Note: All work within this report is taken

from the Annual report or case study unless

referenced otherwise.

TESLA INTERNAL REPORT

Strategic Financial Management ~ 2680 words
Table of Contents
Executive Summary ................................................................................................................................................3
Introduction ............................................................................................................................................................4
Finance.....................................................................................................................................................................5
Share price .........................................................................................................................................................6
Segmental Analysis .............................................................................................................................................7
Product ................................................................................................................................................................8
Key Performance Indicators ..............................................................................................................................9
Profitability Ratios ............................................................................................................................................10
Return on Equity ...............................................................................................................................................11
Efficiency Ratios ................................................................................................................................................12
Asset Turnover ..................................................................................................................................................13
Inventory ...........................................................................................................................................................14
Revenue .............................................................................................................................................................14
Leverage Ratios .................................................................................................................................................15
Shareholder’s Equity and Debt-to-Equity [$] .................................................................................................16
Debt to Equity ...................................................................................................................................................17
Investors ............................................................................................................................................................18
Share Price ........................................................................................................................................................19
Elon ....................................................................................................................................................................20
Competitors ......................................................................................................................................................21
Finance Conclusion ...........................................................................................................................................22
Marketing .........................................................................................................................................................23
Tesla’s 5 Ps ........................................................................................................................................................24
Boston Matrix ...................................................................................................................................................25
Marketing Conclusion ......................................................................................................................................26
HRM .......................................................................................................................................................................27
Corporate Governance .....................................................................................................................................27
Board Committees ............................................................................................................................................28
Employees & Values ........................................................................................................................................29
HRM Conclusion................................................................................................................................................32
Operations .............................................................................................................................................................33
Business Model .................................................................................................................................................33
Cost Structure ...................................................................................................................................................33
Source of Income:.............................................................................................................................................34
Value Chain .......................................................................................................................................................35
Integration.........................................................................................................................................................35

1
 Operations Conclusion .....................................................................................................................................37
Prioritised Strengths & Weaknesses ...................................................................................................................38
Bibliography ..........................................................................................................................................................39

2
Executive Summary
Tesla Inc. is currently the leading company in the electric vehicle industry, with the fastest brand growth
among the auto brands, worth $46,010m in 2022. Although investing $0 in marketing and promotion, the
firm managed to sell hundreds of thousands of cars through its CEO Elon Musk. Thanks to his ambitious,
and obsession of accelerating the world’s transition to sustainable energy, and with the aid of social
medias, he succeeded to make the company famous worldwide.
The firm is specialized in designing, manufacturing, selling, and leasing fully electric vehicles, as well as
selling energy generation and storage products. The company had an initial slow growth, due to huge costs
linked to investments in R&D, and construction of Gigafactories around the globe. Once these were
finalised, the company managed to ramp production, with subsequent delivery of vehicles. Their financial
position reflects their growing success, as they managed to become profitable at the beginning of 2020,
and their net margins grew exponentially since then. The results unsurprisingly attracted more investors,
and talents – company received 3m different job applications in 2021 alone.
With more nations supporting renewable energy to tackle climate change, increasing demand for electric
vehicles from consumers, and strong support from investors, Tesla’s success story is set to continue in the
future years. The firm’s continuous investments in R&D and expansion will allow it to meet the huge
demand that as today is unable to cover.

3
Introduction
Tesla, Inc. is an American company founded in 2003 by Martin Eberhard and Marc Tarpenning. Elon Musk
has been the active CEO since 2008 1 . The company’s market capitalization has been steadily growing
throughout the years, reaching the staggering figure of $1.061 Trillion, with subsequent revenue of $53.82
Billion in 2021. Tesla predominantly operates in designing, manufacturing, and delivering electric cars,
with operational segments in power storage and photovoltaic systems 2.

Current Issues
• Fierce Competition 3
• Logistics Issues 4
• Rising material Costs 5
• China expansion in EV
market 6
• Racial lawsuits 7

Geographical presence 8
As of 2021, Tesla has 4389
stores Worldwide, and 4
Gigafactories 10 See Footnote 6

Income 11
• Automotive Segment (Including leasing, service and other, and sale of Regulatory Credits).
• Energy Generation and Storage Segment.

