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Tesla, Inc.
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About Tesla, Inc.

Founded in 2003, the company designs, manufactures, and markets high-performance, technologically advanced electric cars and solar energy generation and energy storage products. Tesla sells three fully electric models: the Model S sedan and the Model X SUV, and the Model 3 sedan, which is among the world's top-selling electric cars. The fuel-efficient, fully electric vehicles recharge their lithium-ion batteries from an outlet. Tesla's Autopilot self-driving technology hardware has been available on all Tesla models since late 2016. US customers generate about 70% of Tesla’s sales. CEO Elon Musk founded PayPal and also runs SpaceX. 

Operations

Tesla designs, makes, and sells the Model S, Model X, and Model 3 electric vehicles. The company also offers leasing and services. The automotive segment generates just under 95% of sales. The division's operations also include an international network of company-owned stores and used car sales. Tesla's network of Supercharger and Destination Charging stations in North America, Europe, and Asia provides fast, convenient charging locations for Tesla owners to recharge their vehicles.

The company's energy generation and storage segment (just over 5% of revenue) makes and sells stationary energy storage products and solar energy systems to residential and small commercial customers. Its Powerwall 2 lithium-ion battery system is designed to store electricity for use as backup power in the event of an outage and to optimize self-consumption of solar power generation.  Tesla's commercial and utility offering, Powerpack 2, is an energy storage system that offers features like peak shaving, load shifting, emergency backup, and self-consumption of solar generation.

Tesla's solar energy systems include solar panels, inverters, and rack systems. The company's Solar Roof gathers solar energy from glass tiles that aim to be more architecturally pleasing than traditional roof-mounted solar panels. 

Geographic Reach

Tesla operates vehicle manufacturing facilities in Fremont, and Lathrop, California; Tilburg, the Netherlands; and its Gigafactory 1 near Reno, Nevada. Energy storage products are manufactured at its Gigafactory 1. Solar products are made primarily at Tesla's Gigafactory 2 site in Buffalo, New York. The US accounts for about 70% of sales. Other markets for which the company breaks out sales include China (about 10% of sales) and Norway (about 5%).

Sales and Marketing

Tesla markets and sells cars directly to consumers through an international network of company-owned stores and galleries. Tesla is notable in that it does not use dealerships (due, in some states, to legal restrictions). 

The company's solar energy and storage products are typically sold directly to residential customers through the company's stores and galleries, and through channel partners. An international sales organization markets Powerpack 2 systems and residential energy storage products outside the US.

 

Financial Performance

Tesla’s revenue growth has accelerated like its first car, the Roadster sportscar (0-60 in 1.9 seconds), driven by the rising number of vehicles sold each year. Between 2014 and 2018 sales have grown a whopping 570%. The company, however, has posted a string of net losses as it pours money into research and development and manufacturing.

Tesla’s revenue jumped 83% to $21.5 billion in 2018 driven by an 87% increase in automotive revenue. The number of vehicles sold in 2018 rose 138% to about 245,500 compared to 2017. Automotive sales revenue rose 107% but leasing revenue was down 20% in 2018. Service revenue increased about 39%. The energy generation and storage segment contributed about 5% of total revenue.

As fast as the company’s sales are moving forward, its bottom line is stuck in reverse. The company lost about $976 million in 2018, which was an improvement over the nearly $2 billion lost in 2017. The cost of automotive revenue rose 91% in 2018. However, the rise in unit sales is outpacing production cost growth, which may indicate manufacturing is becoming more efficient. Tesla also had higher expenses for R&D, sales, general, and administrative, and interest in 2018, but these expenses grew at a slower pace than in 2017.

Cash at the end of 2018 was $4.3 billion, an increase of about $300 million from the prior year. Cash from operations contributed $2.1 billion to the coffers, while investing activities used $2.3 billion, mainly for capital expenditures. Financing activities used $573.8 million, primarily in the form debt repayments.  

Strategy

Tesla's Model 3 was the US's top-selling luxury car in 2018, the first full year of its production. But production has still struggled to keep pace with demand. During 2018 the company managed to turn out about 7,000 Model 3 vehicles per week. Tesla hopes to accelerate production to 10,000 Model 3s per week by early 2020.

To help meet that goal and ramp up sales in overseas markets, Tesla's Gigafactory 3 in Shanghai, China broke ground in early 2019. Gigafactory 3 passed a government inspection that was necessary to begin production in September 2019 and full production is expected to soon follow. Model 3s rolling out of Gigafactory 3 is pivotal to Tesla's play in the world's largest electric car market and will help it gain ground in China while avoiding import tariffs. 

Tesla is also busy advancing its autonomous car technology. The company's Autopilot driver assist system includes auto-steering, traffic-aware cruise control, automated lane changing and other features that together offer a complete self-driving experience while keeping the driver in ultimate control of the car. 

Electricity isn't just for cars as far as Tesla is concerned. The company is developing Tesla Semi, an electric version of diesel-powered semis, built for hauling heavy payloads. The company said it will have a 500-mile battery range. Tesla intends to use the truck for its own logistics, but PepsiCo, Anheuser Busch, J.B. Hunt, UPS, and FedEx have placed orders for the trucks. Tesla plans to begin production of the Semi in 2020.

While most automakers have generated armies of suppliers providing parts, Tesla tries to handle as much manufacturing as it can in-house, including batteries and drive trains. The company spreads production costs for batteries across its energy and storage unit, but the costs of funding such manufacturing operations eat up a lot of cash.

Tesla pioneered the electric car market of the 21st century, but other automakers are appearing bigger in the rearview mirror. Companies such as Honda, Toyota, Ford, GM, Nissan, BMW, Daimler are investing in development programs designed to shift large parts, in some cases all, of their fleets to electric power in the coming years. Tesla has delivered highly ranked vehicles so far, but traditional automakers can call on deep resources, extensive supply chains, and global markets in developing and selling their vehicles.

Mergers and Acquisitions

Late in 2019, Tesla acquired Canada-based Hibar Systems, a manufacturer of battery systems for electric automobiles, laptops, and other products. Industry watchers believe the deal is part of Tesla's strategy to reduce its dependence on its third-party battery partners. Around the same time Tesla bought computer vision start-up DeepScale. The purchase of DeepScale is expected to accelerate Tesla's autonomous driving technology efforts.

Earlier in 2019, Tesla acquired energy technology company Maxwell Technologies in an all-stock deal valued at more than $200 million. Maxwell develops and makes ultracapacitors, devices that can store and quickly deliver surges of energy. Tesla would use the technology to increase battery capacity while reducing weight in its vehicles.

 

Company Background

Tesla Motors is named for Nikola Tesla (1856-1943), the renowned Serbian-American engineer and inventor. Tesla Motors was incorporated in July 2003.

Tesla, Inc.

3500 DEER CREEK RD
Palo Alto, CA 94304-1317
Phone: 1 (650) 681-5000

Stats

Employer Type: Publicly Owned
Stock Symbol: TSLA
Stock Exchange: , NASDAQ
CFO: Deepak Ahuja
Chairman, CEO, and Product Architect: Elon Musk
CTO: Jeffrey B. Straubel
Employees (This Location): 225
Employees (All Locations): 48,817

Major Office Locations

Palo Alto, CA

Other Locations

Phoenix, AZ
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