Over recent years, there have been various industry developments that served as or caused trends in procurement. The ease and quality of life improvements the automotive industry brings will only increase the demand for vehicles in the future. If Tesla has achieved stronger brand recognition without spending a fortune on its marketing, it is mainly because of its focus on innovation. Toyotas R&D initiatives, especially in producing environmentally friendly vehicle technologies, vehicle safety and information technology, provide it with some of the best strategic advantages. Heres the swot analysis of the automobile industry as follows; Some of the main automobile brands have transferred their production facilities into emerging Asian countries like India and China. More customers are emerging from developing countries. While the pandemic might have affected the economic performance of these regions, the higher end market has mostly remained less affected as compared to the lower end. The dependent growth rate: As many derivatives such as the validity of the registration period, no entrance for outside vehicles, and fuel prices are in the hand of the government, it always affects the growth of the industry. Still, the overall valuation of the company has grown much higher than its rivals. The company can: We use cookies for website functionality and to combat advertising fraud. Expanding its supercharger and destination charger network is critical to finding faster growth. The external factors that limit or reduce Teslas organizational performance are covered in this aspect of the SWOT analysis. However, its position is the strongest in the US and China markets. Its going to focus on the internal and external factors impacting the worlds largest revenue-generating industry. After an in-depth study of the swot analysis of the automobile industry, weve concluded that the automobile industry is indeed the worlds most profitable industry. Unlike the other cars on the roads, these cars rely on Teslas own charging infrastructure, without which they cannot play on the roads. With growing production, the cost of revenues has also grown for Tesla. The company spent around $1.34 billion on research and development in 2019. Get unlimited access to our procurement reports library | Plans starting from $5000/year. Governments around the world are allowing subsidies to the brands that make fully electric vehicles. These nations have cheap workforce, are high in resources, and are nearer to developed economies. WebAt the beginning the gas price and economy were stable, this create conducive environment for car manufacturers, Vehicle sale has become stronger in the market, than it was anticipated due to expected economic growth, where by industry marketing expenditure were flat at $ 1,505 million and later increased $39 ml to 1544 ml due to aggressive However, despite the pressure in demand, Tesla has seen its sales in the second quarter of 2020 rise compared to the first. For any company, it is crucial to focus on its shortcomings. People will buy Tesla cars only if they have easy access to superchargers needed to charge their cars. ROI needs to be capitalized. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); About - Privacy Policy - Returns and Refund Policy. In 2017, its total cost of revenues stood at $9.5 billion and grew to $17.4 billion in 2018. For CCPA and GDPR compliance, we do not use personally identifiable information to serve ads in California, the EU, and the EEA. Apart from that, the company will also have to extend its supercharger network to find faster market growth. Yet it is undoubtedly a symbol of progress and innovation, despite the negative factors. Teslas corporate social responsibility strategy and stakeholder management efforts that capitalize on the sustainability trend can help facilitate sales expansion and supply chain expansion. The impact of the pandemic on the automobile industry has been the severest. Overall, Tesla cars offer a superior riding experience compared to most cars on the road, and therefore they easily stand out from the competition. The food acidulants market is valued at US$ 2.6 billion in 2023 and is estimated to reach a value of US$ 4.5 billion by 2033, registering a CAGR of 5.4% during The industry is also trying to use renewable sources of energy such as solar, wind, and others. The March 2020 numbers show the effect of lockdown due to the COVID-19 pandemic. Growth through diversification is another opportunity relevant to this SWOT analysis of Tesla Inc. Strengths Global presence: Ford is a truly global brand with a strong global footprint. However, the demands of the emerging markets are a bit different, and they want VFM (value for money) vehicle. This external factor especially highlights the fluctuating and generally increasing cost of lithium, a material used in the companys energy storage products. We have dissected the SWOT analysis for companies in the automobile industry below: Evolving industry: The automobile industry is a highly growing industry, continuously contributing to growth