Tesla Porter's 5 Forces Analysis

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Q1. I will address this question by examining some relevant forces from the PESTEL model and Porters 5 Forces analyses (as shown in Appendix 1 and 2.).
From a political standpoint, new CO2 rules are being put in place in Europe and the US to tax vehicles that don’t reach strict target efficiencies (1) (EV companies are exempt). California is also providing EV companies with ‘zero emission credits’. In contrast however, the recent drop in the global fuel price is making fossil fuel vehicles more attractive, at least for the moment. Economically, worldwide growth of new car sales continues in the current environment of low interest rates, available credit and again the current low fuel prices. There is also increased demand from consumers who
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Comparing the revenue for Q3 ’14 to the previous year’s quarter shows an impressive growth rate of 97% (see calculations in Appendix 4) which can probably be linked to increased deliveries of the model S. Although Tesla’s total share of the US auto market is estimated at less than 1% (4), Tesla has claimed that by mid-2013, it was already the market leader in the US Large Luxury Car segment (Appendix 5). It must be kept in mind however that this is only a very small segment of the market. Looking at profitability, the company showed a loss of $39M in Q3 ’14, which was a $9M greater loss than in the same quarter the previous year however looking at their operating expenses, Tesla spent $291M in Q3’14 which is more than twice the in the same quarter ’13 (which was $133M). The Statement of Operations shows a 2.4 fold increase in R&D spending (Appendix 4) indicating a strong commitment to investment in future technology as well as an increase in the ‘Selling, general and admin.’ which could be attributed to growing the Tesla dealer network and the rollout of charging stations. The overall profit margin calculation (see Appendix 4) for Q3’14 was 29.6%, up from 23.8% in the same quarter ’13. This is an impressive margin and is significantly higher than companies like GM, Ford and Toyota (see Appendix 6).Tesla’s technology position shows a strong record of …show more content…
Battery technology on the Model S is market leading, using thousands of small lithium-ion cells, essentially identical to the ones in today’s modern laptops. It’s the heaviest car battery pack on the market but has the largest capacity and range (7). The Tesla S (85kw) can travel over 500km on a single charge, compared to its nearest competitor which can’t manage much above 175 (8). In addition, Tesla has developed an innovative technique of pumping coolant between the individual cells, greatly improving reliability and battery life. This also removes the need to have a thermostat in each battery, further reducing cost. Finally, Tesla is in the process of setting up ‘supercharging’ facilities where batteries can be recharged in less than 30 min and also fast swapping stations where batteries can be swapped out in only 90 sec

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