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Tesla Motors Company (2)
Tesla Motors Company
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Institution
Abstract
The current transport sector depends on the fossils fuels leading to the emission of the greenhouse gases, which have a detrimental effect on the environment. The electric vehicles have an advantage of emission of little or no greenhouse gases. Tesla motor industry manufactures electric vehicles.
To study their effectiveness, the features of Toyota vehicles, the market strategy, and environmental conservation effects were conducted. The main search tool was Google using various terms. The results showed that Tesla produces electric vehicles that do not emit greenhouse gasses to the environment and have the best strategy that ensures market competitiveness.
Tesla Company has succeeded in innovating an environmental friendly vehicles using advanced technology. Furthermore, the company has invented the best market model that can be emulated by other companies. The electric vehicles have a global impact through reduction of global warming and human diseases associated with the effects.
Tesla Motors Company
Introduction
Currently, the transport sector depends on fossils fuels leading to the emission of the greenhouse gases, which have a detrimental effect on the environment (Erickson, 2017). The advent of electric vehicles is becoming the best alternative to curb these adverse effects. The advent of novel and high technology in the motor industry is essential in solving challenges posed by old technologies. The challenges posed by the motors with internal combustion engines include environmental pollution and low performance. These challenges if not solved, could lead to detrimental health and environmental effects. The survival of the planet earth is mainly dependent on government policies that are aimed at achieving successful solutions to solve the challenges. Tesla motor industry, through its innovations, has developed electric cars, which bring extraordinary characteristics such as pollution-free, noise-free, and high performance in the motor industry.
Literature Review
The automobile industry faces many challenges, including environmental impact and the fuel economy. Ecological safety is a challenge requiring a quick solution because of the rising number of vehicles. Since the 1980s, the number of privately owned vehicles has increased worldwide (Jung & Koo, 2018). The organizations dealing with the protection of the environment have sounded an alarm because of the rise in the number of cars, which has become a global issue. The US estimated that the vehicles produce up to 70% of the harmful emissions into the environment (Mandal et al., 2019). The annual estimated amount of pollutant emission is about 22 million tons from different origins. The automobile vehicles with internal combustion were identified to be the cause of pollution. Therefore, the advent of electric cars is essential to solving the alarming environmental issues.
The California Air Resources Board (CARB) in 1998 adopted a decision indicating the number of cars with zero exhaustion, which is sold per year (Erickson, 2017). There was a registered increase in the numbers of zero exhaustion cars sold with 2% in 1998 and 15% in 2003 (Mandal et al., 2019). The EU government promoted the shift to electric vehicles from 2015 to 2020 by increasing the fine for the excess emission of carbon dioxide by the cars.
The emission that gets into the environment drain into the open water, the drainage basins, and into the underground water, leading to the contamination of the water bodies. It has been established that the dust carried by the cars have over 200 different types of chemical substances, with some being radioactive (Jung & Koo, 2018). The accumulated dust in the lungs dissolves in blood and cause human diseases, including allergies, organ diseases, and cancer. Furthermore, noise pollution is notably significant in the contribution to the development of hypertension, reduced life expectancy, hearing deterioration, and increased aggression. The increased electric equipment during the traffic flow causes electromagnetic pollution. Major human body systems such as the immune system, central nervous system, the endocrine glands, and the eyes are sensitive to electromagnetic pollution.
The electric cars are essential because of their ability to revolutionize how the energy is spent, created, and redirected. Electric cars are a solution to the alarming negative effects of conventional cars. More so, they have been demonstrated to have other benefits in society. Notably, electric cars have better energy efficiency. The electric vehicle has 75% efficiency concerning turning the input energy into the kinetic energy, also called moving energy (Rievaj & Synák, 2017). The conventional cars have 25% efficiency. It has been demonstrated that the electric cars based on the fact they have fewer parts that fuel energy have less energy conversion resulting in less energy loss. Furthermore, the electric brakes are regenerative allowing the car to charge its battery while braking. Secondly, electric cars have less greenhouse gas emission. Greenhouse gases contribute to global warming (McDermott, 2017). The advent of electric cars results in elimination or reduced greenhouse gas emission. Therefore, the electric cars are essential for in the creation of a better environment because they are clean and safe.
