% of the global electric vehicle market and thus an infinitesimal share of the global automobile market (MSN Moneycentral, 2015). It is worth noting that 55% of the electric vehicle market today is in the form of hybrids (Perkowski, 2014), whereas Tesla is a pure electric...
Tesla Motors has a cash flow problem, which makes it vulnerable to the many larger competitors who want into the electric vehicle business. The advantage Tesla has is with its battery technology, which is vastly superior to anybody else's, and in its brand name and leadership. The in-house distribution is unique to the industry but it might be too early to determine whether this is helping Tesla or hurting it.
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