Strategic Analysis of Tesla's Operation in China

STRATEGIC ANALYSIS OF TESLA’S OPERATIONS IN CHINA
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Strategic Analysis of Tesla’s Operations in China
Background of the Study
Tesla was founded in 2003 by Elon Musk with the vision of manufacturing affordable electric vehicles (EVS) and offering a unique value proposition for customers throughout the globe. They also aimed at providing environmentally friendly cars to their customers. Accordingly, Tesla sought to find solutions for challenges caused by rising global instability within the automotive industry, an alarming rise in carbon dioxide emissions, and changing technology (Akakpo et al. 2019, p. 57). In the foregoing, the company saw the need to revolutionize the automotive industry by improving from the traditional manufacturing processes to highly innovative yet executable practices. Electric cars would replace normal gas-fuelled vehicles. A significant strategy by Tesla is the ambitious plan to complete large volumes of production of low-cost electric vehicles that utilize long-range battery technology, thus reducing pollution through the noise and exhaust fumes. To realize these goals, Tesla has faced numerous challenges and recently decided to manufacture cars in China in a bid to increase its global presence and competitiveness. Therefore, this paper discusses the challenges faced by Tesla since its founding and analyzes its external environment as it operates in China.
Challenges Encountered by Tesla
Several challenges have been encountered by Tesla since it started operations in 2003. Mangram (2012) opines that Tesla has faced an uphill task as a relatively young firm in the nascent battery electric vehicle (BEV) industry, up against the internal combustion vehicle industry (ICE) that has lasted over 150 years (p. 289). It has taken them tons of energy marketing and convincing potential clients to acquire their cars. Although Tesla has made significant global strides in technological development, market adoption, and global branding; it has still found it hard to penetrate the fossil fuel-driven automotive industry. The fossil-fuel driven cars penetrated and established a strong base for a long time, that it would take years to change. In the foregoing, it is not surprising that existing literature and research on the electric vehicle industry is generally limited. However, the last few years have seen significant growth in the electric vehicle industry thus Tesla now faces direct competition from new entrants who manufacture BEVs, as well as indirect competition from companies such as manufacturers of plug-in hybrid vehicles or BEV substitutes such as gasoline-powered and gasoline-hybrid vehicles.
As detailed in an article by Wu et al. (2019), current trends indicate that the cost of manufacturing BEVs is likely to fall in the coming years thus there will be stiffer competition in the BEV industry to the detriment of Tesla (p. 3). This makes their work even more tricky as their manufacturing is still expensive, and revenues not forthcoming to keep them stable for long. In the Chinese market, for instance, the introduction of EVs notable by Tesla has seen a significant change in the capability requ...