pestle analysis

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Niagara College *

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1301

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Business

Date

Feb 20, 2024

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docx

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Uploaded by ProfessorRatPerson1043

Political Factors: The year 2018 marked a crucial juncture for Tesla, a company renowned for its innovative approach to electric vehicles and renewable energy solutions. Amidst its groundbreaking ventures, Tesla confronted a myriad of challenges influenced by the intricacies of the political and economic spheres. This essay delves into the nuanced landscape that defined Tesla's operating context during this time. Tesla encountered multifaceted challenges in the political arena, where governmental decisions significantly influenced its operations and strategic considerations. Government Regulations and Incentives: One of the pivotal factors impacting Tesla was its reliance on government incentives and subsidies, particularly the federal tax credit for electric vehicles. The ebb and flow of political attitudes towards renewable energy and environmental policies directly correlated with the company's financial health and consumer demand. Trade Policies and Global Relations: As international tensions escalated, Tesla found itself vulnerable to the uncertainties of global trade policies. Geopolitical dynamics posed risks to Tesla's intricate global supply chain, influencing production costs and the company's overall competitiveness. Shifts in international trade agreements also had implications for Tesla's access to vital raw materials.

Economic Environment In the economic landscape, Tesla grappled with a unique set of challenges demanding strategic foresight and adaptability. Cost Dynamics and Price Competitiveness: The economic viability of Tesla's groundbreaking electric vehicles in comparison to their traditional counterparts was a critical concern. Fluctuations in production costs, particularly in essential raw materials like lithium-ion batteries, directly impacted Tesla's ability to maintain competitive pricing. Consumer Behavior and Market Trends: Shifting economic dynamics influenced consumer purchasing power and preferences, thereby impacting the demand for electric vehicles. Tesla's success hinged on its ability to effectively position its products in response to these evolving market trends. Recommendations Addressing the identified challenges required strategic recommendations to enhance Tesla's resilience and competitiveness in the dynamic political and economic landscape. Diversification of Incentive Dependency: Reducing reliance on government incentives by exploring alternative revenue streams and implementing effective cost-cutting measures became imperative for sustained growth.

Strategic Global Partnerships: Establishing strategic partnerships emerged as a viable strategy to navigate trade uncertainties and ensure the stability of Tesla's intricate supply chain. Continuous Cost Optimization: Implementing robust cost optimization strategies became crucial to mitigate the impact of economic fluctuations on product pricing and maintain Tesla's position in the market.

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Social Factors Shift in Consumer Preferences: The preference for larger vehicles, such as pickups and SUVs, among Americans in the past influenced the automotive market. However, there was a notable shift towards smaller cars and alternative propulsion vehicles by 2023 and predicted to continue by 2025. This shift reflected changing societal attitudes towards fuel efficiency, environmental concerns, and urban lifestyles. Generational Trends: Millennials, a significant demographic group, displayed different attitudes towards car ownership compared to previous generations. They showed lower rates of car ownership and preferred compact cars and crossovers. Their approach to purchasing involved extensive online research and reliance on social media for recommendations, indicating a shift in consumer behavior influenced by technology and social networks. Urbanization and Mobility Preferences: Both Millennials and Baby Boomers exhibited changing perceptions of urban living and transportation. Baby Boomers were increasingly moving to cities for shorter commutes and cultural experiences, leading to reduced reliance on personal vehicle ownership. This trend was supported by the popularity of ride-hailing services among older demographics, suggesting a shift towards shared mobility solutions. Changing Priorities in Purchasing Decisions: Safety, fuel efficiency, and high quality emerged as primary factors influencing car buying decisions across different age groups. Millennials, in particular, prioritized features related to connectivity and technology, such as navigation systems and mobile integration, reflecting their reliance on digital connectivity and seamless integration of technology in their lifestyle. Digital Connectivity and Technological Integration: The growing demand for digital connectivity influenced car manufacturers to invest in integrating technology into their vehicles. Tesla's success in the luxury electric vehicle market was attributed to its focus on digital connectivity and technological advancements, aligning with the societal trend towards continual connection with the world. However, Tesla also faced challenges related to technology glitches and quality issues, highlighting the importance of meeting consumer expectations in an increasingly connected world.