1https://www.britannica.com/topic/Tesla-Motors
2 https://companiesmarketcap.com/tesla/marketcap/
3 https://www.privco.com/dailystack/e9533dbfb5
4 See Segmental Analysis

5 https://finance.yahoo.com/news/5-challenges-tesla-growth-140419540.html?soc_src=social-sh&soc_trk=ma
6 https://www.businessofbusiness.com/articles/the-tesla-empire-on-a-world-map/

7 See HRM
8 https://www.businessofbusiness.com/articles/the-tesla-empire-on-a-world-map/

9 https://getoptiwatt.com/blog/how-many-tesla-stores-are-there-around-the-world
10 https://electrek.co/2021/07/14/tesla-factory-locations-where-they-are-and-could-soon-be/

11 See Finance

4
Finance
Financial Highlights 2017-2021 12

Total Revenue Total Assets

increased by increased by
457.74%, from 216.82%, from
$11,759m to $53,823m $28,655m to $62,131m

Total Debt
Share price rose by
decreased by
66.25%, from $10,315m 1,696.49%, from
$20.76 to $352.26
to $6,834m

Quarterly Highlights: 13

12 See Finance
13 https://emea1.apps.cp.thomsonreuters.com/web/Apps/Corp?s=TSLA.O&st=RIC&app=true#/Explorer/EVzCORPxFUNDTALSzBALSHT

5
Share price 14

14 https://www.google.com/finance/quote/TSLA:NASDAQ?sa=X&ved=2ahUKEwiDu4vFjMz7AhVTSsAKHetvCUQQ3ecFegQIJRAg&window=5
Y

6
Segmental Analysis
Geographic Segmentation

• Domestic Segment generates the most revenue – total of $72.93B between 2017 and 2021.
• Revenue steadily increased in each country, apart between 2019 and 2020 due to Covid-19
pandemic - Tesla had to reduce its workforce by more than 75% in Nevada’s Gigafactory 15,thus
reduction in production with negative impact on 2019 and 2020 domestic revenue.
• China is the fastest growing as the new Gigafactory opened in Shanghai in 2018, enabled the
company to accelerate production- revenue increased by 682.98% from $2.037B in 2017 to
$13.84B in 2021.
• Tesla opened a new Gigafactory in Berlin, which will enable the company to increase
production, and subsequent sales on the European Continent in future years16.

15 https://www.theverge.com/2020/3/27/21196879/tesla-gigafactory-shelter-in-place-nevada-coronavirus-covid-19
16 https://electrek.co/2021/09/17/tesla-announces-giga-fest-launch-gigafactory-berlin/

7
Product Segmentation

Tesla operates two reportable segments: Automotive and energy generation & storage.
Several issues in several years:
- Production Hell in 2017: A system integration subcontractor dropped the ball, and Tesla had to
re-write several softwares – 260 Model 3s produced against the 1,500 planned 17.
- Logistics Hell in 2018: Tesla manufactured to inventory exposing issues in vehicle distribution,
and complexities in matching vehicles to individual customer orders 18.
- Demand Hell in 2019: Demand waning in the US and China due to Covid-1919.
Once bottlenecks were resolved, Tesla managed to ramp vehicle production and deliveries, allowing it
to break the $1 billion barrier of quarterly profit - in 2021, Q3, Tesla reported a profit of $1.62b. Tesla
also reported global vehicle demand at record levels, with forecasted revenue growth 20.(S)
Energy Generation’s revenue also steadily increased, predominately by acquiring SolarCity and inclusion
of their revenue on November21, 201621.

17 https://www.inverse.com/article/38031-tesla-model-3-problem-long-term-advantage
18 https://www.forbes.com/sites/lensherman/2018/12/20/tesla-survived-manufacturing-hell-now-comes-the-hard-
part/?sh=696d2d71fae2
19 https://markets.businessinsider.com/news/stocks/tesla-stock-price-tesla-is-in-its-third-stage-of-hell-with-model-3-2019-3-1028032448
20 https://www.statista.com/chart/23535/quarterly-profit-of-tesla/

21 Tesla 10K report, YE 2017

8
Key Performance Indicators22

KPI(2020) KPI(2021)

509,737 produced
930,422 vehicle
vehicles, and delivered
produced, 936,222
499,647 - aim to ramp
delivered (Exceeded)
production

Deployed 3.02GWh,
Deployed 3.99
aim to improve Solar
GWh(Exceeded)
Roof installation

$31.54b in Revenue -
$58.82b in Revenue -
aim to increase
71% increse (Exceeded)
manufacturing capacity

22 Tesla Form 10K Annual report 2020 and 2021

9
Profitability Ratios

Profitability Ratios
30.0%

20.0%

10.0%

0.0%
2017 2018 2019 2020 2021
(10.0%)

(20.0%)

(30.0%)

