Business Environment Analysis of the Electric Vehicle Industry (Tesla)

This report provides an environmental analysis of the electric vehicle industry, specifically focusing on Tesla. It begins with an introduction to environmental analysis as a strategic tool and its importance in understanding internal and external factors influencing organizational performance. The main ...Read More

Environmental Analysis of an
industry

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Explain the major forces shaping the business environment of the car manufacturing industry 1
Discuss the reasons why there is a drive towards the production of electric cars and their
competitive advantages................................................................................................................4
Identify new and emerging business opportunities......................................................................5
Critically assess other businesses.................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Environmental analysis is the strategic tool that define as the process that analysis the
internal or external environment factor. This component influences the performance of the
organization. Thus, internal factor indicates the strength and weaknesses of business whereas
external element indicates the external environment performance as it describe the threat and
opportunity (Lin and Raza, 2019). Therefore, researcher conducts research and gather all the
essential information to estimating and predicting the environment future and current trends.
The present report is based on electric vehicles in Europe” focusing on Tesla. It is the
electronic automotive company based on Palo Alto, California U.S.
The assignment will cover the various environment aspects such as to explain the pestle
analysis in the context of electric vehicles and changing environment. Thus, report will describe
the opportunity of production of electric cars that helps to gain a competitive advantage. Lastly,
identification will be conducted about new and emerging business opportunities also define how
organisations get engages in international trade.
MAIN BODY
Explain the major forces shaping the business environment of the car manufacturing industry
Car manufacture industry has changed in the last few years due to change on different
environment factors, buying behaviour of consumers, constant innovation, taste, style and
capability of consumer purchasing power. As today the demand of electric cars are high that
leads to electronic automotive producers focus on developing the high technology. They set their
priorities for increasing the competitive advantages. Thus, car manufacturing industry are change
rapidly by improving and adding high technology in their production process. The main reason
of shifting towards the electronic cars is that a huge customer demand, government interference,
policies and high competition by new entrants into the market.
For example- Volvo, ford, jaguar land rover and Toyota is the main competitor and they
all have announced the new portfolio of energy car to get win over the competitors. This leads to
have enhancement in competitive advantages (am Ende, ed.2019). On the other side, Tesla is
one of the firm that only serve the electric cars to their customer to attracts the customer and
depict the good brand value in the environment.
Henceforth, there are many auto-mobiles industry that are taking initiatives to launch t
hybrid car that assists to protect environment. So, cars manufacturer needs to put their core focus
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on developing the new and innovative technological advancement. Thus, auto maker needs to
make significant plans to improve fuel efficiency that leads to sustainability in order to meet the
demand of customer. On the other side, the ideas of launching the electric cars is to provide more
sustainable vehicles as dynamic features leads to have enhancement in brand loyalty Therefore,
PESTLE forces will assist to identify the environment analysis of Tesla In the context of electric
vehicles –at international level. Thus, it defined in following manner as-
Pestle analysis – This is the tool that determines the macro environment factor use by marketers
and researcher in order to identify the internal strength and weakness (Fonseka, Rajapakse and
Richardson, 2019). Thus, it also aids to determine external threat and opportunity.
Political factor – This factor is plays an important role as it have directly impact on the
performance of the car manufacture industry. In this factor the government inference affects the
business mostly. Thus, Tesla is majorly sales the purely electronic cars as it creates the positive
impact because the European government is support the low excretion vehicles. As result the
high support by the European union and European government is leads the demand of electrics
cars. On the other side, Tesla takes the green car initiative so, government gives the proper
budget for supporting this project. Further, government provide the tax incentives in the electric
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Figure 1: Pestle analysis. 2016
Sources: (pestle analysis. 2016)

cars. This incentive include the tax reductions and exemptions, as well as of bonus payments for
buyers of PEVs, hybrid vehicles, and some alternative fuel vehicles. Henceforth, the overall
support by the government and buyers creates the positive impact on the performance of Tesla.
On the other side, European governments enhance the tax on the cars who heavily produce
pollution in the environment. So, it creates the negative impact on those companies who only
produce the pollution create car.
Economical factor - This factor is determined the several economic performance. That include
the exchange rate, interest rates, disposable income of consumers and unemployment rates,
inflation rates etc. Tesla have opportunity and threat in this factor. For example, when European
government increased economic activity as they provide the employment and reduce the tax
since the recession time (Liu and Lin, 2019). It Is an important component because when
recession passed the economic activity is increased and which leads the growth. Further, With
rising economic activity, the level of employment has also risen globally and that has led to
higher spending on goods. As result people spend their money in purchasing the luxury vehicles
and especially the demand for SUVs has increased. On the other side, European country is the
development country and the economic value is high. So, economic stabilities issues is the
biggest threat for the Tesla because its affects the financial performance. As when financial
performance is not good so no one wants to invest in the firm as it creates the negative impact on
the performance of the firm.
