Tesla, Inc.

: Pioneering the Future of Transportation and Sustainable Energy

Chapter 1

Introduction

In the world of technology and innovation, few companies have captured the imagination of the

global population as much as Tesla, Inc. Founded in 2003 by a group of visionary engineers and

entrepreneurs. Tesla, Inc., a clean energy company, has become synonymous with electric

vehicles (EVs), renewable energy solutions, and cutting-edge technology. Led by its enigmatic

CEO, Elon Musk, Tesla has emerged as a transformative force in the automotive industry and has

extended its influence beyond cars to reshape the way we think about energy and sustainability.

This introduction delves into the fascinating journey of Tesla, exploring its origins, its

revolutionary products, and its mission to accelerate the world's transition to sustainable energy.,

has become a trailblazer in the automotive and renewable energy industries. Tesla set out to

redefine transportation and energy solutions with a focus on sustainability and innovation. Over

the years, Tesla has gained global recognition for its cutting-edge electric cars, advanced energy

products, and visionary leadership.

This revolutionary idea of Tesla was named after the renowned electrical engineer and physicist,

Nikola Tesla, began as a brainchild of Martin Eberhard and Marc Tarpenning, who had a shared

vision of creating high-performance electric sports cars that could rival gasoline-powered

vehicles. They sought to address the concerns of environmental pollution and dependence on

fossil fuels, which were escalating at an alarming rate. Incorporated in July 2003, Tesla set out to

challenge the perception that electric cars were mere novelties or impractical alternatives to

conventional vehicles. The true turning point for Tesla came in 2004 when Elon Musk, a
billionaire entrepreneur and the co-founder of companies like PayPal and SpaceX, led a

significant investment round in the fledgling electric vehicle manufacturer. Musk recognized the

potential of Tesla's technology and products to disrupt the automobile industry and foster a

sustainable future. In February 2004, Musk joined Tesla's board of directors as Chairman, and

later in 2008, he took over the role of CEO and product architect.

In a remarkably short span of time, Tesla, Inc. has emerged as an iconic company that epitomizes

innovation, sustainability, and audacity. From humble beginnings as an electric sports car

manufacturer, Tesla has transformed the automotive landscape and sparked a global movement

towards electric mobility and renewable energy solutions. With its commitment to pushing the

boundaries of technology, Tesla is poised to continue revolutionizing the way we live, travel, and

power our world, ushering in a new era of sustainable transportation and energy independence.

As the company's influence continues to grow, its impact on shaping a greener and more

sustainable future cannot be overstated. Tesla's journey is a testament to the power of vision and

perseverance, and it serves as an inspiration for generations to come.

Tesla's journey has not been without challenges. As an industry disruptor, the company has faced

skepticism, production hurdles, and regulatory complexities. However, under the dynamic

leadership of Elon Musk, Tesla has defied the odds and persevered, transforming challenges into

opportunities for growth and innovation. Furthermore, Tesla's impact transcends the automotive

and energy industries; it has become a cultural phenomenon, inspiring a passionate global

community of customers, fans, and advocates. Tesla's brand has become synonymous with

innovation, sustainability, and a commitment to a better future. The company's direct-to-

consumer sales model, active engagement with customers, and frequent over-the-air software

updates have redefined the traditional automotive experience.

 Chapter 2

Tesla was established with a mission to address the growing environmental concerns related to

climate change and the impact of traditional internal combustion engine vehicles on the planet.

The founders aimed to challenge the perception that electric cars were slow, impractical, and

limited in range. With Elon Musk's involvement and financial backing, Tesla quickly evolved

from a niche electric sports car manufacturer to a major player in the automotive industry,

leading the way in the development of electric mobility. Tesla's vision is to create a sustainable

future, where transportation and energy are powered by renewable resources, and the world is

less reliant on fossil fuels. The company envisions a world where electric vehicles dominate the

roadways, eliminating emissions and reducing the carbon footprint associated with

transportation. Tesla's long-term vision extends beyond the automotive sector, aiming to address

global energy challenges using renewable energy solutions and energy storage technologies.

