Tesla, founded in 2003, operates in the car manufacturing industry where it develops and sells high-performance electric vehicles and maintains solar energy. The founders wanted to prove to the world that people did not need to rely on gasoline cars and that electric cars would prove to be better and quicker on the road leading to the sustained use of energy and storage products. Tesla has a broad range of networks with international branches in Europe, North America, and Asia.
The Company operates in two fragments, Automotive, and energy generation. In the automotive framework, it’s known for its production and sale of two primary electric vehicles, the Model S and Model X. Model S Sedan became Norway’s most popular vehicle in 2017 and was the best-selling electric car in the USA in mid-2016. The Model 3, which is the company’s next introduction, aims to target a larger market with a cheaper price point and improved range of products and facilities. Some of the benefits enjoyed by consumers include energy efficiency, high performance, and flexibility. The demand for energy generation and storage is also doing well and is highly competitive. It deals with the design, manufacture and the installation of energy storage facilities. The Economic specific concepts that I will look at in depth include risks and return, competition, technological innovation, and economic development, in regards to Tesla’s operations.
A risk is an uncertainty about an occurrence of an event in the future, which may positively or negatively affect a company. Various risks pose threats to the company’s overall performance. Delay in the design, manufacturing, and the production of new vehicles such as the Model 3, is a supply chain cramp that represents a risk to the company. All the models of cars share the same production facilities, and thus the efficiency of production with a new model may negatively impact the creation of another model. The delay the company has in bringing to the market the Model 3 could damage the brand and also its financial conditions. Secondly, there is the delay in awareness of the timelines and cost targets for the launch of the product. It is evident that the model will require an injection of cash and other resources, thus the delay witnessed in its introduction will have a negative impact on the company as a whole.
There is an inability to meet the growing production, and delivery plans for the vehicles and this will also harm the business in the long run. Therefore, calls for the creation and delivery of cars in high volumes and in short periods of time. Business dependence to its suppliers is also another risk that may affect the company. Many of the suppliers of the parts used for the manufacturing of vehicles are individual suppliers, and their incapacity to deliver the elements of the products in a prompt manner and exceptional level could have a negative influence on the financial condition of the Company. If Tesla encounters difficulties with its key suppliers like Panasonic, then they could experience delays and a significant loss of essential technology.
Future growth and the success of the company is dependent on the customer’s will to adopt to using electric vehicles, the opposite of which will pose as a risk to the company if people fail to purchase them. If the market does not develop as is expected, then the business, financial conditions and the prospects would be affected negatively, and this would have a negative impact on Tesla. The company is also dependent on the revenue generated from the sale of the electric vehicles that are in the market. If the products do not meet the consumer expectation, then the future sales may be affected, and this will also pose a risk to the company’s performance.
Lastly, an increase in the costs and the shortage of materials could negatively impact the business and its financial conditions. Some of the critical elements used in the business include steel, cobalt, aluminum, copper, and lithium-ion. The prices of the elements in the market may fluctuate from time to time, and their availability may become unstable depending on the market conditions and its demand globally. Fluctuations may also be caused by the frequent variation in the value of the foreign currency against the U.S. dollar or vice versa. The management, thus needs to access the risks from time to time to assess the risks and look out for other risks that could emerge and affect the company.
Tesla is operating in a tech-savvy environment where adept technological levels of advancement are a critical competitive factor, including technological innovation. The competitive nature assesses the product quality, the performance, design, perception in the market and its manufacturing efficiency. Thus, this shows that the automotive market is highly competitive with the new and domestically established companies. Manufacturers like Toyota, BMW, and General Motors are some of the companies that have entered the electronic vehicle market. The market for energy storage is also contentious with companies such as Samsung introducing similar products. A decrease in the retail prices of electricity could, however, harm the potential to offer better pricing which could generate an increased rate of customer non-remittance. The rise in rivalry could yet lead to a reduction in the sale of vehicles, revenue scarcity, a drop in the consumers and a depletion in the market shares which could concurrently harm the business operations and its financial conditions.
Technology advancement is part of the company’s growth strategy. It has dramatically enhanced how organizations compete with one another as innovations also create new opportunities for businesses. Development in the area of technology is essential for Tesla to remain competitive in the market. The company can also seek to become more entrepreneurial in this area by developing better and innovative products that require the use of technology and applying them directly. This has a positive impact on the company and its overall growth strategy, which is also meant to increase the performance. Technological advancements in the form of advertising could be one way the company can improve productivity. The introduction of better effective methods of reaching its suppliers could also help prevent any forms of delays, which could negatively have an impact on the performance of the company in general.
The company’s financial position shows that it has been performing well regarding the overall revenues that the company generates. The company’s annual report reveals the revenue for the financial year ending in 2012 was $ 413,256, in 2013 the revenue increased to $2,013,496, in 2015 it stood at $ 4,046,025, and finally the company was able to generate high sales in 2017, bringing $7,000,132. It is evident that the revenues have been steadily increasing year-by-year, showing that the company has been making more sales from the sale of their automotive and energy products. The fourth quarter of 2015 saw the company supplying Model X SUV while in 2016; it had already unveiled Model 3 into the market.
The company’s liquidity position also shows the company has been able to meet their long-term dues within the required time frame. In 2016, for instance, the company’s assets stood at 22,664,076 while the total liabilities were $5,827,005. This shows that Tesla’s liquidity position is favorable and the company can meet its short-term dues. The company also offers leases and loans through various financial institutions in its areas of operation. It is evident that Tesla’s performance is above par and the company is doing well. The company, however, requires assessing its risks and comparing their performance with that of their competitors to ensure that they continue in operation and become the best in the industry. Management also needs to adopt other advanced entrepreneurial tools to enhance the company’s ability to fit in a technologically dynamic world.