PESTLE Analysis of Tesla Inc.: The growth of the eco-friendly electric car

If you’re into eco-friendly cars, then you’ve definitely heard about Tesla Inc. The company designs, manufactures, and distributes electric cars which are safe for the environment.

No other company truly compares… yet.

In 2010, Tesla Inc. went public and quickly gained international popularity. Tesla vehicles rely more on electricity than fuel which significantly reduces their carbon footprint. The cars also fall under the category of luxury as they’re mostly out priced for middle to lower class consumers.

How will Tesla Inc. survive in the automotive industry? Will they continue to revolutionize electric cars or fall flat because of their limited options? This PESTLE analysis of Tesla Inc. contains major findings about the company. As well as their strengths and weaknesses in the industry.

Tesla Inc. Political factors: You could qualify for tax credits when buying a Tesla vehicle

Tesla Inc. is at the forefront of electric vehicles. Unlike traditional vehicles which require an abundance of fuel to run, Tesla uses both electricity and gas. But these vehicles don’t need nearly as much gas as a traditional car. For the most part, Tesla drivers use electronic stations to refill their cars. Rather than a typical gas station.

The government has taken stances to improve the development of electric and hybrid engines. You may even qualify for a specific tax credit for buying an electric car. Specific states, like Virginia and Colorado, offer a state tax credit of at least $5,000 when you buy an electric car.

Tesla is branching out into other countries now too, but the success in these locations depends on the local economy.

Tesla Inc. economic factors: Increased economy leads to more Tesla purchases

Sales for electric cars have risen as the global economy increased. In 2017, it was projected that the world economy would grow by 3.5 percent. These rises, in Asia and Europe as well as the United States, led to more electric developments. In fact, the sales of electric cars jumped over 30 percent between 2016 and 2017.

The price of materials is actually on the decline for Tesla. Particularly, the cost of batteries is lower, which is great for the company. The more popular their cars become to the public, the lower materials prices may drop.

This allows for the possible creation of a more cost-effective vehicle for the public. That too can positively impact the price of materials. Results depend on the respective country’s economy, of course. Any country with a declining economy will slice into the company’s profits.

In many countries though, consumers are investing in luxury vehicles like SUVs and BMWs. This is good for Tesla since they are viewed as luxury vehicles with the latest gadgets.

Providing a vehicle for middle-class citizens is a smart idea too. Not only because Tesla has little competition in the electric vehicle space at the moment, but also because people want it. An option like this, for the average person, will be a smart move for Tesla’s feature.

Tesla Inc. social factors: A perfect option for eco-friendly consumers

People love the idea of an electric car. Especially people who have eco-friendliness in mind. An electric vehicle eliminates the need to use as much fuel as a traditional vehicle. And that’s far better on the environment. Not to mention an electric car is supposed to be cheaper to use than a traditional car (over time).

A Tesla is environmentally sustainable. It’s also new. Very few cars on the market boast the power and luxury Tesla does. The company has done an amazing job maintaining their place in people’s mind as that electric car. This makes it more difficult for other, similar vehicles, to come onto the scene.

Because when you think electric, you expect a Tesla.

Tesla Inc. technological factors: Easy entry into automation and AI technology

Technology is both a friend and foe to Tesla.

As a friend, it helps the company maintain a competitive edge on the competition. It allows Tesla to be fuel efficient, and paves the way for future sustainability and usability. The cars are made to adopt newer technology, unlike traditional options in the automotive industry.

But the company also has to be on edge.

It doesn’t take much for technology to become obsolete. We, as people, are constantly creating, developing, and advancing what we already have. In a year’s time, the newest gadgets and apps can be absolutely useless thanks to upgrades and updates. Since Tesla relies on technology for their vehicles, this is both a positive and negative point for the vehicles.

However, Tesla is in a great spot to implement artificial intelligence (AI) and automation into their vehicles. Many traditional cars aren’t built for such advancements, but Tesla makes sure their cars are ready to adopt the advancements (up until they advance too far).

Tesla Inc. legal factors: The need to keep up-to-date with patents

Tesla is expanding into other markets. They’ll need to keep up-to-date on their international patents. If not, expanding will take longer. It may also be intercepted by legality issues.

Also, since the car focuses on eco-friendliness, they can promote their cars as energy efficient and ensure it abides by international environmental regulations.

Tesla Inc. environmental factors: Brand image and recognition

This is where Tesla’s biggest strength lies. The cars are marketed as environmentally friendly because it uses electricity more than gas. Tesla vehicles abide by many environmental regulations and barely impact carbon emissions (compared to traditional cars). By focusing on the environment, Tesla has made a name for itself where few can compare.

Photo by Matt Henry on Unsplash