Gross Margin Operating Margin Net Margin

- Tesla's Gross Margin has steadily increased, from $2,222m in 2017 to $13,606m in 2021 (612.33% increase).
Gross margin increased from 18.9% (2017) to 25.3% (2021). Driven by ramping vehicle deliveries, and sales of
regulatory Credits. In 2021 performed by 3.2% more in Gross Margin than its competitors. (S)

- Net profit was negative in 2017, 2018 and 2019; it turned positive from 2020 onwards. Net Margin increased
from -25.2% (2017) to 12.1% (2021). Mostly driven by increased sales of regulatory credits, with a revenue of
$1.58 billion in 2020 alone, which would have turned Tesla's total net income in 2020 of $721m into a loss if
removed from the equation (W). Net margin was lower than industry median until 2021 - net profit increased
by 665% from previous year. 23

- Tesla's major costs are tied to cost of automotive sales (direct parts, material, labour costs, manufacturing
overhead, depreciation of tooling and machinery). Increasing from $6.724B in 2017 to $32.415B in 2021.
From 2017 to 2019, costs > revenue, thus the negative Operating Margin. By managing cost more efficiently
and ramping sales they managed to have a positive figure at the end of 2021 and outperforming the industry
Median. Operating margin increased from -13.9% to 12.1%.24

23 https://www.fool.com/investing/2021/01/30/teslas-profits-are-not-from-selling-cars/
24https://emea1.apps.cp.thomsonreuters.com/web/Apps/Corp?s=TSLA.O&st=RIC&app=true#/Explorer/EVzCORPxFUNDTA

LSzSEG

10
Return on Equity25

- Significant Increase over the 5 years, from -59.7% in 2017 to 21.1% in 2021, managing to break its continuous
negative trend in 2020.
- Negative values linked to its negative gross profits - the company had great operating expenditure as it was
expanding its business. (R&D: $1,378B in 2017 to $2.593B in 2021, ~53% increase) 26 (S).
- By increasing sales & deliveries and managing to have a positive net income from 2020 onwards, their return on
equity also increased. 27
- By outperforming its competitors Tesla proved that it has improved substantially on how they use their equity to
generate income.

25https://emea1.apps.cp.thomsonreuters.com/web/Apps/Corp?s=GM&st=RIC&app=true#/Explorer/EVzCORPxFUNDTALSzRATIOzMETRICS
26 Tesla’s 10K from 2017 to 2021
27 See segmental analysis

11
Efficiency Ratios

Cashflow

See foot note 28

Although having
negative net margin Cash Flow ($ in thousands)
between 2017 and
2019 29 , Tesla 14,000,000
managed to have 12,000,000
positive Operating 10,000,000
cash flow. Operating 8,000,000
Cashflow was negative 6,000,000
in 2017 and 2018 since
4,000,000
the company had
2,000,000
great Capital
expenditure, due to 0
continuous expansion -2,000,000 12/31/2017 12/31/2018 12/31/2019 12/31/2020 12/31/2021
of building new -4,000,000
factories (2017 –
-6,000,000
Gigafactory in New
York, 2019 – Operating Cash Flow Capital Expenditure Free Cash Flow
Gigafactory in Berlin
and Shanghai, 2020 – Gigafactory in Texas30).

Once factories were finalised, they could accelerate vehicles production, and subsequent sales. Tesla is benefitting from
higher FCF margins because its sales growth is exceeding the rate at which it is spending money on operating activities
plus capex spending. As sales rise, they have a leveraged effect on operating and FCF margins. 31

28 https://finance.yahoo.com/quote/TSLA/cash-flow/
29 See profitability ratios
30 https://manufacturingdigital.com/digital-factory/timeline-teslas-construction-gigafactories

31 https://www.nasdaq.com/articles/teslas-free-cash-flow-surges-pushing-tsla-stock-higher-2021-11-01

12
Asset Turnover

- Asset turnover increased from 0.46 (2017)

to 0.94 (2021), from Avg. Total Assets of
$25,660m in 2017 to $57,140m in 2021
(44.91% increase). 32
- Largest increase between 2020 and 2021,
driven by revenue growing faster than the
assets, due to reduced production costs,
increased deliveries, and more profitable
leasing and service operations 33 -
suggesting that Tesla is efficient in using
their assets to produce revenue.
- Tesla’s asset turnover is considerably
greater than many of its competitors, proving more efficiency, as it is generating more revenue per dollar of assets.
(S)

32https://emea1.apps.cp.thomsonreuters.com/web/Apps/Corp?s=TSLA.O&st=RIC&app=true#/Explorer/EVzCORPxFUNDTALSzRATIOzMETR
ICS
33 https://www.autocar.co.uk/car-news/business-tech%2C-development-and-manufacturing/tesla-profits-and-deliveries-soar-2021-

despite

13
Inventory Turnover
- Slow growth linked difficulties in
logistics and delivery of cars. 34
- Tesla owns its distribution
network and is known for having difficulties
delivering vehicles 35 , with subsequent
increase in inventory ($2,165m in 2017 to
$4,929m in 2021). (W)
- Continuous delivery delays, shows
that Elon Musk is still struggling with the
“delivery logistics hell 36 ” started in 2018. 37
(W).
- Overall performing lower
than industry median (W).

