Academic journal article Academy of Accounting and Financial Studies Journal

Financial Statements Analysis on Tesla

Academic journal article Academy of Accounting and Financial Studies Journal

Financial Statements Analysis on Tesla

Article excerpt


On 23rd Feb 2017, Tesla, one of the most prominent names in the electric car industry declared yet another disappointing financials in the annual report for the year 2015 & 2016. With the net losses aggravating from the year 2015 to in the year 2016, a whooping increase by 13 percent. One day prior to annual report declarations the CFO resigned, just adding to the ongoing woes of the troubled company. The analysts had already named the company as one the potential candidates for the bankruptcy. Some had named the company as one the Ponzi scheme and other have called the stock of tesla worth less than zero. Few analysts have stated that the Tesla will declare insolvent in four months. Unhampered with the losses and the analyst predictions, the company had been very firm in the future expansion and capital expenditure plans in 2017 to invest $2.0 billion and $2.5 billion for the production of the Model 3 and to construct the Giga factory respectively, while expanding the retail and service centers to boost its supercharger network. While the analyst were taking a gloomy picture of tesla, the investors were puzzled with the fact that Why in spite of continually increasing the sales (beating the market analyst expectation in terms of increasing the revenues) the company still ends up in loss every year? Will the company stay afloat and pay off loans and meet its extensive capital expenditure requirements?

This paper is an attempt to describe the Financial Statements analysis of Tesla Inc. for the selected period i.e. from 2015 to 2017. Descriptive research method has been used in this study to describe the various results which are absorbed by using Financial Statements of Tesla Inc. The following sections of the paper arranged in the order starting with Objectives, about the company (Tesla Inc.), followed by literature review. After literature, Research method, Analysis & Discussion and finally ends with conclusion.


1. The main objective of this paper is to know the reasons behind Tesla declaring losses irrespective of the sales for the select period based on Financial Statements analysis.

2. To know the efficacy of ratio analysis in detection the cash flows, working capital and capital budgeting perpetuation

About the company

Listed on NASDAQ, for a period of almost six years Tesla Inc. is well engineered cars with extensive power and nominal emissions had helped Tesla's products to stand out and make a mark in this growing sector. The gradual shift of the consumers towards the importance of environment-friendly automobile options has helped to facilitate this. Another reason why consumers seem to find the shift to electric cars feasible is the fact that consumers can now avoid the cumbersome process of fueling by going to a gas station. This supercharger feature serves as a competitive advantage for the company. Tesla cars are also backed with high safety parameters making them one of the safest cars in the world.


Vehicles compete in the market both based on their traditional segment classification as well as based on their propulsion technology. For example, Model S and Model X compete primarily in the extremely competitive premium sedan and premium SUV markets with internal combustion vehicles from more established automobile manufacturers, including Audi, BMW, Lexus and Mercedes, and Model 3 will compete with small to medium-sized sedans from manufacturers including Audi, BMW, Lexus, Mercedes, Honda and Toyota. The progression in the EV industry has led to the emergence of various competitors for the company. Major competitors being BMW, General Motors and Ford Motor Company with extravagant models like the BMW i8, i3, Spark EV, Chevy Bolt and Ford Fusion Energy.


The Electric Vehicle industry is expected to grow at CAGR of 23% by the year 2021. The immense benefits of Electric vehicles have elicited the scope for growth in this sector. …

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