BUS 478 – STRATEGY / SECTION: D300
Tesla Motors Inc. Case Synopsis
Date: March 17, 2014 [Edited]
Yafeng(Elsie) Liu Yingying Kang Hao Wu Chan Chen Edith Hon
Background Tesla Motors, Inc. is an American company that was founded in 2003 by a group of brilliant and innovative Silicon Valley engineers. These engineers proved that electric vehicles could be awesome substitute of the gasoline powered cars. Tesla not only designs, produces and markets electric cars, but it also provides advance electric vehicle powertrain components to other automakers including Daimler and Toyota. (Tesla Motors) Tesla headquarters is located in Palo Alto, California, and it has wholly-owned ...view middle of the document...
Tesla’s CEO, Elon Musk, claims on the website that “we're catalyzing change in the industry. Tesla vehicles and EVs powered by Tesla are fun to drive and environmentally responsible” (Musk, 2013). To make the charging station more convenient for the EVs users, Tesla aims to develop more stations spread in the world and make continuous improvements on their battery technologies.
Financial performance Tesla Motors is a public company that trades on the NASDAQ stock exchange under the symbol TSLA. From the figures below, it showed that Tesla had a net loss in 2012. It was until the first quarter of 2013 that Tesla finally posted profits for the first time in its ten year history. Tesla suffered significant losses and invested approximately $709.2 million of cash in operations through December 31, 2012. They reported $201.9 million in cash and cash equivalents at the end of year 2012 (Tesla, 2013). Figure 1: Consolidated Statements of Operations (in thousands, except share and per share data) Consolidated Statements (in 000s): December 31: Revenues Automotive sales Development services Total revenues Cost of revenues Automotive sales Development services Total cost of revenues Gross profit Operating expenses Research and development Selling, general and administrative Total operating expenses Loss from operations Interest income Interest expense Other expense, net Loss before income taxes Provision for income taxes Net loss Net loss per share of common stock, basic and diluted Weighted average shares used in computing net loss per share of common stock, basic and diluted 2012 $ 385,699 27,557 413,256 371,658 11,531 383,189 30,067 273,978 150,372 424,350 (394,283) 288 (254) (1,828) (396,077) 136 (396,213) (3.69) 107,349,188 $ 2011 148,568 55,674 204,242 115,482 27,165 142,647 61,595 208,981 104,102 313,083 (251,488) 255 (43) (2,646) (253,922) 489 (254,411) (2.53) 100,388,815 $ 2010 97,078 19,666 116,744 79,982 6,031 86,013 30,731 92,996 84,573 177,569 (146,838) 258 (992) (6,583) (154,155) 173 (154,328) (3.04) 50,718,302
Source: Tesla 10K Annual Report. http://ir.teslamotors.com/secfiling.cfm?filingID=1193125-13-96241&CIK=1318605 (page 64), Accessed March 17, 2014
Product variety Tesla Motor manufactures and sells not only electric cars but also electric vehicle powertrain components, such as Lithium-ion battery packs. The Tesla Roadster is the first highway-capable and all-electric sports 2
vehicle produced by Tesla in 2008. “This high-performance BEV, with a range of up to 250 miles, uses a proprietary lithium-ion Polymer battery pack that stores as much as twice the energy” (Mangram, 2012). Furthermore, it is “capable of acceleration from zero to 60 mph in less than four seconds, with a selflimited top speed of 125 mph” (Mangram, 2012). Tesla’s Model S sedan targets mid-level customers, with a lower price around $57,000 compared to the Roadster. “Tesla’s longer-term product objectives...