Technological Factors In 2018, Tesla faced several technological issues that impacted its position in the market. One of the major challenges was the production and delivery of their Model 3 vehicles. Tesla experienced difficulties in meeting the high demand for the Model 3 due to problems with their production line. This led to delays in delivering vehicles to customers and affected the company's

reputation. Despite these challenges, Tesla made efforts to improve its production processes and worked to address customer concerns. Another significant technological issue faced by Tesla in 2018 was related to its Autopilot feature. While Autopilot provides assisted driving capabilities, there were incidents reported where the technology failed to function as intended, resulting in accidents. This raised concerns about the reliability and safety of Tesla's self-driving technology. As a result, the company faced criticism and scrutiny from regulators and the public, leading to challenges in gaining trust and widespread adoption of their autonomous features. Furthermore, Tesla experienced issues with the durability and longevity of their electric vehicle batteries. Some customers reported reduced battery range and degradation over time, which impacted their overall satisfaction with Tesla cars. This raised concerns about the reliability and performance of Tesla's battery technology, potentially impacting future sales and market perception of the brand. Tesla acknowledged these challenges and worked towards developing better battery technology to address these concerns. In 2018, Tesla faced several technological issues when it comes to its competitors. One of the main challenges was the increasing competition from other car manufacturers entering the electric vehicle market. Companies like General Motors, Nissan, and BMW started producing electric cars and competing directly with Tesla. This posed a challenge for Tesla as they had to continuously innovate and enhance their technology to stay ahead in the market. They had to focus on improving the battery range of their vehicles, implementing faster charging capabilities, and reducing the cost of electric vehicles to remain competitive.

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Another technological issue Tesla faced was the development of autonomous driving technology. While Tesla was known for its autopilot feature, other companies like Waymo and Uber were also investing heavily in autonomous driving technology. This created a sense of urgency for Tesla to further enhance their autonomous driving capabilities. They had to address issues regarding safety concerns, as there were accidents involving vehicles using autopilot mode. To maintain their lead in this technology, Tesla had to invest in research and development, testing, and refining their autonomous driving system while simultaneously ensuring the safety of their customers. In conclusion, Tesla faced various technological issues in 2018 that affected its market position. The production and delivery challenges of the Model 3, concerns about the reliability and safety of Autopilot, and issues with battery durability were some of the key challenges. However, Tesla made efforts to overcome these issues by improving production processes, refining Autopilot technology, and investing in battery technology research. These challenges served as learning opportunities for Tesla to strengthen its market presence and consolidate its position as a leading electric car manufacturer. Legal Factors Breaking franchise laws – Tesla was going against the competition and breaking the franchise laws that have prevented car manufacturers from directly selling to its customers.

Regulations on self-driving cars – The US recently adapted to self-driving cars, however the continuous accidents and damages to property in the US due to GPS malfunctions, poor detections, and other issues have made the US rethink Tesla. Intellectual property – Tesla’s complex manufacturing, trademarks, trade secrets, and patents have the potential to be infringed by the US competitors.

Environmental Factors Sourcing raw materials – Tesla heavily relies on the raw materials imported and delivered from various countries and regions, which involves them dealing with many environmental regulations. Implications on poor standards – There were implications of Tesla sourcing Cobalt and Lithium from geographies with poor labor conditions and low environmental standards. Energy consumption – Although Tesla aims to reduce carbon emissions and greenhouse gas emissions, their manufacturing process still requires fossil fuels as a source of energy. Also, charging these vehicles requires electricity that may or may not use fossil fuels. Battery disposal – Electric vehicles are facing issues with their batteries more often than Tesla’s competitors and often pose the question of how they can be disposed of and recycled without causing harm to the environment.

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