Critical Evaluation of Tesla's Competitive Environment and Capabilities

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Contents
Introduction................................................................................................................................... 3
Critical evaluation of Tesla`s competitive environment.................................................................3
Capabilities and core competencies...............................................................................................4
Analysis of external environment..................................................................................................6
Political factors.......................................................................................................................... 6
Economic factors....................................................................................................................... 6
Social factors............................................................................................................................. 7
Technological products..............................................................................................................7
Ecological factors...................................................................................................................... 7
Advantages and risks of Tesla`s business level strategy............................................................7
Potential future challenges.........................................................................................................8
Recommendations......................................................................................................................8
Conclusion..................................................................................................................................... 9
References................................................................................................................................... 10

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Introduction
Tesla Motors is a motor vehicle manufacturing company formed in the year 2003. The
company specializes in the designing and manufacturing of electric vehicles. Tesla is a silicon
valley based company that was founded in the year 2003. It designs, manufactures and sells zero-
emission electric cars and powertrain parts. The company patents and sells the powertrains to
other vehicle manufacturers. The aim of the company is to create a compelling car company for
the 21st century. The mission of the company is to build and sell electric vehicles, sell
powertrains to other car makers and to act as a role model to others in the industry in designing
electric vehicles (Botsman& Rogers, 2011). The report evaluates the competitive environment of
Tesla and identifies its competitive environment. The internal environment of the company is
also analyzed to determine the factors within the control of the company that has a direct impact
on the company. The external environment of the company is analyzed using PESTEL analysis.
The risks and future challenges that the company could face are also analyzed in the report.
Critical evaluation of Tesla`s competitive environment
Evaluation of Tesla`s competitive environment is important in order to identify the
competitors in the industry. The analysis also helps in understanding the competitive advantage
of the company and the factors that make it unique in the market. Some of Tesla key competitors
include; Toyota, Volkswagen, Ford and General Motors.The jaguar I-Pace is very close to the
Model X of Tesla. The Jaguar I-Pace has similar range and acceleration to the Model X. Jaguar
I-Pace is also cheaper by approximately $ 10,000 compared to Model X. Other serious
competitor brands include the Porche`s mission E- Cross Turismo concept. Porche is planning to
introduce a new model of hybrid 911. This model of electric car is threatening all the competitors

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in this market due to its unique design and power.There are other small players in the market
who are venturing into the market of design and manufacture of electric vehicles. The electric
vehicle industry has very many players. This means that the market is very competitive and
hence it is very important for companies in this industry to come up with strategies that will help
the company compete effectively in this market.
Tesla has a competitive advantage in the electric vehicle market. Tesla is the market
leader in the electric vehicle industry because it was the first company to venture into this
segment of car technology. The competitive advantage of the company of Tesla is in the
technology aspect. The company has the patent rights when it comes to the manufacture of
powertrains components. This means that for any company to design and manufacture electric
cars, it has to depend on Tesla technology (Doeden, 2015). The other car makers pay a
significant license fee to Tesla in order in order to use its technology.Tesla also posses the
competitive advantage of being the market leader in this niche market. It was the first company
to venture into the electric car market and therefore it has the advantage of a great wealth of
resources as well as experience exceeding fifteen years unlike many of its competitors.
Capabilities and core competencies
Tesla has several core competencies that help the company to gain competitive
advantage. Capabilities in strategic management can be defined as the unique factors that a
company has and which are important in helping the company gain competitive
advantage.Tesla`s core competencies are it`s manufacturing and innovation abilities.The
company has invented many different types of electric car parts which are crucial in
manufacturing the electric car with zero emission (Frynas, 2015). The fact that the company has