Methods
The environmental pollution is contributed mainly by the vehicle emission of greenhouse gases. The case of Tesla motor industry was picked through the assessment of the possible innovations that solve the environmental issues (Mandal et al., 2019). The literature was searched in the Google search tool using terminologies such as greenhouse emission, fuel conservation, environment-conserving cars, and electric cars. The best electric motor industry was chosen, and the Tesla motor industry was the best in the search. Various types of motor industries were searched in Google, and the motor company found is Toyota.
The comparisons were made based on customer acceptance, innovation strategies, market challenges, and way forward. The Tesla production history was compared from the time it stated car production. Furthermore, the market comparison was conducted based on the available published information. The three companies were compared also based on their innovativeness and the ability to solve environmental issues.
The various market strategies were compared, and the unique ones focused on, the contribution of the cars to the environment conservation, the features of the vehicles, and the preparedness to meet the market requirements (Nowak, 2019). These comparisons are essential in the determination of the prospects of Tesla industry.
Results
The assessment of the contribution of the Toyota cars and Tesla cars contribution to greenhouse showed many improvements in the two types. Toyota Company has advanced in its creation of brands that use less fuel to travel long distances. The cars have been designed to produce less emission to slow down the rate of global warming. However, this does not mean that there is no emission. On the other hand, Tesla cars are environmentally friendly, that uses electricity as fuel (Rievaj & Synák, 2017). The emissions are minimal, and in cases were the renewable source of electricity was used, the emission is zero.
The features of the cars are different with Toyota cars having the features of a conventional car while Tesla cars have been improved to use electricity. The Toyota cars have internal combustion engines that utilize fuel to provide energy to move the car while Tesla cars use electricity. The electric cars have the electric motor as the engine instead of the combustion engine. The cars use the large traction battery pack as the source of power for the electric motor engine. The battery needs to be plugged in at a charging point, which can be a wall outlet or the charging station. The car emits no exhaust because it uses electricity, and does not have the liquid fuel compartments such as the fuel tank, fuel line, or the fuel pump.
Market issues were also assessed based on the market strategies employed by the two companies. The Toyota company uses the generic strategy, which combines the cost leadership and broad differentiation generic strategy. The cost leadership involves the minimization of the cost of the operations and the selling price. The broad differentiation generic strategy requires the development of the business and the product that is unique to ensure competitive advantage. The combination of the two strategies allows the company to reach the global market. Tesla, on the other hand, uses the high-end innovation strategy through the creation of a unique high-tech product that cannot be imitated by the competitors. The strategy ensures high market performance while at the same time, reducing the cost.
Discussion
Solving the issues that arise from daily life is an essential aspect of innovation. The environmental problems that are posed by the greenhouse gases are alarming and require immediate intervention (Nowak, 2019). The advanced technology is one of the resources that can be used creatively and innovatively to solve the problems affecting the world. Global warming is a global issue that threatens human health and the environment. The inhabitants of the planet already feel the effects.
The plug-in electric cars are practical and reduce the emission to the environment. Furthermore, the cars have the advantage of saving money. The fueling of the cars with electricity has many advantages over conventional vehicles with an internal combustion engine. The electric motors react quickly and are highly responsive (Narins, 2017). The cars are digitally connected with the charging stations providing alternative charging points. This is different from the common fuel stations for conventional cars.
The electric cars are rechargeable just like the hand gadgets where charging is required prior to use. The availability of the electric ports in many points such as at home, at work and along the road, the use of electric cars becomes easier than the conventional cars requiring a recharge at the fuel station only (Rievaj & Synák, 2017). The electric cars will help the state to be diverse concerning the fuel choices that are available for transportation than the typical fueling. The US, for example, uses about nine billion barrels of petroleum annually, with about one-third channeled to transportation. The reliance on petroleum makes the nation vulnerable to the cases of price spikes and the disruptions of the supply. The use of electric vehicles will help solve such problems because electricity in many countries is domestically produced from domestic resources, including nuclear, coal, renewable resources, and natural gas (Ciccone, 2018). The problem of emission will be reduced by electric cars use, and the risk of changes in smog and climate will be reduced. Consequently, there will be improved health and reduction of the ecological damage associated with the use of conventional cars. More so, charging the electric cars with renewable energy minimizes the emission the more.