Revenue per Employee38

- Revenue per employee is lower
than average median. (W)
- The ratio has steadily increased
since 2017, showing strong efficiency from
Tesla.
- Tesla’s workforce has increased
from 37,543 in 2017 to 99,229 in 2021. 39

34 See Segmental Analysis – Product Segment – Logistics Hell

35 https://electrek.co/2021/05/18/tesla-stuck-with-over-10000-cars-factory-hold-resulting-logistical-nightmare/
36 See Segmental Analysis – Product Segment – Logistics hell

37 https://www.cnbc.com/2021/08/18/months-long-delivery-delays-confound-would-be-tesla-owners.html
38 Data taken from Eikon

39 https://www.macrotrends.net/stocks/charts/TSLA/tesla/number-of-employees

14
Leverage Ratios
Tesla mainly funds its business through equity and debt 40.

- Issuance of Debt: The company relies on Debt, increased issuance from $7.649B in 2017 to $8.883B in 2021, to
fund its expansion and investments in R&D; however, it is also re-paying it year on year.
- Equity: In 2020 the firm issued stock to strengthen their balance sheet by investing in high-grade bonds, cash
equivalents and US government securities 41.
In 2019 the company further raised capital to face expensive challenges, such as launching production in China,
to develop new models, including model Y SUV and a Semi commercial truck42.
- Elon Musk constantly buys Tesla’s shares to maintain his large stake in the company. In 2017 he even borrowed
hundreds of millions from Morgan Stanley and Goldman Sachs 43 to buy Tesla’s stocks.

See foot note44

40 https://finance.yahoo.com/quote/TSLA/cash-flow/
41 https://www.forbes.com/sites/jonathanponciano/2020/12/08/tesla-stock-offering-5-billion-billionaire-elon-musk/
42 https://www.reuters.com/article/us-tesla-offering-idUSKCN1S90YT
43 https://electrek.co/2017/03/17/tesla-tsla-capital-raise/

44 https://www.macrotrends.net/stocks/charts/TSLA/tesla/debt-equity-ratio

15
Shareholder’s Equity and Debt-to-Equity [$]

Tesla’s stock is still attractive to investors, as their Equity increased from $4,237m from 2017 to $30,189m in 2021.

See foot note45

45 https://www.stock-analysis-on.net/NASDAQ/Company/Tesla-Inc/Long-Term-Trends/Debt-to-Equity

16
Debt to Equity

Debt to equity decreased from 2.43 in 2017 to 0.23 in 2021, outperforming its competitors. This shows a strong position of
Tesla, as its equity is greater than its debt, therefore it would be able to cover all its debt with equity in case of downfall
(S).46

46 See Leverage Ratios

17
Investors
EPS: turned positive from end of 2019 and beginning of 2020 when the company managed to have a positive net income,
driven by increased sales & deliveries, and reduced cost of producing vehicles. EPS increased from -$0.27 at y/e 2017, to
$0.68 at y/e 202147. Tesla also does not pay dividends, and prefers to further invest in research and development, and
building new Gigafactories. 48

See foot
note 49

See foot note50

47 https://www.nasdaq.com/market-activity/stocks/tsla/revenue-eps
48 https://markets.businessinsider.com/news/stocks/does-tesla-tsla-stock-pay-dividends-1031316295
49 https://tradingeconomics.com/tsla:us:eps

50 https://www.zacks.com/stock/chart/TSLA/fundamental/eps-diluted-quarterly

18
Share Price
Price increased from 20.76USD at y/e 2017 to 362.06USD at y/e 2021.

Remarkable 2020 as its stock price rose by 743%. Reasons being 51:

- Investors becoming more interested in the stock

- Inclusion into the S&P500
- Launch of the electric SUV Model Y
- Raise in sale of regulatory credit (pure profit)
- 90% revenue growth in China over the 9 months in 2020
- Five-for-one split of common stock to make stock ownership accessible to more investors 52

