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Tesla Microeconomic Analysis (6)

Tesla plans to make the use of electrical cars more popular and widespread over the years. Of course, there are environmental reasons for this, but a growth in the use of electrical cars would also lead to a growth in Tesla’s own business. In fact, Tesla plans to phase out most gasoline cars by the next ten to fifteen years. (By 2030, You'll Be Astonished Where Tesla Will Be With Master Plan Part 3)This way, not only will Tesla dominate the electric vehicle market, it will also dominate the entire automobile industry.

I would recommend Tesla to research more on how to reduce their costs in order to also reduce prices. As of now, Tesla’s research is primarily focused on how to make their cars better, such as adding self-driving features or faster acceleration. As seen in the cost analysis section, Tesla's highest costs are its operating costs. If Tesla were able to lower its operating costs, and in turn lower the prices of its products without any loss in profits, then its demand would rise. As stated before, in recent times, there have been several companies that have risen to compete with Tesla. The reason they were able to compete with Tesla, even when Tesla has been the primary seller of electric vehicles for so many years, is that their prices are much lower than that of Tesla’s. Tesla’s market share mainly captures those in the higher percentages of earnings. Not to say that this percentage isn’t important, but there is still a massive market out there of people who earn less than the affluent.

Currently, I think investing in Tesla is a good idea, as, as stated before, the company has been growing quickly in the past couple of years. Though there has been some decline in business recently, I believe Tesla will continue its growth in the long run. So, if one looks for a long term profit instead of a short term profit when they are investing, Tesla is a good choice. Second quarter of 2022 was a rough quarter for the company in that COVID lockdowns in China decreased demand for its product. Yet, Tesla was able to overcome this. Its revenue in quarter two of 2022 was nearly twice of its revenue in quarter two of 2021, from 2,884 million in 2021 to 4,234 million in 2022. (2022 Q2 Tesla Quarterly Update) This demonstrates the firm’s flexibility in times of hardship, meaning that investments are safer.


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