The valuation of Tesla has increased over time. The fact that the Tesla motor industry gained more credibility in 2013 when the stock prices increased by more than 300% is encouraging (Narins, 2017). The comparison between the strategy used by the industry and the technology was essential to find sectors to improve. The comparison was extended to other companies that registered success as Tesla. The Tesla shares increased from 2013 to March 2019, trading at about $427.64.17 (Nowak, 2019). The valuation of Tesla has increased even though, in the past, the industry had registered losses. Tesla, like other tech companies, adopted the disruption strategy and sold directly to its customers. Therefore, this resulted in the building of loyalty like the iconic tech companies like Apple.
Tesla motor industry invented the successful business model. Considering the electric car product sold by the industry, Tesla did not only invent the electric car but invented the best and successful business model by introducing the car into the market. One of the challenges of the adoption of the electric vehicle is the charging points in the market. Tesla’s strategy involved the building of the network of charging stations to solve its market obstacles (Nowak, 2019). The unique business model included the control of sales and the services. Consequently, the business model led to the soaring of sales.
Tesla used the innovative high-end strategy to win the market competition. The Tesla motor industry used the high-end technology disruption strategy by the production of higher technology innovation that is not easy to imitate by other companies. The company focused on using technology to lower the cost of performance per unit over time rather than using technology to improve the performance. The high-end technology innovations have some unique characteristics, including selling at a premium price rather than the discount price and looking for the least sensitive buyer’s opinion before spreading to the market. Furthermore, the strategy targets the competitor industry’s most profitable customers. Therefore, the production of an electric car was one of the high-end technology because other companies could not imitate the product. Consequently, Tesla industry has remained dominant in the market from 2013.
Conclusion
Overall, the use of advance technology through creativity and innovations are meant to solve the challenges that present themselves in our daily lives. Greenhouse gases are posing a significant threat to the environment. The high contributors of h greenhouse gases are the vehicles through their waste emissions. The development of electric cars has helped in the reduction or elimination of the emission. Tesla motor company have made steps in the development and selling of electric vehicles to the customers. The use of high-end innovation strategy was a massive step in the realization of their success. Moreover, the company has used other important strategies to ensure they remain at the top of the car market.
References
Ciccone, A. (2018). Environmental effects of a vehicle tax reform: Empirical evidence from Norway. Transport Policy, 69, 141-157.
Erickson, L. E. (2017). Reducing greenhouse gas emissions and improving air quality: Two global challenges. Environmental Progress & Sustainable Energy, 36(4), 982-988.
Jung, J., & Koo, Y. (2018). Analyzing the effects of car sharing services on the reduction of greenhouse gas (GHG) emissions. Sustainability, 10(2), 539.
Mandal, A., Cho, H., & Chauhan, B. S. (2019). Environmental impact of electric & biodiesel Car-A review. International Journal, 7(3), 256-259.
McDermott, E. G. (2017). Examining the effects of policy interventions on increasing electric vehicle adoption in California.
Narins, T. P. (2017). The battery business: Lithium availability and the growth of the global electric car industry. The Extractive Industries and Society, 4(2), 321-328.
Nowak, D. J. (2019). The atmospheric system: Air quality and greenhouse gases. In Understanding Urban Ecology (pp. 175-199). Springer, Cham.
Rievaj, V., & Synák, F. (2017). Does electric car produce emissions? Zeszyty Naukowe. Transport/Politechnika Śląska.
Tesla Model 3 Marketing Environment
Tesla Model 3 Marketing Environment
Student Names
Institution affiliation
Introduction
Tesla wanted to prove a point when it was founded by engineers in 2003, that electric cars can be produced and they can be more fun and quicker than gasoline cars, and yeah they proved that. The belief of the company that it is time that the world stops relying on fossil fuels and go towards zero-emission is a step towards the right direction for the company (“Tesla’s mission is to accelerate the world’s transition to sustainable energy.”, 2020). The company launched the first the Roadster in 2006 and since then the cars have only got better and better with the latest Tesla Model 3 which began the production in 2017. The discussion below will focus on the Pestle analysis of the Tesla Model 3 car; these are the external forces that play a part in the company’s growth either positively or negatively.