Tesla's mission revolves around the following key objectives:

- Accelerating the Transition to Sustainable Transportation: Tesla aims to lead the shift

from gasoline-powered vehicles to electric mobility by producing high-quality, high-

performance electric cars that appeal to a broad range of consumers.

- Expanding Renewable Energy Adoption: Tesla's mission includes the widespread

adoption of solar energy and energy storage solutions to reduce the world's reliance on

fossil fuels and create a sustainable energy ecosystem.

- Advancing Autonomous Driving Technology: Tesla is committed to developing and

refining autonomous driving capabilities to improve road safety, reduce accidents, and

enhance the overall driving experience.

 - Leading by Example: As a leader in the sustainable energy and transportation sectors,

Tesla strives to demonstrate the viability and benefits of clean technology, inspiring other

companies to follow suit and contribute to a greener future.

Under Musk's leadership, Tesla embarked on a relentless journey to revolutionize electric

vehicles. In 2008, the company launched its first production car, the Tesla Roadster, a sleek and

high-performance electric sports car based on the Lotus Elise chassis. The Roadster, boasting an

impressive range for its time, shattered the perception that electric cars were slow and lacked the

thrill of traditional sports cars. With its innovative battery technology and sleek design, the

Roadster laid the groundwork for Tesla's ambitious plans to bring electric mobility to the masses.

In 2012, Tesla unveiled its game-changer: the Model S. As a premium all-electric sedan with

remarkable range, luxury amenities, and cutting-edge features, the Model S captured the

attention of the automotive world and the general public alike. The Model S showcased the

potential of electric vehicles to outperform traditional gasoline cars and prompted consumers to

reconsider the transition to sustainable transportation. With the Model S, Tesla made a bold

statement that electric cars could be both eco-friendly and high-performance, shattering the

stereotype of EVs as niche products. Building on the success of the Model S, Tesla continued to

expand its product portfolio, catering to a broader range of customers. In 2015, the company

introduced the Model X, an all-electric SUV equipped with distinctive falcon-wing doors and

advanced safety features. The Model X's blend of practicality, style, and innovation further

solidified Tesla's position as a premium electric vehicle manufacturer. In 2017, Tesla launched

the highly anticipated Model 3, aiming to make electric mobility more accessible to a mass

market. The Model 3 was designed to be more affordable while retaining Tesla's signature

performance and range. Its release triggered a surge in demand, underscoring the strong appetite
for electric vehicles among consumers worldwide. To meet the growing demand for its electric

vehicles and renewable energy products, Tesla embarked on an ambitious project: the

construction of massive manufacturing facilities known as Gigafactories. These facilities were

strategically located around the world to produce batteries, electric motors, and complete

vehicles at an unprecedented scale. The first Gigafactory, located in Sparks, Nevada, became

operational in 2016. Its primary focus was on battery production, aiming to optimize economies

of scale and reduce the cost of battery packs, a crucial component of electric vehicles. Additional

Gigafactories followed in Shanghai, China, and Berlin, Germany, allowing Tesla to tap into vital

markets and streamline its supply chain. Beyond manufacturing electric vehicles, Tesla has been

at the forefront of developing autonomous driving technology. Its Autopilot system, a suite of

advanced driver-assistance features, allows Tesla vehicles to perform tasks such as lane-keeping,

adaptive cruise control, and automated parking. As Tesla collects real-time data from its global

fleet of vehicles, the Autopilot system continuously improves through over-the-air software

updates. With the ultimate goal of achieving full self-driving capability, Tesla has been testing

and refining its Full Self-Driving (FSD) feature. While FSD remains a work in progress and

faces regulatory challenges, its development represents a significant step towards a future of

autonomous transportation, which Tesla envisions will enhance safety and transform the way we

move. Tesla's vision for a sustainable future extends beyond electric vehicles. The company has

ventured into the renewable energy sector, offering solar panels, solar roofs, and energy storage

solutions. Tesla's acquisition of SolarCity in 2016 facilitated its entry into the solar industry,

enabling customers to harness solar energy for residential and commercial purposes. In addition

to providing solar solutions, Tesla developed the Powerwall, a home battery pack designed to

