ALTHOUGH TESLA MOTORS has been successful in
entering the U.S. automotive market using innovative
new technology, its continued success will depend on
other firm and industry factors. While industry forces
have been favorable for a long time in the U.S. automotive
industry, recent dynamics have lowered the
profit potential of competing in this industry and thus
reduced its attractiveness. Now that Tesla Motors has
demonstrated how new technology can be used to circumvent
entry barriers, other new ventures may soon
follow. Moreover, the incumbent firms are also adopting
the new technology by introducing hybrid or all-electric
cars, further increasing rivalry in the industry.