Tesla - Flying Too Close to the Sun?

Alessandro Carleo (Bocconi University), Ryan Tenerowicz (California Polytechnic State University), and Kyle Amelio (New York University)

Company Overview

Tesla Inc. is an automotive manufacturer that produces electric vehicles, batteries, and solar panels. Based in Palo Alto, California, Tesla has sold over 1 million electric cars as of 2020, and continues to increase global sales each year. Tesla reported total revenues of just over $6 billion in Q2 2020, slightly higher than their Q1 2020 revenues of $5.9 billion, however significantly lower than 2019 revenue levels that averaged $6.7 billion per quarter. In terms of net income, Tesla reported 4 consecutive quarters of positive net income (Q3 and Q4 of 2019 and Q1 and Q2 of 2020), making them eligible to be included in the S&P 500 index.

Figure 1: Consolidated-Income Statement Q2 '19 & '20 (10-Q)

Figure 2:Segment Performance ‘19 (10-Q)

Core Products

Model S

Introduced by Tesla in 2012, the Model S is a 5 - door electric powered sedan that starts at about $75,000. The Model S was the highest-selling plug-in electric car in 2015 and 2016.

The Model S is positioned in the market as a luxury sedan and the majority of Model S owners are male and over 45 years old with typical income about $100k.

Model 3

Starting production in 2017, the Model 3 is a 4-door electric sedan that costs around $31,000. The Model 3 is the best-selling electric car ever, with over 500,000 units sold.

The Model 3 is marketed as an affordable offering by Tesla, that still has many of the luxury features as the Model S. In the EV market, the Model 3 has managed to capture a 60% market share.

Model X

Produced by Tesla since 2015, the Model X is Tesla’s luxury SUV offering, with pricing starting around $75,000.

The Tesla Model X is positioned in the market as a luxury SUV, however has recently seen a decline in sales in 2020, making up less than 20% of Tesla’s sales volume.

Model Y