Section 4.

5 Comparable Company Analysis

Choosing companies that are comparable to Tesla, it ends up in a mix of automotive and technology
companies. It is due to the nature of Tesla that operates in both sectors: electric vehicle manufacturers
and as a software developer that is implemented into their vehicle models. In this paper particularly,
we choose Microsoft (MSFT), Facebook (FB), Apple (AAPL), and Alibaba (BABA) that represent
technology companies, and Honda (HMC), Toyota (TM), and Ford (F) in automotive companies. And
from those companies, we look at metrics that include the company’s share price, market cap, sales
and EBITDA, and its valuation ratios such as EV/Sales, EV/EBITDA, and price-to-earnings (P/E)
ratio.

Relative Valuation Table

Comparing Tesla with companies in the table above, we come into different insights depending on the
industry we compare it to. It is already reflected the difference between technology and automotive
companies in these metrics. Even companies within the same industry could show significant
difference, like Honda/Toyota companies to luxury cars manufacturers Ford.

When it comes to market capitalization, it is clear that technology companies have higher value than
automotive. But they are significantly lower in sales, especially compared to Honda and Toyota that
capitalize on larger share of market in middle-class vehicles. This key difference between both
average is also the same in EBITDA, with Honda and Motor topping the charts. However, value in
technology companies are higher in its valuation ratios, except for Ford with EV/EBITDA that is way
higher than its rival companies (Honda & Toyota).

Focusing on Tesla, it stands in different positions. It has a market cap that is higher than automotive
average, but still relatively lower against its peers in technology. Same with sales, Tesla is grouped
together with technology companies that are lower than automotive average, and also lower in
technology. However, Tesla is overvalued compared to all other companies in valuation, topping
18.66 in EV/Sales, 295.26 in EV/EBITDA, and 1,057.84 in P/E.

In conclusion, comparing financial data metrics, Tesla is still undervalued compared to its automotive
rivals, as it should be as part technology company. However, in terms of valuation, Tesla is
overvalued even when compared to its automotive and technology company peers.