Tesla PESTEL Analysis

1. Introduction

PESTEL analysis is one of the few business strategies that give a boost to start-ups. It is a tool that determines how external factors affect the organization and its business strategies. In addition to this, PESTEL analysis also identifies the firm's strengths and weaknesses and accordingly comes up with a strategy for further growth.

2. Background of Tesla

3. Tesla PESTEL Analysis

PESTEL encompasses the most relevant factors that affect a business. It includes the Political, Economic, Social, Technological, Ecological, and Legal factors.

Tesla is a luxurious car brand that has international fame for its unique features. Strategies like Tesla PESTEL analysis helps one understand how companies like Tesla have established themselves as a brand in the automotive industry within a few years.

Political Factors:

The political factor is a PESTEL analysis that refers to the government's involvement with the particular industry. It explains how different policies, restrictions, corruption, and other things affect the business and its growth in the long term. All these factors contribute to assessing the growth of the industry and the business.

• The ecological factor of Tesla Inc. directly affects its political and economic factors. The Tesla vehicles that depend more on electricity and less on fuel are environment-friendly. Thus buyers stand a chance of getting a specific tax credit for using an electric car.
• Additionally, the government incentive has strengthened its financial performance owing to its drive for environmental sensitivity.
• The political factors have favored Tesla’s growth and ensured its expansion in other countries.

Economic Factors:

Economic factor refers to the economic growth of the company and its profitability. The current interest rates, exchange rates assessing the consumers' income, inflation, economic growth rates, and other things influence a business. It also considers the unemployment rates.

• Primarily, the car comes under the luxury category. The sale of electric automobiles has proven to be a boost for the global economy. In the period between 2016 and 2017, the world has witnessed rapid growth in the automotive industry. The increased number of sales has given birth to the possibility of producing cost-effective vehicles in the future.
• However, the growth depends on the local economy of the country. Creating cost-effective cars within the grasp of ordinary consumers will benefit the company in the long run in two ways. Firstly, to compete with the other companies in the business. Second, to meet the growing demand for electric cars in the market. While the decreasing cost of renewable sources stands in favor of Tesla’s growth, economic instability is one of its major threats.

Social Factors:

The social factor is directly related to the consumers, the societal norms that regulate consumer behavior, consumer demand. The socio-cultural factors that shape and mold the population help marketers understand the needs of the target customers. Based on the feedback, companies set their short and long-term goals.

• Tesla cars are one of a kind. They have popularized the notion of luxurious electric cars in the minds of people. This part of the analysis also focuses on maximizing profit for the organization studying its investor, buyers, and employees understanding the socio-cultural aspects of a place.
• The environment-friendly attitude of people and renewable energy resources popularity; both work in favor of Tesla.
• The firm should be careful regarding investment in the developing markets. These markets can help in generating better revue for the company. In this macro-environment remote factor, Tesla gives tough competition to other competitors.

Technological Factors:

Technological factors refer to innovations and other factors that may influence the company favorably or unfavorably. Incentives, automation, rate of technology change too may affect the overall growth of companies.

• Tesla cars are at par with technological advancement. These luxurious cars with the latest gadgets are the future, and these features attract buyers. The fuel-efficient characteristic redefines sustainability.
• In addition to this, the latest technology is another feather to the cap. However, technology is ever-evolving. It does not take long for a company to come up with a similar feature to compete.
• Nonetheless, the characteristics of Tesla-like online mobile systems and automation are unparalleled. This part of the analysis provides hope for growth based on technological enhancement.

Ecological Factors:

Ecological factors have been the topmost priority for the past few years. It encompasses environmental concerns, including government regulation of carbon footprint, pollution, scarcity of raw materials, and more. The environment-friendly the company is, the better it is.

• The ecological factors are advantageous for Tesla. The company supports the expanding environment programs to deal with climate change and controlled use of resources issues.
• The company has managed to establish itself as a brand because it abides by many such norms. Environment-sensitive products such as solar panels, batteries, and electric vehicles are parts of the sustainable future.
• Tesla can expect growth by analyzing the ecological factors.

Legal Factors:

Similar to the political factors, the legal factor takes the country’s rules and regulations into consideration. It monitors how the different laws and legal changes like health and safety, consumer rights, equal opportunities, advertisement standards, and more affect Tesla's growth.

• As Tesla is expanding its business to other countries, they need to maintain the regulations and update their policies to abide by the rules. Tesla has scope in promoting its eco-friendly vehicle overseas, improving its international patents.
• It may also choose to introduce its energy solution products in outside markets. Tesla’s limited sales operation overseas might pose a problem in addition to the restrictions put by many states on direct sales.
• Overall it is evident from Tesla PESTEL analysis that there is a growth opportunity for Tesla in the global automotive market considering its legal macro-environment remote factors.

4. Key Takeaways

Tesla's PESTEL analysis has helped the company understand how the macro environment is directly related to business growth. It indicates that Tesla has growth opportunities in the global automotive market. The company has observed steady growth in past years despite stiff competition from other firms. They have aptly analyzed the external factors and have used them to their benefit. For further growth, they should understand growth opportunities and also avoid market-based risks.

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5. References

1. Academy, P., 2021. 'Marketing Theories - PESTEL Analysis', Professionalacademy.com, [online]. Available at: https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-analysis (Accessed 16 June 2021).

2. B2U - Business-to-you.com. 2021 'PESTEL Analysis (PEST Analysis) EXPLAINED with EXAMPLES | B2U', PESTLE Analysis, [online]. Available at: https://www.business-to-you.com/scanning-the-environment-pestel-analysis/ (Accessed 16 June 2021).

3. Corporate Finance Institute. 2021. 'PESTEL Analysis - Corporate Finance Institute', PESTLE Analysis, [online]. Available at: https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/ (Accessed 16 June 2021).

4. Frue, K., 2021. 'PESTLE Analysis of Tesla Inc.: The growth of the eco-friendly electric car', PESTLE Analysis, [online]. Available at: https://pestleanalysis.com/pestle-analysis-of-tesla/ (Accessed 16 June 2021).

5. Panmore Institute. 2021. 'Tesla, Inc. PESTEL/PESTLE Analysis & Recommendations - Panmore Institute', PESTLE Analysis, [online]. Available at: http://panmore.com/tesla-motors-inc-pestel-pestle-analysis-recommendations (Accessed 16 June 2021).