Tesla SWOT Analysis

Long-Term Business Outlook for Tesla

While Elon Musk can be perceived as erratic, the positive aspect to his managerial style is that he is driven to do what is necessary to reach the company's goals. Some people laughed at building vehicles in a tent, but this was a creative decision to achieve production goals in a limited time frame.

The decision to have employees deliver vehicles directly to customers is another example of creative management to achieve goals. With that mindset, Musk can steer the company to avoid bankruptcy, achieve sustained profitability and to possibly shape the company into more of an energy firm over time.  

With competition increasing for EVs, expect Tesla to continue innovating to remain a step ahead. For example, Tesla's EVs have the highest mileage range on a single charge as compared to competing EVs. They also have their own battery charging network. That gives the company an edge over the competition for an issue that is important for many consumers (range anxiety). Continued focus on being a little better than the competition can allow Tesla to grow at an above average pace even with more EV competitors in the market.

When we reach the point where EVs are equal to or less expensive in price than equivalent ICE vehicles, the sales of EVs are likely to accelerate. The declining costs of lithium-ion batteries is the main factor that will reduce the cost of EVs. Tesla is poised to benefit from this trend as they remain a step ahead of the competition for EV technology. Lower battery costs will also help Tesla achieve sustained profitability as the cost of good sold decreases.  

Margin of Safety Investing

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Disclosure: I'm long the ARKW ETF which currently has a 10.8% position in Tesla. 

I contribute to Kirk Spano's 

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