Social factor – This factor describe that how the consumer behaviour, attitudes and life styles is
changing demand of car. Thus, this factor is affects the performance of manufacturing industry
directly or indirectly. In this, The customer of European market have high demand of sustainable
product as the people of Europe are more focus on environment protection. Thus, to attract the
large number of European and international customer Tesla makes the sustainable product. It
aids to increase the sales of Tesla cars because of good brand image (Feng and Wang, 2019).
Organization focus on making the environment friendly product as better greener, pollution less
and fuel efficient product. It helps to satisfy the society and if Tesla initiatives is successfully, it
will lead the sales of Tesla which creates the positive impact on the profitability. On the other
side, the changing future and current trends is affects the demand of product. Constant change in
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trends is affect the demand and popularity of product it creates the negative impact on the
profitability of Tesla.
Technological factor - This factor is pertain that how the innovation and new technology
affects the operational activity of the organization. It incudes the level of innovation, automation,
research and development (R&D) activity, technological change and the amount of technological
awareness. Tesla is the one of the most popular car manufacturing company but it has huge
competition in this industry. As brand like Toyota BMW they all are use the different tactic and
make innovative cars of low emission and environment friendly. It creates the huge competition
and reduce the demand of Tesla cars. On the other side, Tesla constantly develop the new
technology in their product so it can increase the demand of product which creates the positive
impact on the demand.
Legal factor - This factor is related to the political factor. It incudes the discrimination laws,
antitrust laws, employment laws, consumer protection laws, copyright and patent laws, and
health and safety laws (Loconto, 2019). Tesla follows the consumer protection act as Europe
government is more focus on the product quality and safety. If Tesla follow laws and regulation
it creates the positive impact. On the other side, European governments implement the different
laws related to customer safety stricter. Apart from it, Tesla ensure that they follow
environmental laws, tax laws and several other laws while operating in the international market.
So this all procedure is increase the time of operational activity so it creates the negative impact.
Environmental factor - This factor is very important because many government support the
environmental relate brands. Globally, the enterprises that have invested in environment have
grown faster in popularity. The positive impact is that Tesla offer the electric cars which support
the environment. European government is favoured the Tesla cars due to low emission and fuel
consumption. On the other side, European government is established certain test that they allow
only those vehicles who passing these test. If Tesla cars is not passes this test government cannot
allow for the trade so it creates the negative impact.
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Discuss the reasons why there is a drive towards the production of electric cars and their
competitive advantages
The demand of electronic cars is increase day by day and this is good for the economy.
There are several benefits of making the electric cars which described as follows -
Cheaper to run – This is one of the best benefit for producing the electric cars (Xie, Gao and
Sun, 2019). It provides the low cost for running the cars. The cost of charging of electric cars is
lowers as compare to purchasing the petrol.
Better for the environment – The another benefit is reduced the pollution, use the renewable
energy for charging the battery. It helps to attract the number of customer. Thus, Tesla making
the electric car as it provide the more eco-friendly production and materials for evs. This is the
reason car manufacturing company produce the product.
Maintenance will be cheaper – The another benefit of producing the car is that the expenses of
starter motors, fuel injection systems, radiators is not included in the electric cars. So, The
maintenance cost will be low. Thus, Tesla have opportunity as they making the product on low
cost.
Competitive advantages for Tesla.
Tesla are recently used the new technologies called maxwell technologies, this
technology provide the capabilities of improved energy storage that helps to achieve the
competitive advantage. Thus, Tesla is the unique technology and they invest in this for making
the differential product as compare to their competitor (Camus and Smit, 2019).
The another competitive advantage is the research team of Tesla. Recently they applied
for a battery patent that will helps to minimize charging times, higher energy density, and a
lower cost. Thus, this strategy make the different identity in the customer mind as it differentiate
form the competitors.
Thus, the battery is the important factor in the electric vehicles as result Tesla use the best
advance technology to achieve the competitive advantages. The battery system of Tesla is
longest and no other competitors makes this types of vehicles.
Identify new and emerging business opportunities
In the electric car manufacturing industry, there have huge opportunity. It helps to business for
famous in all over the world. There are different types of opportunity in this industry such as
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electric car spying workshop, EV Charging Station Management, Electric Car Rental Service etc.
This all is the different types of business, entrepreneur use these ideas into business for generate
huge success. Thus, for better understanding the opportunity of business, study will use the
porter five forces model which describe below -
porter five forces
Threat of new entrants or barriers to entry – The threat of new entrants is high in the electric
car manufacturing business. Due to low production cost of electric car as compare to the
different auto mobile business. Thus, Tesla have threat to the new entrants because they make
the innovative and differentiate product in the market. It decreases the market share of Tesla. On
the other side, for new entrants is much difficult for enter in the market. It requires huge
investments and skilled employees (Wang, Mi and Wei, 2019). So, it difficult to establish the
business in new market because there also have strong brand in this field.
Threat of substitute products - The threat of substitute product is weak because Tesla is one of
the company who majorly deal on selling the electric cars. However, none of company can
provide the low emission and fuel consumption features in the cars so, it is the biggest
opportunity for the Tesla as they rapidly make the electric cars and build their growth by serving
the product in all over the international market.
