Electric Automobile Industry Analysis

Electric Automobile Industry Analysis Student’s Name Institution Date Introduction The automobile industry is a multi-billion global industry with numerous brands that compete for the market share. This electric automobile sector has grown massively, and it has become an essential component of the world economy in terms of revenue (Nieuwenhuis & Wells, 2015). The paper will analyze the automobile industry and examine three companies that have significantly invested in the electric automobile industry. The paper will also investigate Porter’s five competing forces and identify the forces that provide the greatest threat to the profitability of the motor industry. The top three competitors in the electric automobile industry Based on the financial analysis of the companies, the top three most competitive companies include Honda, Tesla, and Toyota. From the profitability ratios, Honda exhibited a high gross margin of 20.82 while that of Tesla was 18.83, and that of Toyota is 18.01 in 2019. In the electric automobile industry, Honda has risen fast, mainly due to its product diversity efforts and competence in engine manufacturing. The company has vast experience in manufacturing well-performing and quality engines (Candelo, 2019). Engines are the primary component to motor products and the reliability of Honda as a product is high, which has provided it with a competitive advantage. Tesla’s success as a manufacturer of electric vehicles is based on their strategies that focus on the external factors in the automotive industry. This company has a high innovation rate which is a core internal strategic factor that has empowered the enterprise to develop competitive and profitable products (Nieuwenhuis & Wells, 2015). Toyota has a stable brand in the automobile industry. This enterprise has a high-profit average, mainly due to its strategies of market-based risk minimization and a widespread supply chain. Additionally, Toyota has elevated its innovative efforts in the development of electric vehicles and has firmly penetrated this sector of the industry. PESTEL analysis of the automobile industry One of the political factors that have affected the motor industry is the no-deal Brexit prospect. Once Britain cuts its ties with the European Union, automobile manufacturers will be confronted with high risks of operating costs. This will lead to a rapid decline in investment in the European auto-markets (Wedeniwski, 2016). Additionally, the environmental legislations imposed on enterprises in the motor industry have discouraged new firms from entering into the industry. An essential economic factor that has affected the motor industry is the high-income levels in developing nations. This has led to consumers having access to massive amounts of disposable income that they can invest in personal vehicles. A significant social factor is that with the lower cost of travel and introduction of car-hiring service such as Uber, most companies have begun focusing on creating strategies whereby global automakers are partnering with technology firms in meeting consumer demands (Candelo, 2019). Since its inception, the automotive industr...