PESTLE Analysis of Tesla

This article provides a PESTLE analysis of Tesla, examining the political, economic, social, technological, legal, and environmental factors affecting the company. It explores whether Tesla should expand its business in Brazil based on these factors.

PESTLE ANALYSIS OF TESLA
0
TESLA COMPANY
PESTLE ANALYSIS
System
4/15/2019

PESTEL ANALYSIS OF TESLA 1
Contents
Introduction......................................................................................................................................2
PESTLE Analysis............................................................................................................................2
Political factors............................................................................................................................3
Economic factors.........................................................................................................................4
Social factors...............................................................................................................................5
Technological factors...................................................................................................................6
Legal factors................................................................................................................................6
Environmental factors..................................................................................................................8
Conclusion.......................................................................................................................................8
Bibliography..................................................................................................................................10

PESTEL ANALYSIS OF TESLA 2
Introduction
Tesla came into existence in the year 2003. It was having a Mission to sell electric vehicles. Its
vehicles produced at Fremont, California. It gives training to employees in order to reduce
wastage. Its products are accessible and affordable so to reach every people. It deals in products
such as electric cars, batteries, and production of clean energy resources thus as to serve future
well (Tesla, 2019). The Year 2018 serve as a challenging year but by putting more efforts this
becomes equal to the 2017 target. Model 3 is the best-selling vehicle in 2018 in the US. It takes a
decision to reduce the number of employees so to reduce product cost thereby satisfying more
customers (Tesla, 2019).
PESTEL Analysis is done for the company in order to find out whether to carry out business in
Brazil or not. PESTEL means political, economic, social, technological, environmental as well as
legal factors (ProfessionalAcademy, 2019).
PESTLE Analysis
PESTEL Analysis is a tool to check the macro-environmental factors impact on the enterprise as
a whole (ProfessionalAcademy, 2019). PESTLE Analysis is the most popular tool used for
taking decisions for business regarding current and future position of enterprise. It is a good way
to identify potential risk before starting a project. It is an analytical tool based on strategic
planning and its process known as risk management process (Nitank Rastogi, 2016).
 Benefits of conducting PESTLE Analysis:

PESTEL ANALYSIS OF TESLA 3
i. It helps to identify opportunities and gives alert when there is threat.
ii. It finds out changes in the environment.
iii. It helps to find out loss making projects before starting a project.
iv. It helps to evaluate new environment so that it might not face any difficulty in setting
up business there.
v. It encourages in strategic thinking as well (Nitank Rastogi, 2016).
Political factors
Tesla produces electric vehicles run by electricity and gas. The government has taken various
measures for electric vehicles to reduce the level of pollution. It does not use fuel in its vehicles
lead to consumption of fuel at a low level thus saving of fuel for the future (Tesla, 2019).
A. Political stability: In Brazil, there is political stability because there is no election at this
moment as elections in the year 2022.
B. Government Influence: Brazil is a federal republic state it means it gives major power in
the hands of a government.
C. Corruption: It is the major issue, faced by company as it is ranked 72 in Brazil among
180 countries (Portal, 2019).
Economic factors
Brazil is the eight large countries in the world (Amedeo, 2018). Its battery cost is low thus,
selling it effectively to individual and organization. Result changes from one economy to another

PESTEL ANALYSIS OF TESLA 4
economy. Its product is for middle –class people thus more people want its product, as it is not as
much as costly as well as environment-friendly. Brazil has a large population and there are more
middle-class people so, it can easily set up the market there. The Government has reduced
inflation in the country and for doing business outside it has reduced tariff duty for increasing
imports. (Focuseconomics, 2019).
A. Corporate tax rate: Its corporate tax rate is 15% .It is very high for Tesla as after paying
tax it earns less profit than before.
B. Inflation: It has taken steps to reduce inflation as in 2016 rate 8.7% and in 2017 rate,
3.4%, so it is reduced as clearly shown from the data (Portal, 2019).
C. Demand: Demand of product is high because it tends to focus on middle-class people
thus it can easily sell in Brazil as here focus is on increasing middle-class people so to
reduce economic disparity in the country.
D. Growth Rate: It has 0.1% growth rate in the 4th quarter of 2018; slowdown from 0.5%
increase as in previous but it has huge population in country (Anon., 2019).
Social factors
It makes a good job as it is environmentally sustainable thus helps in protecting the
environment. In Brazil, there is economic disparities means there is a gap between urban and
rural population. People are modern and follow fashion trends in Brazil. South portion of Brazil