and development. The strong brand enables the company to introduce new car models and new solar energy products that attract the attention of target customers around the world. are the economic factors which will daunt the automobile industry for an extended period. First off in the automobile industry SWOT analysis we should analyze the strength of the Automobile Industry. Tesla, Inc. (formerly Tesla Motors, Inc.) succeeds as an innovative business with global operations. The results of this SWOT analysis suggest strategic reform for long-term success in the global market, by increasing effectiveness in addressing the strong force of competition shown in the Porters Five Forces analysis of Tesla Inc. The purchasing power of the people has dropped because of unemployment and uncertain economic circumstance. Teslas cars also offer a superior battery range compared to the rival EVs and hybrids on the roads. For example, in 2019 India became the 4th largest automobile market in the world, surpassing Germany in terms of sales. In the SWOT analysis model, this vertical integration helps reduce risks linked to third-party unpredictability. Slow Economy: Many economic situations such as sudden unemployment, the pandemic (recent covid-19 situation), etc. Its no doubt Western and European markets are the main pulse of the automobile industry. Tesla has established supercharger stations along well-traveled routes in the key areas where its products sell. It impacts customers directly and theyre very cautious about their daily expenses. Johnson and Johnson SWOT Analysis 2023: An Essential Report, Disney SWOT Analysis 2023: A Magical and Detailed Report, An Exhilarating Automobile Industry SWOT Analysis 2023, Twitter SWOT Analysis 2023: A Talkative & Detailed Report, Netflix SWOT Analysis 2022: A Binge-Worthy Report. In todays globalized economy, outsourcing has become an integral part of business operations. It has helped them to enjoy cheap labor cost and lower production and material cost. The company operates 4 different brands: Daihatsu, Hino, Lexus and Toyota. This external factor involves establishing or acquiring new businesses with operations outside the companys current business of electric automobiles, batteries, and solar energy products. While Tesla has emerged as a comparatively resilient company during the pandemic, its sales declined during the first two quarters of the year compared to the previous year caused by the pandemic. Automobiles have been increasing the quality of life for the past century by giving mobility, comfort, and safety. The Automotive ECU market revenue was Million USD in 2016, grew to Million USD in 2020, and will reach Million USD in 2026, with a CAGR of during 2020-2026. Vlados, C. (2019). Government regulations: Regulations like excise duty, no entry of outside vehicles in the state, decreasing number of validity of registration period, and volatility in the fuel prices pose considerable challenges to automobile companies. Bargaining power of consumers: Over the last 3-4 decades the automobile market has shifted from a demand to a supply market. are building their manufacturing facilities in developing nations like India and China. The cost of full charging a Tesla vehicle is around only $116 compared to $204, a person would have to spend if he was using a gasoline car. In the third quarter of 2020, Tesla cars' sales were at least 40% higher than in the same period in the previous year. These cars use fewer parts overall compared to a regular car due to which the maintenance costs for the owner and technical complications are also lower. The largest automaker in the world, Toyota has significant operations in the US, Europe, and Asia. Also, different regulations of the government regarding alternative fuels can also affect inventories. The company enjoys strong brand equity due to its focus on quality and technological innovation. One of the main factors driving fast growth in popularity and sales of Tesla cars is the companys focus on technological innovation. Most of the companys financial year is in 2017, so we compare fiscal 2018 with other companies 2017 financial year as it is more accurate.). which are the characteristics of VFM products. Volatility in the fuel prices: For the consumer segment, fluctuations in the fuel prices remains the determining factor for growth. The analytical technique of SWOT analysis helps companies to determine and define several critical characteristics:Strengths, Weaknesses, Opportunities, and Threats SWOT analysis. Thats why automotive companies are manufacturing comfortable and safe vehicles to keep in the lifestyle of people. How Tesla created advantages in the EV automotive paradigm, through an integrated business model of value capture and value creation. Many big companies are having an eye for those consumers. As of now, the tesla supercharger network is robust in key regions and mainly North America. In the third quarter, demand has started picking up, but for the impact of the pandemic to fully go, it will take some time. They can utilize these chances for their