PESTLE Analysis of Tesla – Innovative Electric Vehicles Producer


by Shamsul
Tesla Motors
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PESTLE Analysis of Tesla


Tesla is a well-known company in the world that manufactures electric vehicles, solar panels, battery energy storage systems, and other related products. Tesla is a US-based company and one of the largest companies in terms of market value. The leading man of the company is Elon Musk. More than 99,290 employees are working for the company, and the company has operations in over 40 countries. In 2021, the company gathered a whopping revenue of 53,823 million dollars. This external analysis of Tesla or PESTLE analysis will show you how external factors can affect the business performance of a company like Tesla.

Tesla wants to become the world’s largest electric vehicle manufacturer. The main motive behind it is to protect the environment by making sustainable energy eco-friendly vehicles. In order to fulfill this dream, Tesla has launched several highly innovative vehicles and products. Tesla also deals in solar energy storage systems. The company also provides an excellent opportunity for people to install a solar roof that will cut their electricity bills.

PESTLE is one of the most effective tools to analyze the external business scenarios of Tesla. The company can use this tool to identify its weak points and convert them into strong ones by taking aggressive and appropriate actions. So, let’s analyze the PESTLE Analysis of Tesla!


Political Factors | PESTLE Analysis of Tesla

The overall political environment of the US is highly robust for businesses. It holds various opportunities for businesses to use. The Government of America has initiated a funding plan of 7.5 billion dollars to help automotive companies to develop the electric vehicle infrastructure. On the other hand, the United States has various trade agreements with different countries. So, being an American automotive company is a significant edge for Tesla.

This kind of enormous funding will enhance the automotive operations in the country, especially in the electric vehicle segment. Electric vehicle manufacturing companies are highly reliant on semiconductor chips. But, its shortage due to the Ukraine war and Covid-19 is slowing down the speed of the automotive companies.

For businesses, the UK’s political environment is also conducive. But, the recent Brexit deal has created various trade restrictions and issues in the country. The UK government plans to eradicate those vehicles that run on biofuels and red diesel. It means there is a lot of scope for electric vehicle manufacturers like Tesla in the UK automotive market.

Tesla has a presence in more than 40 countries, so it is highly vulnerable to the political environment of every nation. Every country is governed by its rules and regulations regarding the production of electric vehicles. It means Tesla is highly exposed to the laws and regulations of each country. It is essential for Tesla to thoroughly analyze the trade policies and strategies before venturing into a new market or country.

Before installing charging stations and manufacturing plants, the company should evaluate each and every aspect, such as trade rules, import and export restrictions, and tariffs of the specific country.


Economic Factors | PESTLE Analysis of Tesla

When it comes to the economy, the US economy is one of the most reliable economies. However, it is currently facing a downfall due to the recent global economic recession and Covid-19. Inflation is another big concern in this regard. In order to retain skilled and competent workers, companies need to pay attractive salaries. The increasing prices of raw materials will also increase the rate of the final product, which ultimately impacts the buying power of customers. As a result, many companies, including Tesla, would face a reduction in their sales and annual profits. According to a report, the electric vehicle market in the United States is worth over 287 billion dollars, and it is growing with every passing year.

On the other hand, there is a chance that the growth rate of the United Kingdom will also drop from 7.5 percent to 3.6 percent. So, the UK’s economy is going to be beneficial for companies and businesses. Its per capita income is also increasing, directly enhancing expenditure and usage so companies can make higher profits.

In developing countries, cars are one of the major luxury goods. It is crucial to set the price of the products according to the market conditions and people’s affording power. The demand for SUVs, pickup trucks, and crossovers is really huge in these countries. The overall image of Tesla and its cars are considered slightly expensive in these countries. They can’t even think about purchasing a Tesla vehicle. However, the government is aiding people in this regard by offering incentives and financial support. Tesla can make affordable vehicles to capture new markers, especially in developing markets.


Social Factors | PESTLE Analysis of Tesla

The electric vehicle manufacturers can exploit the United States market because people are more curious about self-driving or autonomous vehicles due to their sustainability and innovative features. Recent surveys indicate that more than 40 percent of people would love to consider electric vehicles as their next vehicle. That’s why every EV Company is trying to produce less expensive and more efficient electric vehicles. Another survey states that people are highly interested in substitutes because they are really concerned about the environment. The rising fuel prices are another major issue for people. People who want to adopt modern or luxurious lifestyles are also interested in electric or sustainable vehicles. As Tesla is a premium brand, youngsters and high-class people are their main customers.