Political
To conduct any business in any environment the political stability of the country must be ensured, this is because that countries that have insecurity will affect the operation of the business which will reduce the revenue of the firms. Unfortunately, most of the Tesla cobalt product that it uses is from Democratic Republican of Congo (DRC) and this has caused conflict, child labor and corruption, this is bound to affect the company. Also, every country has set regulations that the company interested in selling have to meet, lately, the requirement that all company must produce energy-efficient products plays a big role in marketing the Tesla model 3(Elsayed Elrayes, 2016).
Economic
They are various economic factors that can affect Tesla, one is the foreign exchange rates that affect the company since its operations are in international markets and this is the reason that the company in 2015 recorded some losses because of these fluctuations. The different taxation and tax rates affect the revenue of any company but Tesla has benefited from the incentives provided by Nevada since they are provided abatements for property taxes, personal and real taxes, and tax credit until in the year 2034. Also, California, where the Tesla company is located, has awarded them the ZEV credits which are tradable hence benefiting the firm because of its investment in zero-emission products (Elsayed Elrayes, 2016. Also, the cycles in the economy play a big part wherein a boom the market demand is high hence high revenues and during the recession the revenue decreases because the consumers purchasing power is affected.
Competitive
Every company has to ensure that it can compete in the market even when there are similar products across an industry there is a need to ensure that the advantage is greater if one is to get profit. For Tesla one of these factors is the structure of the organization that is composed of innovators who always make the decisions together hence eliminating the bureaucracies that affect most industries (Binkiewicz et al., 2008). The recognition of the brand in both the global and local market has placed them on another level and the increase in the number of cars they produce have ensured that their customers can get the products. In addition, to take the stand in the competitive market the Tesla the horsepower is none like any other companies and its two-seater car is a design that most people looking for lavish just want (Moritz et al., 2015). However, the prices of this car are one factor that affects these advantages since their customers are wealthy people earning more than $100,000 and in some cases, they have failed to meet the targeted products.
Technological
Technological advancement plays a big part in the automobile industries and is one way that companies try to stand out in the product quality. With Tesla, the fact that the cars are zero-emission and do not run on gasoline is one factor because lately they have been reports on climate change and people are trying to use products that hardly emit gases to our already poor air quality. Tesla was the first company to introduce the all-electric car and this has led to it having a position and the continuous innovation in the latest model is proof that technology is placing the industry in its platform (Binkiewicz et al., 2008). Lastly, technology have increased the market base for the product and its reach where people are able to learn about the product and its features from their homes.
Social
The social factors affect the buyer’s decision when it comes to the type of products to buy. Tesla cars are built for the wealthiest people and as its the norm wealthy buyers tend to value quality over pricing, this has been recognized by the shops set up by the companies in places they can access these consumers. Also, consumers’ purchase behavior seeks economic benefits hence the focus of consumers now on energy efficiency products plays a part in how Tesla is thriving in the automobile industries (Elsayed Elrayes, 2016.
Legal and Regulatory
These are every state regulation that every country sets for all industries, they range from the operating to labor laws and if not adhered to the company can be liable to penalties that affect the revenue of the firms. Tesla is situated in California and the incentives it receives in terms of subsidized taxes is proof that it does no only meet the countries regulation but its already leaping benefits., this is because of its cars being eco-friendly (Moritz et al., 2015). Unfortunately, the Tesla Model 3 faces the problem that they cannot transact with the consumers directly because if the franchise laws of the US.
Conclusion
Every company for it to sustain in the global market it has to ensure that the external forces which can affect the revenue of the company negatively are mitigated, Tesla Model 3 is a car that in all its form and production is giving the company standing in the automobile industry despite them targeting the high-end consumers.
References
Binkiewicz, N., Chen, J., & Czubakowski, M. (2008). Tesla Motors [Ebook] (pp. 2-6). Retrieved 5 March 2020, from https://www.mcafee.cc/Classes/BEM106/Papers/2008/Tesla.pdf.
Elsayed Elrayes, A. (2016). Tesla Marketing Strategy. Slideshare.net. Retrieved 5 March 2020, from https://www.slideshare.net/AhmedElrayes7/tesla-marketing-strategy-61953373.