Please see foot note53 for both graphs

51 https://www.forbes.com/sites/greatspeculations/2021/01/05/up-8x-what-really-changed-for-tesla-stock-in-2020/
52 https://ir.tesla.com/press-release/tesla-announces-five-one-stock-split
53 https://www.macrotrends.net/stocks/charts/TSLA/tesla/stock-price-history

19
Elon Musk & Tesla Stock

Tesla’s stock is not only linked to the company’s performance, but also to its CEO Elon Musk:54

- Apr-2018: Elon’s April Fool tweet (Tesla going Bankrupt), made

the stock plunge 7%
- Sep-2018: Stock plunged 9% after Elon Musk smoked marijuana,
and sipped whiskey during a podcast
- Feb-2019: Musk tweeted a correction on a production
prediction, stock fell by 3.7%
- May-2020: Elon tweeted that Tesla stock price was too high, the
share promptly slumped by 10%

Lately he Acquired Twitter Inc., with subsequent effects on Tesla’s

stock:55

54 https://www.iol.co.za/business-report/companies/seven-tweets-from-teslas-ceo-elon-musk-that-sent-the-companys-shares-on-a-wild-

ride-cf73c28a-86b7-57c3-b626-3875a5718908
55 https://abcnews.go.com/Business/timeline-elon-musks-tumultuous-twitter-acquisition-attempt/story?id=86611191

20
Competitors

BYD (Build Your Dream) (China)56

• Revenue of $33.48b in 2021.
• Largest EV maker – 12.5% in global market share
(Tesla at 12% in 2019).
• 30% of market share in China
• Produces batteries, while Tesla must buy from
Panasonic.
• Sold 593,878 plug-in electric vehicles in 2021.

Saic-GM-Wuling (China)57

• 1,177,507 vehicles sold through 2020

• Exporter in 40 countries – Central and South
America, Africa, Middle East, and Southeast
Asia.
• $533.53 million in annual sales from overseas
business alone.
• Car price of just $4,460.
• China’s bestselling “new-energy” vehicle.
• Company partnering with Latvian automaker to
sell in Europe.58

Volkswagen

•452,900 battery-electric vehicles delivered

to customers (96% increase from 2020). 59
•Car prices starting from $39,000
•$88.31B in Market Capitalization
•$147.76 share price 60
•Planning 70% of its sales to be pure-electric
vehicles by 2030.
•Implementation of autonomous driving
features (ID3 and ID4 models).61

Tesla remains top manufacturer, focusing solely on BEV (battery-electric vehicles). Firm lost market share, as overall
market expands faster, but still has a noticeable advantage over Volkswagen, SAIC and BYD. 62

56 https://seekingalpha.com/article/4297305-tesla-vs-byd-relative-valuation
57 https://autonews.gasgoo.com/m/70017874.html
58 https://www.ft.com/content/2cd43afc-0663-47aa-9c30-a3b50483dbc7

59 https://www.volkswagen-newsroom.com/en/press-releases/volkswagen-group-on-course-for-new-auto-deliveries-of-battery-electric-

vehicles-doubled-in-2021-7705
60 https://companiesmarketcap.com/volkswagen/marketcap/
61 https://www.autoexpress.co.uk/news/354436/volkswagen-lays-out-new-plans-electrified-future

62 https://insideevs.com/news/544766/world-top-oem-sales-2021q1q3/

21
Finance Conclusion

Increased profitability
Tesla's profitability ratios Profitability reliant on
linked to ramping vehicle
higher than competitors sale of regulatory
production, sales and
↑ credits↓
deliveries ↑

Continuous expansion By owning its distribution

through building of new network, company faces Exponential stock price
Gigafactories, and heavy bottleneck on inventory, growth ↑
investment in R&D↑ and delivery of cars ↓

22
Marketing 63

Brand
Value as of 2021: $31.9b
6th on the Automotive industry in 2021
Ranking

Toyota($59.5b) taking the 1st place

Mercedes($58.2b) 2 nd place
Volkswagen($47.0b) 3rd place

Changes from 2021 to 2022 64

Tesla biggest growth of all auto brands, value

up 271% since 2020

Toyota retains 1st place as most valuable

car brand, up 8% to $64.3bn

BYD becomes the most valuable Chinese

brand, its value doubles to $6.4bn

Brand League Table

63 Brand - https://brandirectory.com/rankings/auto/2021/table
64 https://brandirectory.com/rankings/auto

23
 Product: automotive, energy storage & generation Pricing Strategy67
markets. The firm is known for electric cars, the Skimming Pricing Strategy: Tesla takes advantages of its
Model S is the world’s most popular electric vehicle 65.- fans’ enthusiasm to price their products. Firstly, using
able to reach 60 mph in 1.99s Double engine, that high prices to gain higher returns, to then launch low-
controls torque to the front and rear wheels. 66 price electric cars to seize market share with aim of profit
maximisation.

