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Tesla Inc.’s Organizational Culture and Analysis Essay

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Updated: Aug 9th, 2021

Organizational Culture

The personality and organizational culture of the Tesla company are primarily manifested in its founder and CEO, Elon Musk. The company’s core values and beliefs are reflected in its mission statement, which is to speed up the world’s transition from fossil fuels to more sustainable sources of energy (“About Tesla,” 2020). Tesla differs from other commercial organizations in that it is a startup. Anyone can ask a question to anyone, even the CEO and the corporation – this is usually a lot of barriers and hierarchical levels. Musk is definitely not a fan of lengthy meetings, he calls it a disease of the growth of large companies, as reported in a personal letter to employees that leaked the Internet. He advises against holding meetings at all if the management is not sure that this is in the interests of the whole audience, and not to arrange frequent meetings unless the matter concerns urgent issues (Loria & Kanter, 2019). Therefore, Tesla’s core values ​​and beliefs are to maximize efficiency and minimize unproductive activities such as meetings.

In addition, it is important to note the fact that major rules for behavior are set by Elon Musk, who encourages Tesla employees to be critical and be unconventional. He mostly uses common sense, and thus, employees can leave a conference or meeting if the latter is not relevant or necessary for them (Loria & Kanter, 2019). The company does not encourage adhering to complex language and excessive use of jargon between a worker in order to make the information flow as simple and comprehensible as possible. There are not specifically important rituals in Tesla, but almost all employees alongside Elon Musk and upper management work longer days. The most important symbol in the company is the Tesla logo, which stands for not only the name itself but also represents an electric motor engine (Edelstein, 2017). Most employees become part of the company as already established and dedicated individuals who believe in the company’s mission.

However, it is important to note that there is no hierarchical structure in Tesla, which is primarily designed to enhance organizational communication. The company believes that every worker should be able to communicate directly with a decision-maker (Bariso, 2018). Therefore, the relevance of the organizational culture and personality of Tesla is manifested in the fact that the company relies on common sense and efficiency. The given approach allowed them to be innovators in the market of the automobile industry.

SWOT Analysis

Strengths
It is the most recognized electric car manufacturer across the globe.
It is known as an innovator and a first mover in the industry.
Elon Musk is widely popular and mega-star among entrepreneurs.
The company is ahead of the competition in the electric car industry.
Weaknesses
The company lacks experience and infrastructure in mass production and logistics.
There is a need for major developments in cars with an affordable price range.
The company’s brand image is highly reliant on Elon Musk.
Opportunities
Electric cars are sustainable, which means they are the future of transportation.
Tesla also produces batteries and chargers, which makes the company less reliant on other firms.
Economies of scale, which will allow the growing company to reduce production costs.
OpenAI integration and advanced automation of the production and manufacturing process.
Threats
The first-move advantage can disappear if the transition from fossil fuels to electric cars will be slow.
Largest automobile producers, such as BMW, can also enter the electric car market.
Tax incentives might be reduced or eliminated, which will affect production costs.

Recommendations Based on the SWOT Analysis

The key recommendation for Tesla is that the company should focus more on its mission statement of transitioning towards more sustainable energy. At the present stage, the global automotive industry is experiencing a number of revolutionary structural changes that change its appearance. New technologies are being introduced everywhere in the industry, autonomous cars are being developed, and new types of mobility in the form of ride-sharing and car-sharing. Many global automotive companies already have their own digital platforms, are changing business models, and the revenue of the largest multinationals is shifting to data management and mobile services. Note that in the context of digitalization and digital globalization, the production structure is undergoing significant changes for automobile companies. Thus, at a new stage of its development, there is also such a promising segment of the automotive industry as the production of electric vehicles.

On an industrial scale, the development of the world market for electric vehicles began due to the fact that, under the influence of the development of digital technologies, the technical characteristics of cars improved, their cost decreased. In this regard, Japanese, European, and American manufacturers have achieved some success in bringing to the market new models of electric vehicles and hybrids. In addition, in order to increase their efficiency, the largest manufacturers use new types of fuel and engines, the purpose of which is, in particular, to reduce specific fuel consumption. The advantages of electric vehicles that led to the development of the global market for these products include reduced fuel costs and environmental factors. Safety considerations may also play a role here because the Tesla Model 3 received one of the highest safety ratings among all cars that have ever been tested in the USA (Nguyen, 2019). Also, the cost is already considered an advantage of an electric car, since mass production causes a decrease in the cost of batteries. Thus, the company should strengthen its current advantages by keeping them at the highest level.

