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. The continued success of Tesla Motors in the industry will depend on other firm and industry factors. Which of the following represents one such factor that directly affects Tesla Motors?

The company should innovates its portfolio, and marketing policies.

A) Since suppliers of its key (re) sources are few, the bargaining power of suppliers is high.

Explanation:

Tesla and most technological companies are facing a serious challenge specially with the supply of lithium which is the primary material used in batteries both for smartphones, electric cars, and almost anything that needs long lasting batteries. Three countries in the world hold 85% of the world's lithium reserves. Before commodity prices fell due to the coronavirus crisis, the lithium reserves of Bolivia (world's largest), Chile and Argentina were worth more money than all the oil in the middle east. The demand for lithium was increasing daily as really more and more on high tech gadgets that need batteries.

All three countries are currently a political mess, with Argentina facing a 9 year long economic crisis that doesn't seem to end and Bolivia's president resigned accused of election fraud. Both Bolivia and Chile were growing at relatively high rates, but now even Chile which was considered the most economically stable Latin American country is facing serious problems, with massive nation wide strikes that lasted for months and paralyzed Chilean economy. And all of that was before the current international health crisis.

The problem is that without lithium, modern world collapses. It is a similar problem that the US faced before with oil, until shale oil replaced imported Arab oil. But the US doesn't have lithium, and the fact that their reserves are concentrated on three unstable countries is not a good news.