Penetration Pricing Strategy: Adopted in markets with

low-income consumers. In China for example, Tesla
reduced the Model 3 price from ~$49k in 2019 to ~$33k
in 2021.

Place68 Promotion
As of 2021, Tesla had 438 stores worldwide, and 100 • $0 on advertisement and promotions.
service centres, and roughly 14,000 Tesla charging Elon Musk has successfully generated huge amount of
points. free publicity thanks to his presence on social media 69.
The firm is frequently on the front page of newspapers –
for instance when Elon Musk launched his Tesla roadster
into space in 2018 70.

People
Elon Musk is a marketing-genius. He is well known on the Internet, making his twitter account the most powerful
marketing strategy, followed by 119 million people.
In 2018 he managed to raise $10m by selling “flamethrowers” - product sold out, following his tweet.
Elon managed to save millions on Marketing just by posting on Twitter. 71

Tesla’s 5 Ps

65 https://panmore.com/tesla-motors-inc-marketing-mix-4ps-analysis
66 https://www.tesla.com/en_gb/models
67 (Ding & He, 2022)
68 https://getoptiwatt.com/blog/how-many-tesla-stores-are-there-around-the-world

69 https://www.thestrategywatch.com/marketing-mix-of-tesla/#Promotion_Strategy_of_Tesla
70 https://edition.cnn.com/2022/02/08/tech/spacex-tesla-roadster-falcon-heavy-anniversary-scn/index.html

71 https://medium.com/swlh/elon-musks-bizarre-guide-to-market-using-memes-for-his-companies-3f3dd8024757

24
 Boston Matrix7273747576

Electric vehicles. High

Energy Storage and Solar consumer demand (model
power. Competitive S took 34% of luxury total
market, thus difficulty for market share) and ample
Tesla to expand. Further government support (tax
investments required to incentives).
transform this segment
profitable.

Manufacturing issues in regards of Regulatory credits, represented $1.5b in

assembling certain models, with sales (with no associated costs) in 2021.
subsequent logistics delays. Sale of such credits might decline with
more automakers shifting to renewable
sources, with consequent negative
impact on Tesla’s revenue.

72 Cash Cow-https://news.bloombergtax.com/financial-accounting/sec-pushes-tesla-to-reveal-how-regulatory-credits-boost-profits
73 Cash Cow-https://uk.movies.yahoo.com/tesla-gains-results-show-dependence-053528438.html
74 Stars-https://www.linkedin.com/pulse/compelling-case-teslas-marketing-strategy-nidhi-arora/
75 Question Mark – please see finance part

76 Dogs - https://www.autocar.co.uk/car-news/new-cars/elon-musk-blames-production-ramp-tesla-quality-issues

25
Marketing Conclusion

Among
$0 promotion the most
costs, thanks
to Elon
valuable
Musk↑ car
brands↑

Revolution
Worldwide
ary
vehicle sales
Technologi
↑
es ↑

Energy
Generation
Logistics
and storage
Issues ↓
has slow
growth ↓

26
HRM 77
All data taken from Tesla’s Impact reports if not stated otherwise

Corporate Governance
Core values and Culture

Pledged to Mission:
Accelerate
Electric: EVs adoption of
product to fulfil sustainable energy
sustainable energy

Build around Vision: to

the become the
customer: most
connect the compelling car
car, driver, and manufacturer
environment of 21st century

Innovation:
Self-drive cars,
solar energy

Think like Owners: ownership mindset to support the company

We are ALL IN: Unifying culture, supports teamwork

Do the Impossible: think outside the box to create cutting-edge technologies

Move Fast: Speedy responses to current issues and challenges in the industry

Constantly Innovate: Innovation at the heart of Tesla Inc.