store excess energy generated by solar panels. The Powerwall enables consumers to store energy
during sunny hours and use it when the sun is not shining, contributing to a more efficient and

sustainable energy system. Furthermore, Tesla developed a Powerpack, a large-scale commercial

and utility-scale energy storage solution that enhances grid stability and facilitates renewable

energy integration. Tesla's Full Self-Driving (FSD) feature aims to achieve full autonomy,

enabling Tesla vehicles to navigate and operate without human intervention once the technology

is fully developed and approved by regulators. Tesla's innovative products and unwavering

commitment to sustainability have positioned the company as a transformative force in the

automotive and energy industries. Through continuous innovation and bold ambitions, Tesla

continues to pave the way for a greener, cleaner, and more sustainable future.
 Chapter 3

From the financial reports of Tesla, ratio analysis, vertical analysis, and horizontal analysis were

calculated. Results of ratio analysis showed that the current ratio of the company has decreased

over the last 3 years in which it decreased from 1.703 in 2022 to 1.619 in 2020 as shown in

figure 1. A current ratio above 1 indicates that Tesla company has enough current assets to cover

its current liabilities in which there are no concerns about meeting short-term obligations. A ratio

significantly higher than 1 may indicate excess liquidity, and there will be no concerns about the

company's short-term financial health and ability to cover its immediate obligations. The current

ratio has been increasing at the same time the acid-test ratio has been decreasing from 1.33 in

2020 to 1.22 in 2022 indicating a significant problem in the inventories of Tesla company. This

current ratio is weaker than the industry average ratio of 1.97%.

1.8

1.6

1.4

1.2

0.8

0.6

0.4

0.2

0
2022 2021 2020

Current ratio Acid-test ratio

Moreover, the debt-to-equity ratio showed a significant decrease from 0.42 in 2020 to 0.04 in

2022 which is lower than the industry average ratio of 0.78. Similarly, the debt-to-total assets
ratio declined from 0.18 in 2020 to 0.02 in 2022 as shown in figure 2. The coverage ratio in 2022

was higher than the average industry ratio (3.08) in which Tesla inc. ratio was 4.64. This ratio

increased was 1.48 in 2020 in which it further increased to 3.79 in 2021. A higher coverage ratio

than the average industry ratio indicates that the company generates substantial earnings relative

to its interest expenses. This implies that the company is in a healthy financial position and has

sufficient cash flow to meet its interest obligations without any strain. A ratio greater than 1

means the company's EBIT is enough to cover its interest expenses. In addition, this ratio can

boost investor confidence as it demonstrates the company's ability to meet its financial

obligations and reduces the risk of default. It may positively influence a company's credit rating

and borrowing costs.

0.45

0.40

0.35

0.30

0.25

0.20

0.15

0.10

0.05

-
2022 2021 2020

Debt-to-equity Debt-to-total asset Total capitalization

The receivable turnover was found to increase from 16.72 to 27.60 from 2020 to 2022 as shown

in figure 3. This higher turnover value indicates that shorter time was required between the

typical sale and cash collection which was proved by the obtained average collection period,

which was found to be 13.23 days in 2022, 12.97 days in 2021, and 21.83 days in 2020. The

inventory turnover ratio in 2020 was found to be 6.07 and then in 2021 it increased to 6.98 which
was then decreased to 4.72 in 2022. This indicates that the company’s efficiency in inventory

management is decreasing, and it can be considered as a sign of slow-moving, excessive items in

the inventory. However, total asset turnover showed an increasing trend from 2020 to 2021 to

2022 in which it increased from 0.013 to 0.088 to 0.15, respectively. An increase in the total asset

turnover indicates that the company is utilizing its assets efficiently to generate sales as well as

efficiently managing its resources and converting its investments in assets into revenue.

