Tesla Competitive Advantage

803 Words 4 Pages
• Social Factor: “72% of people polled have considered buying or would like to buy electric cars. However, 65% of Americans said they would not pay more for an electric car than for traditional car models.” This shows how electric car companies have to lower the prices to attract more customers. In order to do so, they have to minimize the cost and sell high volumes of cars to enjoy high economies of scale. However, this will not be easy for electric car companies because batteries are very expensive and there are numerous global companies such as Toyota, Honda, and Hyundai that can offer excellent qualities of cars with affordable prices for many low/medium income consumers.
• Technological: Because there are not many charging stations for
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Also, Tesla is ready to build charging stations in U.S. so that drivers can drive across the country for free.

3. Use the Four Criteria test to evaluate whether Tesla has a sustainable competitive advantage.
• Valuable Capabilities: Yes. Even though Tesla sells not too many cars, compare to Big Three, German, Japanese, and Korean carmakers, Tesla is still generating more revenues each year. Also, the stock price increased rigorously since 2013.
• Rare Capabilities: No. Other automobile companies can also design and make electric cars. (Ex: Nissan, Mitsubishi)
• Costly-to-Imitate Capabilities: No. Even though Tesla has a positive reputation with their unique car design and function, there are numerous automobile companies that have good brand image as well as efficient cars. Other big companies can also produce electric cars, too.
• Nonsubstitutable Capabilities: No. Luxury hybrid car & traditional cars with cheaper prices can be substituted for electric cars.
• Based on the chart, I would say that Tesla has the competitive parity with the average

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