Finally, electric cars are more reliable due to the smaller number of components and parts, which helps reduce maintenance and repair costs. Among the shortcomings of electric vehicles, it is necessary to point out the need for charging stations, the recharge time, the need to replace batteries after a few years, the increase in energy consumption in the winter, limited speed, and low mileage. While leading automotive corporations are gradually electrifying their product lines, the technical characteristics of electric vehicles are constantly being improved.

An electric car is a car that is not driven by an internal combustion engine, but by one or more electric motors powered by batteries or fuel cells. The battery can be charged using a conventional wall outlet. At the same time, it is necessary to distinguish electric cars from hybrid cars that use a combination of energy from an electric motor and an internal combustion engine, and from trolleys driven by electric motors that receive energy from an external source through trolls, and require specially equipped roads. Electric cars, unlike an internal combustion engine, have many advantages, the main of which is the complete absence of emissions that pollute the environment. The design of the electric car is arranged quite simply, and therefore, preventive maintenance and repair are cheaper. The electric energy consumed by the electric vehicle’s battery is much more affordable than fuel, however, the battery has the ability to charge even during the route. The latter occurs when a car is descending and ascending from a slope, and from solar energy during the day and from the network during the night.

In addition to the advantages, electric cars have their drawbacks, and because of this, Tesla should focus on eliminating or minimizing these problems. Despite the cheap maintenance and repair of an electric car, its manufacturing and production of its battery is an expensive endeavor. Precious metals are used to create the battery, and thus, its cost is also high. Some batteries operate only at extremely high temperatures, which cause certain inconvenience. Due to the harmful elements that make up the batteries, there are difficulties with the disposal of batteries. In addition, electric cars cannot travel long distances without recharging. Therefore, after passing a certain distance, a driver has to replenish the energy of the electric car. The simultaneous multiple recharging of electric vehicles can cause a malfunction of electrical substations.

The evident fact is that Tesla’s stock price is completely out of line with its production potential. Ultimately, without external replenishment, such as borrowing and state subsidies, this will lead to a significant adjustment in the value of Tesla shares. The stock price is supported by the growth expectations of the company amid growing numbers of electric cars sold. At the same time, the company’s production volume continues to be less than forecast. A huge network of Supercharger gas stations around the world, deployed by the company, with a lifetime free charging service, was an excellent incentive to buy Tesla’s cars. However, this is not only an incentive for sales because it also requires constant funding. Thus, Tesla should find new ways of monetizing these charging stations without breaking the promise. The approach can be similar to gasoline car service businesses, which provide accessories and other products related to automobiles.

As mentioned earlier, the electric car market in many developed countries is supported by government subsidies. In the US, an electric vehicle manufacturer receives subsidies in the form of tax breaks. The presence of this state support is an important factor in the continuation of Tesla’s activities, as state aid allows the company to continue its operation. One of the company’s biggest challenges is that Tesla lacks any breakthrough technology. Therefore, another recommendation is that the company should be less reliant on these tax benefits because any political changes in this regard will significantly damage Tesla’s financial state. In the countries that use electric vehicles, it is necessary to create entirely new industries for the repair and operation of electric vehicles. The intensive growth of the world market of electric cars is due to the need to popularize them, tied to environmental problems, and this requires the cooperation of the state and manufacturers at the level of individual state programs, some of which are already being implemented in developed countries. Without state support, subsidies, and preferences to the private sector, it is impossible to achieve any significant advantage in favor of electric vehicles in consumption. These factors are a barrier to the popularization of electric cars, which, most likely, will begin to dominate after a certain period of time.

References

About Tesla. (2020). Web.

Bariso, J. (2018). Inc. Web.

Edelstein, S. (2017). Business Insider. Web.

Loria, K., & Kanter, J. (2019). Business Insider. Web.

Nguyen, C. (2019). Business Insider. Web.

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