30

25

20

15

10

0
2022 2021 2020

Inventory turnover Total asset turnover Receivable turnover Avg collection period

The profitability ratios of the company are considered as an indication of its operation efficiency

as well as its pricing policies. The gross profit margin for 2022, 2021, 2020 was 25.6%, 23.42%,

and 21.02%, respectively which is higher than the industry average of 17.1% as shown in figure

4. This means that for every dollar of revenue generated in 2022, the company retains 25 cents as

gross profit after accounting for the direct costs of producing its goods and services. Generally, a

higher gross profit margin is more favorable, in which it indicates that the company can

efficiently control its production costs and generate a substantial profit from its core operations.

However, since the Gross Profit Margin for Tesla in the period of 2022-2020 is considerably low,

this indicates that a reevaluation for their pricing, production efficiency or cost-saving measures.
The low Gross Profit Margin suggests that there is a relatively high selling cost of goods which

in turn causes a lower profit from each dollar of revenue. In other words, a lower Gross Profit

Margin means that the company retains a smaller revenue proportion as gross profit. This decline

trend may warrant further investigation into the financial health of the company as well as the

overall business strategy. The net profit margin increased from 2.18 to 15.44 in the period of

2020 to 2022, which is stronger than the industry average ratio of 3.2%. Return on investment

ratio was found to increase from 1.3% to 15.3% from 2020 to 2022, which is stronger than the

industry average ratio of 3.7%. Similarly, the return on equity ratio increased from 3% to 28%

from 2020 to 2022.

30

25

20

15

10

0
2022 2021 2020

Gross profit margin Return in investment Return on equity

The vertical analysis allows better understanding of the relative significance of each expense or

income item in relation to the company's total revenue. Vertical analysis is useful for comparing

the composition of income statements across different periods or companies of varying sizes.

Furthermore, vertical analysis helps to highlight the relative significance of different elements of

the income statement and identify trends or changes over time. As shown in figure 5 below,

revenue is the base figure, represented as 100.00%. All other line items are expressed as a
percentage of the total revenue. According to the obtained results, cost of goods sold is 60,609$

in 2022 which accounts for 74.4% of the total revenue. Cost of goods sold accounts to 74.72%,

78.9% of the total revenue in 2021 and 2020, respectively. This means that 74.4% / 74.72% /

78.9% of the revenue was consumed by the direct costs associated with producing the goods or

services sold.

100.00

90.00

80.00

70.00

60.00

50.00

40.00

30.00

20.00

10.00

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re to 2022 2021 2020

Horizontal analysis provides valuable insights into a company's short-term liquidity and working

capital management. It allows stakeholders to understand how the company's asset composition

is evolving over time and provides a basis for evaluating the effectiveness of its operational and
 financial strategies. By assessing the trends in total current assets, investors and management can

make informed decisions to improve the company's financial performance and stability.

Horizontal analysis of income statement and balance sheet are represented in Table 1 and Table 2

below, respectively. From the obtained results, the cost of goods sold decreased from around

79% in 2020 to 74.72 in 2021 and then slightly decreased to 74.40% in 2022. Furthermore, the

gross profit increased from 21.02% to 25.6% from 2020 to 2022. However, the operating

expenses decreased from 14.70% in 2020 to 8.83% in 2022 which in turn led to an increase in

the operating income that increased to 16.67% in 2022 after being 6.32% in 2020. Consequently,

the net income of the company significantly increased in the period of 2020 to 2022 from 2.19%

to 15.45%. As shown in Table 2, total current assets decreased since 2020 from 51.23% to

43.61% in 2021 which suggesting that the short-term liquidity of the company didn’t improve as

it has less assets that can be converted into cash either within a year or the operating cycle during

the period 2020-2021, but then an improvement occurred in the short-term liquidity as the total

current assets increased to then increased to 49.66% in 2022. This improvement could be due to

the increased amount of accounts receivables which increased from 3.08% in 2021 to 3.58% in

2022 as well as the increased levels of inventory which reached 15.58% in 2022 after being

7.86% in 2020. Furthermore, the long-term debt also decreased from 18.42% in 2020 to 1.94% in

2022.

