Columbia College Yoro Coulibaly

Economics for Managers

Course Project
TESLA
By Yoro Coulibaly
Economics for Managers

Columbia College
Columbia College Yoro Coulibaly
Economics for Managers

Executive Summary: This plan's information is being disclosed to specific

individuals under the strict understanding that they would maintain their privacy

and not reveal or distribute any part of it to third parties without the author's prior

written consent. Any information, reports, timelines, or linkages that could be

included in or referenced in this record are included in the data. To give the reader

a thorough picture of how the business is conducted, this paper synthesizes the

organizational characteristics of Tesla into a set of conclusions. This examination

includes descriptions of Tesla's organizational strategy, structure, and culture, as

well as the variables affecting their external environment. The main concerns about

Tesla's performance are then presented in the study from several angles. These

issues and findings are then used to inform a set of conclusions and suggestions

that the reader should remember.

Introduction:

Tesla, Inc., formerly (2003–17) Tesla Motors, American manufacturer

of electric automobiles, solar panels, and batteries for cars and home power

storage. It was founded in 2003 by American entrepreneurs Martin Eberhard and

Marc Tarpenning and was named after Serbian American inventor Nikola Tesla. It

quickly became one of the most recognizable cars brands in the world. “Tesla
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Economics for Managers
Motors was formed to develop an electric sports car. Eberhard was Tesla’s chief

executive officer (CEO) and Tarpenning its chief financial officer (CFO). Funding

for the company was obtained from a variety of sources, most

notably PayPal cofounder Elon Musk, who contributed more than $30 million to

the new venture and served as chairman of the company, beginning in 2004.

In 2008 Tesla Motors released its first car, the completely electric Roadster.

In company tests, it achieved 245 miles (394 km) on a single charge, a range

unprecedented for a production electric car. Additional tests showed that its

performance was comparable to that of many gasoline-powered sports cars: the

Roadster could accelerate from 0 to 60 miles (96 km) per hour in less than four

seconds and could reach a top speed of 125 miles (200 km) per hour. The

lightweight car body was made of carbon fiber. The Roadster produced no tailpipe

emissions, as it did not use an internal-combustion engine. Tesla Motors found that

the car attained efficiency ratings that were equivalent to a gasoline mileage of 135

miles per gallon (57 km per liter). The vehicle’s electric motor was powered

by lithium-ion cells—often used in laptop-computer batteries—that could be

recharged from a standard electrical outlet. Despite a federal tax credit of $7,500

for purchasing an electric vehicle, the Roadster’s cost of $109,000 made it a luxury

item” (Barbara A . Schreider).

SWOT of Tesla:
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Economics for Managers

Tesla Strengths:

Tesla has an impressive hiring strategy. As a CEO, Musk has always given

more weight to skill and experience than to academic degrees, and this is evident in

the way Tesla selects its staff. Having this vision, however, is one thing; being able

to use it as a successful hiring strategy is quite another. The business has created a

two-step, novel hiring process to do this. The first stage is like the conventional

interview method employed by most recruiters, but it places more value on

relevant work experience than academic credentials. Candidates that succeed in the

first round of the hiring process advance to the second stage, which entails

practical sessions that assess each applicant's practical skills. These issues and
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Economics for Managers
findings are then used to inform a set of conclusions and suggestions that the

reader should remember.

Tesla has a strong brand value and high market capitalization. “As of when

this article was written, Tesla had a total market capitalization of $547 billion,

making it the seventh most valuable company in the world. Though this is roughly

half its peak value of $1.06 trillion in 2021, the company is still a safe investment,

and most investors see strong long-term growth potential. The Tesla brand is also

quite valuable, valued at $76 billion in 2023, nearly twice its 2022 valuation”

(Daniel Pereira). In addition to being one of the most expensive brands in the

world, Tesla is also among the most distinctive. The question of whether the

business is an automaker that dabbles in technology or a tech company that builds

vehicles continues to spark heated debate. The corporation appears to be leaning

toward the latter with its growth into ancillary areas like solar energy and electric

batteries.

Tesla Weakness:

Despite all its advantages, the business nevertheless has certain weaknesses. They

consist of:

Tesla frequently experiences manufacturing and distribution delays despite having

a huge number of highly qualified employees, cutting-edge technology, and a

ground-breaking manufacturing procedure. This is probably because the business

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Economics for Managers
is involved in producing highly complicated technologies, which have a varied

supply chain network and intricate logistics. Due to several supply chain delays,

the company is frequently required to halt accepting orders for fresh deliveries

when it comes to its range of electric vehicles. This problem affects the Tesla Solar

Roof as well, delaying installations for months.

“Despite the effectiveness of Elon Musk’s leadership strategy and his ability

to spot talents, his tendency to prioritize results and profits over the well-being of

his staff as well as his somewhat abrasive nature, have led to an unnaturally high

employee turnover rate, especially amongst executive staff. Some workers have

even gone so far as to describe Tesla workshops as sweatshops and abusive, with

the average employee spending just 3.7 years with the company.