Moritz, M., Redlich, T., Krenz, P., Buxbaum-Conradi, S., & P. Wulfsberg, J. (2015). Tesla Motors, Inc.: Pioneer towards a New Strategic Approach in the Automobile Industry along the Open Source Movement? [Ebook] (pp. 3-13). Retrieved 5 March 2020, from http://www.openproduction.info/wp-content/uploads/2016/03/Moritz-et-al_Tesla-Motors-Inc_Pioneer-towards-a-New-Strategic-Approach.pdf.
Tesla’s mission is to accelerate the world’s transition to sustainable energy.. Tesla. (2020). Retrieved 4 March 2020, from https://www.tesla.com/about.
Tesla Inc. Five Forces Analysis
Tesla Inc. Five Forces Analysis
Name
Institution
Tesla Inc. Five Forces Analysis
Introduction
Tesla Inc. is an American international clean energy and electric vehicle firm with its headquarters in Palo Alto, California (Liu et al., 2014). The company thrives in the highly-competitive automotive industry since it probably relies on a suitable management strategy. Since Tesla has various major competitors that entail BMW, Nissan, Toyota, Volkswagen, Ford, General Motors, and Honda, it should adequately address the external forces to gain more resilience and competitive advantage (Cheong, Song & Hu, 2016). Accordingly, this Five Forces analysis (Michael Porter’s Five Forces analysis) would reveal and elaborate on the intensities of external forces facing Tesla and influencing the automotive industry landscape.
Discussion
The threat of New Entrants/ New Players
Tesla Inc. faces a weak threat of new players primarily due to the presence of many barriers to entry. One, the high cost of establishing an automobile firm and manufacturing vehicles makes acts as a barrier to new companies. Interested organizations must invest heavily to participate in the manufacture and sale of vehicles. Specifically, new firms use lots of financial, human, and technological resources to establish their businesses. Besides, the manufacture of electric cars like those made by Tesla demand further research studies, knowledge, skills, and advanced technologies (Wilberforce et al., 2017). Also, Tesla has a great competitive advantage because of the popularity of its brands. For instance, Tesla’s Elon Musk is very popular across the globe (Mair, 2016). Accordingly, limited organizations would afford to raise the high costs of developing and marketing new brands. Also, Tesla enjoys rising economies of scale because it is well-established. Thus, new firms would be disadvantaged since they must surpass the production threshold to realize increasing economies of scale. Hence, new players could be discouraged because they may not realize profits from the business during their first few years of operations because of the high-costs of production. Therefore, Tesla’s strategic management would exhibit little concern over new entrants.
The Threat of Substitute Products/ Substitution
Substitutes in the energy and automotive industries impact significantly on Tesla. Specifically, a low cost of switching from one product to the other exists. Some clients could opt to use alternative products such as public transport and the other conventional vehicles rather than Tesla’s electric ones. Fortunately, a moderate presence of substitute products allows Tesla to maintain a reasonable market share (Hoelzlhammer, 2018). Moreover, clients would not attain maximum satisfaction from the available substitutes for certain reasons that could entail versatility. For instance, public transport vehicles are less versatile compared with private ones. Consequently, Tesla has the upper hand in developing products that meet or exceed the expectation of customers. Therefore, the threat of substitute products serves as a moderate strategic concern for Tesla.
Bargaining Power of Suppliers
Tesla experiences a moderate bargaining power of suppliers due to a mixture of strong and weak forces. First, the suppliers have minimal influence on the automobile industry’s environment since the majority of them are medium-sized. Besides, most of the suppliers engage in the moderate supply of certain products, thus exhibiting limited effects on Tesla. Since Tesla, and many other automobile firms, rely on more than one supplier, it tends to be difficult for such suppliers to gain adequate bargaining powers for increasing prices of their products. That is, Tesla would handle every supplier separately, depending on what they offer. Similarly, Tesla could choose and transact with suppliers that offer suitable raw materials at reasonable prices. Moreover, the capacity for Tesla’s suppliers to unite and control the distribution and sale of their products is limited. For instance, some suppliers engage in direct transactions with Tesla, while others rely on third parties to sell their products to Tesla. Accordingly, some suppliers, especially those with direct transactions with Tesla, could pose a significant threat of forging forward integration. Luckily, those that use third parties have low forward integration because they have limited control over their products’ distribution and sale (Hunold & Schlütter, 2017). Subsequently, the bargaining power of suppliers serves as a medium-level concern for Tesla’s strategic management.
