Business Case Study on Competitive Analysis Paper about Tesla Co

Competitive Analysis Paper about Tesla Co

Suitable Alternative

Tesla Motors face the challenge of mass production and meeting the demand for its Models S vehicle type.  The company has three alternatives; to enter into a partnership with an established company in the electric vehicle manufacturing industry, go public and get the required capital to go on with the mass production of Model S vehicle and finally to remain private till it has enough capital to build many model S vehicles.

Given this, the company should pursue the first alternative of entering into a partnership with another company, probably Daimler which it had a successful partnership in 2009. The advantage of this strategy is that it will help the company to meet the technical cost of producing the electric car, while keeping the selling price low to attract more customers. Ideally, Tesla does not have the required capital to launch mass production of the smart car as compared to the big companies such as GM, Ford, BMW, and Honda in the Industry, with its only strength being technology capability. According to the external analysis of the company, the most influential factors are social and technological factors in this scenario. On the technological context, the major challenge is the cost of car components, especially car batteries. However, the fact that those non-gasoline vehicles are highly recommended by the government due to their low carbon emission and attract significant tax subsidies can be a huge incentive for getting people to buy the electric model. On the social context, consumers are generally not ready for electric cars because of the available infrastructure to support gasoline combustion engines and associated cost.

With the technology and first mover market advantage, Tesla needs capital from an established company to fully pursue the model S.  The benefit of this strategy is that Daimler is a Europe-based company where production cost is cheap.  Moreover, since Tesla does not have a manufacturing plant, which Daimler offers, it is guaranteed available labor. Consequently, the company will have low investment cost, sell more cars and make a better profit in the long term.  Moreover, it will help the company to fight competition from bigger companies with better financial power than Tesla.


First, the company should assess the available infrastructure that supports electric vehicles in target markets. Secondly, Tesla should immediately engage Daimler to ascertain its resource base and what it offers regarding manpower, technology apparatus and distribution channels.  Tesla can estimate the projected profit if it enters into a partnership with Tesla, particularly by analyzing the market forces in the proposed partnership. The assessment of available infrastructure and profitability of the possible Daimler partnership should be done within a year.

Projected Resource

The most valuable resources in this alternative are Tesla technology and Daimler capital. On the other side, the returns are more sales for Tesla and wider market recognition. Tesla will use its superior capabilities and Daimler’s resources in Europe to design its vehicles.  The move will be crucial in the sense that the company will be closer to new markets both in Europe and Asia. However, the company will need to improve the software aspects of its car models that were a fundamental weakness according to the consumer reports, regarding early adopters of the Model S, in the motor trends of 2013 (King& Rothaermeal, 2015). Overall, the company needs to invest more in facilities that will ensure it meets the expected high standard of electric vehicles. Tesla has to us Daimler technological and financial resources to mount a sustainable competition in the market.


King, D. & Rothaermeal, F. (2015). Tesla Motors Inc (pp. 1-29). Washington: MC Graw Hill.