Threat of established rivals – This force is also moderate strong because Tesla have few
competitors like Toyota, Volvo (Liu, Wu and Chu, 2019). This brands compete on the basis of
price, design, quality, technology, customer safety and several other points. Overall, competition
in the auto industry is strong but Tesla have opportunity so, they expend their electric car
business and compete with their rivalries by using the advance technology such as maxwell
technologies. This technology helps to Tesla for compete with the rivalries in order to enhance
the profitability and market share.
The bargaining power of buyers – The bargaining power of buyer is moderately strong because
they have many options to choose the cars and switching to another brand. Thus, the customer
are easily switch the brand because they are prices sensitive that means customer easily attract
towards the low prices of products. Therefore, it is the opportunity for the Tesla as they provide
the low prices of electric cars to the customer. So, customer wants to purchase the Tesla cars. On
the other side, Tesla focus on building customer loyalty through design, quality and by offering
competitive prices.
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The bargaining power of suppliers- The bargaining power of supplier is low in this industry
because there are few companies who only produce the electric cars. So, Supplier sale the raw
material on the minimum price value. This is the biggest opportunity for the Tesla as they
produce more electric cars and sale this car in international market for future growth.
Critically assess other businesses
BMW group is one of the branded group and the price of BMW car is also high. On the
other side, Tesls is also the branded company but the price of car is low. So this both business is
different but to invest in BMW for the long run purpose is not good because the demand of
electric car is high in current trend (Xian, Wang, Wei and Huang, 2019). So, customer wants to
purchase the electric cars and they cannot purchase the BMW cars. The another reason is prices
of BMW is high, so, customer who have no high income they cannot want to purchase the high
price of products. Thus, Tesla provide the low prices of product to the customer so, customer
easily attracts the low prices and high quality of product. This is the big reason that any investor
who want to invest in the BMW they cannot achieve the huge success.
CONCLUSION
From the above project report it can be summarised that environmental analysis is
assessment tool that helps to determine the external forces that might affect the working of
business. Thus, this investigation assists to identify the internal or external factor of business that
relay over environment scanning, monitoring, measuring.
Furthermore, report based on electric vehicles in Europe” focusing on Tesla. The
assignment has described the pestle analysis it helps to identified the macro environment of the
electric car business. Moreover, report has demonstrated the reason of producing the electric car
that helps to determine the different opportunity and threat while producing the product. Lastly,
report has explained the porter five forces model to identify the existing competition and
opportunity to establish the business in international market.
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REFERENCES
Books and Journals
Xian, Y., Wang, K., Wei, Y.M. and Huang, Z. 2019. Would China’s power industry benefit from
nationwide carbon emission permit trading? An optimization model-based ex post analysis
on abatement cost savings. Applied energy. 235. pp.978-986.
Liu, H., Wu, J. and Chu, J. 2019. Environmental efficiency and technological progress of
transportation industry-based on large scale data. Technological Forecasting and Social
Change, 144, pp.475-482.
Wang, K., Mi, Z. and Wei, Y.M. 2019. Will Pollution Taxes Improve Joint Ecological and
Economic Efficiency of Thermal Power Industry in China?: A DEA‐Based Materials
Balance Approach. Journal of Industrial Ecology. 23(2). pp.389-401.
Camus, L. and Smit, M.G. 2019. Environmental effects of Arctic oil spills and spill response
technologies, introduction to a 5 year joint industry effort. Marine environmental research.
144. pp.250-254.
Xie, P., Gao, S. and Sun, F. 2019. An analysis of the decoupling relationship between CO2
emission in power industry and GDP in China based on LMDI method. Journal of cleaner
production. 211. pp.598-606.
Loconto, P.R. 2019. Trace Environmental Quantitative Analysis: Principles: Techniques, and
Applications. CRC Press.
Feng, C. and Wang, M. 2019. Journey for green development transformation of China’s metal
industry: A spatial econometric analysis. Journal of Cleaner Production. 225. pp.1105-
1117.
Liu, K. and Lin, B., 2019. Research on influencing factors of environmental pollution in China:
A spatial econometric analysis. Journal of cleaner production. 206. pp.356-364.
am Ende, M.T. ed.2019. Chemical Engineering in the Pharmaceutical Industry: Drug Product
Design, Development, and Modeling. John Wiley & Sons.
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Fonseka, M., Rajapakse, T. and Richardson, G. 2019. The effect of environmental information
disclosure and energy product type on the cost of debt: Evidence from energy firms in
China. Pacific-Basin Finance Journal, 54, pp.159-182.
Lin, B. and Raza, M.Y. 2019. Analysis of energy related CO2 emissions in Pakistan. Journal of
Cleaner Production. 219. pp.981-993.
Online
Pestle analysis. 2016. [online]. Available through :
<https://www.business-to-you.com/scanning-the-environment-pestel-analysis/>.
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