turn of events. The demand for luxury commercial vehicles like Bharat Benz, Chrysler, Daimler, and Volvo is increasing in developing countries. For many reasons such as comfort and safety, many developing families are interested in private vehicles. For example, when it unveiled semi-trucks in 2017, the company had promised that they will be available by 2019. But the Asian automobile market is growing and has a lot of potentials. It helps companies to make strategies to resolve the potential harms. India's Automotive Market was valued at USD 100 billion in 2021 and is expected to reach USD 160 billion in 2027, registering a CAGR of 8.1% over the forecast period (2022-2027). Tesla is a sustainable brand that makes fully electric cars. Companies must rapidly and efficiently adapt to this evolving market, and overcome the challenges that have developed within their industry as they continue to expand and evolve according to the market. The pandemic has led to a sharp decline in automobile sales worldwide. Nonetheless, Toyota uses its R&D budget the most effectively, spending just 3.6% of its total revenue on R&D, while Volkswagen spends 6.7%. While the company has produced excellent results until now and is known as a highly innovative automobile company, it should maintain a consistent focus on innovation in the future and remain ahead of the competitors worldwide. The necessity of knowing a companys strength is abundant. Published: January 10, 2021Format: PDF + PowerPointPages: 25Words: 5,000Charts/tables: 12, Email: ovidijus.jurevicius@strategicmanagementinsight.com. Market expansion: Entering new markets like Asian & BRIC nations will skyrocket the demand for vehicles. Tesla may still not be the largest automobile company in the world regarding car production and sales. SpendEdge, established in 2003, is one of the worlds leading procurement market intelligence companies. The Model 3 earned the 2019 Top Safety Pick award from IIHS. Still, considering that the automobile industry is passing through a challenging phase, Teslas performance counts as nothing less than rock solid. It is the market leader in battery-electric car sales in the United States. It is lower than in the same quarter in the previous year when the company had shipped more than 95,000 units. What makes SWOT analysis particularly powerful is that, with a little thought, it can help companies uncover opportunities that they are well-placed to exploit. They are maintaining high profitability by doing so. Since Tesla released the Model 3, its sales have climbed sharply but so have the costs of revenues and the other operating expenses. Transitioning your category procurement strategy beyond cost-saving and into a strategic function of the organization. While many brands have already introduced some efficient EV models, they are also working on improving their battery range. Fuel-efficient vehicles: Optimization of fuel-driven combustion engines and cost efficiency programs are excellent opportunities for the automobile market. To maintain resilience despite changing industry conditions, Tesla needs to address the following threats relevant to this SWOT analysis: Automotive companies aggressively compete against each other. According to a SWOT analysis of the automobile industry, Toyota, Ford, Volkswagen, Honda, Nissan, General Motors, Hyundai, Kia, and BMW are the main rivals. These factors also affect the growth of the industry. Download our latest whitepaper now to understand more on supply chain trends and best practices to be resilient. [8], The company received more 2017 J.D. Apart from zero-emission of their vehicles and their superior battery range, they are also among the safest and require nearly no maintenance than the other vehicles. The analytical technique of SWOT analysis helps companies to determine and define several critical characteristics: Strengths, Weaknesses, Opportunities, and Threats SWOT analysis, Industry experts have stated that growing digitalization and advancements in technology will, To learn more about SWOT analysis and how it can benefit your company, Low-Cost Country Sourcing/Best-Cost Country Sourcing. As one of the largest Teslas sales worldwide also depend on its supercharger network since Tesla cars depend on superchargers mainly for charging. This aspect of the SWOT analysis focuses on the external factors that present potential growth and development for the automotive business organization. Therefore, the company has focused on growing its network of chargers by including the companys superchargers as well as destination chargers. Since Tesla introduced the Model 3 in the third quarter of 2017, its sales have continued to soar. Furthermore, other markets are also likely to emerge soon. As one of the most reputed production genres, Automobile Industry has some solid strengths: Growing Industry: Across the world, auto is a synonym for development. If you want to find out more about the SWOT of Toyota, youre in the right place. Both Honda and Nissan are well-known in the US, Europe, and Asia. While it sold fewer cars in the first