Tesla Case

NAME: MD MEJBAHUL ALI
ID: 2022896
Case 2_ Tesla Motors
1. Which PESTEL factors are the most salient for the electric vehicle segment of the car industry? Do you
see a future for electric vehicles in the United States? Why or why not?
Many PESTEL factors play a significant role for the electric vehicle segment for the car industry. After reading the
Tesla case, I believe the political, technology and environmental are the PESTEL factors for the electric vehicle
market.
Political factors this refers to how governments interfere with the economy. Politics have a significant impact on
developments of industries. Government restrictions in 1980 prevented non-American automobile companies, in
the other hand the government combine political and legal factors to achieve desire changes in the consumer
behavior.
Technological factors at the present time the technologies for electric cars are not completely well-engineered
and we can appreciate this with the electric car batteries. The battery of the electrical vehicle is that the most
problematic component of the automotive because of its weight, limited capacity, range and costs. However,
technology is maturing with many new ways of reducing CO2 imitations and ways of reducing the speed of
battery loss in the automobile itself.
As we already know in today‘s world climate change and climate protection is a crucial issue. Therefore, the
need for new engine possibilities is high. Electric cars provide a solution to this major issues because it reduced
the level of emissions in the atmosphere which it will help reduce the amount of Greenhouse Gases and help the
climate. Also electric cars are attracting increasingly more attention thanks to its lower ecological footprint in
comparison to cars with combustion engines.
In my opinion electric cars are here to stay. Society is more aware of the environmental issues in comparison to
20 years ago. Technology has evolved drastically and will continue to produce new innovations that will
revolutionize the automobile industry. We can see new ideas such as automated pilots, break sensor, lane
sensor. Hopefully the come with a full size pick-up truck with the same power of a HEMI V8 or a Cummings
engine.
2. Looking at Porter’s five forces of competition, how would you assess the profit potential Of the U.S car
industry?
The automotive industry has an immense impact on our economy. The number of cars sold annually is an
indicator of the nation's economic health. But when the recession hit in 2007- 2008, car sales declined quickly,
reflecting the decrease in consumer spending.
Now, we can see how the automobile industry has recovered and also the market is changing. We can see shifts
in consumer demand, expanded regulatory requirements for safety and fuel economy, and the increased
availability of data and information. Also the government has been very pleasant with tax exemption for electric
car owners.
All this factors play a major role in the sales of this industry. Although, the barriers to entry the auto
manufacturing industry in the United States remain high, there has been an increase of foreign competitors with
the capital, technology, management and marketing skill which represent a real threat to the domestic industry.
However, I believe that with all the technologies, innovations and government regulations the automobile
industry in general will remain profitable. One of the main reason I believe that the automobile industry will
remain the same, is because the public transportation system in the U.S. is expensive and there is so many
option such as Uber. Innovations such as electric cars, automated pilot will help automobile industry keep
flowing.
3. Using the five forces model, what implications can we derive for how Tesla Motors should compete
in? The U.S. car industry? What would be your top three recommendations for Leon Musk? Support
your Arguments.
For Tesla to compete in the US and achieve long term competency and flexibility, they must be
effectively tackle external factors like brand awareness because not many Americans are aware of the existence
of Tesla. Tesla should also focus on technology advancement and the political regulation in which the markets
are operating on. Example Tesla should invest on research and development this may enable them to create
their own lithium batteries which will ensure the product is ever available. Tesla should also work on expanding
on a wide variety of their products and offer different price ranges to their consumer. This can help them out-
perform their competitors and gain a competitive advantage. Tesla should also be available to their consumers
and offer affordable products too all consumers not aim the high end consumers.
Tesla should also focus on their relationship with their suppliers to ensure that delivery of their product is done
smoothly and in the most efficient manner with no delay. This help reflect a good image of the company to its
consumers.
4. Draw a strategic group map for the U.S. automotive industry. What are your conclusions?
The Tesla Company is in a separate segment with a pretty design and a good electrical car. Tesla became the
carmaker with the most satisfied customers for the third year in a row. Consumer Reports said at the time Tesla had
received 98 out of 100 points regarding the driving experience, comfort, value, and styling, as well as things such as
the audio and climate systems
5. Why do you think that Tesla’s market capitalization (Share price × Number of outstanding shares) is?
Roughly 50 percent that of GM, while GM’s revenues are more than 50 times larger than that of Tesla
Motors?
This is because Tesla needs a lot of capital to invest in the cars development and for its future growth.

Tesla Case

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Tesla Case

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NAME: MD MEJBAHUL ALI

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