Tesla, Inc. designs, develops, manufactures, and sells electric vehicles and energy storage products in the United States, China, Norway, and internationally. The company operates in two segments, Automotive, and Energy Generation and Storage. It primarily offers sedans and sport utility vehicles. The company also provides electric vehicle powertrain components and systems to other manufacturers; and services for electric vehicles through its 135 company-owned service centers and Service Plus locations, as well as through Tesla Ranger mobile technicians. It sells its products through a network of company-owned stores and galleries, as well as through Internet. In addition, the company offers energy storage products, such as rechargeable lithium-ion battery systems for use in homes, commercial facilities, and utility sites. Further, the company designs, manufactures, installs, maintains, leases, and sells solar energy systems to residential and commercial customers through a sales organization that include specialized internal call centers, outside sales force, a channel partner network, and a customer referral program, as well as through selected Tesla stores. Additionally, it sells renewable electricity generated by solar energy systems to customers. The company was formerly known as Tesla Motors, Inc. and changed its name to Tesla, Inc. in February 2017. Tesla, Inc. was founded in 2003 and is headquartered in Palo Alto, California.
Business Analysis of Tesla Motors
The Automobiles and Parts Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Tesla Motors compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Tesla Motors to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Tesla Motors with an interactive chart.
- Revenue Growth: Tesla Motors reported a revenue growth of 73.0% year-on-year during 2016. Automobiles Industry grew at 4.4% in the same period
- COGS share of Revenues: As a percentage of revenue, Tesla Motors spent 77.2% of its total revenues on COGS. Automobiles industry average (COGS share of revenue) in the same period was 86.6%
- R&D share of Revenues: As a percentage of revenue, Tesla Motors spent 11.9% of its total revenues on R&D. Automobiles industry average R&D spending in the same period was 0.4%
- SG&A share of Revenues: As a percentage of revenue, Tesla Motors spent 20.5% of its total revenues on Sales, Marketing, and General Administration (SG&A). Automobiles industry average SG&A spending in the same period was 8.0%
- Inventory share of Revenues: As a percentage of revenue, Tesla Motors spent 29.5% of its total revenues on Inventories. Automobiles industry average Inventory spending in the same period was 8.0%
- Accounts Payable share of Revenues: As a percentage of revenue, Tesla Motors invested 26.6% of its total revenues on Accounts Payable (A/P) Automobiles industry average Accounts Payable investment in the same period was 14.6%
- Accounts Receivable share of Revenues: As a percentage of revenue, Tesla Motors invested 7.1% of its total revenues on Accounts Receivable (A/R). Automobiles industry average Accounts Receivable investment in the same period was 47.5%
- PP&E share of Revenues: As a percentage of revenue, Tesla Motors invested 214.8% of its total revenues on Property, Plants, and Equipments (PP&E). Automobiles industry average PPE investment in the same period was 34.0%
- Intangibles share of Revenues: As a percentage of revenue, Tesla Motors invested 5.4% of its total revenues on Intangibles. Automobiles industry average Intangibles investment in the same period was 2.9%
- Net Margins: Tesla Motors Net Margins in the year 2016 were -9.6%. Automobiles industry average Net Margins in the same period were 4.1%
Sector and Industry Association of Tesla Motors
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Tesla Motors is associated with Industrials Sector Group, Automobiles and Parts Sector, and Automobiles Industry.
Automobiles and Parts sector is comprised of the following industries: Automobiles; Auto Parts. The definitions for each of the industries is as follows:
- Automobiles industry includes manufacturers of passenger vehicle that includes Cars, SUVs etc. and recreational vehicles including motorcycles like Harley Davidson. Companies making boats and other recreational vehicles are also part of Automobiles industry.
- Auto Parts industry includes manufacturers and distributors of automobile parts including engines, batteries and also tires.
Industry Ranking of Tesla Motors
With $7 billion revenues, Tesla Motors ranked number 5 of all the companies in the US Automobiles industry. There were a total of 18 public companies in the US Automobiles industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Automobiles industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.