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Case Study – Tesla Inc

Case Study – Tesla Inc

Tesla is an automotive and energy company whose success is primarily attributed to electric vehicle production. The company manufactures electric vehicles besides designing and producing energy generation and storage systems. Its growth is linked with climate sustainability calls as more people seek alternative energy options over fossil fuels for commercial, home use, and transportation. Tesla’s research and innovative efforts have contributed to the brand’s strong global brand associated with luxury, sustainability, and technological advancement.

Porter’s Five Forces Analysis

Competition in the Industry

There is intense competition in the electric vehicle industry. Although Tesla pioneered the electric vehicle industry, other companies have started manufacturing their own versions of electric vehicles (Sierzchula et al., 2012). Traditional vehicle manufacturers such as General Motors, Volkswagen, and Ford have entered the market with their versions of electric vehicles. Besides, startup firms like NIO and Rivian have entered the market and are competing with Tesla for the market share. Therefore, competition in the electric vehicle industry is high based on the above factors.

Potential of New Entrants

The potential of new entrants entering the electric vehicle market and performing is relatively low. Tesla has already built a strong position in the industry, such that dislodging the company would be difficult. Some of the factors that complicate entry into the industry include the significant capital requirements for research and development and manufacturing (Yang, 2022). On the other hand, Tesla has already built a solid global brand characterized by large economies of scale and technological expertise, which are barriers to entry (Hill et al., 2017).

Suppliers’ Bargaining Power

Suppliers’ bargaining power in the electric vehicle industry is moderate. Tesla relies on external suppliers for critical supplies such as batteries and semiconductors. Limited production of lithium-ion batteries puts pressure on the company since they are core components in its production processes (Yang, 2022). However, the company is currently building its in-house production capabilities for batteries, which will likely give the company high bargaining power over suppliers.

Buyers’ Bargaining Power

Buyers of Tesla’s electric vehicles have a high bargaining power. This is partly because buyers have a wide range of options since traditional vehicle manufacturers such as General Motors and Ford now manufacture electric vehicles (Yang, 2022). Besides, governments are now offering incentives to buyers to purchase electric vehicles. If governments source electric vehicles from Tesla’s competitors, that means the company has to contend with increased competition.

Threat of Substitutes

The threat of Tesla’s substitutes is relatively moderate. Most people still use traditional internal combustion engine (ICE) vehicles. However, concerns about climate change are enhancing a global shift towards electric vehicle use. On the flip side, the emergence of hydrogen cells and alternative energy sources poses a threat to the company’s market in the future.

Tesla’s Strengths and Weaknesses


One of Tesla’s strengths is its innovation capability and advanced technological capability. The company has invested heavily in developing high-end battery technology, self-drive capability, and battery charging stations (Tesla Inc., 2022). These strengths give the company a competitive edge in the electric vehicle industry. Another strength is associated with a solid global brand. Most consumers planning to purchase electric vehicles think of Tesla as their first choice due to the established brand’s luxury features and cutting-edge technology. Vertical integration at Tesla also contributes to the company’s success (Tesla Inc., 2022). Besides enhancing its battery production capability, Tesla manufactures most of the components used to make electric vehicles. With such capabilities, the company controls the quality and costs of electric vehicles.


            Although the company has been highly successful, it faces some weaknesses that limit its growth. One such weakness is a limited market reach. The company has largely focused on the US market despite increasing demand for electric vehicles from non-US markets. One of the reasons why the company focuses on the US market is its exclusive distribution policy, which limits access to non-US EV markets. In the age of globalization, companies should expand beyond their global borders to gain a competitive edge (Hill et al., 2017). Also, premium pricing has hindered the growth of Tesla’s market share. The company focuses on retaining a premium brand image by selling its products at high prices. This has locked out low-income buyers interested in purchasing electric cars and alternative energy solar panels.


Tesla controls a significant portion of the electric cars market share. Although traditional vehicle manufacturers have made an entry into the industry, Tesla remains a dominant player. The company’s cutting-edge technology and innovative efforts have led to a globally recognized brand encompassing luxury, technology, and sustainability. However, Tesla’s exclusive distribution policy and premium pricing have limited further growth.


Hill, C. W. L., Schilling, M. A., & Jones, G. R. (2017). Strategic Management: an Integrated Approach: Theory & Cases (12th ed.). Cengage Learning.

Sierzchula, W., Bakker, S., Maat, K., & Van Wee, B. (2012). The competitive environment of electric vehicles: An analysis of prototype and production models. Environmental Innovation and Societal Transitions2, 49-65.

Yang, X. (2022, July). Research on Tesla’s Market—Based on Porter’s Five Forces and Ratio      Analysis Model. In 2022 2nd International Conference on Enterprise Management and Economic Development (ICEMED 2022) (pp. 773-777).

Tesla Inc. (2022, December 31). 10-K.


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Case Study - Tesla Inc

Case Study – Tesla Inc

In this assignment, you need to review the Tesla, Inc. case study. The case study describes the rise of Tesla Motors, an electric vehicle company founded in 2004 by electric inventor Martin Eberhard and South African innovator Elon Musk. The case details the motivation of the two men, their personalities, and the conflicts they went through to develop the company. It also provides an overview of the challenges and opportunities of competing in the electric vehicle space, discusses Tesla’s strategies for manufacturing, marketing, and distributing the cars, and points to key questions about Tesla’s future.


Review the Tesla Case Study. Also, feel free to utilize information from the Tesla videos found in Reading and Resources in this unit.

Using Porter’s Five Forces model:

Describe in detail the challenges and opportunities of competing in the electric vehicle

You will need to create a section for each of the five forces when answering the question in detail.

Finally, describe Tesla’s strengths and


  • Submit a two-page Word document covering the elements of the assignment.
  • Develop a clear introduction, body, and conclusion. Use paragraph format and transitions.
  • Focus on the quality of writing and
  • Use APA format with a title page, in-text citations, and references. Abstract not required. The title page, reference page, and appendices are excluded from the page length.
  • Research and cite at least two credible sources in APA

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