Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

create a conclusion for the passage below This paper aims to provide an overview of Tesla Inc.'s business profile for the purpose of seeking a

create a conclusion for the passage below

This paper aims to provide an overview of Tesla Inc.'s business profile for the purpose of seeking a potential investment."To accelerate the world's transition to sustainable energy" is Tesla's mission.

A group of engineers founded Tesla in 2003. They wanted to prove that people did not need to compromise to drive electric - that electric vehicles can be better, quicker and more fun to drive than gasoline cars. At the present, Tesla builds not only all-electric vehicles but also infinitely scalable clean energy generation and storage products. Tesla believes the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better.

Tesla, Inc. which was formerlyTesla Motors, Inc., designs, develops, manufactures and sells fully electric vehicles, and energy storage systems, as well as installs, operates and maintains solar and energy storage products.

This company operates via two segments: (1)Automotive, and (2)Energy generation & storage. TheAutomotivesegment includes the design, development, manufacturing, and sales of electric vehicles while theEnergy generation & storagesegment includes the design, manufacture, installation, and sale or lease of stationary energy storage products and solar energy systems to residential and commercial customers, or sale of electricity generated by its solar energy systems to customers.

Tesla, Inc. produces and distributes two fully electric vehicles, theModel Ssedan and theModel Xsport utility vehicle (SUV). It also offersModel 3, a sedan designed for the mass market. It develops energy storage products for use in homes, commercial facilities and utility sites.

Tesla, Inc. stakeholders are: 1.) The Communities. This stakeholder of Tesla is their highest priority. Tesla, Inc.'s automotive business directly satisfies the concerns of communities. Communities are stakeholders that determine brand image through their significant lobbying activities and responses to the business. One of the interests of this stakeholder group is to ensure that the natural environment is conserved or protected; 2.) The Customers. Customers affect Tesla's revenues and they are interested in product quality and reasonable pricing. With such significant effect, the company gives high priority to these stakeholders in its corporate social responsibility programs and to address these given interests, the firm seeks new ways of minimizing costs: 3.) The Employees. In designing its corporate social responsibility strategy, Tesla, Inc. believes that employees are a critical success factor in its automotive and energy solutions business. As stakeholders, employees influence business productivity and performance. Their CSR interests include high compensation and significant career opportunities. Tesla's corporate responsibility approach satisfies these interests through a competitive compensation strategy, as well as HR programs for skills development and leadership development. 4.) The Investors/Shareholders. Tesla's early years relied on a series of funding from investors that is why these stakeholders are important in influencing the company's capitalization. It is a given that investors and shareholders have interests in the profitability and growth of the business. Tesla's corporate social responsibility approach addresses these interests through long-term strategies that aim to transform the automotive/transportation and energy market; and 5.) The Governments. Tesla, Inc. experiences the effects of governmental action. Governments are stakeholders that present requirements, limits and opportunities to businesses. This stakeholder group's interests include legal compliance, as well as business contribution to economic growth. With plans for strategic global expansion and an excellent sustainability record, Tesla's corporate social responsibility strategy satisfies these interests. Also, governments impose requirements that influence operational tactics.

The social environment shaped Tesla's business through: First, what is social environment? According toShawn Grimsley,social environmentconsists of the sum total of a society's beliefs, customs, practices and behaviors. Furthermore, it is an artificial construct that can be contrasted with the natural environment in which we live. An example of this, (as we are on Tesla, Inc.'s business analysis), is a change in beliefs and values towards energy conservation and global climate change may have a change in consumer preference away from gas guzzling SUVs to hybrid sedans.

Social trends affect a business remote or macro-environment through their employees, customers/clients, and investors. The company's managers must make sure that strategies are applied to maximize the company's benefits of such external factors. The social trends (which are all opportunities) that influence Tesla, Inc.'s business are the following: 1.) Increasingly popularity of low-carbon lifestyles;2.) Increasing preference for renewable energy; and 3.) Improving wealth distribution in developing markets.

It shows opportunities to grow the multinational automotive business. For example, Tesla Inc. has growth opportunities based on the rising popularity of low-carbon lifestyles and increasing preference for renewable energy.

According to Joe Harpaz of Forbes.com "The U.S. government has put money into the auto and new energy industries to promote R&D and innovation. In the case of Tesla, this meant a $465 million loan from the Department of Energy in 2009. For a while it seemed that some of these programs were a sucker's bet, with companies going bust, defaulting on payments or producing nothing of note. Tesla is a darling of the program, however, havingrepaid its loan nine years early. Obviously the company's success is based on a lot of things, but the U.S. government loan played a big role in helping get this firm off the ground. In this way, the government almost acts like a venture capitalist, making new energy companies viable when private investment wouldn't have been enough."

Martin Eberhard and Marc Tarpenning are the two engineers who founded Tesla in 2003 and named the companyTesla Motors. Later on, it caught the attention of PayPal co-founder Elon Musk. He invested millions during the early rounds of funding and he then eventually became chairman of the company before taking on the role of the chief executive officer (CEO).

Institutional investors hold 63% of Tesla's shares. At the end of 2018, the company had a capital surplus of $10.2billion, with just over $4.9billion in stockholder equity.Tesla's market cap, as of August 2019, is $38.817billion. To fund the expansion of manufacturing facilities for its cars and batteries, the company is not expecting to make a big profit until 2020. Tesla'sreturn on equity(ROE) is -9.54%, return on assets (ROA) is 0.70%, and profit margin is -2.64%, though its quarterly revenue growth year over year (YOY) as of 2018was 58.70%. --From TK McDonald

When the company is in a negative cash flow situation, the only way to fund this position is through ever-increasing share-equity or long-term debt raises. These scenarios result in either diluting theearnings per share(EPS) value for stockholders or saddling the company with debt to equity in a ratio that will continue to outpace its major competitors. The capital structure of Tesla appears to be in trouble for investors. It must continue to grow its top-line revenue significantly to be able to provide confidence to its investors, lenders, and shareholders, while at the same time increasing its return on equity, return on assets, and profit margins.

When US-China trade war escalated last, China plans to increase tariffs on US cars. China's yuan fell, which prompted Tesla to increase its prices in China in August 2019. Tesla increased its prices in China following the tariff hike. However, the company rolled back the prices when China lowered the tariffs.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Experimental Econophysics Properties And Mechanisms Of Laboratory Markets

Authors: Ji Ping Huang

1st Edition

3662442345, 9783662442340

More Books

Students also viewed these Economics questions