BUS349 Strategic Management

Answer

Trends and Needs for the Market

There has been a stream of path-breaking trends in the automobile industry that have continued effect how automobile companies conduct their activities. First, the increasing cost of safety and environmental regulations is a concern in the auto industry (Vox, 2018). Some nations like China have formulated strict emission standards for large cities similar to Europe’s with only a short grace period of about two years for smaller cities.

Presently, car sharing is the innovation that has a tremendous practical impact on how people get around. The big question for the automobile sector is whether the Ride-hailing services like Uber and Lyft will displace car ownership as the sole way people get around (Vox, 2018). Therefore, Tesla may consider improving from selling cars to individuals to selling a fleet of cars to car hire companies in the future.

Finally, it is expected that companies making electric vehicles like Tesla could replace conventional car companies in the market. However, so far, electric vehicles have not posed much threat to conventional vehicles (PWC, 2018). The primary problem is that electric vehicles don’t extend a compelling value proposition for ordinary customers as they tend to be more expensive.

The electric vehicles are expensive. Therefore, there is a demand for cheaper electric automobiles by customers (Vox, 2018). Presently, although customers might save on the cost of fuel, the electric vehicles offered by Tesla tend to be more expensive even after effecting the generous government subsidies.

There is also a demand for more charging stations for the electric vehicles. The electric vehicle owners are faced with problems relating to a few charging stations and relatively long charging hours in most metropolitan areas (Vox, 2018). Furthermore, there is a need for the automobile companies to comply with the increasingly stringent safety and environmental regulations. Compliance with safety rules will ensure that automobile companies like Tesla do not incur unnecessary fines and penalties.

References

PWC. (2018). Five Trends Transforming the Automotive Industry. Retrieved on August 28, 2018, from https://www.pwc.at/de/publikationen/branchen-und-wirtschaftsstudien/eascy-five-trends-transforming-the-automotive-industry_2018.pdf

Vox. (2018). The Three Big Trends that will Reshape the Car Industry in the 2020s. Retrieved on August 28, 2018, from https://www.vox.com/2016/5/27/11763610/detroit-silicon-valley-disruption