Table 1. Horizontal analysis of income statements

2022 2021 2020

Regular Common Regular Common- Regular Common-
(thousands -size % (thousand size % (thousands size %
$) s $) $)
Revenue 81,462 1.00 100 53,823 1.00 100 31,53 1.00 100
6
cost of goods sold 60,609 0.74 74.40 40,217 0.75 74.72 24,90 0.79 78.98
 6
gross profit 20,853 0.26 25.60 12,606 0.23 23.42 6,630 0.21 21.02
research and 3,075 0.04 3.77 2,593 0.05 4.82 1,491 0.05 4.73
development
expenses
SG&A expenses 3,946 0.05 4.84 4,517 0.08 8.39 3,146 0.10 9.98
operating 7,197 0.09 8.83 7,083 0.13 13.16 4,636 0.15 14.70
expenses
operating income 13,656 0.17 16.76 6,523 0.12 12.12 1,994 0.06 6.32
total non- 63 0.00 0.08 (180) (0.00) (0.33) (840) (0.03) (2.66)
operating
income/expenses
pre-tax income 13,656 0.17 16.76 6,523 0.12 12.12 1,994 0.06 6.32
income taxes 1,132 0.01 1.39 699 0.01 1.30 292 0.01 0.93
income after 12,587 0.15 15.45 5,644 0.10 10.49 862 0.03 2.73
taxes
income from 12,587 0.15 15.45 5,644 0.10 10.49 862 0.03 2.73
continuous
operations
net income 12,583 0.15 15.45 5,524 0.10 10.26 690 0.02 2.19
EBITDA 17,403 0.21 21.36 9,434 0.18 17.53 4,316 0.14 13.69
EBIT 13,656 0.17 16.76 6,523 0.12 12.12 1,994 0.06 6.32
basic shares 3,130 0.04 3.84 2,959 0.05 5.50 2,798 0.09 8.87
outstanding
shares 3,475 0.04 4.27 3,386 0.06 6.29 3,249 0.10 10.30
outstanding
basic EPS 4.02 0.00 0.00 1.87 0.00 0.00 0.25 0.00 0.00
EPS-earnings per 3.62 0.00 0.00 1.63 0.00 0.00 0.21 0.00 0.00
share
Table 2. Horizontal analysis of balance sheet

2022 2021 2020

Regular Regular Regular
(thousands Common (thousands Common (thousand Com
$) -size % $) -size % s $) -size
Cash on hand 22,185 0.269 26.92 17,70 0.284 28.49 19,38 0.371 37.1
7 4
Receivables 2,952 0.035 3.583 1,913 0.030 3.078 1,886 0.036 3.61
Inventory 12,839 0.155 15.58 5,757 0.092 9.265 4,101 0.078 7.86
Pre-paid 2,941 0.035 3.569 1,723 0.027 2.773 1,346 0.025 2.58
expenses
total current 40,917 0.496 49.66 27,10 0.436 43.61 26,71 0.512 51.2
assets 0 7
property, 23,548 0.285 28.58 18,88 0.303 30.39 12,74 0.244 24.4
plant, and 4 7
equipment
Goodwill and 409 0.004 0.496 457 0.007 0.735 520 0.009 0.99
intangible
assets
other long- 9,866 0.119 11.97 9,163 0.147 14.74 7,515 0.144 14.4
term assets
total long-term 41,421 0.502 50.27 35,03 0.563 56.38 25,43 0.487 48.7
assets 1 1
total assets 82,388 1 100 62,13 1 100 52,14 1 100
1 8
total current 26,709 0.324 32.41 19,70 0.317 31.71 14248 0.273 27.3
liabilities 5
long term debt 1,597 0.019 1.938 5,245 0.084 8.441 9,607 0.184 18.4
other non- 5,330 0.064 6.469 3,546 0.057 5.707 3,330 0.063 6.38
current
liabilities
total long-term 10,140 0.123 12.30 11,41 0.183 18.36 14,82 0.284 28.4
liabilities 1 5
total liabilities 36,849 0.447 44.72 31,11 0.500 50.08 29,07 0.557 55.7
6 3
common stock 3 3.6E-05 0.003 3 4.8E-05 0.004 1 1.9E-05 0.00
net
retained 12,885 0.156 15.63 329 0.005 0.529 -5,399 -0.103 -10.3
earnings
(accumulated
 deficit)
comprehensiv -361 -0.004 -0.438 54 0.0008 0.086 363 0.006 0.69
e income
shareholder 45,389 0.550 55.09 31,01 0.499 49.91 23,07 0.442 44.2
equity 5 5
total liabilities 82,338 0.999 99.93 62,13 1 100 52,14 1 100
and 1 8
shareholders’
equity