PESTEL ANALYSIS OF TESLA 5
contribute a major part in GDP and have a great population willing to buy luxury items. In this
country every class of people lives. (Anon., 2019).
The culture of Brazil is different as it is a mix of Portuguese, African and Indian tradition. It is
known for its hospitality and open-mindedness. By understanding, people’s social and cultural
values setting up business easily.
A. Places value to the family: In Brazil there are big joint-families exist and its family
together works for a company as it is their culture. Thus follows family profession (Tesla,
2019).
B. To personal trust: They are on relationship as to know about the person personally as well
officially thus it helps in finding a trustful person (Malinak, 2007).
C. Flexible Timings: It leads to taking of longer time for doing a task as they work lazily
while performing task (Anon., 2019).
D. Consumer taste and fashion: People want luxury goods and follow fashion trends in
Brazil and there are more middle- class people so it is easy to establish business there in
market (Myer, 2010).
E. Labor Conditions: There working hours is 8 hours per day that is 44 hours in a week and
they receive13th salary on special occasions such as Christmas and maternity leave is
allowed for 4 months which is fully paid (Anon., 2019).

PESTEL ANALYSIS OF TESLA 6
Technological factors
Technology is dynamic which needs to be updated accordingly in order to run the business
effectively. It is fuel-efficient, as it not uses fuel in its vehicles. Thus, it adopts new technology
in this way. It adopts artificial intelligence in its product, which is not adopted by other vehicles.
Most research work is carried in public universities as well as in research institutes regarding
technology. It has to constantly adopt technology to survive for longer period (Anon., 2019).
A. Weaker technology base: It has weaker infrastructure as compared to UK and Russia so,
it is the difficulty which business has to face (Tesla, 2019)
Legal factors
While expanding its business in various markets so they should carry with them up to date
patents. It should follow international regulations while conducting business. Brazil law is based
on Federal constitution means it gives more power to government and it is based on civil law.
A. Business vehicles: Business vehicles can be in brazil are:
a) Limited Liability Company: In this type of companies, there is less restriction on rules of
member’s rights. There is flexibility in constitutional documents and minimum two
members should be there to set up.
b) Business Corporations: It is complex business vehicle and here more emphasis on rules
is given. Minimum number of members is similar to LLPs but there are more formalities

PESTEL ANALYSIS OF TESLA 7
as compare to above. It is required when funds are to be raised from different sources and
when there is, need to raise additional funds.
c) One-person company: It is a company of one member only. Its rules are similar to LLP
but require minimum capital of 100 times of wage rate for its incorporation.
B. Employment Laws: It is regulated by Consolidated Labor Laws of 1May 1943 and by
Brazilian constitution. It is applied to all employees who work in Brazil.
C. Tax rates: Various taxes are there which are imposed on income such as :
a) Corporate tax rate: It is paid 15% and on profit 10% if income is more than Two Lakh
Forty Thousand.
b) Social Contribution: It is 9% for company and 15% for financial institution on net profit.
c) Excise Tax: It is paid 0% to 300% for manufacturing products.
d) Sales Tax and Service Tax: Sales tax on sales at 17% to 19%and Service tax is tax on
services at 2% to 5%.
D. Intellectual Property Rights: It is on usually Patents, Copyrights, Trademarks and
Designs (Anon., 2019).