According to MarketWatch, the executive turnover rate of the company was

estimated to be about 27% in 2019. While this was found to be higher than the

15% cohort average, it was not abnormally high when compared to figures found

at several other top tech companies. However, the executive turnover rate of staff

reporting directly to Musk was found to be 44%, much higher than the industry

average of 9%. This shows that Musk has a penchant for letting go of employees

who displease or disappoint him, even to the detriment of the company” (Daniel

Pereira).

Tesla Opportunities:
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Economics for Managers
Even though the sales of electric cars have skyrocketed in recent years,

traditional cars powered by fossil fuels still dominate them in many parts of the

world. This voyage has been primarily driven by seals in Europe and China, with a

little portion of new electric vehicle purchases occurring in the United

States. Therefore, by making major investments to promote the sale of electric

vehicles in countries like the United States as well as other countries like Asia and

Africa, the corporation may dramatically increase its client base. In terms of

innovation and the creation of new technology, Tesla has always been in the

forefront. Its status as the innovation champion is used to leverage a sizable chunk

of its brand image. This means that the business must keep working to maintain its

current standing through the combined efforts of its leadership, solid financial

support, and a big pool of competent employees. A lot of well-known businesses

are working hard to change their production procedures and operational procedures

to fit a more sustainable model. The radio firm Tesla is well known for promoting

this movement. However, it is still capable of doing more if it positions itself at the

very top of the movement toward a greener future by leveraging its strong brand

equity and distinctive selling strategy.

Tesla Threats:
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Economics for Managers
Certainly not the first business to make investments in the market for electric

vehicles is Tesla. However, it was the first to get the public's attention. For years,

Tesla has sold more automobiles than its nearest rivals thanks to its distinctive

brand positioning and technological advantages over other electric vehicle

producers. Tesla has begun to lose some of its market supremacy, though, as rival

auto industry juggernauts like Ford, Chevrolet, Hyundai, and Kia have entered the

market. In terms of pure sales, the firm continues to lead other producers of electric

vehicles. However, the question of how long it can hold onto this advantage in the

face of escalating competition, increased customer unhappiness, and less expensive

alternatives to its products has begun to surface. Although there is widespread

agreement that the world needs to transition to more environmentally friendly

energy sources, such as renewable energy and the use of electric vehicles, certain

global shocks have forced governments, citizens, and even corporations to

reevaluate how exactly the goals will be attained. Numerous government initiatives

aimed at promoting green technology extensively subsidize and support several the

technologies created and sold by Tesla. A large decrease in funding and support for

these projects could result from changes in public opinion, which would be

detrimental to the company.

PESTLE Analysis of Tesla:

Columbia College Yoro Coulibaly
Economics for Managers
Political factors: Leading the way in electric vehicles is Tesla Inc. Tesla employs

both electricity and gas, in contrast to conventional automobiles, which need a lot

of fuel to operate. But compared to a conventional car, these vehicles use a lot less

gas. Most Tesla owners refuel their vehicles at electronic stations. instead of a

standard 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” (Kiesha Frue).

Economic factors: As the world economy grew, so did sales of electric vehicles.

The global economy was expected to expand by 3.5 percent in 2017. These

increases sparked new electric advances in Asia, Europe, and the US. In fact,

between 2016 and 2017, sales of electric vehicles increased by almost 30%. In fact,

materials are becoming less expensive for Tesla. Batteries are less expensive now,

which is wonderful for the business. Their cars may become less expensive as they

become more well-liked by consumers.

Social factors: Electric cars are extremely popular. especially those who value

environmental sustainability. The requirement to utilize as much fuel as a typical

vehicle is eliminated by an electric vehicle. And the environment will benefit

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Economics for Managers
greatly from that. Not to add that using an electric vehicle should eventually be less

expensive than using a conventional one. Environmental sustainability is a Tesla

feature. It is also fresh. There aren't many automobiles on the market that can

match Tesla's power and luxury. The business has done a fantastic job of retaining

its reputation as the manufacturer of that electric vehicle. It is now more

challenging for other, comparable cars to arrive on the scene.

Technological factors: As a buddy, it aids the business in keeping a competitive

advantage over rivals. It enables Tesla to use less fuel and opens the door to

sustainability and usability in the future. In contrast to conventional alternatives in

the automotive business, cars are designed to adopt current technology. But

business must also be alert. It takes very little for technology to become outdated.

People are continually evolving, improving, and creating new things to add to what

we already have. Thanks to updates and upgrades, the most recent devices and

applications might be completely worthless in a year. Tesla's reliance on

technology for their automobiles has both a positive and a negative aspect.

Environmental factors: The greatest strength of Tesla is in this area. Since

electricity is more environmentally benign than gas, vehicles are marketed as being

such. Compared to conventional cars, Tesla vehicles scarcely affect carbon

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Economics for Managers
emissions and adhere to numerous environmental requirements. By concentrating

on the environment, Tesla has distinguished itself in a field that few can match.

