Tesla’s Most Underrated Challenge To Medium and Long-Term Success
- by Forbes
- Jun 26, 2023
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search of the companyâs top challenges reveals that navigation of legal and regulatory challenges is not on the radar of many experts and journalists following the EV market (Reuters, Nasdaq, Google).
Teslaâs Problems in Germany
Apparently, it was not high on Teslaâs list either when establishing its presence in Germany. Below, I provide a case study to demonstrate how Teslaâs apparent failure to explore legal nuances of Germanyâs investment climate caused labor problems and significant manufacturing delays.
In December of 2022, Teslaâs reputation and bottom line in Germany have taken a significant hit. Harsh working conditions that violate local employment laws have triggered widespread dissent within the facility, toxic press coverage, and significant labor shortages that caused the car manufacturer to fall âway shortâ of its production goals.
If they were looking at the right data in the due diligence stage, Tesla would not have been surprised by this problem. Conventional review of country data calls for analysts to look at ârule of lawâ or âpolitical stabilityâ to measure the quality of a host countryâs investment climate. A review of this data would have revealed that Germany is a low-risk, high-reward location for inbound investment. That said, selection of data that was tailored to Teslaâs business model would have identified the need to look at the extent to which the host government restricts managementâs efforts to control the labor environment.
The following numbers demonstrate that a proper review of specific data points is what should have been performed prior to considering operations in Germany.
Germany Rankings:
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