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Tesla's Strengths and Weaknesses - Opportunities and Threats

Tesla is a great company that has many strengths and some weaknesses. It has opportunities and threats. Here is our SWOT analysis.
Tesla's Strengths and Weaknesses - Opportunities and Threats

Tesla's Strengths

Tesla has many strengths that make it a once in a generation company. There are also some weaknesses that Tesla has, however, but we'll get to those in a minute. Let's go over Tesla's strengths first:

Tesla is amazing at producing EVs - manufacturing cost is low. Tesla produces EVs faster and more efficient than anyone - a master at manufacturing.

Tesla's are great value and profitable for Tesla.

Tesla's come with great technology and unique features.

Tesla's have the most safe, powerful, and long range vehicles. Tesla has the best engineers.

Tesla has the best charging network with the Supercharger Network.

Tesla has its own insurance and tracks user behavior.

Tesla has the largest supply of batteries in the world with itself and 3rd party suppliers like CATL.

Tesla has also designed the best EV cell in the world, the 4680 batteries. The U.S. government is offering $7,500 of tax credits for Tesla vehicles when they lowered prices.

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Tesla's Weaknesses

Tesla still has to charge a relatively high price for its vehicles - it has to maintain high margins.

Tesla can undercut most of the competition and make good margins, but its vehicles are still expensive.

Tesla has demand, but that isn't guaranteed - there are plenty of alternatives coming, but they aren't quite at Tesla's level yet.

Tesla's economies of scale is great, but it means they have locked in the design of their vehicles - their models might look dated in the future compared to other cars. People want a car that is unique to them, and Tesla vehicles are nice looking, but not varied.

Tesla has been late on some promises, such as FSD (7 years late), the Tesla Semi, the Cybertruck, the new Roadster, 4680 batteries, Giga Texas and Giga Berlin reaching volume production and the Model 2 compact car.

Tesla has overpromised and under delivered on many things. Tesla solar roof isn't doing much for Tesla and its mission.

Tesla's Opportunities

Tesla has the opportunity to reduce the costs of its vehicles further, such as Project Highland, which will allow them to reach more people.

The Model Y is an amazing vehicle and will continue to be a bestseller as an EV and SUV. The 4680 battery will be the lowest cost EV cell to produce at $70 per kWh. They qualify for tax credits in the U.S. at $45 per kWh. That's $25 per kWh.

Giga Texas has a capacity of 100 GWh per year, and other factories could generate $5 billion in tax credits and subsidies each year. At 100 GWh, which is Elon's target, that's $45 billion a year just in subsidies.

The Tesla Semi is another opportunity and if it uses 4680 batteries, that could reduce the cost by up to $100,000. That's a lot of extra profit. Who knows what the total cost will be.

The Cybertruck will be a desired vehicle even in a recession. It should have a high profit margin.

The next generation 3 model should also generate a lot of demand.

FSD when it is eventually solved, could be the biggest gain for Tesla.

With a new Megapack facility, Tesla Energy can get to high margins.

Tesla's Threats

China's EV companies are ramping and taking market share. Tesla has a one design fits all. Tesla will need to keep up. Legacy automakers aren't much of a threat. Ford and GM are building massive battery factories for around 2 to 3 million EVs per yer.

Tesla needs to ramp Giga Texas. Legacy auto needs to get their battery cell cost down in order to profitably make EVs. The tax credit in the U.S. is per vehicle. Hybrids and pure EVs count, which benefits legacy auto hybrids. Tesla cannot depend on the U.S. tax credits. Legacy auto needs the tax credits more. 2023 and 2024 will be important years for Tesla.

The key element is looking at supply and the 4680 batteries being ramped. If cost can continue to come down, Tesla should do well.

What do you think of this Tesla SWOT analysis?

In Related News: Tesla not opening a Giga factory in Mexico yet

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Jeremy Johnson is a Tesla investor and supporter. He first invested in Tesla in 2017 after years of following Elon Musk and admiring his work ethic and intelligence. Since then, he's become a Tesla bull, covering anything about Tesla he can find, while also dabbling in other electric vehicle companies. Jeremy covers Tesla developments at Torque News. You can follow him on Twitter or LinkedIn to stay in touch and follow his Tesla news coverage on Torque News. Image Credit, Tesla, Screenshot

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Comments

Oscar Eloy Rom… (not verified)    September 18, 2023 - 12:50PM

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I loved your article--thank you, Jeremy.

Just to mention about the ongoing weakness in servicing them. Need to develop a network of authorized and experienced servicers--additionally, need to lower cost for servicing them, especially bodywork. Understandably, they are using new materials--then, focus on providing the materials, tools of the trade and the knowhow. After all, one of the 5 Porter points to pay attention to--in order to remain competitive, is service after sales.