PESTEL ANALYSIS OF TESLA 8
Environmental factors
It is environmental friendly as it uses electricity than gas. It follows environmental regulations by
putting less impact on carbon emissions spread by fuel cars. Brazil raised initative to be more
environmental friendly as it is the second largest producer of bio-fuel ethanol (Tesla, 2019).
Deforestation is the major problem in country. It has the largest collection of flora and fauna in
the planet. The company knows that they release carbon-emissions as by using electricity in
vehicles so it takes a decision to use solar panels in charging vehicles thus in this way it reduces
carbon emissions and at the same time able to manufacture renewable energy resource thus
saving resource for future (Anon., 2017).
Conclusion
It can be said that by concluding political factors that it has political stability leads to setting up
business there easily but it should kept in mind the factor of corruption may cause impact on
business. In considering economic factors, demand of product is good, as people will adopt
product in market as it has high population and it has high growth rate in previous year. In social
factor, it can develop product according to needs of customers so to satisfy them and it can easily
up in country, as there are more middle-class people. It has low technology base but now
technology is improving in Brazil so it can set up there. It has to follow various laws like
intellectual property law, employment law and consumer protection law for being successful in
market. It will create good impact on environment of country as it makes environmental-friendly
products thus making in environment clean and healthy.

PESTEL ANALYSIS OF TESLA 9
Bibliography
Amedeo, K., 2018. Brazil's economy and its effect on unitied states. [Online]
Available at: https://www.thebalance.com/brazil-s-economy-3306343

PESTEL ANALYSIS OF TESLA 10
Anon., 2017. Tesla motors:a case study in environmental impact. [Online]
Available at: https://www.gaiashomes.com/tesla-motors-case-study-2/
Anon., 2019. Brazil GDP growth rate. [Online]
Available at: https://tradingeconomics.com/brazil/gdp-growth
Anon., 2019. cultural considerations while doing business in brazil. [Online]
Available at: https://www.tmf-group.com/en/news-insights/articles/2018/may/cultural-
considerations-when-doing-business-in-brazil/
Anon., 2019. Doing Business in Brazil. [Online]
Available at: https://uk.practicallaw.thomsonreuters.com/0-503-8385?
transitionType=Default&contextData=(sc.Default)&firstPage=true&comp=pluk&bhcp=1
Anon., 2019. PEST ANALSIS OF BRAZIL. [Online]
Available at: https://www.academia.edu/19313794/PEST_ANALYSIS_OF_BRAZIL
Focuseconomics, 2019. BRAZIL-ECONOMIC OUTLOOK. [Online]
Available at: https://www.focus-economics.com/countries/brazil
Malinak, C., 2007. Brazilian social and business culture. [Online]
Available at: https://businessinsurrey.com/wp-content/uploads/2016/03/DoingBusinessinBrazil-
Overview.pdf

PESTEL ANALYSIS OF TESLA 11
Myer, A., 2010. Brazilian social issues. [Online]
Available at: https://www.brazil.org.za/social-issues.html
Nitank Rastogi, D., 2016. International Jornal of Engineering and Technology. PESTEL
ANAYSIS-A TOOL TO IDENTIFY EXTERNAL RISKS IN CONSTRUCTION PROJECTS,
JANUARY, 3(1), pp. 384-388.
Portal, 2019. BRAZIL:ECONOMIC AND POLITICAL OUTLINE. [Online]
Available at: https://en.portal.santandertrade.com/analyse-markets/brazil/economic-political-
outline
ProfessionalAcademy, 2019. MARKETING THEORIES-PESTEL ANALSIS. [Online]
Available at: https://www.professionalacademy.com/blogs-and-advice/marketing-theories---
pestel-analysis
[Accessed 12 April 2019].
Tesla, 2019. About Tesla-Tesla's mission is to accelerate the world's transition to sustainable
energy. [Online]
Available at: https://www.tesla.com/en_GB/about?redirect=no
Tesla, 2019. PESTEL Analysis of Tesla Inc.-The growth of eco-friendly car. [Online]
Available at: https://pestleanalysis.com/pestle-analysis-of-tesla/
[Accessed 12 April 2019].

PESTEL ANALYSIS OF TESLA 12