Reasons from "first principles": identify issues, and understand how to solve problems

77 Data taken from Tesla Impact Report 2021

27
Board Committees

Robyn Denholm Elon Musk Zack Kirkhorn

(Independent Board (CEO) (CFO)
Chair)

Built Rockets, electric vehicles with self-driving softwares and energy

Innovative generation products

Inspiring Ability to get people excited about his projects and plans

Fast-Acting Opionanted, beneficial for business, but can be frustrating for his team

Ambitious Sets aggressive, and sometimes impossible plans for his team

Obsessive Usually works 80 to 90 hours a week

Please see foot note 78

Consequences of Musk’s style

- 44% executive turnover 79
- Blind to his employees 80
- A one-man brand: no succession plan, and no Chief Operating Officer 81

78 https://www.fingerprintforsuccess.com/blog/elon-musk-leadership-style
79 https://www.thestreet.com/investing/tesla-worries-heat-up-as-major-exec-goes-mia
80 Se HRM – Work/Life balance

81 https://edition.cnn.com/2021/06/09/investing/elon-musk-tesla-coo/index.html

28
Employees & Values 82

Company’s target is to produce 20x more cars by 2030, thus company will build new factories and will have to hire for
new positions.

Please see note 82

Tesla is also committed to deal only with suppliers that share their values and beliefs, thus they are committed to ensure
that none of their suppliers use slave or child labour or engage in human trafficking (footnote 82). However, Tesla has
been accused of being complicit in the death of children forced to mine cobalt – an essential material to make batteries. 83

82 Tesla’s 10K 2021 annual report – page 19

83 https://news.sky.com/story/tesla-and-apple-among-tech-giants-accused-of-aiding-child-labour-in-africa-11888600

29
See foot note 84

Safety is one of Tesla’s priorities, they launched “take charge” encouraging employees to submit innovative ideas to
improve safety and continuous improvement of the business.

84 https://www.glassdoor.co.uk/Reviews/Tesla-Reviews-E43129.htm

30
 Please see footnote

34% of directors and vice presidents are non-white and firm’s focus on recruiting from historically Black Colleges and
universities and Hispanic Serving Institutions, they are active in the National Society of Black Engineers, the Society of
Hispanic Engineers and AfroTech. 85

Company faces racial lawsuit from California’s

Department of Fair Employment and Housing, DIVERSITY DATA
which alleges Black workers experiencing
rampant racism left unchecked for years.86 Male Female

22%

78%

Tesla claims of actively working to increase women’s representation but fails

to mention tangible plans.

Please see footnote87

85 Tesla Impact Report 2021

86 https://www.theguardian.com/technology/2022/feb/18/tesla-california-racial-harassment-discrimination-lawsuit
87 https://app.impaakt.com/analyses/tesla-has-not-achieved-gender-parity-in-its-us-workforce-and-at-leadership-levels-as-of-2022-51590

31
Tesla is known for delivering, for this reason the firm demands long hours from its employees. On Glassdoor many
employees mentioned working between 36 and 72 hours a week, with many complaining that they had to work during
weekends and even holidays. “Long hours” is a common theme in Tesla Glassdoor Reviews:

Please see footnote88

Tesla provides highly competitive wages. In 2021, Tesla’s average national wage for manufacturing jobs in the US was
$21.60/h, compared to the national median of $17.59. Tesla also offers stock-based compensation.

Tesla’s median base pay is 3.2% lower for female employees. 89

Tesla does not require candidates to have a college degree, as they provide several development programs and
apprenticeships.

HRM Conclusion

88https://www.zippia.com/tesla-careers-11363/salary/#
https://www.tesla.com/sites/default/files/pdfs/UK%20Gender%20Pay%20Report%20Summary%202022%20reporting.pdf
89

32
Operations
Business Model90
Based on direct sales, not car dealership franchises

• Customer Segments: Model X & S (<20% of total deliveries) focused on a niche market; however, Model 3 >80%
of total deliveries makes Tesla mainly mass-market.
• Value proposition: Vehicle, Battery, and Infrastructure innovation. Focusing on autopilot function, increasing
battery’s capacity, dual motor, free software updates, electric charging stations.
• Key Partners: Panasonic (batteries) 91. Ningde Era (cell to pack batteries for Model 3). Ganfeng (lithium) 92.
Acquisition of Solar City (2016). Government providing tax incentives. Glencore (cobalt) 9394
• Key Businesses: Automotive (81%) and energy generation and storage (19%). 95
• Key Resources: Intellectual property (revolutionary motor, inverter, battery, and software). Talented engineers.
• Customer Relationship: Direct to customer sale model, with self-service website. Well-known brand. 96
• Channels: Online websites, retail & galleries locations.

