Tesla's Evolution: History, Challenges, and China's Market Analysis

This report provides a comprehensive overview of Tesla, starting with its founding in 2003 by Marc Tarpenning and Martin Eberhard, highlighting its evolution under Elon Musk. It details the challenges Tesla faced, including production issues, financial constraints, and regulatory scrutiny. The report also includes a PEST analysis of Tesla's operations in China, examining political, economic, social, and technological factors impacting the company. It discusses the trade war between the US and China, the economic slowdown in China's car industry, customer preferences, and technological advancements. The report concludes by emphasizing Tesla's strategic responses to these challenges and opportunities in the Chinese market, including the opening of R&D facilities and the adoption of technological innovations.

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Strategic management

Answer 1
Brief history of tesla
Engineers named Marc Tarpenning and Martin Eberhard in San Carlos, California founded
Tesla in 2003. The company has titled after the inventor of 19th century Nikola tesla who was
known for effectively realising the “rotating electromagnetic field.” Tesla is also historically
known for its several significant contributions in the sciences and electrical engineering. At
the Tesla founding, Tarpenning served as CFO and Eberhard served as the CFO. They both
propelled the company to produce and develop the electric car. However, it is found that
Musk is the face of Tesla until he did not linked with the company until 2004. Elen invested
around $30 million in the company and after that became the chairperson of board of
directors. After the several challenges and issues, Tesla was able to found the constant
solution for its short term capital concern in the year 2010 after going out in public. Model S
was the first step of Tesla toward the consumer market. In 2012, Tesla car went into the
whole production that helped the model S of Tesla to become critically successful. It also
received the awards from different environmental and automotive publications by setting the
new benchmarks in the electric vehicle. After this, tesla has increased its ambition by
announcing the new solar energy products in 2015 that was made for power the businesses
and homes through the rechargeable batteries. After the 2017, Tesla has also changed its
name from Tesla motors to the Tesla Inc. Even after facing several issues and challenges,
share prices has risen that helps the company in going well. In the paper, discussion has been
carried on the challenges that Tesla has faced since starting. Afterwards, Pest analysis has
been done for Tesla in China (Lau, 2020).
Answer 2
Challenges faced by Tesla since its founding
From its starting only, Elon Musk has gone through several challenges in Tesla. In the year
2006, Musk has invested around $10 million in the solar city and solar energy company.
After its first every roadster model, it was touted as the symbol of “green sports car.” Musk
always had the big vision for its brand. In the year 2008, Musk has taken over the Tesla
Motors as CEO. The Tesla Roadsters had faced had directly hit the production line.

Several experiments were failed in tesla as company has struggled to produce the [battery
powerful to keep cats on the road (Frangoul, 2019). It was also facing challenge to develop a
cost effective motor that cab easily fit inside the vehicle of consumer. When Tesla made the
roadster as a consumer product during the release, it is seen that car cost more than $1,00,000
that further most of the consumer out of the market. it has caused the challenge for company
into the charging time (Ingram, 2018). It is because the roadster requires time of around 24 to
48 hours to recharge. This has led to the most significant challenge for the Tesla. Despite
launching the Roadster, Tesla was facing significant financial issues. It has less than $10
million in cash. In this year, Daimer AG has brought the 10 per cent stake in the company for
around 50 million $. Besides this, loan of $465 has also taken from the Energy Department
for the survival (Thomas and Maine, 2019). After entering into 2018 also, tesla faced various
difficulties. Some of the wrong predictions and assumptions have led the investors to dump
the stock of company. It lost around 5 per cent of its value in the collapse of 12billion $. The
major issues or challenges was coming from its supply chain that was requiring it to
inefficiently sourcing the parts across the different parts of the world rather than assembling
or building the car at one place. In addition to this, “Security and Exchange Commission”
also charged the Musk with the securities fraud by alleging that it has released misleading
and false information that drove the stock price of company. Due to this, Tesla also paid the
$20 million fine.
Answer 3
External environmental analysis of Tesla in China
Political factors: trade war is seen between the China and United States. In this regard,
government of China is supporting the EVs as compare to the US government. The China
Tariff has however hurt the companies as well as automakers hat make industrial components
in United States. Tesla has also convinced the China to bring changes its policy. In spite of
biggest vehicle market, China has turned out to be the excellent opportunity for Tesla to
establish its brand in such a potential and huge market (Isidore, 2018).
Economic factors: In China, the care industry is in major slump that is expected to slow due
to the economic slowdown. At the same time, Tesla also faces competition from foreign
rivals and local carmakers who have more manufacturing experiences from China. The
slowing sales from the economic problems of China are compounded by US-China trade war,

rising debt as well as staple meat of country. At the same time, buying power of Chinese
consumers also taken a hit. In addition to this, due to the rising population, it is seen that
mileage will also increase. It is predicted that demand of automobiles will increase by 183%
in China (Teece, 2018).
Social factors: It is true that customer preferences and demand directly affect the performance
of company. In China, customers have complaint regarding the new model 3s model of
autopilot hardware was not delivered as per promise. Due to the increasing demand of
customers for model innovation, Tesla is required to give emphasis on advancement. Due to
the trade war in China between US, tariff is becoming the greater issue for Tesla. In the
consumer market of automobiles, elevation of China consumer’s purchasing power and
development in the overall economy, an upgrade into eh consumption is on the way.
Consumers are also changing their definition of luxury by not only giving emphasis on
beautiful appearance but also on the function performance (Ubri, 2018).
Technological factors: due to the biggest supplier of the chemic materials for the automotive
industry globally, BASF tends to support the automobile industry of China to advanced and
upgrade the materials, seize opportunities as well as tackling the challenges. In the urban
regions also, China have caught up with the Europe and US by 2030 in terms of the
development in technology. For supporting the China, Tesla is also opening research and
development facility in China and taping the talent from domestic market. In this way, Tesla
give high emphasis on adopting and bringing the technological innovation for giving best to
the society.

References
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Ingram, N., 2018. Tesla Motors: A Potentially Disruptive Force in a Mature
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Isidore, C. (2018) Elon Musk next move: 5 challenges facing Tesla. [online] Available from:
https://money.cnn.com/2018/08/27/technology/elon-musk-tesla-challenges/index.html
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Lau, L.J., 2020. Economic relations between China and the US. Journal of Chinese Economic
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market and its comparisons to the United States. Renewable and Sustainable Energy
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Teece, D.J., 2018. Tesla and the Reshaping of the Auto Industry. Management and
Organization Review, 14(3), pp.501-512.
Thomas, V.J. and Maine, E., 2019. Market entry strategies for electric vehicle start-ups in the
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Ubri, J. (2018) Elon Musk has a lot going on, and it may be coming at the expense of Tesla.
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