Bài tập chủ đề: Tesla's competitive position: Porter’s five forces analysis môn Business Strategy and Policy | Đại học kinh tế Quốc dân

lOMoAR cPSD| 58511332
National Economics University -------***------- BUSINESS STRATEGY
TOPIC: TESLA'S COMPETITIVE POSITION: PORTER’S
FIVE FORCES ANALYSIS
TESLA'S COMPETITIVE POSITION: PORTER’S FIVE FORCES ANALYSIS
Downloaded by Lu Lu (tuankhang19@gmail.com) lOMoAR cPSD| 58511332
As the global electric vehicle (EV) industry enters a critical phase of maturation,
Tesla remains at the forefront of this transformative sector. However, the company
now faces an increasingly dynamic competitive landscape characterized by rapid
technological advancements, evolving regulatory frameworks, and intensified global
competition. Utilizing Michael Porter's Five Forces framework, this analysis
provides a comprehensive examination of the external factors shaping Tesla's
strategic position in 2025. Through this lens, we assess the company's ability to
navigate industry challenges, sustain its competitive advantages, and maintain its
leadership in an ever-shifting market environment
1. Threat of new entrants.
The threat of new entrants in the electric vehicle (EV) market is weak due to substantial
entry barriers. The automotive industry requires high capital investment for
manufacturing facilities, research and development (R&D), and supply chain
infrastructure, making it difficult for new players to compete. Established brands,
particularly Tesla, benefit from economies of scale, allowing them to maintain cost
advantages that startups struggle to match.
However, technological advancements and modular manufacturing have slightly
lowered barriers, enabling some new entrants, such as Rivian and Lucid Motors, to
enter the market. Additionally, government subsidies for EV manufacturers,
particularly in China, have fueled competition from domestic brands like BYD and
NIO. Despite these factors, Tesla’s strong brand equity and existing market
dominance create significant challenges for newcomers trying to gain traction.
2. Bargaining power of Suppliers
The bargaining power of the suppliers is low because the companies in the electric car
segment rely majorly on their technological capabilities and innovation. The major part
of Tesla's car is the batteries and the engine which are manufactured by the company
reducing the dependence on the suppliers. From the perspective of suppliers, there are
very few buyers of their supplies as the number of electric car manufacturers is low.
Both of the factors contribute towards the strength of companies for bargaining leading
to the low bargaining power of the suppliers.
● High supplier power: Critical components such as lithium-ion batteries,
semiconductors, and rare-earth metals are supplied by a few dominant
players like CATL, LG Energy Solution, and Panasonic. This concentration
gives these suppliers considerable leverage, particularly in times of supply
shortages (e.g., the 2021–2023 global chip shortage).
● Tesla’s mitigation strategies: Tesla reduces dependency through vertical
integration—manufacturing its own batteries through Gigafactories and
investing in lithium mining and recycling. The company also employs a
multi-sourcing strategy for non-core components, working with regional suppliers to minimize risks.
● Software advantage: Unlike traditional automakers, Tesla’s proprietary
software and AI-driven technologies (e.g., Autopilot and Full Self-Driving)
limit its reliance on external software suppliers, further reducing supplier power in high-margin areas. lOMoAR cPSD| 58511332
3. Bargaining power of Buyers
The bargaining power of buyers is moderate, driven by increasing competition and
transparency in the EV market.
● More choices for consumers: As EV adoption grows, buyers can compare
range, charging infrastructure, and pricing across multiple brands,
increasing their influence. Platforms like Electrek and InsideEVs provide
detailed comparisons, further enhancing consumer knowledge.
● Corporate buyers’ influence: Fleet buyers, such as rental companies and
ridesharing firms, place large orders and negotiate bulk discounts, adding to buyer power.
● Tesla’s competitive edge: Despite these pressures, Tesla benefits from strong
brand loyalty and an exclusive Supercharger network, which creates
switching costs for customers. However, the expansion of competing charging
networks (e.g., Electrify America) could reduce this advantage over time.
● Recurring revenue model: Tesla’s shift towards subscription-based services
(e.g., Full Self-Driving software) and leasing programs helps offset the impact
of fluctuating vehicle sales, making the company less reliant on one-time purchases.
4. Threat of substitutes
The threat of substitutes for the electric car industry is moderate as the substitutes for
different types of cars are continuously evolving. The electric car itself is a substitute
for gasoline and fossil fuel-based cars and the production of biofuels for converting
fossil fuel cars into biofuel cars is a threat for electric vehicles as well. The biofuels are
highly friendly which provides a good substitute for electric cars. China is making an
ambition to turn vehicles into biofuels by 50 percent till 050 which shows a big threat
to the electric car segment . Keep in view the probable substitute of the biofuels, in the
long run, the threat of substitutes is high.
● Internal combustion engine (ICE) vehicles: While still dominant in many
regions, regulatory policies (e.g., the EU’s ban on ICE vehicles by 2035) are accelerating their decline.
● Hybrid and hydrogen fuel cell vehicles (FCVs): While hybrids serve as a
transitory solution, their long-term viability is decreasing due to tightening
emissions regulations. FCVs pose a potential future threat, but high costs
and limited refueling infrastructure hinder their widespread adoption.
● Public transit and ride-sharing: Non-automotive substitutes like public
transportation, e-bikes, scooters, and ride-sharing services (e.g., Uber, Lyft)
reduce the demand for private vehicle ownership, particularly in urban areas.
Tesla could counter this trend by investing in autonomous taxi networks. 5. Competitive rivalry
Competitive rivalry in the EV market is intense, as both legacy automakers and
startups aggressively invest in electrification.
● Established automakers: Companies like Volkswagen, General Motors, and
Ford are committing billions to EV production. Volkswagen’s MEB platform, lOMoAR cPSD| 58511332
for instance, enables cost-efficient mass production of multiple EV models,
challenging Tesla’s scale advantages.
● Chinese competitors: Brands like BYD, NIO, and XPeng leverage state
support and vertical integration to offer competitive pricing, making them a
growing threat, particularly in Asia.
● Tesla’s response: In response to rising competition, Tesla has implemented
price cuts (e.g., 2022–2023 reductions) to maintain market share, though this
could pressure profit margins.
● Software and autonomy as differentiators: Tesla’s over-the-air (OTA)
software updates, data-driven AI, and autonomous driving advancements
create a technological moat. However, competitors like Ford’s BlueCruise
and GM’s Ultra Cruise are narrowing the gap.