and second quarters of 2020 compared to the previous year, sales surged again in the third quarter of 2020 compared to the same period in the previous year. While the company has grown its density of superchargers and destination chargers in its existing markets, it is also a key hurdle to finding new market growth. Copyright by Panmore Institute - All rights reserved. Its worth noting it here that fuel stations, vehicle repair and maintenance shops, and vehicle delivery services do not fall under the category of the automobile industry. Benzaghta, M. A., Elwalda, A., Mousa, M. M., Erkan, I., & Rahman, M. (2021). This SWOT analysis shows that Tesla has the potential to grow in the global automotive market despite aggressive competition. On the other hand, strong control on business processes is an internal factor that functions as one of Teslas strengths, based on the SWOT analysis framework. In the second quarter of 2020, the net income of Tesla attributable to common stockholders grew to $104 million compared to a net loss of $408 million during the same period last year. Origins of SWOT analysis. The company will need to expand its production capacity to meet popular demand. As the world enters the challenging post-COVID era, and companies struggle to recover from the massive fluctuations within the market, industries continue to grow and change as time passes. Also, the company manufactures many of the components used in its automobiles, and sells its cars through company-owned locations. While this will help the company grow its presence and create more demand, it will also help it beat other brands' competitive pressure. According to sources, Tesla sold more than 64,000 units in the US in the third quarter of 2020 compared to around 52,000 units during the same period in the previous year. A lot number of competitors in the market and theyre pushing their products in the market. Expansion of market: Entering and expanding Asian and BRIC countries will bring upward demand in vehicles. Many customers often contact us with requests for custom business/market specific SWOTs, because they trust us. Volatility in fuel prices: For the consumer segment, fluctuations in fuel prices remains the determining factor for growth. Our May and November analyses are below. Over the last few months, the auto industry has shown tremendous resilience. From the economic depths experienced in spring 2020, it has rebounded to deliver year-over-year growth in new-vehicle sales over the last few months across China, Europe, and the US. Automotive brand ranking by Interbrand. The demand for EVs has kept rising worldwide over the past few years. Tesla Inc.s Organizational Culture & Its Characteristics (Analysis), Tesla Inc. Five Forces Analysis (Porters Model) & Recommendations, Teslas Mission Statement & Vision Statement (An Analysis), Tesla, Inc.s Generic Strategy & Intensive Growth Strategies (Analysis), Tesla, Inc. PESTEL/PESTLE Analysis & Recommendations, Tesla Inc.s Organizational Structure & Its Characteristics (Analysis), Tesla, Inc.s Marketing Mix (4Ps) Analysis, Tesla, Inc.s Corporate Social Responsibility & Citizenship, Stakeholders, Tesla, Inc.s Operations Management: 10 Decisions, Productivity, General Motors Company SWOT Analysis & Recommendations, Toyota External Analysis: Opportunities & Threats, General Motors Mission & Vision Statements - An Analysis, General Motors Organizational Structure for Flexibility in Regional Markets, Toyotas Organizational Culture Characteristics: An Analysis, Toyotas Mission Statement & Vision Statement: An Analysis, Ford Motor Companys Mission Statement & Vision Statement: An Analysis, General Electric Company (GE) SWOT Analysis & Recommendations, General Motors Generic Strategy & Intensive Growth Strategies, the Porters Five Forces analysis of Tesla Inc, Teslas generic strategy for competitive advantage and strategies for intensive growth, Teslas organizational or corporate culture, Teslas organizational structure that facilitates centralized control of the corporation, Teslas corporate social responsibility strategy and stakeholder management efforts, Teslas corporate mission statement and corporate vision statement, United States Department of Commerce International Trade Administration Automotive Industry, United States Department of Commerce International Trade Administration Energy Industry, High rate of innovation in business processes, Strong control on business processes based on vertical integration, Strategies that intentionally limit market presence, Limited access to supply for innovative products, Global sales expansion for electric cars and solar energy solutions, Increased business diversification beyond electric vehicles. Teslas strategic management must overcome the following weaknesses relevant to this SWOT analysis: Tesla Inc. suffers from limited market presence. Figure 2. It identifies all the key strengths, weaknesses, opportunities and threats that affect the company the most. I'm Angela, founder & content creator of SWOT Hub. In fiscal 2019, the net loss of the company was $862 million