Tesla financial statement:

Tesla annual/quarterly revenue history and growth rate from 2010 to 2023.

Revenue can be defined as the amount of money a company receives from its

customers in exchange for the sales of goods or services. Revenue is the top line
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Economics for Managers
item on an income statement from which all costs and expenses are subtracted to

arrive at net income.

 Tesla revenue for the quarter ending March 31, 2023, was $23.329B,

a 24.38% increase year-over-year.

 Tesla revenue for the twelve months ending March 31, 2023, was $86.035B,

a 38.34% increase year-over-year.

 Tesla annual revenue for 2022 was $81.462B, a 51.35% increase from

2021.

 Tesla annual revenue for 2021 was $53.823B, a 70.67% increase from

2020.

 Tesla annual revenue for 2020 was $31.536B, a 28.31% increase from

2019. (macrotrends.net).
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Economics for Managers
“

“As with the simple regression analysis example, we are estimating a linear

relationship between the dependent variable, quantity demanded, and the two

independent variables—price and advertising expenditure. The constant term, a,

shows the effect on quantity demanded of other variables not included in the

equation. The coefficients, b and c, show the effect on quantity demanded of a unit

change in each of the independent variables” (Farnham, P. G. 2014).

Tesla Price Elasticity of Demand:

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Economics for Managers
Tesla produces a variety of automobile models targeted at various consumer

segments. Despite the larger market demography that the Model 3 is aiming for,

the Model S and Model X market demographics are more competitive (2018

Annual reports). Additionally, there are ever more electric automobiles coming

onto the market. There are still misconceptions about the features, quality,

performance, and safety of electric vehicles as well as their range on a single

battery charge, even though the market for EVs is much less than the market for

gasoline vehicles (2018 Annual Reports). Although there is a lot of consumer

interest in and demand for Tesla cars, the Model 3 is significantly more popular

than the Model S and Model X. This is due to the pricing of the base Model 3

variant. Compared to the Model S, which costs $76,000, and the Model X, which

costs an outrageous $82,000, the base model starts at $35,000 and the enhanced

version costs $50,000. The $35,000 Model 3 vehicle has received more than

400,000 deposits (Song, 2018). This proves unequivocally how high Model 3 car

demand price elasticity is.

Recommendation:

Tesla should strive to become the top or one of the leading producers of the

EV given the market's quickly increasing and ongoing demand for EVs.

Additionally, there are few to no charging outlets and little to no knowledge about
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Economics for Managers
EVs in many of the central states of the United States. The business should

consider concentrating on investing part of their cash in more Supercharger

stations in these regions as well as more in the regions of their top sales.

Additionally, adding additional advertising will raise awareness of their vehicles

and the special deals they are offering in comparison to other businesses in the

industry. Additionally, they have expanded their product selection to better suit a

variety of customers, especially those with lower incomes. Tesla is presently in a

position where they can easily overtake the market and implement their general

ambition for innovation as well as a safer and cleaner planet with the switch to

EVs. Every time one of their rivals introduced a promotion or a supplement to their

hybrid or electric vehicle, Tesla saw the move and prepared an answer. Every plan

of action developed was well considered, well-funded, and required for the

business to make its products superior to those of its rivals. With the numerous

options, opportunities, and incentives offered by Tesla, they shouldn't have a

difficult time attracting new clients, particularly once they cut the price of the

Model 3.

Conclusion:

The trajectory of the Tesla firm from niche manufacturer to technology

innovator has been anything but simple. The corporation, which has been marred
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Economics for Managers
by both innovations and scandals, has overcome all its challenges to become the

unchallenged market leader in the electric car sector as well as a major player in

other fields of sustainable technology. Only time will tell what the firm's future

contains, but it is safe to say that Tesla (much like the illustrious inventor after

whom the company was named) has irrevocably impacted the IT industry.
Columbia College Yoro Coulibaly
Economics for Managers

References

Schreiber, B. A. and Gregersen, . Erik (2023, April 19). Tesla, Inc.. Encyclopedia

Britannica. https://www.britannica.com/topic/Tesla-Motors

Daniel Pereira, 03, March 2023. https://businessmodelanalyst.com/tesla-swot-

analysis/

Kiesha Frue.17 October, 2018. https://pestleanalysis.com/pestle-analysis-of-tesla/

https://www.macrotrends.net/stocks/charts/TSLA/tesla/revenue

Farnham, P. G. (2014). Economics for Managers (3rd ed.). Pearson Education

(US). https://ccis.vitalsource.com/books/9780133561128

Song, K. (2018, June 29). Elon Musk opens Tesla Model 3 sales to all, but auto

experts give 3 reasons why you may want to wait. Retrieved from

https://www.cnbc.com/2018/07/13/tesla-model-3-sales-car-experts-say-consumers-

may-want-to-wait.html