Tesla Motors, Inc. Financial Analysis Paper
Tesla Motors, Inc. Financial Analysis
MGMT 475
September 23, 2013
Tesla Motors, Inc. was founded in early 2003 by a group of Silicon Valley engineers, incorporated in Delaware on July 1 of the same year, and is now headquartered in Palo Alto, California (“Tesla- Investor”). The company designs, develops and manufactures electric vehicles and electric vehicle powertrain components. Tesla also provides the same services and powertrain components to other manufacturers of electric vehicles (Analysts Corner 2). Tesla Motors is best known for producing the Tesla Roadster, an all electric sports car released in 2008, with outstanding performance results (“About Tesla”). Tesla has developed a unique marketing plan …show more content…
has doubled within the last couple months and is now over $22 billion. The value of an enterprise for profit is dependent on what it can produce or profit from moving forward into the future, and in doing so increase the wealth of the ownership. Tesla Motors will produce roughly 20,000 cars this year and plans on doubling that output for 2014. That makes every car Tesla produced this year worth $1.1 million of stock. Compare that number to “luxury automaker BMW that has a market cap of$52.79 billion on global sales of 1.85 million cars or $28.53 thousand per car. Mercedes Benz produces cars at $43.4 thousand per car using the same calculation (Finger). Tesla will have to produce hundreds of thousands of vehicles to support a stock price even half of what it is currently. With the limited amount of demand at the current price, the stock can soar as high as the market will allow it, but the price will have no foundation and will eventually crumble down. The over-valuation leaves Tesla poised for a buyout or takeover by a larger …show more content…
The whole package is a winning combination, in a small segment of the market. The company may be headquartered in California and founded by geeks, but it is still an automobile producer. The automotive industry is dominated by an oligopoly of corporations that historically have been successful at weeding out smaller companies just like Tesla Motors. The competition is fierce and the pockets are deep, economies of scale are a reality in automobile manufacturing. The patents and proprietary technology that Tesla holds right now will be meaningless in a matter of a few years, or several months. If the demand for electric cars increases significantly, Tesla will be forced to compete. Without the differentiation that Tesla has now, the company doesn’t have much of a chance. Tesla has a challenging future; in order to survive it must lower its costs and crank up production. The niche market of wealthy movie stars that want to be seen in a Tesla Roadsters isn’t going to get them there. The high price people are willing to pay for their stock isn’t going to
MGMT 475
September 23, 2013
Tesla Motors, Inc. was founded in early 2003 by a group of Silicon Valley engineers, incorporated in Delaware on July 1 of the same year, and is now headquartered in Palo Alto, California (“Tesla- Investor”). The company designs, develops and manufactures electric vehicles and electric vehicle powertrain components. Tesla also provides the same services and powertrain components to other manufacturers of electric vehicles (Analysts Corner 2). Tesla Motors is best known for producing the Tesla Roadster, an all electric sports car released in 2008, with outstanding performance results (“About Tesla”). Tesla has developed a unique marketing plan …show more content…
has doubled within the last couple months and is now over $22 billion. The value of an enterprise for profit is dependent on what it can produce or profit from moving forward into the future, and in doing so increase the wealth of the ownership. Tesla Motors will produce roughly 20,000 cars this year and plans on doubling that output for 2014. That makes every car Tesla produced this year worth $1.1 million of stock. Compare that number to “luxury automaker BMW that has a market cap of$52.79 billion on global sales of 1.85 million cars or $28.53 thousand per car. Mercedes Benz produces cars at $43.4 thousand per car using the same calculation (Finger). Tesla will have to produce hundreds of thousands of vehicles to support a stock price even half of what it is currently. With the limited amount of demand at the current price, the stock can soar as high as the market will allow it, but the price will have no foundation and will eventually crumble down. The over-valuation leaves Tesla poised for a buyout or takeover by a larger …show more content…
The whole package is a winning combination, in a small segment of the market. The company may be headquartered in California and founded by geeks, but it is still an automobile producer. The automotive industry is dominated by an oligopoly of corporations that historically have been successful at weeding out smaller companies just like Tesla Motors. The competition is fierce and the pockets are deep, economies of scale are a reality in automobile manufacturing. The patents and proprietary technology that Tesla holds right now will be meaningless in a matter of a few years, or several months. If the demand for electric cars increases significantly, Tesla will be forced to compete. Without the differentiation that Tesla has now, the company doesn’t have much of a chance. Tesla has a challenging future; in order to survive it must lower its costs and crank up production. The niche market of wealthy movie stars that want to be seen in a Tesla Roadsters isn’t going to get them there. The high price people are willing to pay for their stock isn’t going to