Tesla is trying to enhance safety features in order to avoid fatal accidents or crashes. According to a report, people love those brands that use innovation in their products and services. Being a diverse company, Tesla has a huge impact on the audience. More than 70 percent of people in the UK would love to buy electric vehicles to reduce their expenses and carbon footprint. It is a beautiful opportunity for electric vehicle companies to diversify their operations in order to make affordable and reliable vehicles.

Brand-conscious people are the strength of companies like Tesla. They are affluent enough to afford Tesla vehicles. They are happy with their current vehicles even after the increase in fuel prices. But, some people focus on quantity instead of quality. The company needs to carefully analyze customer preferences before launching a product in a specific region. By making better-performing and cost-effective vehicles, Tesla can easily spark the interest of every type of customer. This thing will certainly improve the profitability and reach of the company.


Technological Factors | PESTLE Analysis of Tesla

When it comes to spending on R&D, the US leads the chart. It spends the highest amount of money on R&D every year. In 2021, it spent 157 billion dollars, and it is going to be 171 billion dollars in 2022. Contrary, the UK government invested 14.9 billion euros in R&D in 2021. Many electric vehicle companies are testing fast charging technologies and wireless charging networks that can charge an electric vehicle in just 14-15 minutes. Gold nano-wire gel electrolyte, zinc magnesium oxide, and NanoBolt lithium tungsten batteries are one of the latest batteries. 

Moreover, the idea of solar-based electric cars is in the initial phase.

With every new launch, Tesla has been improving its technology with the cooperation of tech giants. They are installing useful features in their vehicles to enhance the experience of drivers or users. The autopilot technology of Tesla is in the testing phase, which will be a game-changer. This technology will help you to park your car painstakingly.


Legal Factors | PESTLE Analysis of Tesla

The National Highway Traffic Safety Administration controls the automotive sector in the United States. It designs standards and policies for automotive companies when it comes to manufacturing, designing, operating, and constructing vehicles. According to the agency, it is imperative for companies to install essential features such as automatic emergency braking, lane-keeping assistance technology, and forward-collision warning technology in each vehicle. Installing such expensive technologies would undoubtedly increase the costs of vehicles.

It is mandatory for automotive companies to install special features such as intelligent speed assistance systems in their vehicles in the United Kingdom. This will also increase the prices of vehicles in the UK. It can create a bad impact on the company’s sales. However, the financial support from the government will enable electric vehicle companies to build cost-effective vehicles.


Environmental Factors | PESTLE Analysis of Tesla

The scrapped or defective batteries are also causing environmental pollution. If these are not recycled properly, they can release toxic chemicals. For example, lithium-ion cells are incredibly reactive and explosive. So, they are hazardous to the environment. The chemicals released from these batteries can lead to cancer and some major neurological diseases.

Furthermore, the United Kingdom has banned the trade of combustion engine automobiles from 2030. Only emission-free cars would be permitted to trade. This thing will create so many growth opportunities for electric vehicle companies.

In addition, the US and UK are part of the Paris Agreement and adhere to the agreements and rules. In short, both countries have very strict environmental policies.

Tesla aims to make this world more sustainable. The company has planned to reduce GHG emissions by exploiting two significant technologies: transportation and electricity. This thing encourages people to shift to electric vehicles from conventional fuel-based vehicles. It is a winning move for electric vehicle companies.


Final Thoughts | PESTLE Analysis of Tesla

We will encapsulate this PESTLE analysis by saying that Tesla has immense growth opportunities in both countries. Both countries are highly favorable to electric vehicle companies in terms of their political, economic, social, technological, legal, and environmental sectors. Moreover, they are also providing special financial assistance to enhance this sector. The rising fuel prices and other related things are also increasing the demand for electric vehicles. It is mandatory for electric vehicle companies to produce efficient and highly desirable cars in order to get the attention of maximum users. These sustainable vehicles are our future. Also, electric vehicle companies should handle battery waste with care because they are highly hazardous to humans and our environment.


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