Cost Structure:97

Interest, tax and COST STRUCTURE

Selling, general other
and admin 4%
8%
R&D
13%

COGS
75%

90 (Li, 2021)
91 https://asia.nikkei.com/Business/Technology/Tesla-strikes-new-Panasonic-battery-deal-as-sales-and-shares-soar
92 https://www.reuters.com/business/autos-transportation/chinas-ganfeng-lithium-inks-lithium-battery-supply-contract-with-tesla-2021-

11-01/
93 Please see marketing
94 https://www.cnbc.com/2020/06/16/tesla-glencore-cobalt-gigafactory.html

95 https://www.statista.com/statistics/314741/revenue-of-tesla-by-segment/
96 https://bstrategyhub.com/tesla-business-model-tesla-business-model-canvas/

97 Based on 2021 K-10 Tesla Report – cost on total revenue

33
Source of Income: Automotive, Service and Other, energy generation & storage segment. Sale of regulatory
credits included in Automotive Sales. 98

SOURCE OF INCOME
Energy Generation
Service and Other - and Storage - 5.18%
7.06%

Automotive
Revenue - 87.75%

98 Tesla’s 2021,2019,2018 and 2017 10-K

34
 Value Chain99 100 101 102 103 104 105

Technology Development

Outbound Logistics
Inbound Logistic

Service
Operations
- Raw material - $2.593b in R&D in - Gigafactories in: - Vehicle Storage - Tesla App
storage (steel, 2021 USA, China, Europe - Direct Delivery - Super Charge units
copper, cobalt, etc) - Car batteries, - Design, Engineering, - Energy power - Customer Support
-Warehouses in USA Drivetrain, self-drive Manufacturing storage
and Taiwan software - On Demand service
- Company-owned van
- Top 5 most stores and
inovative companies showrooms
in 2021 - OPEN
PATENTS

Company Infrastructure
• Automotive and energy operating sectors
• CEO
• CFO
• Board of directors

Human Resource Management

• Attract, train and maintain talented employees
• Elon Musk
• 99,920 employees

Procurement
• Panasonic - long term supplier of batteries
• Strong relationship with hundreds of suppliers
• Thousands of parts from several different suppliers

99 https://abhijeetpratap.medium.com/tesla-value-chain-analysis-f572c834fd39
100 https://electrek.co/2021/07/14/tesla-factory-locations-where-they-are-and-could-soon-be/
101 https://www.coursehero.com/file/pfno2t/iii-Outbound-Logistics-Tesla-Motors-distribution-channel-consists-of-their-own/
102 https://www.edrawmax.com/article/tesla-value-chain-analysis.html

103 https://tradingeconomics.com/tsla:us:employees

104 https://www.tesmanian.com/blogs/tesmanian-blog/tesla-entered-the-top-5-most-innovative-companies-in-2021
105 https://www.tesla.com/en_GB/blog/all-our-patent-are-belong-you

35
Integration
Vertical 106

• Backward:
• Creates flexibility with decisions, shorter learning, and improvement times
• From battery production to in-house software development
• Forward:
• Direct sale to customer reduces distribution costs and enhanced brand relationship
• Company-owned showrooms and outlets, allowing unbiased and direct access to customer feedback107
• Acquisition of SolarCity to increase deployment of energy generation and storage products 108

Key Value-added activities: 109

• Fully electric auto vehicles

• Autopilot and Full Self-Driving (FSD)
• Solar Roof: roof tiles made of solar panels
• Powerwall: batter that can store electricity

106 https://www.notateslaapp.com/tesla-reference/867/tesla-s-vertical-integration-and-efficiency-show-why-they-re-the-leader-in-evs
107 https://www.linkedin.com/pulse/8-things-i-would-do-were-head-tesla-suvrajit-sarkar/
108 See product segmentation – p 8
109 https://www.makeuseof.com/could-tesla-be-the-most-innovative-company-in-the-world/

Image: https://cleantechnica.com/2022/04/13/teslas-giga-texas-to-become-the-worlds-largest-battery-cell-manufacturer/

36
Operations Conclusion

37
Prioritised Strengths & Weaknesses
STRENGTHS

-Outstanding Leader110
-Leading edge technologies111 and
heavy investment in R&D112
-Profits highly dependant on
-Robust brand name113 sale of regulatory credits 116
-Double Electric Vehicle Delivery -Manufacturing
from 2020 to 2021114 complications117&118
-Continuous expansion by
-Difficulty in meeting demand119

WEAKNESSES
building Gigafactories all over the
world 115 -Racial Lawsuits120
- A one man show with high
executive turnover121

110111112113114115116117118119120121

110 Please see HRM – page 25

111 Please see Operations – page 32
112 Please see Finance – page 8
113 Please see Marketing – page 20
114 Please see KPI – page 6
115 Please see Finance – page 9
116 Please see Finance – page 7
117 Please see Finance – page 5
118 Please see marketing - page 22
119 Please see Finance – page 11
120 Please see HRM – page 28
121 Please see HRM – page 25

38
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