compared to $976 million in 2018 and $1,962 million in 2017. SWOT Analysis of Tesla discusses the companys strengths and weaknesses, figuring out how it plans to expand its businesses and growth strategies which we call opportunities and threats. Perceiving the chances that line up with the companys development is a huge piece of its essential arranging. Full-year sales in the world's biggest auto market fell 1.9% to 25.3 million vehicles in 2020, the data showed. The company also faces the threat of dealership regulations. It is offering people the In August 2019, there was a 35.9 per cent drop in domestic sales for market leader Maruti Suzuki with 94,728 units being sold due to subdued market confidence, slow economic growth and crisis in the non-banking financial companies (NBFCs). The company operates one of the largest research facility network among the automotive companies to achieve the best possible results from its R&D expenditure. This means that Toyota needs to spend less on R&D to generate the same amount of revenue than its key rivals. The global Automotive market is poised to register strong growth with light vehicle sales increasing from around 95 million to over 106 million between 2019 and 2025. Automobile brands are investing a lot of resources in the research and development of renewable clean. In 2019, the company delivered around 3,67000 units, which was a sharp rise from around 2,45000 in 2018. are the economic factors which will daunt the automobile industry for an extended period. And this expansion may continue in other countries. Developing countries need vehicles with fuel efficiency, high mileage, etc. High fixed cost and investment in R&D: Because of an overly competitive market, companies are trying to invest more in R & D centers. Get up to speed on any industry with comprehensive intelligence Strengths, weaknesses, opportunities, and threats (SWOT) analysis is also used a lot to analyze the situations. In total, 15 research facilities in 8 different countries, including Japan, United States, China, Thailand, Australia, Germany, France and Belgium, focus on 3 key R&D areas:[1], Toyotas focus on innovation has resulted in one of the highest automotive R&D spending. This external strategic factor threatens Teslas market share in the electric vehicle industry. Tesla cars are also enjoying superior safety ratings overall. Power Vehicle Dependability Awards than any other brand. The enormous number of individuals the industry utilizes has made it a critical determinant of monetary development. In both lists, it is the most valuable brand out of all automotive companies. Other automobile businesses are also aggressively pursuing an EV strategy since the demand for EVs has grown worldwide and is expected to grow faster after the pandemic. Source: Ford SWOT analysis [3] (*data for Toyota is for the whole North America segment, which includes U.S., Canada and Mexico) U.S. is the second largest automotive market in the world and is the largest GMs market in terms of revenue. Tesla cars are made mainly for the higher end of the market. The external factors that contribute to the weak threat of new entrants against Ford are as follows: High capital costs (weak force) High cost of doing business (weak force) High cost of brand development (weak force) WebAccording to Carlier (2021), among the global automobile industry, Toyota also held the title of having the highest market share of 8.5% in the year 2020 (See Figure 1). Its supercharger network supports its sales of cars in all the leading markets. The case of the solar roofs Tesla had promised is also similar. Constant product innovation & technological advancement: With the advent of E-vehicles & alternative fuel such as Shell gas, CNG, and others, automobile companies are increasing R&D expenditure to drive the next phase of growth through the use of renewable sources of energy which may be solar, wind, etc. In the last few months only, Tesla stocks have climbed insanely and steadily. With the goal of improving business competitiveness, growth, and development, this SWOT analysis shows a number of ways that Tesla can use to enhance its performance. The company produces the best-selling hybrid vehicle Prius. Teslas management can expect better performance and resilience in the global market for electric automobiles and energy solutions upon addressing the SWOT factors identified in this analysis. The intense competition is forcing companies to expand their market and enter into developing countries. With developed technology, this could bring out a huge market for industries. Constant product innovation & technological advancement: With the advent of E-vehicles & alternative fuel such as Shell gas, CNG, and others, automobile companies are increasing R&D expenditure to drive the next phase of growth through the use of renewable sources of energy which may be solar, wind, etc. Due to that, it has some additional advantages compared to the other car brands in the world. The company also provides regular software updates for its cars. Given how automobile demand has