Bargaining Power of Customers
Tesla experiences moderate bargaining power of buyers due to a combination of weak and strong forces. One, Tesla, and other automotive companies experience low influences from clients because each customer tends to acquire a limited number of vehicles. Contact between the firm and its clients could end once a client has purchased their products, thus discouraging undesired influence on the company’s future operations. Besides, customers exert low forces on Tesla due to the relatively few numbers of manufacturers of electric cars (Tuan et al., 2018). However, a strong force against Tesla and other automobile and energy firms exists following the low cost of switching products. The customers’ ease of switching products could result in Tesla’s loss of significant market share and revenues. Fortunately, the limited availability of suitable alternative products, especially in the automotive industry, lessens the effects of the force. For instance, public transport may be unavailable or inconvenient in some areas, thus encouraging the use of private vehicles. Additionally, a strong force from a few clients who need high quality, efficient, and sustainable vehicles at reasonable prices face Tesla. Collectively, the force of the bargaining power of customers appears to be of moderate concern to Tesla’s strategic management.
Competitive Rivalry
Tesla experiences a strong competitive rivalry from other multinational automobile firms. First, customers could purchase their vehicles from competitor firms due to the low switching costs. Clients could opt to transact with firms that offer alternative or similar vehicles at lower prices. Moreover, virtually every automotive company exhibits high levels of innovation to manufacture quality products (Fathali, 2016). As such, more automobile firms would manufacture quality vehicles that meet the specific demands of clients. Besides, virtually every automobile firm relies on aggressive marketing programs to promote and sell their products in different niche markets. Luckily, the limited number of firms in the automobile industry, especially those manufacturing electric vehicles, lessens the effects of competition in the industry. Even so, Tesla’s solar energy systems and energy storage products face increasing competition from the global market where international firms such as LG Chem, Siemens, and AES Energy operate. Overall, the strong competitive rivalry is Tesla’s strategic management main concern.
Conclusion and Recommendations
Porter’s Five Forces analysis provides invaluable details about Tesla’s external environment and the automobile industry environment. Precisely, the study elaborates factors in the external business environment that impact on the profitability of the automotive industry. Specifically, Tesla is facing intense competitive rivalry, moderate bargaining powers of customers and suppliers, and a weak threat of new entrants. Accordingly, Tesla should prioritize on the strong force of competition while developing its strategic plans. As such, Tesla should strive to gain more competitive advantage by employing suitable strategies such as substantial investment in research and innovation to facilitate diversification of products and generation of products of exceptional quality. Moreover, the firm should review and revise its sales and marketing strategies to ensure that it remains more aggressive to convince and persuade potential customers to purchase its products. Even so, Tesla should not ignore but rather consider the other four forces and act as per their intensities to ensure that it continues enjoying high and increasing profits.
References
Cheong, T., Song, S. H., & Hu, C. (2016). Strategic alliance with competitors in the electric vehicle market: Tesla motor’s case. Mathematical Problems in Engineering, 2016.
Fathali, A. (2016). Examining the impact of competitive strategies on corporate innovation: An empirical study in automobile industry. international Journal of Asian social science, 6(2), 135-145.
Hoelzlhammer, A. (2018). A Strategic Audit of Tesla.
Hunold, M., & Schlütter, F. (2017). Partial forward integration.
Liu, Y. E., Kang, Y., Wu, H., Chen, C., & Hon, E. (2014). Tesla Motors Inc. Case Synopsis.
Mair, M. (2016). Enlightened entrepreneurship: the success of Elon Musk.
Tuan, N. K., Karpukhin, K. E., Terenchenko, A. S., & Kolbasov, A. F. (2018). World trends in the development of vehicles with alternative energy sources. ARPN Journal of engineering and applied sciences, 13(7).
Wilberforce, T., El-Hassan, Z., Khatib, F. N., Al Makky, A., Baroutaji, A., Carton, J. G., & Olabi, A. G. (2017). Developments of electric cars and fuel cell hydrogen electric cars. International Journal of Hydrogen Energy, 42(40), 25695-25734.