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Tesla's PESTEL Analysis


Political factors
Tesla was able to set up its Gigafactory 3 in Shanghai, China. The factory is the first wholly owned foreign auto factory in China. This shift, where China allows a foreign manufacturer to build their facility without partnering with local companies may mean that Tesla can tap the Chinese market without paying high tariffs on US cars (CNBC). However, Tesla might still risk retaliation from Chinese consumers amidst US-China trade war.
 
Economic factors
More people are moving towards electric cars to save on the added expenses. All electric cars purchased during or after 2010 are eligible for a federal income tax credit of up to $7,500 (US department of Energy). These governmental incentives for electric automobiles could encourage people to buy more electric cars.  
Also, the US government has incentives for plug-in hybrid cars from $2,500- $7,500 based on battery capacity. These plug-in hybrid cars have high-capacity batteries that can be charged to store electricity so that petroleum consumption can be reduced. They could be potential competitors to fully electric cars with their affordable prices. Zero Emission Vehicle (ZEV) credits in California, Nevada states are other economic factors that affect Tesla . ZEV credits provide financial benefits for the business. 

Socio-cultural factors
With more people wishing to make their contributions towards reducing their carbon footprint, it looks promising for Tesla and other electric car manufacturers. Also, maintaining individual status is part of social factor. Tesla is popular as a luxury, electric car manufacturing company that offers better performance. This brand image can help Tesla can capture consumer segment who are willing to premium price for status.

Technological factors
Tesla focuses on autonomous technologies using advanced AI and bigdata supported by efficient use of inference hardware. Tesla sources its data from all its vehicles using internal and external sensors to collect information and refine its systems. The vehicles send data directly to the cloud. Any problem with detected with engine operation can be automatically repaired by software patch (Bernard Marr,2018). All these innovations in technology and makes Tesla a pioneer in tech advancements in the electric vehicle market.

Environmental factors
More people are willing to buy an electric car, to do their part in creating a sustainable environment. Compared to traditional cars, electric cars have least carbon emissions. Tesla has a very good reputation in terms of its environmental impact. Tesla impact report, 2019 reveals that so far, they helped to save 4M metric tons of CO2 emissions into the atmosphere and their electricity generation exceeds the amount of energy Tesla’s vehicles consumed. Environmental impact report of Tesla which reveals that Tesla’s vehicles consumed 5.26TWh of energy in 2019 while the company generated 13.25TWh of solar energy. With continuous efforts like this, Tesla might create a positive impact on the market and customers.

Legal factors
In March of 2018, while using Tesla’s Autopilot, a driver crashed and died. This costed $5 billion to Tesla’s market value. An official release in company’s website stated that it is 3.5 times less likely for someone to involve in accident with Tesla’s autopilot hardware and believe that autonomous cars are 10 times safer than non-autonomous cars. Also, many states temporarily blocked the Tesla sales directly to the consumer and requires third party dealer (Federal Trade Commission). This legal factor can affect the Tesla because having a dealership means less profits. As mentioned earlier, Tesla decided to waive off patent rights and released them as open source to other electric car makers and this might open road for new competitors.


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