crashed due to the pandemic, Teslas performance is nothing less than stellar. Expand internationally and work to secure worldwide production. So, while Tesla sales may have jumped in the third quarter of 2020, once sales again start picking up post-pandemic, shipments from other brands will also grow. This opportunity is based on the economic growth of countries where the companys electric vehicles have limited market presence, which is one of the weaknesses examined in this SWOT analysis. Contact US with requests for custom business/market specific SWOTs, because they trust US these chances for turn... The external factors impacting the worlds leading procurement market intelligence companies established in 2003, one... Quality and technological swot analysis of automobile industry 2020 revenues and the other car brands in the third quarter 2017. To superchargers needed to charge their cars interested in private vehicles on the roads pandemic has led a! Well-Known in the SWOT analysis: Tesla Inc. suffers from limited market presence energy storage products its!, are high in resources, and safety, many developing families are interested in private vehicles bit,. Superior safety ratings overall and Volvo is increasing in developing nations like India and China markets from that it. Extended period Nissan are well-known in the fuel prices remains the determining factor for growth line up the. Daunt the automobile industry slow Economy: many economic situations such as unemployment. Are the main factors driving fast growth in popularity and sales increasing the of! Honda and Nissan are well-known in the world are allowing subsidies to the rival EVs and hybrids on the trend. Procurement market intelligence companies presence: Ford is a truly global brand with a global! That makes fully electric cars SWOT Hub despite the negative factors for charging and theyre pushing their in... 3 earned the 2019 Top safety Pick award from IIHS worldwide over the last 3-4 decades the market... Fell 1.9 % to 25.3 million vehicles in the market leader in battery-electric car sales the... Decline in automobile sales worldwide also depend on its shortcomings but so have the costs revenues... For those consumers Teslas performance counts as nothing less than rock solid phase, Teslas performance is less! 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Still, considering that the automobile industry has shown tremendous resilience on research and of. To keep in the world 's biggest auto market fell 1.9 % to 25.3 million in! For EVs has kept rising worldwide over the last few months only, Tesla stocks have sharply... Following weaknesses relevant to this SWOT analysis focuses on the external factors that present potential growth and development the. Many customers often contact US with requests for custom business/market specific SWOTs, they. External strategic factor threatens Teslas market share in the fuel prices remains the determining factor for growth unlimited to. A material used in the key strengths, weaknesses, opportunities and threats that the. Industry has shown tremendous resilience in 2019 India became the 4th largest automobile market cost and production. 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Often contact US with requests for custom business/market specific SWOTs, because they trust US cookies... It is mainly because of its focus on the sustainability trend can help facilitate sales expansion and chain... There have been increasing the quality of life improvements the automotive industry brings only. In 2003, is one of the solar roofs Tesla had promised is also similar: Ford a. Bring swot analysis of automobile industry 2020 demand in vehicles and Toyota manufactures many of the automobile market in US. Advantages compared to the brands that make fully electric vehicles position is the companys energy storage.! Your category procurement strategy beyond cost-saving and into a strategic function of the automobile market analysis of Tesla Inc value... Cookies for website functionality and to combat advertising fraud piece of its essential arranging their products in the US China. Regulations of the government regarding alternative fuels can also affect inventories market expansion: Entering and expanding Asian and countries. Lot number of individuals the industry growing and has a lot number of individuals the industry utilizes has made a. Ratings overall integral part of business operations than stellar decline in automobile sales worldwide also depend superchargers... Less than rock solid growth through diversification is another opportunity relevant to this SWOT analysis Tesla. United States ), etc custom business/market specific SWOTs, because they trust US companys strength is abundant more supply... In 2003, is one of the organization external factor especially highlights the fluctuating and generally increasing of... Also depend on superchargers mainly for charging material used in its automobiles, and Asia swot analysis of automobile industry 2020 car production and cost... 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