Chapter 4

In conclusion, Tesla, Inc. has emerged as a trailblazer in the automotive and renewable energy

industries, driven by a visionary mission to accelerate the world's transition to sustainable

energy. Founded in 2003, Tesla set out to redefine transportation and energy solutions by

focusing on electric vehicles and renewable energy sources. Under the leadership of Elon Musk,

the company has transformed the automotive landscape with its high-performance electric cars,

starting with the iconic Tesla Roadster and followed by the groundbreaking Model S, Model X,

and more accessible Model 3. Tesla's commitment to sustainability extends beyond electric

vehicles, as evidenced by its foray into the renewable energy sector. The company offers solar

panels, solar roofs, and energy storage solutions to reduce the world's reliance on fossil fuels.

The Gigafactories strategically located around the globe have played a crucial role in scaling up

production and driving down costs, making sustainable products more accessible to a wider

audience. However, Tesla's focus on innovation and continuous improvement remains evident.

Tesla's impact goes beyond financial metrics; it has become a cultural phenomenon, inspiring a

global community of customers and advocates passionate about sustainability and clean

technology. The company's brand is synonymous with innovation, and its direct-to-consumer

sales model and frequent software updates have redefined the traditional automotive experience.
The journey of Tesla exemplifies the power of vision, perseverance, and disruptive thinking. As

Tesla continues to expand its influence and push the boundaries of technology, it holds the

potential to drive significant change in the automotive and energy industries. With a commitment

to sustainable transportation and energy solutions, Tesla stands at the forefront of shaping a

greener and more sustainable future for generations to come.

The financial analysis of Tesla, Inc. reveals both strengths and areas of concern. The company's

current ratio has been decreasing over the past three years, indicating a slight decline in its ability

to cover short-term liabilities with current assets. However, the current ratio remains above 1,

indicating that there are no immediate concerns about meeting short-term obligations. On the

other hand, the acid-test ratio, which excludes inventory from current assets, has been

decreasing, signaling potential issues in inventory management. This is an area that the company

may need to address to improve its short-term liquidity. The debt-to-equity ratio and debt-to-total

assets ratio have shown significant decreases, indicating that Tesla has reduced its reliance on

debt financing and strengthened its financial position over the years. This is a positive sign,

especially when compared to industry averages. The coverage ratio, which measures the

company's ability to meet interest expenses, has been increasing and is higher than the industry

average. This indicates that Tesla generates substantial earnings relative to its interest

obligations, highlighting its healthy financial position. The receivable turnover has improved

over the years, indicating that Tesla has been collecting payments from customers more

efficiently. However, the inventory turnover ratio has shown a slight decrease, suggesting a

potential issue in inventory management. Overall, Tesla's profitability ratios have shown

significant improvement, with higher gross profit margins, net profit margins, and return on
investment and equity ratios compared to industry averages. These improvements demonstrate

the company's operational efficiency and ability to generate returns for its investors. Vertical

analysis of the income statement highlights the significant portion of revenue consumed by cost

of goods sold, indicating the importance of efficient cost management in production. Horizontal

analysis shows positive trends in gross profit and net income, reflecting the company's financial

growth over time. In terms of the balance sheet, horizontal analysis indicates a decrease in total

current assets in 2021, followed by an improvement in 2022. This suggests some challenges in

short-term liquidity in 2021, which were addressed in 2022 with increased current assets. In

conclusion, while Tesla has shown remarkable financial performance and growth, there are areas

that warrant attention, such as inventory management and gross profit margins. As Tesla

continues to innovate and expand its presence in the electric vehicle and renewable energy

markets, careful financial management and efficient operational practices will be critical to

sustaining its success in pioneering the future of transportation and sustainable energy.