Tesla Motors Industry Report

The automobile industry is an established industry where players seek to improve their performance and expand their market share. The companies in the industry compete for market share in many ways, as each player attempts to build on its unique capabilities to remain competitive. Entry to the industry requires high capital investments, and new entrants are faced by competition from established companies. In the recent years, the traditional manufacturers in the automobile industry have experienced disruptive technologies owing to the entry of hi-tech companies in the industry. The entry of Tesla Motors in the automobile industry has caused disruptive innovation (Stringham, Miller & Clark (2015: 85). This report explores the case of Tesla Motors as one of the disruptive companies that have changed the status quo in the automobile industry.

The company’s innovative technology in manufacturing hybrid and electric cars has led to technological shift in the industry. Whether it remains a disruptor is subject to how it strategically fares in the coming years. Overcoming the barriers to new entry requires strategic management of key competencies and market environment.

The paper is divided into three main sections to provide the company leadership with key aspects that are relevant in driving success. The first section presents drivers of change in the macro environment relevant for the automobile industry. The second section presents the drivers of profitability in the industry. In the third section, opportunities and threats facing Tesla Motors are identified. The section also recommends strategies that the company leadership could utilize to exploit opportunities and counter threats in the industry.

Drivers of Change in the Automobile’s Macro Environment             The automobile industry is characterized with high cost of capital, high switching costs, barriers to entry, and economies of scale. Existing manufacturers are determined to remain innovative and profitable, resulting in intense competition in the industry. Understanding the key drivers of change in the industry will help the management at Tesla to execute strategic change that would facilitate innovation and returns on capital.

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